Ongoing Evolution of Investment Policymaking in RTAs and IIAs

Organised by
ICTSD, IDB
13 June 2018
|
Geneva, Switzerland

The aim of this multistakeholder dialogue was to tap into the wealth of information emerging from recent international investment agreements (IIAs) and regional trade agreements (RTAs), in order to understand how trade and investment concerns are being jointly addressed to suit the needs of 21st century patterns of production.

The meeting examined how investment provisions have evolved in recent years, the ways and means through which they are integrated into investment and trade frameworks, and the impact of including such provisions to achieve sustainable development outcomes.

The main types of provisions analysed were host state flexibilities; investment protection provisions; investor-state dispute settlement mechanisms; and sustainability provisions.

Main takeaways

  • IIAs increasingly including sustainability provisions in preambles, general public policy exceptions clauses, and specific clauses in the text. These provisions, however, remain largely aspirational. A question is whether there is a need to shift from aspirational to binding provisions in order to foster responsible investor behaviour and achieve sustainable development outcomes. Recent sustainability relevant chapters enforceable through state-to-state procedures are an important step in that direction.
  • Industrial policy is an increasingly active issue in investment jurisprudence. Prohibitions can be categorised under three approaches: 1) silent approach – no specific provision on industrial policy, the claimant uses traditional investment provisions such as fair and equitable treatment and national treatment to counter a host state policy measure; 2) WTO approach – reaffirmation of WTO rules on Trade-Related Investment Measures (TRIMs), where disciplines on technology transfer and services are therefore excluded; and 3) WTO-plus approach – extending beyond TRIMS, which usually covers performance requirement disciplines on services and technology transfer. Industrial policy will be an increasingly relevant issue driving fragmentation within the investment regime. Additional guidance on strategic industrial policy measures in investment jurisprudence will be key to managing this fragmentation.
  • ISDS reforms are resulting in a fragmented landscape: developed countries are pursuing procedural reforms, and developing countries are initiating more substantive reforms and alternative modes (e.g. exhaustion of local remedies (India); emphasis on dispute mediation and prevention (Brazil); separate regional state-to-state tribunal (Southern African Development Community)). Going forward a key question will be how these different systems co-exist. Will there be a need for a dispute settlement à la carte institutional structure?

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The event built on previous ICTSD dialogues and ongoing research on investment policymaking.

Attendance was by invitation only.

This meeting is part of the RTA Exchange dialogue series aimed at constructing better trade and investment agreements for sustainable development at the regional and multilateral levels.

10:15 - 10:30
Welcome Remarks and Strategic Considerations

This session will establish the scope by reviewing:

  • Systemic issues of the investment regime
  • The evolution of and the differences in approaches to investment policy and treaty making at the regional and international levels
  • Role of trade agreements

Analyse the differences in approaches and experiences of how investor protection provisions are addressed through RTAs and IIAs. Relevant agreements to be reviewed could include TPP-11, Pacific Alliance, CETA, Africa-based FTA or Model BIT; China Model BIT; and the U.S. Model BIT.

13:00 - 14:00
Lunch

Compare how the following features are treated in universe of IIAs and RTAs, including TPP-11, Pacific Alliance, CETA, Africa-based FTA or Model BIT; China Model BIT; and the U.S. Model BIT.

  • Host state flexibilities and investor obligations provisions (e.g. right to regulate, industrial policy related provisions- including technology transfer and performance requirements)
  • Sustainability relevant investment provisions (e.g. human rights, labour and environmental law provisions)

Compare how investment provisions are enforced and monitored through dispute settlement mechanisms in select BITs and FTAs, including the TPP-11, Pacific Alliance, CETA, Africa-based FTA or Model BIT; China Model BIT; and the U.S. Model BIT.

Taking into consideration the day’ discussions. What lessons and best practices should be advanced in order to design better agreements at the regional and multilateral levels?

What policy options should be prioritised for the purpose of advancing coherence, convergence and inter-operability among agreements?

17:45 - 18:00
Ways Forward on Investment and the RTA Exchange

Ricardo MELÉNDEZ-ORTIZ is founder and Chief Executive since 1996 of the International Centre for Trade and Sustainable Development (ICTSD), based in Geneva, Switzerland.

Previously, he co-founded and was General Director of Fundación Futuro Latinoamericano (Quito). He has represented Colombia as a negotiator in several multilateral fora, including as permanent delegate of Colombia in Geneva and as a negotiator in GATT’s Uruguay Round, the Rio’92 UN Conference process, UNCTAD VIII, the Climate Change Convention, the Intergovernmental Panel on Climate Change (IPCC) and the Montreal Protocol. He acted as spokesperson for the G77 in several fora and served as chair of the UN Standing Committees on Commodities and on Trade Preferences. Earlier, he had served as Principal Adviser to the Colombian Minister of Economic Development and as Chief of Administration of the Office of the President of Colombia.

