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INTRODUCTION

The most-favored-nation and national treatment principles are central to GATT and
GATS. The objective of this essay is to critically investigate and evaluate the meaning
of these two WTO principles. The focus will then shift to a critical examination of
these two clauses which is related to the application of logistic industry, especially their
application in VJEPA and USMCA as we may discuss further in Chapter 2 of our
report. Before reaching a decision on the use of the WTO's GATT and GATS MNF and
NT requirements, the focus will shift to GATT and GATS case law of both WTO panel
and appellate bodies, provisions of international agreements, and scholarly research.
However, these principles of non-discrimination of the MFN and National treatment
differ in their application with respect to trade in goods and services, although they are
not exclusive in their application.
Not counting the introduction, conclusion, and references, the report consists of:
Chapter 1: Literature review of the Non-Discrimination principles in
International Economic Law
Chapter 2: National Treatment in Vietnam- Japan Economic Partnership
Agreement (VJEPA) and United States- Mexico- Canada Agreement
(USMCA)
Although free trade agreements (e.g., EVFTA, USMCA...) and GATT, GATS contain
provisions for MFN and NT, the concepts do not apply in the same way. As a result,
some modifications in all sectors may be required if the concept of trade liberalisation
in the aforementioned areas is to be realized.
We would like to express our profound gratitude to Ph.D. Vu Thi Kim Ngan for your
dedication and thoughtful instructions. Throughout our report- making process, we
tried our best to offer a high quality report. However, because of limited insights into
the application of MFN and NT, we inevitably made mistakes. We are looking forward
for your feedback, so that we can improve and provide more satisfying report in the
future.

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CHAPTER I: LITERATURE REVIEW OF THE

NONDISCRIMINATION PRINCIPLES IN
INTERNATIONAL ECONOMIC LAW

1.1 Most-Favoured-Nation Treatment (MFN)

• History of MFN
The term MFN has a long history, dating back to the 12th century in various forms.
Still, it only became an official principle in international trade in the 17th century.
The tense politics preceding and during World War I had caused the MFN principle to
be lost or nearly lost. Nonetheless, the principle was vigorously revived after the war,
with the introduction of the General Agreement on Tariffs and Trade (GATT 1947). The
MFN is a generally binding obligation under GATT 1947. Any treatment given to one
member is immediately extended to all other members. This is also mentioned in some
WTO agreements. GATT officially added this statute to Article 1 of the GATT in 1948.
• Function of MFN
MFN treatment allows countries to import from the most efficient supplier by requiring
that any favorable treatment and trade restrictions to one country be extended to all
other countries immediately and unconditionally. Therefore, MFN increases
predictability and hence trade and investment.
MFN lowers the cost of upholding the multilateral trading system. This allows WTO
Members to reduce the costs of monitoring and negotiating unfair treatment.
Finally, imports from all WTO Members are treated equally, lowering the cost of
determining the origin of a substance and thus improving economic efficiency.
1.1.1 MFN under GATT 1994
The MFN rules require that a good, service, or service provider in one WTO Member
State not be treated less favorably than a 'like' good, service, or service provider
originating in any other Member State. Finally, there can be most favored' members
among WTO members because they must all be treated equally.  Meaning and
Purpose
The MFN principle of GATT prohibits Members from discriminating among 'like'
products from other Members by requiring GATT members to treat imports and
domestic products equally. Furthermore, under MFN treatment, WTO members must
extend any benefits to all WTO members immediately and unconditionally. Any WTO

