--- normative: no --- # Most favoured nation duties ## What most favoured nation is Most favoured nation (MFN) is a principle of the World Trade Organization (WTO). It means members of the WTO cannot usually discriminate between their trading partners. Countries must offer access to their market on the same terms for all members of the WTO. Any favour offered to one country must be offered to everyone. For example, if you offer a lower rate of customs duty to a country for one of its products, you must do the same for all countries. ## Exceptions to most favoured nation There are some exceptions to MFN treatment. ### Free trade agreements Countries can negotiate a free trade agreement. Free trade agreements set out the rules that cover trade between 2 or more countries. They aim to make trading easier between only those countries. They do this by reducing the restrictions on imports and exports between them. Learn more about [how free trade agreements work](https://uktrade.github.io/tariff-data-manual/documentation/tariff-policy/free-trade-agreements.html#free-trade-agreements). Read about [the UK’s trade agreements](https://www.gov.uk/government/collections/the-uks-trade-agreements) on GOV.UK. ### Trading with developing nations Countries can give developing nations special access to their markets. These are known as [unilateral preferences](https://uktrade.github.io/tariff-data-manual/documentation/tariff-policy/unilateral-preferences.html#unilateral-preferences). Eligible countries can pay less or no duties on some goods they import under the UK Generalised Scheme of Preferences (GSP). Read [more about GSP](https://www.gov.uk/guidance/use-the-generalised-scheme-of-preferences-to-import-and-export-goods) on GOV.UK. ### Trade barriers Countries can make it more difficult for other nations or traders to import products they believe are being traded unfairly. They do this by raising trade barriers. Trade barriers can include: * taxes on imported goods * import quotas or price controls (including limits on the amount of goods that can be imported) * requirements for goods to be locally produced Read [about trade barriers](https://www.gov.uk/guidance/report-a-trade-barrier) on GOV.UK. ## Creating MFN duties in the tariff There are about 24,500 commodity codes in the Tariff. Every commodity code must have one or both of the following MFN measure types attached to it: * 103 (Third country duty) * 105 (Non preferential duty under end-use) About 16,500 of the total number of commodity codes are declarable end-lines. An end-line is the most specific classification of a product. Each end-line has an MFN duty attached to it. Often, the MFN duty is 0%. However, it does not matter what the duty is, it must be set against the commodity code in the Tariff. ### Attaching MFN duties in the commodity code hierarchy You can attach the MFN duty to any tier in the commodity code hierarchy. All the codes below it in the hierarchy inherit the same duty. For example, the commodity code for Natural Chilean sodium nitrate is 3102500010. Commodity code hierarchy for Natural Chilean sodium nitrate This is made up of: * HS chapter: 31 Fertilisers * HS heading: 02 Mineral or chemical fertilisers, nitrogenous * HS subheading: 50 Sodium nitrate * CN subheading: 00 (not set) * Taric code: 10 Natural Chilean sodium nitrate If the MFN duty on '31 Fertilisers' is 0%, all the codes below it in the hierarchy inherit the 0% MFN duty. Read more [about commodity codes](https://uktrade.github.io/tariff-data-manual/documentation/tariff-data-structures/nomenclature.html#commodity-codes). ### Attaching MFN duties to a geographical area You must create all MFN duties (103s and 105s) against ‘Erga Omnes’. Erga Omnes is a Latin phrase which means ‘towards all’ or ‘towards everyone’. In trade terms, Erga Omnes is the geographical area group which covers the whole world. Erga Omnes has a geographical area ID of 1011. This country group includes the UK. There is also a country group called ‘All third countries’. This group has the ID 1008. This country group excludes the UK.