India, EU agree on 5-year most-favoured nation treatment in trade deal

The MFN treatment excludes provisions related to taxation treaties, recognition of standards or authorisations, and dispute settlement procedures.

India and the European Union have agreed to grant each other Most-Favoured-Nation (MFN) treatment for a period of five years from the entry into force of the free trade agreement between them.

This means that the listed sectors, services and service suppliers of each Party will be treated at least as well as those from any other country, with certain limits and conditions.

The MFN treatment excludes provisions related to taxation treaties, recognition of standards or authorisations, and dispute settlement procedures. Parties may also confer advantages in contiguous frontier zones for services that are locally produced and consumed.

This was included in the Trade in Services chapter, a part of the FTA text made public on January 27.

A Joint Committee will review in the fourth year, developments concerning the entry and stay of Indian students in the EU, their work rights, and arrangements for the temporary movement of service suppliers.

Based on this review, the Committee will decide whether to continue MFN treatment beyond the initial five-year period.

Parties may also request further review if circumstances adversely affect their interests. Should the Committee decide not to continue the treatment, the obligation to extend MFN treatment will cease, though benefits already granted remain unaffected.

India and the EU reached the long-delayed agreement last month to reduce tariffs and increase trade between them.