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member who provides preferential treatment to another partner is obligated to give the
same treatment to all WTO members.  Scope and Application
The MFN Rule's Scope of Application: De Facto & De Jure Discrimination.: The
GATT MFN principle has been interpreted to mean that a measure can be
discriminatory in law (de jure) but also in practice (de facto).
The measure in EC-BANANA III was the European Communities' import regime for
bananas, which treated bananas from Latin American countries less favorably than
from former European colonies or African – Caribbean Pacific bananas. Article I (1) of
the GATT addresses not only 'in law' but also 'in fact' discrimination. As a result, it
appears that Article I (1) applies not only to 'origin-based' measures but also to
measures that appear to be origin-neutral but discriminatory on the surface. As a result,
it was rejected in Canada-Auto, just as the Panel had done when Canada argued that
Article I (1) does not apply to measures that appear to be 'origin-neutral' on the surface.
1.1.2 MFN under the GATS
 Meaning and Purpose
At the same time, there is the GATS MFN obligation, outlined in Article II (General
Agreement on Trade in Services); this obligation applies to measures affecting trade in
services that fall within the scope of GATS agreements.
Discrimination against any WTO member based on the product's "national origin or
destination" is prohibited under the MFN obligation. Furthermore, membership in
the WTO is not required for the recipient country that was granted preferential
treatment for the MFN obligation to apply.  Scope and Application
All levels of government are covered by GATS. Furthermore, trade in services refers to
four modes of service supply: Cross-border trade (Mode 1), consumption abroad
(Mode 2), commercial presence (Mode 3), and temporary movement of natural persons
(Mode 4).
The first issue concerning the GATS application is said to have arisen in the context of
Canada – Periodicals. Canada contended that a tax equal to 80% of the value of all
advertisements in so-called split-run periodicals was a measure affecting trade in
services. Furthermore, Canada believed that the measure could only be reviewed under
the GATS's national treatment obligation, for which no commitments on advertising
services were made. The Panel and the Appellate Bodies rejected Canada's arguments,
concluding that the obligations of both agreements are cumulative and coexist, rather
than the obligations of one agreement, GATS, superseding those of the GATT.

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1.2 National Treatment (NT)

• History of NT
The national treatment obligation requires a WTO Member to treat foreign products,
services and service suppliers not less favourably than it treats ‘like’ domestic products,
services and service suppliers. Pursuant to the national treatment obligation, a WTO
Member is not allowed to discriminate against foreign products, services and service
suppliers. For trade in goods, the national treatment obligation has general application
to all trade. By contrast, for trade in services, the national treatment obligation does not
have such general application.
• Function of NT
To begin with, WTO law mainly covers trade in goods and services and the main
purpose of the multilateral trading system treaty is to broaden the platform. Moreover,
the function of national treatment in WTO law is to ensure Members do not circumvent
their tariff reduction commitments at the border by enacting discriminatory taxes and
internal measures once goods have been cleared in customs. In addition, as outlined
above, national treatment has the function of equalizing the competitive opportunities
between imported and domestic products and services to avoid protectionism.
1.2.1 NT under GATT 1994
• Meaning and Purpose
The NT prohibits any of the member nations from favouring or giving any advantages
or raising any benefits to their domestic products/ goods over imported products of
other member nations. Article III of GATT 1994 specifically deals with NT and
explains the secondary need of NT after MFN principles to fight against any
discrimination of imported products. NT has been well defined under paragraph 1, 2 &
4 of Article III and 2nd sentence of Article III.
• Scope
Just like the MFN principle, the scope of the NT also covers the scope of de jure and de
facto discrimination of imported products. A stance is de jure discriminatory when
discrimination can clearly be seen between imported and domestic like products in
term of a legal manner. And when the discrimination is very much clear on the face of a
legal instrument that it doesn’t have any complexity to understand, then it can be de
facto discrimination. The most important part of NT is that it only applies to internal
measures, and it does not border on imported goods.
• Application

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It seems that any discrimination by one party in favor of a product originating in

