The Investment Component of Trade Agreements

Abstract

Most free trade agreements signed over the past two decades should more appropriately be called preferential trade and investment agreements (PTIA). Measured in words, investment provisions already occupy more space in the corpus of the 450 trade treaties notified to the World Trade Organization than any other issue area. This chapter introduces the main rules, issues and controversies raised by investment provisions in trade agreements. It provides an overview over investment commitments in trade agreements and sets out the wider policy context in favor of and against the inclusion of such investment rules. It then discusses normative issues raised by investment provisions in trade agreements in their substantive and procedural dimension as well as in relation to their interaction with parallel and often overlapping bilateral investment treaties (BITs). Even though the future inclusion of investment rules in trade agreements, at least in some parts of the world, is uncertain, PTIAs will likely remain a central venue for reforming and updating investment rules.

Keywords: investment protection, trade agreements, investment chapters, arbitration