Regulation of Foreign Investment

The following sections are included:

• Acknowledgements

• Contents

• List of Contributors

The inspiration for this book came from two sources: First, one cannot be but impressed by the spectacular growth of foreign investment over the last three decades — despite the imperfect regulatory frameworks in which they operate. Globalization has brought about a rapid growth of international trade but even more dramatic growth of cross-border foreign investment — both portfolio and direct. World FDI stocks increased at an annual rate of almost 12 percent between 1980 and 2008, growing at almost a double rate of world output as well as significantly faster than the annual growth of world merchandise exports or world exports of services. The growth of cross-border foreign investment is all the more impressive given the absence of a globally binding agreement on foreign investment…

The following sections are included:

• Introduction

• Investment Regulation in the Havana Charter

• The GATT-Era

• The WTO-Era
  • Trade in goods
  • Trade in services
  • Trade related intellectual property rights (TRIPs)
  • The working group on trade and investment

• Attempts to Multilateralize Outside the WTO

• Conclusions

• References

• Annexes
  • Annex 1: Investment Regulation in the Havana Charter
  • Annex 2: Article III.5 GATT
  • Annex 3: TRIMs
  • Annex 4: Mode 3 GATS
  • Annex 5: TRIPs Provisions

Like tariff liberalization — applied tariffs under domestic laws, preferential tariffs through regional trade agreements, and WTO bound tariffs — States also have three levels to liberalize investment. Domestic laws on investment are unilateral acts by a State that provide benefits not only for investors, both national and foreign, but also for other States. Bilateral Investment Treaties (BITs) are bilateral or regional international treaties where States reciprocate obligations vis-à-vis investors from the other States parties to BITs. But, BITs in some circumstances may also provide benefits to the cosignatory States…

The following sections are included:

• Introduction

• Scope of Mode 3 and Investment
  • Commercial presence
  • Owned or controlled
  • Investment by service suppliers
  • GATS scope with regard to investment measures
  • Commitments on Mode 3 service supply

• Gaps in Disciplines on Mode 3
  • GATS provisions that discipline measures that hamper investment
  • GATS provisions that discipline measures that attract investment

• Conclusion

• References

The following sections are included:

• Introduction

• Human Dignity in an Integrated Global Economy
  • Globalization, labor and human-rights violations, and the remedy for market inefficiency

• Empirical Evidence on the Impact of Labor Standards on International Trade and Investment: Is There a Race to the Bottom?
  • The experience of US GSP and better factories Cambodia
  • Other evidence of the effects of labor standards on trade and investment
  • Is there a race to the bottom?

• Conclusions

• References

The following sections are included:

• Introduction

• The Economic Effects of Subsidies: Distinguishing Between International Trade and FDI
  • The effects of subsidies on international trade and justifications for regulation
  • The effects of subsidies on FDI and justifications for regulation

• Trade and Investment Concerns Relating to Subsidies: The Structural Primacy of the Trade Regime

• Gaps in the Existing WTO Subsidies Regime Relating to Investment

• Thoughts on Addressing Future Challenges: Regulating FDI Subsidies Through Investment Arbitration?

• References

The following sections are included:

• Introduction

• The Interaction of Environmental Law and FDI
  • Vertical interactions
  • Horizontal interactions
  • “Diagonal” interactions

• Evidence: International Investment Agreements and disputes
  • Expropriation
  • Fair and equitable treatment
  • National treatment and the most favored nation standard
  • Umbrella clauses
  • Object and purpose

• Toward International Harmonization
  • Preserving flexibility for environmental regulation
  • Incentivizing sustainable development through low-carbon FDI

• Conclusion

• References

The following sections are included:

• Introduction

• Technology Transfer, FDI and Investment Regulation
  • Direct national regulation
  • The emergence of IIAs
  • Multilateralism
  • Empirical evidence

• Technology Transfer in IIAs
  • The baseline: TRIPS
  • PTAs and TRIPS-plus
  • BITs
  • Characterizing investor-state disputes on technology transfer
  • Non-trade agreements

• Inconsistencies and Harmonization

• References

The following sections are included:

• Introduction

• Background

• SWF Investment and Political Risk

• Pecunia Non Olet? Market Failure Considerations

• The Current Regulatory Setting on Foreign Sovereign Investment: A Sketch From the US and European Perspective

• Toward a “Smart” Regulatory Framework for SWF Investment

• Conclusions

• References

The following sections are included:

• Introduction

• Decentralized Legal System

• Tribunals as Agents of Legal Harmonization
  • Recognition of new binding rules
  • Interpreting Treaty Provisions
  • Precedent and Harmonization of Investment Law

• The Limits of Harmonization by Investment Tribunals

• Concluding Remarks

• References

The following sections are included:

• Introduction

• A framework for threat assessment
  • Threat I
  • Threat II
  • Threat III

• A Common Approach for OECD, and Beyond

• The Broader Context: Allowing the Benefits From Foreign Direct Investment (FDI) — Including FDI via Acquisitions — To Spread Around the World

• References

The following sections are included:

• What Is the Definition of “Public Services”? How Are They “Regulated”?

• Do International Investment Agreements (Whether Bilateral, Regional or Multilateral) Cover “Public Services”?

• Investment Liberalization and Investment Protection Provisions in International Investment Agreements

• Additional Provisions in Investment Agreements Relevant for “Public Services”

• Impact of International Investment Treaties on “Public Services”: Investor-State Arbitrations
  • Emergency legislation and gas transportation sector in Argentina: CMS v Argentina
  • Universal service obligation in the telecommunication sector in Hungary: Telenor v Hungary
  • Termination of 30-year concession agreement for the provision of water and sewage services in the Argentine province of Tucuman: Vivendi v Argentina
  • Reversal of privatisation of the energy sector in Hungary: AES v Hungary
  • Reversal of liberalization in the health insurance services in the Slovak republic: Eureko v Slovak Republic

• Impact of International Investment Treaties on “Public Services”: Preliminary Findings

• Conclusion

• References

The following sections are included:

• Introduction

• The EU Recent Practice
  • The CARIFORUM–EU Economic Partnership Agreement
  • The EU–Korea FTA

• The Future EU Approach — Changes Brought About by the Treaty of Lisbon
  • The changes brought about by the Treaty of Lisbon
  • New or revised Member State treaties
  • Cooperation during the lifetime of Member State agreements
  • Future EU external investment policy

• Conclusion

• References

The following sections are included:

• Introduction

• Arguments in Favor of Harmonization

• Arguments for Regulatory Diversity

• A Way Forward in the Debate and Negotiations of International Harmonization
  • Theoretical issues
  • What is not working in our attempts to harmonize trade rules?
  • Practical problems and impediments

• WTO and GATS

• Conclusion

• References

The following sections are included:

• Index