Promoting Equality, Black Economic Empowerment, and the Future of Investment Rules

Abstract

It generally is assumed that rules to protect and promote foreign investment are sufficiently flexible to address the specific needs of developing and less developed countries. What happens, however, when the typical model of investment treaty rubs against national constitutional commitments, such as those mandating the promotion of equality in post-apartheid South Africa? This paper explores such tensions in the context of free trade and investment negotiations between the United States and the South African Customs Union. South Africa’s plan to generate a new black middle class via a program of Black Economic Empowerment, it turns out, was a contributing factor to the scuttling of treaty negotiations. It is suggested that powerful OECD states such as the US are less likely to tolerate divergence from their model of investment protection even where divergence arguably is mandated by constitutional commitments to the promotion of equality elsewhere.

Keywords: international investment law, equality promotion