Since 1997, Mr. Meléndez-Ortiz has been the publisher of BRIDGES and its sister publications, and has edited, authored and published a wide range of books, articles and opinion pieces in English, French and Spanish on economic governance, trade, sustainable development and conflict management.

He has served or currently sits on advisory committees and the boards of a number of global policy initiatives, including as Board chairperson of the Meridian Institute (U.S.); World Economic Forum’s Global Future Council on Biodiversity and the Bio-Economy; World Economic Forum’s Stewardship Board on Trade and Investment; a Convener of the 'E15 Initiative’, an international undertaking involving over 400 experts seeking options for the global trade and investment system; Member of the Board of Intellectual Property Watch (Geneva); the Operating Board of AccountAbility (London); the World Economic Forum’s Global Agenda Council on Trade and WEF’s Working Group on Trade and Climate Change; The Pardee Center Task Force on Governance for a Green Economy (U of Boston); The Center for Global Development’s Global Trade Preference Working Group (Washington, DC); The Evian’s Group Brains Trust (IMD); the Global Governance Network of Globus et Locus (Milano); the Steering Committees of DfID’s Global Trade and Finance Architecture Initiative and of UN DESA’s Sustainable Development Knowledge Partnership (New York), a Patron of the Earth Focus Foundation (Geneva); in the recent past he served as Chair of the Global Action Network’s Council (Cambridge, MA); and member of the U.N. Secretary General Millennium Project Task Force on Trade; the WTO’s Director General NGO Advisory Group; and the MOFCOM/IISD China Sustainable Development and Global Markets Task Force.

In 2016 he was an advisor to the G20 China Presidency on Trade and Investment, in 2017 co-chair of the T20 Task Force on Trade and Investment during Germany’s G20 Presidency, in 2018 co-chair of T20 Task Force on Trade, Investment and Tax Cooperation during Argentina’s G20 Presidency and in 2018/2019 co-chair of T20 Task Force for Trade, Investment and Globalization during Japan’s G20 Presidency.

Since 2015, he is part of the Columbia University’s School of International and Public Affairs (SIPA) Global Digital Futures Policy Forum.

Mr. Meléndez-Ortiz, a graduate of Harvard University, has recently co-authored the New Industrial Revolution: Upgrading Trade and Investment Frameworks for Digitalization (21 August 2018) with Axel Berger: this policy brief was produced by the T20 Task Force on Trade, Investment and Tax Cooperation under the G20 Presidency of Argentina in 2018; Renforcer le système international du commerce et de l’investissement au 21ème siècle (1 December 2016) with Richard Samans; The Law and Economics of a Sustainable Energy Trade Agreement (30 August 2016) with Gary Hufbauer, Richard Samans; Envisioning China’s G20 Presidency: Proposals for the global trade and investment regime in the 21st century (19 March 2016); Strengthening the Global Trade and Investment System in the 21st Century, Synthesis Report, under the E15Initiative (22 January 2016) with Richard Samans, Harsha V. Singh, Sean Doherty; Enabling the Energy Transition and Scale-up of Clean Energy Technologies: Options for the Global Trade System, under the E15Initiative (22 January 2016)Envisioning a Sustainable Development Agenda for Trade and Environment (Palgrave Macmillan, 2007) with A. Najam and M. Halle, and co-edited Rebuilding Global Trade: Proposals for A Fairer, More Sustainable Future(Global Economic Governance Programme at Oxford U. and ICTSD, 2009) with C. Deere; Agricultural Subsidies In The WTO Green Box: Ensuring Coherence With Sustainable Development Goals (Cambridge University Press, 2009) with C. Bellmann and J. Hepburn; Intellectual Property and Sustainable Development, Agendas in a Changing World(Edward Elgar Publishing, 2009) with P. Roffe; and, WTO Dispute Settlement: The Developing CountryExperience (Cambridge U. Press, forthcoming November 2010) with G. Shaffer. He holds the Colombian nationality and is a resident of Switzerland where he lives with his wife and two daughters.

Marisol Rodríguez Chatruc is an Economics Specialist at the Integration and Trade Sector of the Inter-American Development Bank. Previously, she was a consultant in the same sector. Her research focuses on the impacts of International trade shocks on the labor market and on the impact of virtual platforms on firms' exports. Marisol holds a Ph.D. in Economics from the University of Maryland and a BA in Economics from the University of Buenos Aires (Argentina).

Professor Wagner teaches and writes in the areas of international law, constitutional law and comparative law. His recent scholarship has focused on the development of autonomous weaponry and its compatibility with international humanitarian law and various aspects of international economic law. The latter includes work on second and third generation barriers to trade (including measures to regulate toxicity and other public health measures) as well as comparisons between the global trade and investment regimes. His work has appeared or is forthcoming in the Journal of World Trade, the Harvard Journal of International Law, the University of Pennsylvania Journal of International Law, the Vanderbilt Journal of Transnational Law, and the Fordham International Law Journal.

