Most-Favoured Nation Clauses: A Double-Edged Sword in a Geo-Economic Era

The geo-economic turn in global policy-making has manifested itself not only in the rise of bilateral and regional free trade agreements (ftas), but also in the more “strategic” design of these ftas. States increasingly rely on fta provisions like most-favoured nation (mfn) clauses to secure preferential market access and protect these gains against competitors. While mfn clauses are the cornerstone of the multilateral trade regime that limits possibilities for discrimination, they can also be employed on a bilateral and regional level to ensure that trade partners do not extend more favourable conditions to third parties in future fta negotiations. To date, we find that the eu makes more frequent use of mfn clauses in ftas than its trading partners in asia—with the exception of china. While we observe no clear regional variants of mfn obligations, the trend to include mfn clauses in ftas—especially in the services and investment chapters—reveals governments’ growing interest in safeguarding their exporters’ interests against third party competition in as many ways as possible. However, as we show, the strategic potential of mfn clauses remains uncertain as there is so far no evidence of active monitoring or enforcement of mfn obligations between trade partners