Title Investment Provisions in RTAs W. A. Dymond November 14, 2003

Investment Provisions in RTAs Where are they found Where are they found The case for investment provisions The case for investment provisions The content of these provisions The content of these provisions The challenge of multilateralization The challenge of multilateralization The options The options Good News, Bad News Good News, Bad News

Where Investment Provisions are Found NAFTA, U.S., Canadian and Mexican RTAs NAFTA, U.S., Canadian and Mexican RTAs APEC, ASEAN, MERCOSUL, Andean Pact – statements of intent APEC, ASEAN, MERCOSUL, Andean Pact – statements of intent FTAA? FTAA? Australia – NZ not Australia – NZ not BITs: almost 2,200 in 2002 BITs: almost 2,200 in 2002

The Case for Investment Provisions in RTAs Investment as driver of economic growth Investment as driver of economic growth Market reform and trade liberalization Market reform and trade liberalization MNEs as mobilizers of capital MNEs as mobilizers of capital Restoring bad reputations Restoring bad reputations

The Content of Investment Provisions in RTAs Non-discrimination Non-discriminationExpropriation Minimum Standard of treatment Transfers Performance Requirements Establishment Investor state dispute settlement

The Challenge of Multilateralization: Arguments For: Arguments For: –Multilateral agreements are better than regional or bilateral ones –Existing WTO provisions provide a launch pad

The Challenge of Multilateralization: Arguments Against: Arguments Against: –Investment not a trade issue: no place for multilateral approach –Need to maintain policy flexibility in face of power asymmetries –RTAs can be tailored: multilateral agreements cannot be

Issues to Resolve Architecture Architecture Reconciliation Reconciliation Special and differential treatment Special and differential treatment

Architecture Beneficiaries and States Beneficiaries and States Depth and duration of intrusive obligations Depth and duration of intrusive obligations Balance of advantage Balance of advantage

Reconciliation Vienna Convention Vienna Convention Supercession clause in NAFTA Supercession clause in NAFTA Broad network of RTAs and BITS creates major reconciliation 10task Broad network of RTAs and BITS creates major reconciliation 10task

Special and Differential Treatment Rational for S&D in investment provisions Rational for S&D in investment provisions Could investment provisions be multilateralized without S&D? Could investment provisions be multilateralized without S&D?

Options Post Cancun pace of RTAs and Bits likely to accelerate Post Cancun pace of RTAs and Bits likely to accelerate Doha Mandate not sustainable Doha Mandate not sustainable GATS options GATS options Declaration of principles Declaration of principles

Good News Bad News Story Good News Good News Bad News Bad News Risks manageable Risks manageable