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National Treatment in the NAFTA Trucking Case

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Document pages: 14 pages

Abstract: The NAFTA Trucking decision is the first major case decided under NAFTA s Chapter Twelve (on services). Cross-border trucking is not just any service - it is perhaps the essential service in functionally establishing the North American market NAFTA seeks to create. The Trucking panel found itself in rather untested waters as it confronted NAFTA s National Treatment principle in the context of services. It succeeded, more or less well, in transporting notions established in GATT and NAFTA trade-in-goods jurisprudence to the relatively unexplored service regime. That said - it is not clear how well some of these principles transfer. The concept of National Treatment is well developed in the treatment of goods. Applying National Treatment principles to services, such as cross-border trucking, is problematic, at least on first impression. The NAFTA treaty language tests whether the treatment accorded to foreign service providers is "no less favorable " than the treatment accorded national service providers in "like circumstances. " This language is meant to be a functional analog to the well-worn GATT test used to analyze whether imported and domestic goods are being treated alike under national regulation. The express commitments made by the United States to phase-out the restrictions on access for Mexican trucking firms were difficult for the Trucking panel to ignore. The challenged U.S. measure (a categorical denial of access to all Mexican trucks) was so beyond the pale that the panel did not have to reach in finding the United States to be in noncompliance with its NAFTA obligations. But the panel used the occasion of the Trucking decision to provide some useful guidance as to the nature of NAFTA s service obligations. This essay makes three observations about the operation of the National Treatment principle as it is developed in the Trucking decision: 1. A NAFTA Party s National Treatment obligation with respect to services may be "harder " than is the case with respect to goods. Pacta sunt servanda applies with more force where the operation of the National Treatment principle is precisely negotiated with respect to a specific service sector. 2. In testing host country regulation of a foreign service provider for National Treatment, the design and efficacy of the regulatory scheme of the home country of the service provider is relevant. 3. A perception of protectionist intent will doom arguments seeking to justify departures from National Treatment. Nothing is new under the sun here.

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