New Players and Old Rules: A Critique of the China-Ethiopian and China-Tanzanian Bilateral Investment Treaties Amy Man PhD Candidate/Associate Lecturer University of the West of England Amy.Man@live.uwe.ac.uk

OUTLINE Core argument: IIL is not best placed to reflect the interests of developing host states. Emerging actors (e.g. China) have taken positive steps but change is minimal. Structure 1) Introduction 2) The role of the State: IIL and Regulation 3) China’s investment agreements: A critique a) China-Ethiopia b) China-Tanzania 4) Conclusion

INTRODUCTION Neo-liberal assumption: FDI will improve economic development  standard of living Developing states conclude IAs  Signal commitment and encourage capital inflows Indicates: Willingness to join the existing game. But the playing field is uneven.

THE ROLE OF THE STATE: IIL & REGULATION Tension: Becoming parties – submit to terms Submit to regulation of their policies Do not have regulatory freedom – encroaches on sovereign autonomy Standards that favour foreign investors and capital-exporting states Vulnerable to investment dispute claims

The Role of the State: IIL & Regulation Argentinean financial crisis 2001 Legal claims estimated at US$17 billion CMS v. Argentina Award = US$133.2 million Not absolved of IIL obligations under IAs Must provide a stable environment for investments

The Role of the State: IIL & Regulation ‘Regulatory chill’ Integrate into a system which encroaches on their regulatory space. Traditional origin: FCNs and capital-exporting states Desire to limit risk Protect assets No explicit requirement to protect public interest in host state

The Role of the State: IIL & Regulation Developing States Suspicious of IIL system – control over assets & resources Desire freedom to enact policies & legislation Join the system nonetheless Emerging Actors: Signs of change China Prudent navigation of system and existing rules

EMERGING ACTOR: CHINA Shift from capital-importing economy to major capital-exporting economy Outflows estimated at US$128 billion (2015) Integration within the IIL regime - generations of IAs 145 BITs concluded Reflection of different economic policies Second-generation – China-Ethiopia BIT Third-generation – China-Tanzania BIT.

CHINA-ETHIOPIA BIT (1998) Second-generation: amongst the oldest Chinese IA in force Little tailoring unlike China-Tanzanian counterpart Inclusion of usual standards of treatment characteristic of IAs: FET (Art. 3(1)) MFN (Art. 3(2)) Absence of national treatment

CHINA-TANZANIA BIT (2014) Third-generation: most recent Shift to major exporter of capital Hallmarks features of IAs remain but with some modest but notable changes

China-Tanzania BIT (2014) National treatment Art. 3(2) – allows host to adopt measures to promote local entrepreneurship MFN Art. 4 – Usual formulation FET AND full protection and security Art. 5(2) fair and judicial proceedings Art. 5(3) implementation of police measures

China-Tanzania BIT (2014) Art.10: ‘… it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures… [i]n the pursuit of FDI…’ Unique inclusion Recognition of social norms outside of IIL remit that IIL can/does encroach upon

China-Tanzania BIT (2014) Art. 10 Conditional language Lacks legal legitimacy BUT Positive value/step Adapting existing rules and willingness to do so Future developments will require further scholarship

CONCLUSION FDI has a positive influence over development? IAs signed in hope Challenges: vulnerable to claims and encroaches on regulatory space Expectation to join and participate where rules do not represent interest New players e.g. China do not substantially change the game