VIII
ing’’ on the basis of nationality during the investment process, as well as nationality-based post-establishment measures. For pur- poses of the Treaty, ‘‘national treatment’’ means treatment no less favorable than that which a Party accords, in like situations, to in- vestments in its territory of its own nationals or companies. For purposes of the Treaty, ‘‘MFN treatment’’ means treatment no less favorable than that which a Party accords, in like situations, to in- vestments in its territory of nationals or companies of a third coun- try. The Treaty obliges each Party to provide whichever of national treatment or MFN treatment is the most favorable. This is defined by the Treaty as ‘‘national and MFN treatment.’’ Paragraph 1 ex- plicitly states that the national and MFN treatment obligation will extend to state enterprises in their provision of goods and services to covered investment. Paragraph 2 states that each Party may adopt or maintain ex- ceptions to the national and MFN treatment standard with respect to the sectors or matters specified in the Annex. Further restrictive measures are permitted in each sector. (The specific exceptions are discussed in the section entitled ‘‘Annex’’ below.) In the Annex, Par- ties may take exceptions only to the obligation to provide national and MFN treatment; there are not sectoral exceptions to the rest of the Treaty’s obligations. Finally, in adopting any exception under this provision, a Party may not require the divestment of a pre- existing covered investment. Paragraph 2 also states that a Party is not required to extend to covered investments national and MFN treatment with respect to procedures provided for in multilateral agreements concluded under the auspices of the World Intellectual Property Organization relating to the acquisition or maintenance of intellectual property rights. This provision clarifies that certain procedural preferences granted under intellectual property conventions, such as the Patent Cooperation Treaty, fall outside the BIT. This exception parallels those in the Uruguay Round’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the North American Free Trade Agreement (NAFTA). Paragraph 3 sets out a minimum standard of treatment based on standards found in customary international law. The obligations to accord ‘‘fair and equitable treatment’’ and ‘‘full protection and secu- rity’’ are explicitly cited, as is each Party’s obligation not to impair, through unreasonable and discriminatory means, the management, conduct, operation, and sale or other disposition of covered invest- ments. The general reference to international law also implicitly in- corporates other fundamental rules of customary international law regarding the treatment of foreign investment. However, this provi- sion does not incorporate obligations based on other international agreements. Paragraph 4 requires that each Party provide effective means of asserting claims and enforcing rights with respect to covered in- vestments. Paragrah 5 ensures the transparency of each Party’s regulation of covered investments.
VerDate 11-MAY-2000 10:13 May 25, 2000 Jkt 079118 PO 00000 Frm 00008 Fmt 7633 Sfmt 6602 E:\HR\OC\TD027.XXX pfrm08 PsN: TD027
Powered by FlippingBook