Community Research and Development Information Service - CORDIS



Project ID: 333374
Funded under: FP7-PEOPLE
Country: Israel

Final Report Summary - BITRENEGOTIATION (The Renegotiation of International Agreements: The Case of Bilateral Investment Treaties)

Since the late 1950s, and in particular since the end of the Cold War, governments from around the globe have concluded about 3,000 bilateral investment treaties (BITs). These treaties provide foreign investors with favorable treatment and legal protections and are currently the main legal instrument by which foreign direct investment (FDI) is regulated worldwide. With current global FDI flows of over one trillion dollars annually and the exponential growth of high-stakes investment disputes, these agreements have far-reaching implications for questions of economic development, global inequality, and national sovereignty.
Given that their main function is to solidify international obligations, it is notable that many investment treaties have changed over time through the increasingly common practice of renegotiation. Since the 1990s, states have engaged in the renegotiation of close to two-hundred BITs. The main objectives of this project are to understand why some of these international agreements have been renegotiated while others have remained intact, to shed light on the motivations of governments that revisit their treaty obligations, and to conceptualize and account for the changes in the content of investment treaties. More broadly, this project seeks to spell out the implications of this increasingly significant trend for the regulation of multinational corporations (MNCs) and, more broadly, for governments’ ability to harness foreign capital to promote their economic, social, and political objectives.
This project employs a multipronged approach to tackle these issues. It first develops a comprehensive theoretical framework to account for the renegotiation of international treaties, with particular emphasis on the potential effect of investor-state dispute settlement (ISDS). Specifically, it argues that many governments concluded BITs with an incomplete understanding of their implications. Through direct experience with ISDS, governments learned to appreciate the consequences and costs associated with these treaties more fully. This has increased the propensity of those governments to renegotiate their BITs and revise their content in manners that respond to legal developments reflected in ISDS proceedings. In other words, new information revealed through ISDS propelled governments to adjust the balance between the level of protection provided to foreign investors, on the one hand, and their ability to regulate their local economy, on the other. It then evaluates this argument with a combination of qualitative, legal, and quantitative approaches, which includes a collection of original data on renegotiated BITs, a theoretically-guided analysis of their content, and a large-N regression analysis.
In this project, I have completed the analysis of renegotiated BITs and published the findings in the prestigious peer-reviewed journal the Review of International Organizations. The most notable finding of this article provides strong support for my theoretical expectations: direct experience with investment disputes is associated with greater propensity to renegotiate these agreements.
I have also collected almost all texts of renegotiated BIT needed for the content analysis of these agreements. Using a coding scheme produced by United Nations Conference on Trade and Development (UNCTAD) as a springboard, I have developed my own coding system and employed it to measure the degree to which any given treaty reflects either greater investor protection or greater state regulatory space (SRS). Collaborating with colleagues and graduate research assistants, I have coded almost all provisions of the original and renegotiated treaties. I then analyzed the variation in SRS across countries and over time. The most striking result is that many treaty revisions resulted in less, rather than more, SRS. Nevertheless, there is a growing consideration to SRS in recent years as well as in the Western Hemisphere. These findings, with a particular focus on ISDS, are reported in two forthcoming book chapters, one with Cambridge University Press and another with Oxford University Press.
I used the data collected for this project to conduct another study, this time on the relationships between the Transpacific Partnership (TPP) and previous investment agreements concluded by parties to this agreement. Using statistical techniques, I have found that the regulatory space in the TPP is most similar to US agreements, more recent agreements, as well as free trade agreements. This timely study was accepted for publication in the important peer-reviewed Journal of International Economic Law.
As part of this project, I have organized an international conference on the evolution of the global investment regime, which BIT renegotiation is an important aspect of. This conference, which took place at the Hebrew University of Jerusalem in May 2016, brought together about twenty-five Israeli, European, and global experts on the topic. Each of the participants presented original research related to the global investment regime and commented on the others. This conferenced was instrumental my research agenda and cemented the network of scholars working on related topics.
Taken as a whole, this project represents the first attempt to assess the implications of BIT renegotiation in a systematic and rigorous manner. As such, its results have illuminated the manners by which governments respond to the challenges emanating from the global investment regime and the conditions under which they do so. The findings of this project provide important lessons to policy makers who contemplate concluding new investment agreements or revising existing ones. This is especially relevant in the EU context, where the European Commission was recently granted competence in this area. In one striking example, ISDS provisions were perhaps the most controversial in the Transatlantic Trade and Investment Partnership and the Canada-EU Comprehensive Economic and Trade Agreement, and hampered their negotiation and conclusion.
Beyond the scholarly output and contribution to the understanding of the issue under investigation, the CIG grant assisted with my reintegration into the Israeli and European research communities. At the Hebrew University, this project has fostered collaboration with colleagues in several units and garnered the interest of talented graduate students. In Europe, through presentations and participation in conferences in Geneva, Bonn, and Oslo I was able to establish myself as a leading scholar in the field. The international conference I have organized further enhanced my reputation and integration into this growing research community and my connections with officials in governments and international organizations the world over.

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