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102 Am. J. Int'l L. 48 (2008)
Nondiscrimination in Trade and Investment Treaties: Worlds Apart or Two Sides of the Same Coin

handle is hein.journals/ajil102 and id is 56 raw text is: NONDISCRIMINATION IN TRADE AND INVESTMENT TREATIES:
WORLDS APART OR TWO SIDES OF THE SAME COIN?
By Nicholas DiMascio andJoost Pauwelyn *
For global business, international trade and investment are bound at the hip.1 When busi-
nesses trade internationally, goods or services cross borders; when they invest, it is capital and
other factors of production that do so. Companies trade to supply their foreign investments;
they invest to facilitate and diversify their trade. In contrast, international law addresses trade
and investment separately and regulates them in ways that are dramatically different. First,
trade has been governed multilaterally since 1947 through what today is the World Trade
Organization (WTO), whereas close to 2,600 separate bilateral investment treaties (BITs),
which mushroomed only in the 1980s and 1990s, now regulate foreign direct investment
(FDI).' Second, hundreds of increasingly sophisticated W TO rules discipline trade, whereas
a mere handful of principles cover investment-many of which derive from customary inter-
national law. Third, trade agreements are enforced exclusively between states, with reciprocal
trade sanctions as the remedy of last resort; under investment treaties, private companies have
standing to claim monetary damages from host country governments.
This article tries to explain some of these differences and, in particular, to elucidate some of
the consequences for international economic law. It does so through the lens of a specific legal
obligation that, today, is prominent in the fields of both trade and investment: the principle
of nondiscrimination, as it is embodied in the requirement to provide national treatment.3 In
trade law, national treatment has long been a core discipline. Most recently, the WTO con-
demned Chile, Japan, and Korea for imposing discriminatory taxes on vodka and whiskey,
taxes that favored national drinks such as shochu and pisco.4 In the investment context,
* Nicholas DiMascio (nick.dimascio@alumni.duke.edu) received hisJ.D. and LL.M. in International and Com-
parative Law from Duke University School of Law. He is currently Law Clerk, U.S. District Court for the District
of Arizona. Joost Pauwelyn (joost.pauwelyn@graduateinstitute.ch) is Professor, Graduate Institute of International
and Development Studies, Geneva, and SeniorAdvisor, King & Spalding LLP. The authors wish to thank Deborah
Upchurch and Doak Bishop for their assistance. The views expressed here are exclusively those of the authors.
' At the W TO's 1996 Singapore Ministerial Conference, the director-general stated that [i] n today's economy,
trade and investment are not merely increasingly complementary, but also increasingly inseparable as two sides of
the coin of the process of globalization. WTO Press Release No. PRESS/42, Foreign Direct Investment Seen as
Primary Motor of Globalization, Says WTO Director-General (Feb. 13, 1996), at <http://www.wto.org/english/
news e/newse.htm#archives>.
2 UNCTAD, Investor-State Dispute Settlement and Impact on Investment Rulemaking 3 (2007), UN Doc.
UNCTAD/ITE/IIA/2007/3 (Byend 2006, the cumulative number of BITs stood at 2,573.), available at <http:ll
www.unctad.org/Templates/Page.asp?intltemlD =4432&lang= 1>.
3 The obligation to provide national treatment essentially prohibits discriminating between foreign and domestic
products, investments, or investors.
' See Henrik Horn & Petros Mavroidis, Still HazyAfterAll These Years: The Interpretation ofNational Treatment
in the GA TT/WTO Case-Law on Tax Discrimination, 15 EUR. J. INT'L L. 39 (2004).

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