Despite the sustained advance of preferential trade agreements in recent decades, the Most Favored Nation (MFN) principle remains the cornerstone of global trade. This is revealed in the annual report published this week by the World Trade Organization (WTO), in collaboration with the International Trade Centre (ITC) and the United Nations Conference on Trade and Development (UNCTAD).
The study - which this year devotes its special theme to the MFN principle - analyzes how global trade flows are distributed according to different tariff regimes. This principle, enshrined in Article I of the General Agreement on Tariffs and Trade (GATT 1994), establishes that any trade advantage granted to one country must be extended immediately and unconditionally to all other WTO members. “This principle has promoted a more stable and predictable global trading environment,” the report notes, emphasizing that it “discourages discriminatory practices and fosters fairness in trade relations.”
According to preliminary estimates - based on data available until May 2025 -, Around 74% of world merchandise trade is currently conducted under Most Favored Nation terms., which implies that most trade flows remain subject to equal tariff treatment, with no differentiated preferences between partners.
Argentina's tariff profile
The report also includes individual tariff profiles by country and territory. In the case of Argentina, The simple average tariff applied in 2024 is 12,5%, While the trade-weighted average—which reflects the effective impact on real imports—reaches 11,3%, one of the highest in the multilateral system.
In 2023, Argentine imports totaled $72.900 billion, of which almost 90% were non-agricultural products.
Consulted by Customs News, the international trade specialist, Master Gustavo Scarpetta, analyzed the data in the report: “The weighted average fell, and that's positive, but we're still one of the countries with the highest levels in the region. There are still items that face 35% tariffs, which pushes the average up."He explained.
And I add: "Tariff policy must advance along two paths: reducing not only tariffs but also non-tariff restrictions. Only then will we truly become more open to trade..
Regarding the international context, Scarpetta valued the fact that 74% of world trade is still conducted under Most Favored Nation terms, and highlighted the importance of comparing tariff structures: “The average can be misleading, because there are products that pay zero alongside others that face 35%. There are countries with lower averages that nonetheless maintain high tariff levels in specific sectors. It's all a strategy."
Professor and international trade specialist, Master Gustavo Fadda, highlights that while the 74% figure is significant, it also means that 26% of trade is not governed by the MFN, operating under preferential agreements (regional or bilateral). This generates a "spiderweb» of preferences that can be complex and, in some cases, divert trade.
A striking figure of this situation is that 70% of global trade is carried out between companies located in different countries that have entered into trade agreements with each other. «Esto-he reasoned- It shows the steady progress of the integration processes«.
On the other hand, he noted: "The average tariff of 11.3% for MCS and Argentina in particular, three times higher than the world average, positions it as an economy with a significant level of protection; which implies -he warned- challenges and opportunities in its foreign trade strategy, especially in a context of seeking greater competitiveness and economic openness."
«All of this can be seen as a barrier to greater integration into global value chains and to attracting foreign direct investment seeking export platforms.", Fadda considered.
Multilateralism in force
Although 22% of global imports would be eligible for tariff benefits under bilateral, regional agreements, or unilateral schemes, only 17% of world trade actually takes advantage of them, according to the report. This low utilization means that much of this trade remains under the terms of the Most Favored Nation principle, leading to 2022% of global trade in goods being conducted without tariff preferences by the end of 83, a proportion even higher than in previous years.
Although all countries participate in at least one preferential trade agreement, the report highlights the centrality of the multilateral system. "Trade quotas under the Most Favored Nation principle vary significantly across economies and sectors, reflecting their continued relevance," the WTO warns. It also emphasizes the need to better understand the actual use of preferences in a context where regionalism is gaining prominence.
trade tensions
In this sense, the study also notes the growing use of restrictive measures in trade. Around 9% of global imports are now affected by trade tensions, such as unilateral tariffs, antidumping duties, and countervailing duties. "This is a considerable increase compared to previous years," warns the WTO.
The report is available in English, and the Spanish and French versions are expected to be available for download in August 2025 from the official WTO website.
◾ Download the official PDF of World Tariff Profiles 2025 HERE
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