Iza Lejárraga is a Senior Policy Analyst/Lead Manager at OECD, where she has been responsible for leading analytical work on regional trade agreements, services trade and investment, and small and medium-sized enterprises.  Prior to joining the OECD, she worked as a Research Economist with the African Development Bank, in the Regional Integration and Trade Department as well as under the Office of the Chief Economist.  Previously she also worked for the International Trade Department of the World Bank and for the Trade Unit of the Organization of American States in Washington, D.C.  She holds a Master’s degree in Economics and International Development from Harvard University, where she has also been a Visiting Scholar at the Center for International Development. 

Catharine Titi is a Research Associate Professor (tenured) at the French National Centre for Scientific Research (CNRS)-CERSA, University Paris II Panthéon-Assas, France. She is Co-Chair of the ESIL Interest Group on International Economic Law; Member of the International Law Association (ILA) Committee on Rule of Law and International Investment Law; and she sits on the Editorial Board of the Yearbook on International Investment Law & Policy (Columbia/OUP). She co-directs the research project The impact of international investment agreements on FDI flows funded by the French Ministry of Justice (2017-2019). Catharine holds a PhD from the University of Siegen in Germany (Dr. Iur., Summa cum laude, Rolf H. Brunswig Prize)) and has previously been a consultant at the United Nations Conference on Trade and Development (UNCTAD). In 2016, Catharine was awarded the prestigious Smit-Lowenfeld Prize of the International Arbitration Club of New York for the best article published in the field of international arbitration.

 

Associate Professor of Law, Peking University School of Transnational Law; Co-Director, Pearl River Delta Academy of International Trade and Investment Law. Former: Chief of NAFTA/CAFTA-DR Arbitration in the Office of the Legal Adviser of the US Department of State.

Mia Mikic is the Director of the Trade, Investment, and Innovation Division of the United Nations Economic and Social Commission for the Asia and the Pacific (ESCAP). She also coordinates the Asia-Pacific Research and Training Network on Trade (ARTNeT), an open network of research and academic institutions and think-tanks in Asia-Pacific. Previously, she was Professor of International Economics at the University of Zagreb, and Senior Lecturer at the University of Auckland. She is the author of International Trade (Macmillan, 1998), co-authored Trade Statistics in Policy-making (United Nations, 2009) and editor or co-editor of a number of other volumes. She has contributed chapters to several edited volumes and reports and published a number of journal articles and other papers. Her current work focuses on the impacts of preferential and multilateral trade liberalization, services trade liberalization, non-tariff protection, Aid for Trade and evidence-based policy-making in trade.

 

Professor of International and Economic Law and Governance, University of Amsterdam; Principal Investigator, European Research Council-funded project on ‘Transnational Public-Private Arbitration as Global Regulatory Governance’; Member, ICSID List of Conciliators; Editor-in-Chief, Journal of World Investment and Trade. Admitted to the bar in Germany and New York. Has published numerous articles and several books on international investment law, including The Multilateralization of International Investment Law (Cambridge University Press 2009) and, as editor, International Investment Law and Comparative Public Law (Oxford University Press 2010).

Geraldo Vidigal is Assistant Professor in Public International Law and International Trade Law at the University of Amsterdam. He received his PhD in International Law from the University of Cambridge and has worked as a Dispute Settlement Lawyer at the WTO Legal Affairs Division. Geraldo is the Managing Editor of the journal Legal Issues of Economic Integration.

Karl P. Sauvant is an ICTSD Senior Fellow - Investment, Resident Senior Fellow, Columbia Center on Sustainable Investment (CCSI), a joint center of Columbia Law School and the Earth Institute at Columbia University; Adjunct Professor and Senior Research Scholar, Columbia Law School; Guest Professor, Nankai University, China. Former: Founding Executive Director, Vale Columbia Center on Sustainable International Investment; Director of the Investment Division, United Nations Conference on Trade and Development (UNCTAD). Created the prestigious annual World Investment Report, of which he was the lead author until 2004. Authored a substantial number of publications on issues related to economic development, FDI and services. Honors: Fellow of the Academy of International Business and an Honorary Fellow of the European International Business Academy. PhD, University of Pennsylvania. 

Anabel González is a global expert in economic development, focused on trade, regional integration and investment. As former Senior Director of the World Bank´s Global Practice on Trade & Competitiveness (2014-18), she led the Bank´s agenda on trade, investment climate, competitiveness, innovation and entrepreneurship. She previously served as Minister of Trade of Costa Rica (2010-14), where she led the country´s strategy to join the OECD, negotiated and implemented six FTAs, and contributed to attract over 140 greenfield investment projects. She also worked as Director, Agriculture Division, WTO; Costa Rica Chief Negotiator for the Central America-United States-Dominican Republic Free Trade Agreement, Costa Rica Ministry of Trade; Senior Consultant on Trade and Investment, Inter-American Development Bank; and Director-General, Costa Rican Investment Promotion Board. She is a member of the World Economic Forum Global Future Council on Trade and Foreign Investment, sits on several boards, and writes and presents on related topics.

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