DEFINITION of National Treatment
National treatment is 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. For example, if Country A provides special tax breaks for its fledgling pharmaceutical industry, all pharmaceutical companies that have operations in Country A will be entitled to the tax breaks, regardless of whether the company is domestic or foreign. The concept of national treatment can be found in bilateral tax treaties as well as in most World Trade Organization agreements.
BREAKING DOWN National Treatment
When applied to international agreements, the concept of national treatment means that a state must treat citizens of other states that are participating in the international agreement the same. When goods are imported under an international agreement, they must be treated the same as goods produced locally, although this obligation does not take effect until the imported goods have entered the foreign market.
Drawbacks of National Treatment
National treatment is generally considered to be desirable. However, it may not always be, because the concept allows a state to, in theory, deprive foreigners of any rights or property of which that state also deprives its own citizens. 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. Or, say the laws of a state hold that a married woman may not travel without the permission of her husband; under the concept of national treatment, a foreign married woman traveling or living in that state would need her husband’s permission to travel, even if she would not need it in her country of origin. However, depending on the country, other laws may exist that could limit national treatment to only the upside benefits.
While, historically, governments, especially those of developing nations, have used national treatment to justify expropriations, these issues are usually dealt with via contracts or treaties.
An opposing principle to national treatment is that of the minimum standard of justice, which would provide foreign nationals access to judicial process and basic rights protections, regardless of what they are allowed under the doctrine of national treatment.