another party’s market for the product through border measures is seen as affecting the
access of the parties not so favored to the same market. Obviously, Article I of the
GATT prohibits such discrimination as it uses the phrases such as ‘like products’ to
limit the set of products within which prohibition applies and Article III prohibits such
discrimination among products within a set that is specific to each relevant paragraph
of the Article, if such discrimination is applied ‘so as to as to afford protection to the
domestic product’.
1.2.2 NT under the GATS
• Meaning and Purpose
In the same fashion, NT is also featured as a principle in the General Agreement on
Trade in Services (GATS), as set out in the Article XVII of GATS. NT applies in
respect to services and service suppliers. The obligation of NT is to guarantee access
and treat all 'like' services and service suppliers equally and without discrimination.
The obligations in GATT and GATS are different; the National Treatment of the GATS
(General Agreement on Trade in Services) is not a general application as is NT under
GATT, because the obligation of NT in Article XVII in GATS does not apply generally
to all measures impacting trade in services. The latter obligation applies only to cases
where the countries of GATS have explicitly committed to grant the NT in regard to
specific service sectors.
• Scope
NT applies with respect to services and service suppliers. This principle is considered
to have wider scope than the NT in GATT. However, while the NT in GATT is
concerned with products, NT under GATS is concerned not only with products but also
service suppliers. NT under GATS is more limited in application than NT under GATT
because while NT in GATT applies to cross-border commerce, NT under GATS applies
only to scheduled sectors, and these too are subject to limitations.
• Application
The GATS outlines this principle in Article XVII. It has been surmised that the
National treatment principle of the GATS, like that of the GATT, refers to equal
treatment for foreign and domestic providers, or equal competitive opportunity where
identical services are on offer. This principle of non-discrimination is that fundamental
concept of trade that binds Members. Furthermore, it has been opined that trade in
service is of substantial and growing importance to the world and national economies,
hence its introduction at the Uruguay Round. However, the GATS and its National
treatment obligation seem to have come into effect before WTO Members were willing
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to completely eliminate discriminatory measures in service trade, and as a result, it is

argued that the negotiators faced (and still face) significant challenges when having to
draft a comprehensive set of rules governing the multilateral trade in services, and as a
result the accomplishment has been a complex one.

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CHAPTER II: NATIONAL TREATMENT IN VIETNAM JAPAN

ECONOMIC PARTNERSHIP AGREEMENT (VJEPA) AND
UNITED STATES-MEXICO-CANADA AGREEMENT
(USMCA)

2.1 National treatment under Article III:4/XX GATT and Article 14.4 USMCA
2.1.1 Comparison between Article III:4/XX GATT and Article 14.4 USMCA
 Article III GATT states that:
“1. The Contracting Parties recognize that […] laws, regulations and requirements
affecting the internal sale, offering for sale, purchase, transportation, distribution or use
of products, […] should not be applied to imported or domestic products so as to afford
protection to domestic production. […]”
“4. The products of the territory of any contracting party […] shall be accorded
treatment no less favourable than that accorded to like products of national origin in
respect of all laws, regulations and requirements affecting their internal sale, offering
for sale, purchase, transportation, distribution or use. […]”  Similarly, Article 14.4
USMCA indicates that:
“1. Each Party shall accord to investors of another Party treatment no less favorable
than that it accords, in like circumstances, to its own investors with respect to the
establishment, acquisition, expansion, management, conduct, operation, and sale or
other disposition of investments in its territory.”
From two national treatment provisions above, the two important pillars of the National
treatment principle are nationality discrimination and public policy justification. We
will base on these pillars to distinguish between Articles III:4/XX GATT and Article
14.4 USMCA. Nationality discrimination in USMCA and GATT case-law focuses on a
relatively structured analysis of the discriminatory/protectionist effect of the measure
under consideration involving such factors as: likeness, nationality imbalance and less
favourable treatment.
 Likeness
Regarding the analysis of nationality discrimination a determination of likeness has
mostly concentrated on the nature and extent of the competitive relationship between
products or investors, even though the definition of ‘likeness’ may have various roles in
the operation of the NT principle. In line with NT principle ‘s function of to tackling
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competitive relationship in the marketplace can be impacted by the less favourable

