atus were not in place. However, critics of MFN status to China point out that China has no incentive to open its market to American goods, and that the US trade deficit topped more than $60 billion in 1998 (Owens, 1998, p. 18).
The political ramifications of MFN status, particularly with regard to China, include using MFN to encourage nations to behave in ways which meet the goals of the United States. In the case of China, MFN status has been used to encourage the Chinese government to improve its human rights performance. Thus the issue of MFN moves out of the realm of the strictly commercial and into the political realm, with the result that companies interested in international trade must be politically active to protect their interests.
Managers who participate in international markets must recognize that MFN status can directly affect their business. Many nations have other trade agreements with the United States which might supersede MFN (such as the North American Free Trade Agreement), but MFN can be a particularly important success factor for companies that are looking to open up new markets in the former Soviet Union or China. Companies may want to import goods from those countries and enjoy the lower tariffs that MFN would provide. Without those protections, the American companies might find themselves at a disadvantage in the marketplace. In addition, MFN can be used to encourage countries to open up their own markets to trade (under threat of losing their MFN status) so that American exporters also have interest in MFN status.
Companies with international interests involving non MFN nations (and there are only a handful with either conditional or no MFN status), thus are likely to participate in the political process. Such participation may involve lobbying politicians both in the legislative branch as well as the federal administration in order to encourage MFN status for desired countries. Companies wh...