Minimum Standard Of Treatment

Minimum standard of treatment in Global Commerce Policy

In this regard, minimum standard of treatment is: Article 1105 of NAFTA (minimum standard of treatment) requires each party to accord to investments of investors of another party treatment in accordance with international law, including fair and equitable treatment and full protection and security. This provision has caused considerable comment and analysis, though, as many have pointed out, such provisions have been around for some time. The entries on trade policy in the Encyclopedia are here. One difference is that NAFTA has the judicial environment where this provision can be enforced. Views on the meaning and impact of this provision are still evolving. The entries on trade policy are here. A recent judgement in a NAFTA dispute illustrates the issue. The judge in The United Mexican States v. Metalclad Corporation held that Article 1105 was framed in absolute terms, intended to establish a minimum standard so that a party may not treat investments of another investor worse than this standard irrespective of the manner in which the Party treats other investors and their investments . He quoted with approval the tribunal ™s view on 13 January 2000 in S. D Myers, Inc. v. Government of Canada (another NAFTA case) that the minimum standard  was a floor below which treatment of foreign investors must not fall, even if a government were not acting in a discriminatory manner. He noted that the introductory phrase to Article 1105 referred to treatment in accordance with international law . Hence, in order to qualify as a breach of Article 1005, the treatment in question must fail to accord with international law. So the judge. The significance therefore of the minimum standard  is that it establishes an absolute standard for treatment of investors, in contrast to the relative standards implied by most-favoured-nation treatment (non-discrimination between foreign investors) and national treatment (non-discrmination between foreign and domestic investors). Neither of these two standards prescribes how well a party must treat foreign investors, except in terms of its own practices.[1]

Minimum standard of treatmentin the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.

Resources

Notes and References

1. Dictionary of Trade Policy, “Minimum standard of treatment” entry (OAS)

See Also