The Challenges Ahead

6.2 Mandated Review of MFN Exemptions

Most-favoured-nation treatment is a fundamental principle of the multilateral trading system as it was conceived after World War II and reconfigured in the Uruguay Round (Chapter 1.5). Any departures should thus be limited to exceptional circumstances and, where possible, be phased-out over time.

The Annex on Article II Exemptions stipulates that MFN exemptions should not exceed ten years in principle, and provides for a review of all existing measures that had been granted for periods of more than five years. The latter review is destined to examine whether the conditions that led to the creation of the exemptions still prevail. More importantly, the Annex also requires that MFN exemptions be subject to negotiation in any subsequent trade round (Annex on Article II Exemptions).

The first review was concluded in May 2001; Members decided to conduct another review not later than June 2004.