treatment accorded to a sub-category of those products or investors.
Similar to GATT 1994, USMCA would incorporate nondiscrimination provisions,
requiring that each country accord the investors and investments of another country
treatment no less favorable than that it accords, in like circumstances, to its own
investors or the investors of any other country throughout the lifecycle of the
investment. With regard to the potentially broad definition of “like circumstances”,
USMCA tribunals state that firstly the comparison is related to investors and
investment in the “same business or economic sector”. For greater certainty, whether
treatment is accorded in “like circumstances” under this Article depends on the totality
of the circumstances, including whether the relevant treatment distinguishes between
investors or investments on the basis of legitimate public welfare objectives. While
indirect (also known as regulatory) expropriation is included, the proposed USMCA
affirms that nondiscriminatory regulatory actions designed to protect legitimate public
welfare objectives would not constitute indirect expropriation except in “rare
circumstances,” similar to language in more recent U.S. FTAs.  Nationality
imbalance
An apparent distinction between the nationality discrimination analysis under USMCA
Chapter 14 and the GATT lies in the type of “nationality imbalance” required in the
two systems. So far, according to the very few cases determined under USMCA
Chapter 14 dispute settlement mechanism, a breach of the NT obligation may be
established by figuring out that the national measure under review affords less
favorable treatment to the foreign investor (that has brought the claim) compared to the
treatment afforded to at least one domestic investor operating in the same business
sector. This means that nationality discrimination is established simply by
demonstrating that one foreign investor has been given less favorable treatment
compared to at least one domestic competitor (or investor operating in the same sector).
This approach to the issue of “nationality discrimination”, simply concentrating on the
treatment afforded to a foreign investor compared to that given to a domestic investor,
can move the concept of national treatment very close to the principle of equality.
Practically, rather than making a comparison between the different treatment of two
similarly-situated investors as it would occur under an examination of equality, this
interpretation of the NT principle requires a comparison between one foreign and one
domestic entity operating in the same business sector.  Less favorable treatment
With a view to determining whether a measure gives “less favorable treatment” to
foreign investors or products, USMCA tribunals pay attention to that measure’s
“adverse effect” on foreign investors (and their investments) or on foreign products,
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while intent does not seem to be an indispensable factor. Apart from that, in line with
NT principle’s function of providing equality of opportunities or expectations, this
statement should not be read to require a demonstration of “actual” detrimental
impacts; rather “potential” devastating influences are sufficient.
With a view to determining whether a measure gives “less favorable treatment” to
foreign investors or products, USMCA tribunals pay attention to that measure’s
“adverse effect” on foreign investors (and their investments) or on foreign products,
while intent does not seem to be an indispensable factor. Apart from that, in line with
NT principle’s function of providing equality of opportunities or expectations, this
statement should not be read to require a demonstration of “actual” detrimental
impacts; rather “potential '' devastating influences are sufficient. It is also important to
note that though USMCA seems to be a tri-partite treaty only applying to the U.S. and
Mexico. This means that it only protects Mexican nationals investing in the U.S. and
U.S. nationals investing in Mexico. Nonetheless, the current investments in Canada and
investments made by Canadian investors will be protected under the existing NAFTA
regime for 3 years after the USMCA comes into force.
2.1.2 Justification on public policy grounds
A finding of nationality discrimination isn't enough under NT. Policy may foster
nationality prejudice. Before considering the two conditions required by the USMCA
and WTO judges for granting this public policy explanation, it is necessary to study
nationality discrimination and public policy rationale.
• Relationship between discrimination and justification
USMCA Chapter 14's public policy argument differs from GATT's. In USMCA
Chapter 14 on Investment, despite the lack of a provision expressly allowing States to
justify on public policy their national measures that afford less favorable treatment to
foreign investors, USMCA tribunals have interpreted the "in like circumstances"
language in Article 14.4 as a de facto public policy justification mechanism. If a
foreign investor is treated less favorably than a domestic investor because of a
reasonable public policy, then the NT requirement is not violated. Article 14.4's "in like
conditions" has a second purpose (the first being the determination of whether the two
investors compete in the same sector). In Myers, the tribunal ruled that "the assessment
of 'similar circumstances' must also take into account facts that would justify
governmental rules that treat them differently to protect the public interest." According
to the tribunal, this view is inconsistent with the USMCA's environmental and trade
distortion standards.

