Can anyone tell me what is MFN.Bilateral relations between Pakistan and India are given a boost when Pakistan has given the status of MFN to India while Indiz had done so in 1996.Then why Pakistan had taken so much time to give India this status.Please clarify.
Regards

MFN stands for Most favorite nation. Its percussion on the two countries is summed up in a article. Follow the link.
http://tribune.com.pk/story/884483/p...status-report/

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watu'izzu man tasha-“au wa-tuzillu man tasha-“au

Informal way to convey the over-simplified gist(1 main point out of 3; rest 2, you can interpret yourself after reading this):

I know most of the people will share the links of different newspapers and websites about "Most favoured nation"(MFN), which will be beneficial for deep understanding of the rapprochement between countries/states, in lieu of explaining the notion itself. Therefore, let me try to explain it first.

For instance, there are two states - let us say Pakistan and India.

Now you know every state wants to export its products, so as to strengthen its economy, which is actually a good thing. But hey! Have you realised the implication of that in other state's frame of reference? If you have not, then let me picture that implication first.

Suppose you are a Pakistani citizen, which obviously you are, and you want to start your own business here - let us say potatoes business(lol). Now you have all the resources here to launch your business in Pakistan, but it is natural that you will first make yourself aware of your competitors. Then you start supplying potatoes all over Pakistan with the cost of, let us say, Rs. 50/kg(including TAX of let us say Rs. 5/kg), which let us assume that the lowest price through out the country; Now you are happy, living your life lavishly.

Now let us suppose that India is "exporting" potatoes to Pakistan. Their original price-set is Rs. 40/kg. Now what the government of Pakistan do will be imposing the tariff on top of that price - let us say 50%(Oh man! That's a bit of over-exaggeration, but whatever). Now in Pakistan the same potatoes of India will be available to the people of Pakistan for Rs. 60/kg. In contrast, you, being the Pakistani national, selling the potatoes of Rs. 50/kg. Are you interpreting the whole scenario here? Who is winning? Who is losing? Yes, overall, Pakistan is winning. How? Rs. 20 will go to Pakistan's government if the consumer - which in this case is the people of Pakistan- buys one kg Indian potatoes. Furthermore, Rs. 5 from you as well if the consumer buys your potatoes. Overall, win-win situation for our economy(Rs. 25/kg); furthermore, your business(meaning Pakistani business) will be save as your price is smaller than that of Indian export industry.

Now plot twist:

One day, the government of Pakistan has decided to give "Most favoured nation" status to India. Now the following questions arise: what will happen to our(Pakistan's) economy; how it will affect you and the local business?

Let me answer them one by one;

1) What will happen to our(Pakistan's) economy
The moment Pakistan gives the status "Most favoured nation" to India, it(India) will start exporting their products WITHOUT any tariff, meaning NO 50% tariff; which will allow India to export their potatoes for Rs. 40 to our markets. Are you foreseeing the catastrophe here? Are you? If no, let me do some maths for you.

You will be selling your potatoes for Rs. 50/kg; out of which, Rs. 5/kg(TAX) will go to our economy. Whereas, Indian potatoes will be sold for Rs. 40/kg, without any tariff; out of which, how many rupees will be added to our state bank? NONE! NOTHING! Overall, our government will be getting Rs. 5/kg instead of Rs. 25/kg.

We are losing from all sides in that aspect.

2) Now let's take the second question which is: How it will affect you and the local business?


Indian potatoes will be available in Pakistan's market for Rs. 40/kg to consumers; whereas, your potatoes(local business) will be for Rs. 50/kg. whom consumer will prefer? Obviously consumer will buy (cheap) Indian potatoes instead of yours. Here, our(Pakistan's) local business will be on stack too.

Again, you are losing; Pakistan's government is losing; India is winning. Indian economy is strengthening to some extent; creating imbalance in the region; and ultimately we will become losers. #NoOffence

Gosh, I wrote too much while eating too many potatoes(Lay's salted chips). I hope you get some gist; it is an oversimplified picture. I really wanted to add two to three pages more to it, so as to present the complete picture. However, time is kicking my head right now. At this point read different links and understand the advanced aspect related to MFN.

Long story short: MFN -> No tariff.

Regards.