Q. Consider the following statements:
1.According to World Trade Organization (WTO) rules, any special trade concession granted to a member under the Most Favoured Nation (MFN) status must receive approval from the WTO council.
2.Some Double Taxation Avoidance Agreement (DTAA) includes Most Favoured Nation (MFN) clause.
Which of the statement(s) given above is/are correct?
Answer: B
Notes:
Explanations –
Statement 1 is incorrect. The MFN principle under WTO rules requires that any favorable trade terms granted to one member must automatically be extended to all other WTO members, without needing specific approval from the WTO council. The MFN status is about non-discriminatory treatment among all WTO members, and does not involve a case-by-case approval process for each concession.
Statement 2 is correct. Some DTAAs do include an MFN clause, which ensures that if a country offers more favorable tax terms to another country in a separate agreement, those same terms must be extended to the partner country in the original DTAA.
Source: The Hindu
