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National treatment

 
Investment Dictionary: National Treatment
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A concept of international law that declares if a state provides certain rights and privileges to its own citizens, it also should provide equivalent rights and privileges to foreigners who are currently in the country. This concept of equality can be found in bilateral tax treaties and also in most World Trade Organization agreements.

Investopedia Says:
For example, if country A provides special tax breaks for its fledgling pharmaceutical industry, all pharmaceutical companies that have operations in country A would be entitled to the tax breaks, regardless of whether the company is domestic or foreign.

In some situations, national treatment may not be such a great thing. For instance, suppose that a state has a law that allows it to expropriate property. Under national treatment, a foreign firm would technically still be subject to the expropriation law. However, depending on the country, other laws may exists that could limit national treatment to only the upside benefits.

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Political Dictionary: national treatment
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Along with the Most Favoured Nation clause, the principle of national treatment underpins the trade regime embodied in the World Trade Organization. It means that a government must not apply regulations or restrictions to imported products any more strict than those applied to domestic producers.

— Geoffrey R. D. Underhill

Wikipedia: National treatment
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National treatment is a principle in customary international law vital to many treaty regimes. It essentially means treating foreigners and locals equally. Under national treatment, if a state grants a particular right, benefit or privilege to its own citizens, it must also grant those advantages to the citizens of other states while they are in that country. In the context of international agreements, a state must provide equal treatment to those citizens of other states that are participating in the agreement. Imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market.[1]

While this is generally viewed as a desirable principle, in custom it conversely means that a state can deprive foreigners of anything of which it deprives its own citizens. An opposing principle calls for an international minimum standard of justice (a sort of basic due process) that would provide a base floor for the protection of rights and of access to judicial process. The conflict between national treatment and minimum standards has mainly played out between industrialized and developing nations, in the context of expropriations. Many developing nations, having the power to take control over the property of their own citizens, wished to exercise it over the property of aliens as well.

Though support for national treatment was expressed in several controversial (and legally non-binding) United Nations General Assembly resolutions, the issue of expropriations is almost universally handled through treaties with other states and contracts with private entities, rather than through reliance upon international custom.

National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.[1]

GATT/WTO

National treatment is an integral part of many World Trade Organization agreements. Together with the Most-Favoured-Nation principle, national treatment is one of the cornerstones of WTO trade law. It is found in all 3 of the main WTO agreements (GATT, GATS and TRIPS).[1]

National treatment is a basic principle of GATT/WTO that prohibits discrimination between imported and domestically produced goods with respect to internal taxation or other government regulation. The principle of national treatment is formulated in Article 3 of the GATT 1947[2] (and incorporated by reference in GATT 1994); Article 17 of the General Agreement on Trade in Services (GATS); and in Article 3 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The aim of this trade rule is to prevent internal taxes or other regulations from being used as a substitute for tariff protection.[3]

A good summary is found in Japan-Alcohol[4] which states; "[a] national treatment obligation is a general prohibition on the use of internal taxes and other internal regulatory measures so as to afford protection to domestic production".

See also

References

  1. ^ a b c WTO: Understanding the WTO http://www.wto.org/english/theWTO_e/whatis_e/tif_e/fact2_e.htm
  2. ^ The General Agreement on Tariffs and Trade (GATT) http://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm
  3. ^ CRS Report for Congress: Agriculture: A Glossary of Terms, Programs, and Laws, 2005 Edition - Order Code 97-905
  4. ^ Report of the WTO Appellate Body 1994 http://www.worldtradelaw.net/reports/wtoab/japan-alcohol(ab).pdf

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