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In the GATT context, WTO case law has recognized the conclusion that the public
policy justification alternative is outside the NT requirement, notwithstanding some
attempts to construe it otherwise. Article XX, the "General exception" clause of GATT,
specifies the policy goals and critical elements for a judgment of NT violation.
Contradiction between rule (prohibition on nationality discrimination) and exception
(public policy justification option) is more pronounced in GATT than in USMCA
Chapter 14. Different constructions of nationality discrimination and public policy
justification may have two effects. On a normative level, separating the two processes
may indicate a preference for investment protection/liberalization above other policy
goals. On a tighter procedural level, such divergence may also affect who bears the
burden of establishing a public policy reason.
Despite this formal, structural difference, the two systems are not so dissimilar in
reality since under GATT, the Appellate Body has mitigated the discrepancy between
the non-discrimination "rule" in Article III:4 and the public policy "exception" in
Article XX. The Appellate Body knows that the WTO Agreements demonstrate a
carefully negotiated balance of rights and obligations that must be respected, so it has
considered the public policy justification in Article XX as a Member's "right to invoke
an exception" that must be balanced with "substantive treaty rights" provided for in the
Agreement.
• Admissible public policies
Article 14.4 USMCA and Article XX GATT may read public policy justification
differently. While the list of public policies in Article XX GATT has been viewed as
exhaustive, there appears to be no numeric or qualitative restriction on the types of
public policies that may be used to justify less favorable treatment of foreign investors
under Article 14.4 USMCA.
Article 14.4 USMCA's de facto exception is an open-ended list, therefore the sole
general criteria for admissible public policies is that they be "legitimate" or
"reasonable." There hasn't been any discussion about the legitimacy of a national
measure that treats international investors less favorably. In the few cases decided by
USMCA Tribunals under Chapter 14, the following public policies have been
considered "legitimate": (a) to ensure the economic strength of the domestic PCB
processing industry to maintain the ability to process PCBs within the country in the
future; (b) to remove the threat of countervailing duty actions and to provide for new
entrants in the lumber industry; (c) to ensure road safety in the trucking services sector;
and (d) to protect the environment.

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Aware of the potential problems with interpreting Article XX as a closed list of

admissible public policies (thus leaving out of the exception a host of important or
legitimate policy goals), the Appellate Body has tried to expand the reach of Article XX
in two ways: first, and more explicitly, by adopting a ‘evolutionary' reading of the term
“exhaustible natural resources” in sub-lett (g) of Article XX (thus endangered animal
species such as sea turtles). Second, the Appellate Body has implied, albeit implicitly,
that a 'extensive' interpretation of the exception in Article XX(d) for measures
"necessary to secure compliance with laws or regulations" not inconsistent with other
GATT provisions could expand the reach of the public policy justification in GATT. In
its Report on Korea-Beef, the Appellate Body supported the Panel's broad
interpretation of "to secure compliance" in Article XX(d), noting that the phrase can be
applied to a wide variety of laws and regulations.
2.2 National treatment under the GATS Article. XVIII and Article 8.11 EVFTA
2.2.1 Comparison between GATS Art. XVIII and Article 8.11 EVFTA
Commitment of Vietnam and the EU in the EVFTA on service trading and
investment towards creating an open and favorable investment environment for the
operation of enterprises of the two Parties, in which:
 EU’s commitment to Vietnam: Higher than EU’s commitment in WTO and
equivalent to the highest level of EU in recent EU FTAs
 Vietnam’s commitment to EU: Higher than Vietnam’s commitments in WTO
and at least equal to the highest level of openness that Viet Nam offers to
other partners in Vietnam’s current FTA negotiations (including CPTPP)  In
the GATS Article XVII: National Treatment:
“1. In the sectors inscribed in its Schedule, and subject to any conditions and
qualifications set out therein, each Member shall accord to services and service
suppliers of any other Member, in respect of all measures affecting the supply of
services, treatment no less favorable than that it accords to its own like services and
service suppliers.”
 In Chapter 8 of EVFTA: Liberalization of investment, trade in services and
electronic commerce:
EVFTA Chapter 8 is a large chapter that covers a number of commitments in three key
commercial areas: (i) cross-border services, (ii) investment, and (iii) natural person
presence. This Chapter also contains a number of legislative commitments connected to
the provision of public telecommunications networks and financial services (can be
considered as separate service commitments for this field.

