Version: (2020-10-12 14:45)

Standstill clause

In a “standstill clause” the parties to a trade agreement commit to keeping the market at least as open in the future as it was as at the time of conclusion of the agreement.

In practice, it means that, after the conclusion of a trade agreement, if a party decides to further open up its market and subsequently decides to fall back to a more restrictive framework, that framework may never fall below the level of openness committed to in the agreement.

Example: if a party, in a trade agreement, commits to allowing 30% foreign ownership in domestic companies and later on decides unilaterally to allow 40%, the party can re-introduce the original level of 30% whenever it wishes (but it cannot restrict further below 30%).

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