Under the World Trade Organization (WTO) regime, the Most Favoured Nation (MFN) clause is based on which one of the following principles?

Introduction / Context:
The Most Favoured Nation (MFN) principle is one of the cornerstones of the World Trade Organization (WTO) framework. It governs how member countries extend trade advantages such as lower tariffs or fewer restrictions to one another. Understanding the basic idea behind MFN is essential for anyone studying international trade, economics or general studies for competitive examinations.

Given Data / Assumptions:

• The question asks about the principle underlying the MFN clause under the WTO regime.
• Four descriptions are provided: non-discrimination between nations, discrimination between nations, differential local/foreigner treatment and uniform commodity tariffs.
• We assume basic familiarity with the idea that WTO aims to reduce discrimination in trade.

Concept / Approach:
The MFN principle means that if a country grants a trade advantage such as a lower tariff rate to one trading partner, it must extend that same advantage to all other WTO member countries, subject to some exceptions such as regional trade agreements and preferences for developing countries. This embodies the idea of non-discrimination between nations in terms of trade treatment. It does not force uniform tariffs on all commodities, nor does it legitimise discrimination between nations; rather, it restricts it.

Step-by-Step Solution:
Step 1: Recall the basic formulation of MFN: any favourable treatment granted to the goods of one country must immediately and unconditionally be extended to the like goods of all other WTO members. Step 2: This rule is designed to prevent countries from arbitrarily discriminating among different trading partners by giving special favours only to some and not to others (except under permitted arrangements). Step 3: Option A states that the MFN clause is based on non-discrimination between nations. This matches the idea that all WTO members must be treated equally with respect to any advantage granted. Step 4: Option B suggests deliberate discrimination between nations, which is the opposite of the MFN goal, so it is incorrect. Step 5: Option C talks about differential treatment between locals and foreigners within domestic markets, which relates more to national treatment rather than MFN. Step 6: Option D refers to a uniform tariff across all commodities; this is not required by MFN, which deals with discrimination among trading partners, not among different products. Step 7: Therefore, the correct answer is option A: non-discrimination between nations.

Verification / Alternative check:
WTO summaries of MFN describe it as a principle of non-discrimination that ensures all trading partners are treated on an equal footing with respect to any concessions granted. They clearly distinguish MFN from other concepts such as national treatment and from domestic tax or product-specific tariff policies. Exam-oriented materials also summarise MFN in a single line: it requires that any favourable treatment granted to one member must be extended to all others, confirming that non-discrimination between nations is the core principle.

Why Other Options Are Wrong:

• Option B describes discrimination between nations, which MFN is designed to reduce or eliminate, not promote.
• Option C mixes up MFN with national treatment, which is about treating foreign and domestic products equally once they enter a market.
• Option D confuses MFN with a policy of uniform tariffs across commodities; MFN does not prevent countries from having different tariff rates on different goods.

Common Pitfalls:
A frequent mistake is to think that MFN requires all tariff rates to be the same for every product and every partner, which is not entirely accurate. MFN prevents discrimination among partners, not differentiation among commodities. Another pitfall is to confuse MFN with national treatment, which focuses on how imported goods are treated inside a country compared with domestic goods. Remembering that MFN is about non-discrimination between countries and national treatment is about equality between foreign and domestic products helps avoid these confusions.

Final Answer:
Non-discrimination between nations in trade matters