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The EVFTA Commitment to the Services includes the opening up principles embodied
in the Service text of Chapter 8 EVFTA and the specific opening up commitments
outlined in Annex 8-B-1 (opening up commitments to services and investment of
Vietnam) and Annex 8-A-1 (opening up commitments to services of the EU).
EVFTA service commitments are limited to cross-border services, provided in one of
the following forms:
 Services supplied from the territory of one Party to the territory of the other
Party
 Services provided in the territory of one Party to service users of the nationality
of the other Party
It stated that: “A Party shall accord to investors of the other Party and to their
enterprises, with respect to the operation of those enterprises, treatment no less
favorable than that accorded, in like situations, to its own investors and to their
enterprises.”
EVFTA on service market opening is negotiated on a choose-for (Positive list) basis,
similar to WTO negotiations, in which Vietnam opens only to the extent that it has
committed, in sectors already covered by commitments; for the remaining fields,
Vietnam can stipulate its discretion. Furthermore, the EVFTA excludes specific service
areas from which the Parties will not be bound by the EVFTA's principles (e.g.
translation audio-visual services, coastal passenger transport services, some air freight
transport services).
Most of the concepts of the opening service market outlined in Chapter 8 EVFTA are
based on Vietnam's commitments solely to the EU and investors only in sectors where
agreements have been made (as stated in the Schedule). Nonetheless, Vietnam commits
to all service sectors (whether or not they are on the Schedule or Commitments) under
a number of specific instances mentioned in the EVFTA.
 In Section B: Liberalization of investment, Article 8.5: National Treatment:
“1. In the sectors inscribed in its respective Schedule of Specific Commitments in
Annexes 8-A (The Union's Schedule of Specific Commitments) or 8-B (Viet Nam's
Schedule of Specific Commitments) and subject to any conditions and qualifications
set out therein, each Party shall accord to investors of the other Party and to their
enterprises, with respect to establishment in its territory, treatment no less favorable
than that accorded, in like situations, to its own investors and to their enterprises.”
On the question of business premises, Vietnam pledges to treat EU investors equally to
Vietnamese subjects, but only in areas covered by the Schedule of Commitments,

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unless otherwise stipulated in the Schedule. However, as stated in the Schedule of

Commitments, Vietnam reserves the right to use a different approach in the case of
foreign investor business enterprises as long as the procedure does not materially
impair the investor's rights. The Investment Law of 2016 takes a step in this direction,
establishing a distinct investment registration procedure for foreign investors from that
for domestic investors.
Regarding the operation of the investment: Vietnam commits to treat the EU investors
no less favorable than the Vietnamese subjects unless the Schedule of Commitments
has different provisions, or discriminatory measures were in place before the EVFTA
went into effect, or investments in several sensitive sectors listed (journalism, cultural
distribution, security - investigation, elementary/secondary education, etc.).
 In Section C: Cross-border supply of services, Article 8.11: National Treatment:
“1. In the sectors inscribed in its respective Schedule of Specific Commitments in
Annex 8-A (The Union's Schedule of Specific Commitments) or 8-B (Viet Nam's
Schedule of Specific Commitments) and subject to any conditions and qualifications
set out therein, each Party shall accord to services and service suppliers of the other
Party, in respect of all measures affecting the cross-border supply of services, treatment
no less favorable than that it accords to its own like services and service suppliers.”
Except as provided in another provision in the Schedule of Commitments, Vietnam
pledges to treat EU service suppliers no less favorably than it treats its own similar
services and service suppliers in areas relating to cross-border service supply. This
commitment does not obligate Vietnam to treat domestic service providers and EU
service providers equally. Vietnam can continue to treat them differently as long as they
do not change the competitive conditions in the relevant service market in favor of
domestic service suppliers.
As we can see, there aren't many significant differences between GATS Art. XVII and
EVFTA Art. 8.11. There are some minor changes in the text that we can notice:
 In our opinion, WTO laws in general impose and regulate WTO members'
measures and actions. EVFTA, on the other hand, has only two signatories: the
European Union and Vietnam. As a result, instead of calling a Member, we only
see a Party.
 While GATS Art XVII covers all types of services and service providers,
EVFTA mainly regulates services and service providers relevant to mode 1 of
supply as defined by GATS Art. I(2) (Cross-border trade: A service is supplied
from the territory of one Member into the territory of any other Member)

