The status of
permanent normal trade relations (PNTR) is a legal designation in the United States for free trade with a foreign nation. In the U.S. the name was changed from
most favored nation (MFN) to PNTR in 1998.
In
international trade, MFN status (or treatment) is awarded by one nation to another. It means that the receiving nation will be granted all trade advantages — such as low tariffs — that any other nation also receives. In effect, a nation with MFN status will not be discriminated against and will not be treated worse than any other nation with MFN status.
Applicability
Granting of permanent normal trade relations status is automatic, except where specifically denied by law.
The following countries are specifically denied NTR status, as of 2005:
[http://www.au.af.mil/au/awc/awcgate/crs/96-463.pdf]The following countries are temporarily afforded NTR treatment by presidential waiver in accordance with the
Jackson-Vanik amendment, as of 2005:
- Vietnam (permanent NTR status granted in 2006)
The following countries are temporarily afforded NTR treatment by a presidential compliance determination, in accordance with the
Jackson-Vanik amendment, as of 2005::
Embargoes also apply to additional parties; see
United States embargoes.
History
In 1948 the United States joined the
General Agreement on Tariffs and Trade (GATT), the predecessor organization of the World Trade Organization.
At the same time the United States agreed to extend what was then called Most Favored-Nation status (MFN) to all other countries. The status was also extended to some countries that did not join GATT. In 1951, the U.S. Congress directed President
Harry Truman to revoke MFN status to the
Soviet Union and other
Communist countries.
Yugoslavia was not part of this exclusion. During the Cold War, most Communist countries were either denied MFN or had to meet certain conditions to be granted the status.
Poland was granted MFN in December 1960 by President
Eisenhower.
Both Poland and Yugoslavia were still on the list of "communist countries", also known as Section 5. In 1962, Congress enacted a directive that would have jeopardize the status of Poland and Yugoslavia MFN tariff; however, the directive was delayed until a new one was passed that allowed any countries with MFN to keep the status if the President determines it to be in the national interest
In addition some non-Communist countries such as
Afghanistan and
Serbia and Montenegro were excluded from PNTR/MFN for various reasons. Congressional action denied PNTR status to the reconstituted
Federal Republic of Yugoslavia (Serbia and Montenegro) in reaction to the armed conflict in the region and human rights abuses committed after the breakup of the old Yugoslavia.
Countries that wish to have PNTR must fulfill two basic requirements: (1) comply with the
Jackson-Vanik provisions of the Trade Act of 1974 that states that the President of the United States determines that a country neither denies or impedes the right or opportunity of its citizens to emigrate; and (2) reach a bilateral commercial agreement with the United States. Jackson-Vanik allows for the President to issue a yearly waiver to allow the granting of PNTR.
For many years,
People's Republic of China was the most important country in this group which required an annual waiver to maintain free trade status. The waiver for the PRC had been in effect since 1980. Every year between 1989 and 1999, legislation was introduced in Congress to disapprove the President's waiver. The legislation had sought to tie free trade with China to meeting certain human rights conditions that go beyond freedom of emigration. All such attempted legislation failed to pass. The requirement of an annual waiver was inconsistent with the rules of the
World Trade Organization, and for the PRC to join the WTO, Congressional action was needed to grant PNTR to the PRC. This was accomplished in late-1999, allowing the PRC to join WTO in the following year.
was given temporary free trade status in 2001 on a year-to-year waiver basis. As a prerequisite for that country's accession to the WTO. Vietnam has had PNTR status since December 2006.
