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Economic Definition of most-favored nation. Defined.

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Term most-favored nation Definition: A condition, usually as part of a trade agreement among nations (such as General Agreement on Tariffs and Trade), that ensures one country will extend its least restrictive trade barriers to another country. Suppose, for example, the good old U. S. of A. makes the Republic of Northwest Queoldiola a most-favored nation. If the United States then eliminates tariffs on sundials imported from Brazil, it must also eliminate tariffs on imported Queoldiolan sundials. Because countries have generally followed this most-favored nation system for several decades, international bickering over trade barriers has been significantly reduced. See foreign trade.

 

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