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Forum
Paper Title: From ‘non-discrimination’ to ‘reasonableness’: a paradigm shift for international economic law?
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Abstract of Forum Paper:
Among the few basic legal instruments employed in international economic law for the promotion of trade and investment, the National Treatment (NT) principle and the reasonableness principle constitute the two predominant ones. In their general stance, the NT principle seems to require that a nation treat within its own borders, goods, services, investors, etc., originating from outside its borders, in the same manner as it treats those which are of domestic origin, and the reasonableness principle seems to mandate a certain level of rationality in the conduct of States, involving an examination of the relationship between the conduct of the State and the objective pursued by that State through such conduct.
While both norms deal principally with national measures of legislative, administrative or judicial nature taken to regulate the internal market (so called ‘internal measures’), they appear to represent two quite different legal paradigms. By requiring each member to treat products and investors of the other member (at least) as well as it treats its own products and investors, the NT principle provides for a “relative” standard of treatment. In other words, the NT principle does not guarantee a specific level of protection or that foreign products or investors will receive a “fair” or “reasonable” treatment. It simply guarantees against States affording foreign products and investors less favorable treatment compared to that granted to domestic products and investors. On the other hand, the reasonableness principle provides for an “absolute” standard of treatment, in as far as it requires States to recognize to foreign products and investors a certain (minimum) level of treatment, the determination of which does not have to depend on the treatment afforded to domestic products and investors. Although the concept of reasonableness may be given potentially a broad range of meanings, it usually refers to both substantive and procedural requirements, including concepts such as ‘suitability’, ‘necessity’, ‘proportionality’, ‘transparency’ and ‘participation’. While the imposition of the reasonableness principle does not sic et sempliciter bring about harmonization between national regulatory regimes, it certainly appears to be striving in that direction, in particular where the principle is interpreted to cover the reasonableness of the policy objectives pursued by the State and where the function of adjudicating such reasonableness is attributed principally to the sovra-national institution.
Accordingly, the reach of the reasonableness principle appears to be quite broad compared to that of the NT principle and the normative standards imposed on States by the former seem to bite deeper than those imposed by the latter. It may also be said that the level of intrusiveness into national regulatory prerogatives of an international legal regime providing for the reasonableness principle as its core normative standard (i.e., rationality-based regime) is on its face higher than that stemming from a regime based on the NT principle (i.e., non-discrimination-based regime).
By focusing specifically on the experience of the WTO and NAFTA in promoting trade and investment across countries through the NT principle and the reasonableness principle, this paper tries, first of all, to show that the two norms under consideration do not represent two completely different legal paradigms. On the contrary, the overlap between non-discrimination and reasonableness is quite broad. Secondly, the paper tries to highlight the advantages and disadvantages of favoring a rationality-based regime instead of a non-discrimination-based one, as well as the ways in which to mediate certain effects of adopting reasonableness as the core normative standard.
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