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This paper, examines the issue of regional economic integration organization (REIO) exceptions in international investment agreements (IIAs) and its possible effects, in particular with regard to developing countries. Such provisions exclude the applicability of the principle of most-favoured-nation (MFN) treatment with regard to preferential treatment that members of a REIO grant other REIO members and their investors. While REIO members defend this clause as indispensable for the pursuit of their internal investment policies, including possible future integration measures, non-REIO countries are concerned that it might undermine the principle of non-discrimination as one of the essential rights in IIAs.
