Global Trends in International

Investment Agreements (IIAs)

Training course for economies in transition on a new

generation of international investment policies

1- Setting the stage: an IIA system ?

2- Recent trends in IIAs

3-Emerging issues

a. New generation of investment policies

b. Rising regionalism

4- Main challenges

1. Setting the stage: an IIA system ?

• Absence of a multilateral agreement on investment (unlike trade, services, IPR)

• Absence of a global body administering the process

• International investment rulemaking lacks system-wide coordination

• Countries continue to conclude investment treaties on an individual basis

(vulnerability to bargaining power; various models; implications for economies in

transition)

• Perpetuating and accentuating the fragmentation of the IIA network

• Is there an IIA system ?

• Bilateral investment treaties (BITs)

• Free trade agreements / economic partnership

agreements with investment provisions (FTAs/EPAs)

• Regional investment agreements (EU, CEFTA,

CARICOM, MERCOSUR, COMESA, Inter-Arab IA, ASEAN

IA)

• Sectoral agreements dealing with investment in Energy

(Energy Charter)

• Preamble

• Definitions (investment/investor)

• Admission and establishment

• Core standards of protection:

• Principle of fair and equitable treatment

• Principle of non-discrimination (NT/MFN)

• Expropriation

• Transfer of funds

• Investor-State dispute settlement

2. Recent trends in IIAs

The current three-year average of one new IIA per week is considerably

lower than the 4 new IIAs per week average of the mid-1990s.

0 20 40 60 80 100 120 140 160

Spain

Czech Republic

Romania

India

Turkey

Korea, Republic of

Belgium and Luxembourg

Italy

Netherlands

Egypt

France

United Kingdom

Switzerland

China

Germany

• Total of 694 BITs, constituting 23% of the BITs universe

0

10

20

30

40

50

60

70

80

African countries 7%

Latin American countries

3% North American countries

3%

EU countries 54%

Asian countries 33%

Importance of EU

regulation No. 1219/2012

Treaty with investment provisions Signatory economies in transition

Partnership and Cooperation Agreements/Association

agreements with the EC

Armenia, Azerbaijan, Belarus, Bosnia and

Herzegovina, Georgia, Montenegro,

Kazakhstan, Kyrgyz Republic, Serbia, Ukraine,

Uzbekistan, Turkmenistan

Free Trade Agreements with EFTA States Albania, Macedonia, Serbia, Montenegro,

Ukraine,

Framework Agreements on trade and investment with

the United States of America

Georgia, Kazakhstan, Kyrgyz Republic,

Tajikistan, Turkmenistan, Uzbekistan

The Energy Charter Treaty Albania, Armenia, Azerbaijan, Bosnia and

Herzegovina, Croatia, Georgia, Kazakhstan,

Kyrgyzstan, Moldova, Tajikistan,

Turkmenistan, Ukraine, Uzbekistan, Belarus,

Russia

The Central European Free Trade Agreement (CEFTA)

and the Agreement on Amendment of and Accession to

the Central European Free Trade Agreement

Albania, Moldova, Bosnia and Herzegovina,

Montenegro, Croatia, Serbia, Macedonia

Agreement on Promotion and Reciprocal Protection of

Investments in the Member States of the Eurasian

Economic Community

Belarus, Kazakhstan, Kyrgyz Republic, Russia

and Tajikistan

3. Emerging issues

a. Towards a new generation of international investment

policies

Model with defined

scope, taking into

account national

development

strategies,

investment

promotion,

exceptions, and SD

Changing investment policy

environment

Traditional international

investment policy making

New generation of

investment policies

• Integrating international investment policies into national development

strategies

• Strengthening the development dimension in IIAs – Reference to the protection of health, labour, environmental standards

– General exceptions (e.g. for protection of human, animal or plant life or health)

– Not lowering standards clauses

– Investment promotion provisions

• Preserving regulatory space – Narrow definition of investment, detailed clauses on FET or indirect expropriation, exceptions

to free transfer of funds, carve-outs for prudential measures).

– Minimizing exposure to ISDS (e.g. excluding treaty provisions or policy areas from ISDS,

limiting time period for submitting claims.

• Balancing the rights and obligations of States and investors – Reflecting investor responsibilities in IIAs

– Learning from CSR principles

Source : UNCTAD

Source : UNCTAD

3. Emerging issues

b. Rising regionalism: challenges and opportunities

More than 110 countries are currently involved in

22 regional negotiations (agreements involving

more than two countries)

PACER

Source : UNCTAD

Most treaty provisions governing the relationship between regional agreements and other

(investment) treaties allow for the continuing existence of the BITs in parallel with the regional treaty

22

• China-Singapore investment framework is governed not only by two

but by three overlapping agreements:

- Investment provisions of the China-Singapore FTA

- The China-Singapore BIT

- The ASEAN-China Investment Agreement

• The parties endorse the existence of parallel treaties by re-affirming

the continued validity of existing agreements in various ways

• They, however, provide little guidance on how to deal with the

ensuing overlap

Indonesia-Thailand BIT

(1998) (members of ASEAN)

• Vague language

• No public policy

carve-outs

!

ASEAN CIA (2009)

• Specific language

• Public policy

carve-outs

Parallel IIAs may create situations where a single government measure could be challenged by the investor under

different IIAs. This increases the possibilities available to foreign investors to sue governments.

• If certain conditions are met, regionalism can provide an

opportunity to consolidate and rebalance the IIA system

• The negotiating process of regional investment

agreements may create a conducive environment for

countries to express specific developmental concerns

• Regional cooperation on investment can establish useful

precedents and build consensus among countries on core

elements of investment protection and sustainable

development

• This may spur a constructive dialogue on international

investment policy, representing a crucial step towards

multilateralism

Source : UNCTAD

IIA negotiations nevertheless present a window of opportunity to

consolidate the existing network of BITs.

4. Main challenges