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 In the case services, that are supplied in mode 3 (Commercial presence: services
supplied by a service supplier of one Member through establishing a
commercial presence in the foreign market by opening an office/ subsidiary/
branches, etc. in the territory of any other Member), fall into the scope of
Section B: Liberalization of investment.
2.2.2 NT application of EVFTA
With respect to measures affecting trade in services, the national treatment obligation is
set out in Article XVII of the GATS. The national treatment obligation of Article XVII
is different from the national treatment obligation of Article III of the GATT 1994.
While, for trade in goods, the national treatment obligation has general application to
all trade, the national treatment obligation for trade in services applies only to the
extent WTO Members have explicitly committed themselves to grant ‘national
treatment in respect of specific service sectors.
WTO members express such open interest in the national treatment column of their
"Schedule of Specific Commitments." For instance, Members can provide national
treatment in a certain service sector exclusively to certain modes of supply such as
cross-border supply or commercial presence). Typical national treatment constraints
mentioned in Schedules include:
 Nationality or residence requirements for executives;
 Requirements to invest a certain amount of assets in local currency;
 Restrictions on the purchase of land by foreign service suppliers;
 Special subsidy or tax privileges granted to domestic suppliers; and
 Differential capital requirements and particular operational limits apply only to
operations of foreign suppliers.
Therefore, we will pay more close attention to the Agreement on Trade-Related
Investment Measures, and certain modes of supply, specifically Section A: Schedule of
Specific commitments in services sectors, Appendix 8-B-1: Specific commitments on
cross-border supply of services and liberalization of investments in EVFTA.

 Maritime Transport Services and Maritime Auxiliary Services

In EVFTA, Vietnam commits to open its Maritime Transport Services market to EU
investors, closed to the level of commitments in the WTO, only broader than the WTO
commitments in the following operational aspects:

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Firstly, the general feature of open-door commitments in this sector is:

 Number of committed services: Opening two more services than WTO
commitments
 Level of commitment: Full open (no restrictions) for the mode of cross-border
trade (mode 1), consumption abroad (mode 2), but with a limited level to the
commercial presence (mode 3) and presence of EU natural persons in Vietnam
(mode 4).
Secondly, commitment to open market to mode 3, it should be noted:
 Vietnam generally commits to fully open the representative office (no business)
and business cooperation contract (no establishment of new legal entity) of a
foreign service supplier in Vietnam.
 Vietnam has not made any commitments in respect of establishing branches of
foreign service suppliers in Vietnam.
 The listed commitments only include commitments on forms of foreign direct
investment in Vietnam (joint venture, 100% foreign equity enterprises) and
detailed restrictions on FDI enterprises (for example on the scope of activities,
foreign nationality personnel operating in the enterprises in Viet Nam…)  Air
Transport Services
Air transport service is a service that Vietnam has very limited commitments in the
WTO and other FTAs. In EVFTA, Vietnam only committed to open a number of
services for air transport, without any commitments directly related to passenger and
cargo transportation. Specifically, Vietnam commits to open aviation services in
EVFTA and shown as detail:
 Quantity: opens 05 service groups, including 02 new commitments (Vietnam
has no commitments in the WTO, including Ground-handling services, with
some exceptions; in-flight meal serving services)
 Level of commitment: Vietnam commits to fully open to services supplied under
modes 1 (cross-border trade) and 2 (consumption abroad); commitments have
not been made under mode 4 (presence of natural persons) and commitments are
very limited under mode 3 (with general commitments similar to the case of
marine transport services and differ only in specific commitments as shown in
the Table).
Before EVFTA, the competitiveness of Vietnam's logistics firms is evaluated as low,
with a limited scope of operation and basic service categories. The fundamental defects
of Vietnam's logistics firms:

