GAMI INVESTMENTS, INC. - NAFTAClaims

of those obligations in a BIT that doesn't depend on whether there is
discrimination. There is simply a requirement not to interfere in
transfers by an investor, a foreign investor, regardless of whether there
is an interference with transfers of domestic investors.
Now, that point, of course, is going to be wholly lost in the
Mexican view because a measure that interfered with all transfers by
anyone would not refer to foreign investors. It would simply restrict
them in the same way it restricted everyone else. It would have no
relationship to foreign investors other than effect. And yet by the
Mexican view, Article 1109, even as an affirmative obligation, simply
gets reduced to--or at least even a state that is half-clever, and reduce
it to simply a ban of discriminatory transfers.
Then it goes on, and there are two exceptions provided in
1109 in paragraphs (4) and (5) to the rule against limiting transfers.
Because it's shorter, I'll read paragraph (5), which is--it says
paragraph (3), which is one of the restrictions, "shall not be construed
to prevent a party from imposing any measure through the equitable, nondiscriminatory,
and good-faith application of its laws relating to the
matters set out in paragraph (4)," which are things like bankruptcy,
trading, and securities.
Well, again, I ask the question. This paragraph simply makes
no sense if these measures are not within the scope of Chapter 11 anyway.
So there's no need to make another exception for them, and Mexico
referred this morning to the principle of effectiveness. Part of the
principle of effectiveness, as I recall--I hesitate to say this in front
of people who teach, but it is that you can't reduce whole clauses or
whole phrases of a treaty to a nullity or to give them no point. And yet
this would give no point to these exceptions.
We've provided a lot of other examples. I don't think I need
to go on with them. As I say, we will be very happy to answer questions
you have about the examples we've provided and any others you might have
in mind.
Let me close where Mr. Aguilar closed this morning. Mexico's
interpretation of Article 1101 and the "relating to" standard would
really rip a very large hole in NAFTA's protection. One of the trends of
modern states--and I used to work for a big modern--well, sort of modern
government. Governments--and this is certainly something that Mr.
Lacarte will have experienced in the WTO. Governments are pretty good
about writing their regulations in a way that can be highly restrictive,
interfering, and so forth, without saying I'm trying to get the
foreigners, I'm trying to get the foreign investors, I'm trying to get
the foreign products, what have you. And one of the developments of
international law over time is that Tribunals and the WTO Panels and so
forth have no patience for the exercise that says, you know, this tax is
non-discriminatory, anybody who produces shochu liquor will benefit from
this tax break and it's just a coincidence that 99 percent of the
production is Japanese and so forth.
The fact is if you take away--if you apply a standard like
"relating to" here, you will invite states to embark on a great course of
restriction of investment. And while it may feel good when a state is
defending its conduct in a particular dispute, where, after all, it's
under tremendous pressure to try to avoid liability, it actually defeats
the whole purpose for which the state engaged in the negotiation in the
first place. There's a kind of an irony for governments. You go out and
negotiate these treaties because you want to encourage investment, and
that this is one way to encourage investment by protecting it. Well,
then you go into the individual cases where you have to defend yourself,