Subject: III. Treatment

A. Standards
1. Fair & Equitable Treatment
Yes. Each Party shall at all times accord to covered investments fair and equitable treatment, ... and shall in no cases accord treatment less favorable than that required by international law. (Article II (3) (a)).

2. Full Protection and Security
Yes. Each Party shall at all times accord to covered investments full protection and security. (Article II (3) (a)).

3. Non-Discrimination
Yes. Neither Party shall in any way impair by unreasonable and discriminatory measures the management, conduct, operation, and sale or other disposition of covered investments. (Article II (3) (b)).

4. National Treatment
Yes. Article II on treatment requires the better of either national treatment or most-favored nation treatment with respect to both pre-establishment and post-establishment investments. With respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of covered investments, each Party shall accord treatment no less favorable than it accords, in like situations, to investments in its territory of its own nationals or companies (national treatment) or to investments in its territory of nationals or companies of a third country (most-favored-nation treatment), whichever is most favorable (national and most-favored-nation treatment). Each Party shall ensure that its state enterprises, in the provision of their goods or services, accord national treatment and most-favored-nation treatment to covered investments. (Article II (1)).

5. Most-Favored-Nation Treatment
Yes. Article II on treatment requires the better of either national treatment or most-favored nation treatment with respect to both pre-establishment and post-establishment investments. With respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of covered investments, each Party shall accord treatment no less favorable than it accords, in like situations, to investments in its territory of its own nationals or companies (national treatment) or to investments in its territory of nationals or companies of a third country (most-favored-nation treatment), whichever is most favorable (national and most-favored-nation treatment). Each Party shall ensure that its state enterprises, in the provision of their goods or services, accord national treatment and most-favored-nation treatment to covered investments. (Article II (1)).

B. Exceptions
The United States may adopt or maintain exceptions to the obligation to accord national treatment to covered investments in the sectors or with respect to the following matters: atomic energy; custom house brokers; licenses for broadcast, common carrier, or aeronautical radio stations; COMSAT; subsidies or grants, including government-supported loans, guarantees and insurance; state and local measures to exempt from Article 1102 of the North American Free Trade Agreement pursuant to Article 1108 thereof; and landing of submarine cables. Most-favored-nation treatment shall be accorded to these sectors and matters. (Article 1 of the Annex). The United States may adopt or maintain exceptions to the obligation to accord national and most-favored-nation treatment to covered investments in the following sectors or matters: fisheries; air and maritime transport, and related activities. (Article 2 of the Annex). The United States may adopt or maintain exceptions to the obligation to accord national and most-favored-nation treatment to covered investments, provided that the exceptions do not result in treatment under this Treaty less favorable than the treatment that the United States has undertaken to accord in the North American Free Trade Agreement with respect to another party to that Agreement, in the following sectors and matters: banking, insurance, securities, and other financial services. (Article 3 of the Annex). Nicaragua may adopt or maintain exceptions to the obligation to accord national treatment to covered investments in the following sectors or matters: real estate in the border zone; fishing (with the exception of aquaculture); and official subsidies for small and medium-sized businesses. Most-favored-nation treatment shall be accorded in the sectors and matters indicated above. (Article 4 of the Annex). A Party may adopt or maintain exceptions to the obligations of Article II (1) in the sectors or with respect to the matters specified in the Annex to this Treaty. In adopting such an exception, a Party may not require the divestment, in whole or in part, of covered investments existing at the time the exception becomes effective. (Article II (2) (a)). The obligations of Article II (1) do not apply to procedures provided in multilateral agreements concluded under the auspices of the World Intellectual Property Organization relating to the acquisition or maintainance of intellectual property rights. (Article II (2) (b)). This Treaty shall not preclude a Party from applying measures necessary for the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests. (Article XIV (1)). With respect to Article XIV (1), the Parties confirm their mutual understanding that whether a measure is undertaken by a Party to protect its national security interests is self judging. (Paragraph 1 of the Protocol). The Parties understand that, with respect to rights reserved in Article XIV (1), "obligations with respect to the maintenance or restoration of international peace or security" means obligations under the Charter of the United Nations. (Paragraph 3 of the Protocol). Each Party reserves the right to deny to a company of the other Party the benefits of this Treaty if nationals of a third country own or control the company and: a) the denying Party does not maintain normal economic relations with the third country; or b) the company has no substantial business activities in the territory of the Party under whose laws it is constituted or organized. (Article XII).

C. Other Aspects

1. Performance Requirements
Neither Party shall mandate or enforce, as a condition for the establishment, acquisition, expansion, management, conduct or operation of a covered investment, any requirement (including any commitment or undertaking in connection with the receipt of a governmental permission or authorization): (a) to achieve a particular level or percentage of local content, or to purchase, use or otherwise give a preference to products or services of domestic origin or from any domestic source; b) to limit imports by the investment of products or services in relation to a particular volume or value of production, exports or foreign exchange earnings; c) to export a particular type, level or percentage of products or services, either generally or to a specific market region; d) to limit sales by the investment of products or services in the Party's territory in relation to a particular volume or value of production, exports or foreign exchange earnings; e) to transfer technology, a production process or other proprietary knowledge to a national or company in the Party's territory, except pursuant to an order, commitment or undertaking that is enforced by a court, administrative tribunal or competition authority to remedy an alleged or adjudicated violation of competitive laws; or f) to carry out a particular type, level or percentage of research and development in the Party's territory. (Article VI (1)). Nothing in Article VI (1) shall preclude a Party from providing benefits and incentives conditioned upon the requirements listed in Article VI (1). (Article VI (2)).

2. Others
Subject to its laws relating to the entry and sojourn of aliens, each Party shall permit to enter and to remain in its territory nationals of the other Party for the purpose of establishing, developing, administering or advising on the operation of an investment to which they, or a company of the other Party that employs them, have committed or are in the process of committing a substantial amount of capital or other resources. (Article VII (1) (a)). Neither Party, shall, in granting entry under Article VII (1) (a), require a labor certification test or other procedures of similar effect, or apply any numerical restriction. (Article VII (1) (b)). Each Party shall permit covered investments to engage top managerial personnel of their choice, regardless of nationality. (Article VII (2)). Each Party shall accord national and most-favored-nation treatment to covered investments as regards any measure relating to losses that investments suffer in its territory owing to war or other armed conflict, revolution, state of national emergency, insurrection, civil disturbance, or similar events. (Article IV (1)). Each Party shall provide effective means of asserting claims and enforcing rights with respect to covered investments. (Article II (4)). This Treaty shall not derogate from any of the following that entitle covered investments to treatment more favorable than that accorded by this Treaty: a) laws and regulations, administrative practices or procedures, or administrative or adjudicatory decisions of a Party; b) international legal obligations; or c) obligations assumed by a Party, including those contained in an investment authorization or an investment agreement. (Article XI). This Treaty shall not preclude a Party from prescribing special formalities in connection with covered investments, such as a requirement that such investments be legally constituted under the laws and regulations of that Party, or a requirement that transfers of currency or other monetary instruments be reported, provided that such formalities shall not impair the substance of any of the rights set forth in this Treaty. (Article XIV (2)). A Party's obligations under this Treaty shall apply to a state enterprise in the exercise of any regulatory, administrative or other governmental authority delegated to it by that Party. (Article XV (2)).