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 Small scale: Small logistics enterprises' capital scale (charter capital of around
4-6 billion VND), less investment in assets directly servicing logistical
operations (while the rental/leasing mechanism is unstable).
 The limited scope of operation: Generally only provides simple 2PL logistics
chain services (customs clearance, warehouse leasing convenience...), operates
as an agent, or performs each stage as a subcontractor in the logistics operation
chain for international logistics service suppliers.
 Limited human resources: The logistics industry's human resources currently
employ mainly general training staff, with about 5-7 percent being well-trained
employees.
 Lack of connections between logistical companies: There is no link between
shipping lines, shippers, trade, and insurance for information technology.
 Information technology infrastructure is limited: There is a low level of
information technology application; there is no regular and reliable
communication link with the global logistics network; the task must be handled
through foreign company agents, resulting in delays, intermediary costs, and
reduced service efficiency.
Therefore, Vietnamese transport companies (marine, air transport) account for a very
small share in international transport (due to their limited competitiveness) but take a
large share in domestic transport (because they are protected by very limited or no
commitments to open doors in the WTO and other FTAs). In the field of shipping,
Vietnam's fleet is mainly bulk carriers and oil tankers, with very few container ships.
On international shipping routes, Vietnamese fleets only run on short routes (China,
Korea, Japan, Asian countries, and Southeast Asia). The currently open inland sea
shipping routes are very limited to foreign investment, so the Vietnamese fleet can
occupy an overwhelming market share.
Similarly, in the air transport sector, Vietnamese airlines account for only 18% of the
market share for international freight routes but control almost all of the market share
in domestic routes (by 04 in a total of 07 aviation companies, including Vietnam
Airlines, Vietjet, Jetstar, SkyViet, Vietstar Airlines, Hai Au and Vietnam Helicopters).
After EVFTA, with more significant openness in some of Vietnam's logistics
subsectors to the EU than those in the WTO. Under the terms of EVFTA, Vietnam
commits to open its market to air, road, rail, marine freight, inland waterways, and a
number of auxiliary services in all transport modes. The decision to open the service
market is based on the principle of preference for committed sectors. As a result, unless
otherwise specified, Vietnam agrees not to impose restrictions on EU investors in terms
of the number of companies, total transaction value or assets, the total number of
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service activities, maximum ratio of shares/capital contribution / foreign investment

value, and specific type of legal entity or joint venture…
Vietnam also commits to providing EU investors with no less favorable treatment than
Vietnamese investors in terms of the establishment of a commercial presence or
corporate operations in all sectors. Vietnam also makes a commitment to give EU
service supply agents treatment no less convenient than for service supply agents in
other economies except in other cases where there are other commitments, etc.
As a result, this Agreement is expected to have a substantial positive and bad influence
on the future of Vietnam's logistics business. From a positive standpoint, the EVFTA
provides significant economic and protection prospects for EU logistics service
providers and investors in Vietnam's future market. On the negative side, these two
Agreements make it more difficult for Vietnamese logistics companies to compete
against EU competitors that are already quite strong in this market. This is a direct
challenge, but it may also be a legitimate push to reform and increase the
competitiveness of Vietnam's logistics industry and firms.

CONCLUSION

Most-Favoured-Nation and National Treatment are critical elements that comprise the
WTO's non-discrimination norm. The basic goal of these principles is to provide equal
opportunity to all World Trade Organization members. The essential provisions of these
principles are outlined in GATT and GATS.
The MFN and NT responsibilities are the two basic principles of non-discrimination in
WTO law. In layman's words, the MFN treatment obligation forbids a country from
discriminating amongst countries, whereas the national treatment obligation forbids a
country from discriminating against other countries. These non-discrimination rules
apply to both commerce in products and trade in services.
On the other hand, under NT obligation, if a state grants a particular right, benefit or
privilege to its own citizens, it must also grant those advantages to the citizens of other
states while they are in that country. In the context of international agreements, a state
must provide equal treatment to those citizens of other states that are participating in
the agreement. Furthermore, imports and locally-produced goods should be treated
equally, at least after the foreign goods have entered the market. However, while the
NT obligation is generally viewed as a desirable principle, in custom it equally may
mean that a state can deprive foreigners of anything of which it deprives its own
citizens. Moreover, NT only appears to apply once a product, service or item of
intellectual property has entered the market. Therefore, charging customs duty on an
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import is not a violation of national treatment even if locally-produced products are not
charged an equivalent tax.
MFN and NT are designed to prevent discrimination against the imported products,
services or service suppliers. The two principles apply to trade in goods as well as trade
in services. Both principles should be applied ‘immediately and unconditionally’ to all
other members of the WTO.
Whether positive or negative, Vietnam also needs to try and make great efforts to take
advantage of the opportunities from free trade agreements. The trade agreement is not
only a pressure but also a driving force for economic development.
Last but not least, we would like to thank Ph.D. Vu Kim Ngan for your dedication and
comprehensive directions, which have allowed us to better understand the teachings
and execute our report in the proper manner. Despite our efforts, our report had several
flaws due to a lack of time and comprehension. As a result, we would like to hear from
you in order to deliver a more successful report.

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