WTO Framework
MFN Principle and the FTA Exception (GATT Article XXIV)
Under the WTO's General Agreement on Tariffs and Trade (GATT), the Most Favoured Nation (MFN) principle (Article I) requires a member to extend the same trade terms to all WTO members equally. Bilateral/regional trade agreements like the India-EU FTA are, on their face, inconsistent with MFN because they offer preferential terms only to the partner country or bloc — GATT Article XXIV creates the specific legal exception that permits this.
- Article XXIV distinguishes a "customs union" (common external tariff) from a "free trade area" (members retain individual external tariffs but eliminate barriers between themselves)
- Article XXIV:8(b) requires that duties and restrictive regulations be eliminated on "substantially all trade" between the FTA partners for the exception to apply
- FTAs must be notified to the WTO and are subject to review by other members
- India already has similar preferential arrangements under this exception with the UAE and EFTA (see below)
● Tracked since April 27, 2026 · last seen September 23, 2026 · updates as the daily brief publishes
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