MFN Clause Law and Legal Definition
MFN clause means most favored nation clause. It is a clause that is seen used in agreements between two nations. MFN clause provides that one country will treat the other in the same manner as it treats any other nation that is given preferential treatment. A country may grant this clause to another if it is interested in increasing trade with that country. Countries achieving most favored nation status enjoy certain benefits. For example, such countries are given specific trade advantages such as reduced tariffs on imported goods. Such clauses are sometimes referred to as favored nation clause.
In Kolovrat v. Oregon, 366 U.S. 187 (U.S. 1961), the court held that the term "most favored nation" clause in a treaty means that each signatory grants to the other the broadest rights and privileges which it accords to any other nation in other treaties it has made or will make.