Investment Treaty Forum Twelfth ITF Public Conference Investment Treaties at 50: Host State Perspective 15 May 2009 Developing country challenges in negotiating, implementing and complying with BITs: trends and outlook Anna Joubin-Bret Senior Legal Advisor UNCTAD

TRENDS Among the most important recent trends is the increasing number and complexity of IIAs →risk that countries face overlapping and sometimes inconsistent obligations →possibly detrimental to their policy objectives → increased risk of investor-State disputes → increased risk of investor-State disputes Several factors: substantive, systemic, subject-specific

The network of BITs continues to grow rapidly, there are now over 2500 BITs

BITs concluded by country group

The top ten signatories of BITs in the world, June 2008

South-South BITs 47 South-South BITs in 1990 Over 700 in 2008

Renegotiations rise in renegotiation of BITs among countries rise in renegotiation of BITs among countries In 2008 eight additional BITs were renegotiated among member countries In 2008 eight additional BITs were renegotiated among member countries This brings the total number of renegotiated BITs to 132 by the end of 2008 This brings the total number of renegotiated BITs to 132 by the end of 2008 During the year, Czech Republic alone renegotiated five BITs while Vietnam renegotiated two BITs During the year, Czech Republic alone renegotiated five BITs while Vietnam renegotiated two BITs China and Germany lead the renegotiation process by 16 BITs each while Morocco and Egypt follow with eleven and nine BITs respectively. China and Germany lead the renegotiation process by 16 BITs each while Morocco and Egypt follow with eleven and nine BITs respectively.

Number of renegotiated BITs 1998 – 2008

Free Trade Agreements with Investment Chapters  International investment rules are increasingly being formulated as part of agreements that encompass a broader range of issues (including trade, services, competition, intellectual property)  Regional integration with investment disciplines: ASEAN investment liberalization and protection  The total number of such economic agreements with investment provisions exceeded 254, as of June 2008

Over 250 trade agreements with investment provisions

Recent FTAs with investment chapters  Free Trade Agreement between the EFTA States and Canada  Free Trade Agreement between China and New Zealand  Free Trade Agreement between Singapore and Panama  Economic Partnership Agreement between Japan and Thailand  Free Trade Agreement between the United States and the Republic of Korea  EC-CARIFORUM Economic Partnership Agreement

IMPLICATIONS → Countries and companies operate within an increasingly intricate framework of multi-layered and multi- faceted investment rules, which may contain overlapping and perhaps even inconsistent obligations. → Countries and companies operate within an increasingly intricate framework of multi-layered and multi- faceted investment rules, which may contain overlapping and perhaps even inconsistent obligations. → This may render economic policies of host countries more complicated. → This may render economic policies of host countries more complicated.

Several Factors Divergent model agreements Divergent model agreements Protection-oriented BITs and liberalization-oriented FTAs Protection-oriented BITs and liberalization-oriented FTAs Compatibility/implementation at the national level with national laws Compatibility/implementation at the national level with national laws

Interactions Within an IIA Cumulating interactions: services/investment chapters in FTAs, ISDS/general DS in the FTA Cumulating interactions: services/investment chapters in FTAs, ISDS/general DS in the FTA Contradiction interactions: policy-space issues Contradiction interactions: policy-space issues Explication interactions: definitions or exceptions with substantive provisions Explication interactions: definitions or exceptions with substantive provisions

Interactions With Other IIAs Reinforcement interactions: services- related provisions reinforcing GATs Reinforcement interactions: services- related provisions reinforcing GATs The MFN provisions The MFN provisions Cumulating interactions: dispute settlement provisions (FTAs/WTO) Cumulating interactions: dispute settlement provisions (FTAs/WTO) Contradiction interactions: interactions with State Contracts Contradiction interactions: interactions with State Contracts

CONSISTENCY: DOMESTIC CONCERNS The negotiation of IIAs includes interrelated and complicated policy issues that, at least in principle, touch upon a whole range of domestic concerns. The negotiation of IIAs includes interrelated and complicated policy issues that, at least in principle, touch upon a whole range of domestic concerns. (Ex.: social and environmental matters) Balancing private and public interests: Balancing private and public interests: Protect host country interests: clarification, stronger emphasis on public policy concerns, strengthen public role in ISDS. Transparency.Protect host country interests: clarification, stronger emphasis on public policy concerns, strengthen public role in ISDS. Transparency. create a certain balance between rights and responsibilities of investors. create a certain balance between rights and responsibilities of investors. Preserving regulatory flexibility to pursue national policies. Preserving regulatory flexibility to pursue national policies.

 Developing countries and economies in transition often lack the necessary human resources to negotiate agreements that appropriately reflect their interests and needs  Risk of overlapping and sometimes conflicting commitments in IIAs  Implementing IIA obligations  Developing dispute prevention policies  Dispute management techniques  Strengthening the development dimension of IIAs Challenges for developing countries