International Investment Law (12) ZHANG Jiao

Review

ICSIDNAFTABITFDIIIAs

NTTRIMsMIGAOECDMFN

FET UNCTAD FTA TTIP VCLT

Foreign Direct Investment & Foreign Indirect Investment ? Direct expropriation and indirect expropriation ? Positive and Negative impacts of FDI ?

International Investment Law International Level Multilateral: MIGA, ICSID, TRIMS Regional: NAFTA, ASEAN Agreement, etc. Bilateral: BITsNational Level Foreign Investment LawPolicies for encouraging overseas investment Relevant national legislations: corporate law, capital movement, tax law, etc.

What are the main contents of BITs ? What are the main contents of Foreign Investment Law ? What are the information needed for negotiating an investment treaty for your country?

Developed country vs. Developing country Host country vs. Home country Protection of investments vs. Regulatory power of states Trade Investment Environment Human Rights Social Values

 Entry - admission and establishment  Corporate form and governance  National Security Review  Post-investment report Regulatory Power of the Host Country

Covered Risks Non-compliance with contracts Currency inconvertibility Restriction on currency transfer Direct and indirect expropriation Business interruption Risks of war Civil disturbance

Dispute Settlement State - State Diplomatic Protection Direct Disputes between States Investor - State Domestic Courts Arbitration and Conciliation

Complements to the presentations

 European Common Investment Policy  Ireland  Euro zone vs. Argentina crisis  TPP  ASEAN integration

Trade and Investment

Historical Background Pre-WWI FCN Treaties Havana Charter of the ITO of March GATT 1960s & 1979s: MNCs – economic colonialism and exploitation 1970s: Developing countries – no longer pursued large-scale expropriation

Historical Background (CONT) Debt crisis of the 1980s: developing countries – desired to attract FDI + liberalized restrictions Host country vs. Home country – different levels of instruments; binding and non- binding Uruguay Round: GATT, GATS, TRIPs, TRIMS, GPA, SCM

OECD and WTO Experience : OECD – Multilateral Agreement on Investment (MAI) 1996 WTO Ministerial Conference in Singapore: EU & Canada proposed – Possible Multilateral Framework on Investment 2001 Fourth WTO Ministerial Conference in Doha: EU, supported by other industrialized countries, raised again Doha Ministerial Declaration – launch of negotiations on trade and investment Opposed by developing countries – potential loss of regulatory sovereignty Working Group on the Relationship between Trade and Investment Unsuccessful

Reasons for opposition  Implementation of existing agreements already involved a considerable burden;  Investment policy was under the control of national government;  The existing network of BITs;  The study of investment issues should be conducted under the auspices of UNCTAD;  None of the developed members ever blindly welcomed foreign investment or pursued free investment policies;  Develop domestic industries.

Trade liberalization investment liberalization  Impossible to draw a conceptually satisfactory line between trade and investment;  The concept of investment can no longer be restricted to the classical notion of direct investment;  The sheer complexity arising from the provision of the MFN clause in some 2,600 BITs.

Different regulatory approaches, regimes, and case law specialization Fragmentary

Investment under WTO Agreements The entry and treatment of foreign persons and enterprises or to the protection of their property rights GATS, TRIPS & GPA Restricting the ability of Members to apply investment incentives or to influence the operations of foreign investors TRIMS and the SCM Agreements

“50 years after the founding of GATT, MFN is no longer the rule, but rather the exception.” Regional integration Multilateralism

RegionalBilateralInternational

A possible framework for a WTO investment agreement ?  The scope of investment: broad or narrow ?  Non-discrimination standards: which national regulatory standards ? Should liberalization provisions apply to some or all de jure discriminatory measures, including pre-admission restrictions ? Should the use of investment incentives be restricted ?  Disciplines governing the use of investment incentives and performance requirements ?  Liberalization rather than protection ?  Dispute settlement ?