Community Research and Development Information Service - CORDIS

Better protection for foreign investment on a national level

An in-depth look at bilateral investment treaties (BITs) between nations can help reach better agreements in the future, safeguarding investments and supporting economies.
Better protection for foreign investment on a national level
In recent decades, international trade and investment has flourished, thanks to some 3 000 BITs that world governments have signed. Protecting foreign investors and regulating foreign direct investment, these agreements have implications for economic development, global inequality, national sovereignty and international obligations.

Since the 1990s, many treaties were renegotiated mostly to solidify international obligations. The EU-funded BITRENEGOTIATION (The renegotiation of international agreements: The case of bilateral investment treaties) project examined why some agreements have been renegotiated while others have remained intact. It studied why governments revise treaties and to what extent they could raise foreign capital to further their economic, social and political objectives.

To achieve its aims, the project developed a framework in order to explain the renegotiation of international treaties, looking particularly at investor-state dispute settlement (ISDS). It measured how much the treaties extend greater investor protection or greater regulatory space for the state. This revealed major differences regarding how governments revise treaties, noting how such changes respond to governments’ experiences with the global investment regime.

Importantly, the project’s findings support the theory that direct experience with investment disputes is associated with a greater propensity to renegotiate these agreements. The findings also show that many treaty revisions resulted in less rather than more state regulatory space. Moreover, a study of the Trans Pacific Partnership revealed that its regulatory space is very similar to United States agreements, recent agreements and free trade agreements.

By accurately assessing the implications of BIT renegotiation, the project’s results reveal how governments respond to challenges emerging from the global investment regime and the conditions under which they do so. This provides valuable support to policymakers who seek new investment agreements and could bear on ISDS provisions in the context of new trade and investment agreements.

The outcomes can guide policymakers who want to conclude new investment agreements or revise existing ones, leading to better international treaties that mitigate conflicts and support economies.

Related information

Subjects

Life Sciences

Keywords

Foreign investment, bilateral investment treaties, trade, BITRENEGOTIATION, international agreements
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