**Introduction** “Most-favoured-nation" treatment, or MFN, is the World Trade Organization (WTO) principle that any trade advantage granted by one WTO member to one trading partner must be extended immediately and unconditionally to all other WTO members. Its purpose is to prevent discrimination and support a predictable, rules-based trading system[1]. The free-riding problem arises because the same rule that spreads benefits widely can also allow non-participants to benefit from trade concessions negotiated by others without making equivalent commitments themselves[2]. **Contextual background** The MFN principle was designed to prevent discriminatory trade blocs and reduce fragmentation in international trade. By requiring WTO members to extend trade advantages equally across the membership, MFN helps limit exclusive trading relationships and supports a more predictable trading environment[1]. It also reduces the need for countries to negotiate separate bilateral concessions with every trading partner because concessions granted to one WTO member are generally extended to all WTO members. MFN also supports fairness for smaller and less powerful economies. Without MFN, larger economies would have greater leverage to negotiate preferential access on terms that smaller economies may not be able to secure. By requiring equal treatment, MFN gives all WTO members access to the same basic tariff treatment and helps prevent trade relations from being shaped solely by bargaining power[1]. This makes MFN one of the principal legal foundations of non-discrimination within the WTO system. **How MFN may encourage free-riding** **1.** **Countries can benefit from concessions negotiated by others** The free-riding problem emerges because MFN extends negotiated concessions to countries that were not part of the original bargain. A country that did not actively participate in negotiations may still benefit from tariff reductions or market-access improvements secured by others. This creates a gap between those that bear the political and economic costs of liberalization and those that receive the benefits. In large multilateral negotiations, governments may therefore calculate that they can obtain improved market access without making equivalent concessions themselves[2]. **2.** **MFN can reduce incentives for ambitious collective agreements** Free-riding concerns become especially important in negotiations involving global trade public goods, such as digital trade disciplines, subsidy reform, or environmental goods liberalization. Governments may hesitate to undertake politically costly commitments if countries that did not participate in negotiations receive the same benefits automatically under MFN rules. In response, groups of WTO members increasingly pursue plurilateral initiatives, such as the Joint Statement Initiative on e-commerce, where participating economies negotiate rules among themselves rather than through full multilateral consensus[3]. **3.** **MFN can weaken the reciprocity logic of WTO negotiations** The WTO system traditionally relies on reciprocity, where governments exchange market-opening commitments in return for comparable concessions from trading partners. MFN does not eliminate reciprocity, but it can weaken incentives to reciprocate because negotiated benefits are automatically extended to all WTO members, including non-participants[3]. This can reduce governments’ willingness to undertake politically sensitive liberalization measures when the benefits are shared broadly across the system rather than limited to negotiating partners. **4.** **MFN may encourage arrangements outside the WTO framework** The MFN principle can encourage countries to negotiate trade arrangements outside the WTO framework. Because MFN automatically extends negotiated concessions to all WTO members, including non-participants, governments may prefer regional trade agreements or plurilateral arrangements that limit benefits to participating members. These arrangements reduce free-riding and strengthen incentives for reciprocal commitments. However, growing reliance on preferential and plurilateral agreements can also fragment the trading system and reduce the WTO’s central role in global trade governance[4]. **Conclusion** MFN treatment remains one of the foundational principles of the multilateral trading system because it promotes non-discrimination, predictability, and broad-based liberalization. However, by extending negotiated trade benefits to all WTO members regardless of their contribution, it can also create incentives for free-riding. As trade negotiations increasingly involve complex regulatory and strategic issues, the tension between inclusiveness and reciprocity has become more visible within the global trading system.
