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The MFN Standard and Foreign Investment

The MFN Standard and Foreign Investment I. INTRODUCTION The most-favoured-nation (MFN) treatment standard is a typical substantive commitment of most modem investment treaties. In its usual guise, that standard obliges a host State to treat investors from one foreign country no less favourably than investors from other foreign countries. It is thus part of the broader genus of treaty-based guarantees against discrimination by host countries. The basic purpose of MFN treatment-like its close cousin, the national treatment standardl-is to guarantee equality of competitive opportunities for foreign investors in the host State. The MFN standard formed a central pillar of post-Second World War efforts to establish a system of guarantees against trade discrimination, first in the General Agreement on Tariffs and Trade (GATT)2 and now in the World Trade Organization.3 Section n of this article will trace the strong economic and political case for the use of MFN treatment against trade discrimination with a particular focus on discriminatory tariffs. Sections m and iv then consider the transport of MFN treatment into investment treaties in an attempt to contextualize the later analysis of recent arbitral decisions in Maffezini v. Kingdom of Spain,4 Siemens A.G. v. The Argentine Republics and Mid Equity v. Republic of Chile. Section http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of World Investment and Trade Brill

The MFN Standard and Foreign Investment

Journal of World Investment and Trade , Volume 5 (6): 26 – Jan 1, 2004

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Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1660-7112
eISSN
2211-9000
DOI
10.1163/221190004X00083
Publisher site
See Article on Publisher Site

Abstract

I. INTRODUCTION The most-favoured-nation (MFN) treatment standard is a typical substantive commitment of most modem investment treaties. In its usual guise, that standard obliges a host State to treat investors from one foreign country no less favourably than investors from other foreign countries. It is thus part of the broader genus of treaty-based guarantees against discrimination by host countries. The basic purpose of MFN treatment-like its close cousin, the national treatment standardl-is to guarantee equality of competitive opportunities for foreign investors in the host State. The MFN standard formed a central pillar of post-Second World War efforts to establish a system of guarantees against trade discrimination, first in the General Agreement on Tariffs and Trade (GATT)2 and now in the World Trade Organization.3 Section n of this article will trace the strong economic and political case for the use of MFN treatment against trade discrimination with a particular focus on discriminatory tariffs. Sections m and iv then consider the transport of MFN treatment into investment treaties in an attempt to contextualize the later analysis of recent arbitral decisions in Maffezini v. Kingdom of Spain,4 Siemens A.G. v. The Argentine Republics and Mid Equity v. Republic of Chile. Section

Journal

Journal of World Investment and TradeBrill

Published: Jan 1, 2004

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