Can International Investment Agreements Be Instruments of Sustainable Development? Systemic Capacity Challenges for Developing Countries
Building Legal Capacity for a More Inclusive Globalization: Barriers to and Best Practices for Integrating Developing Countries into The Maze of Global Economic Regulation, Joost Pauwelyn and Mengyi Wang, eds (Georgetown Law and The Graduate Institute Geneva, TradeLab e-Book, 2019).
17 Pages Posted: 27 Feb 2019
Date Written: January 03, 2019
The world is girdled by a dense network of international investment agreements (IIAs). IIAs are not well-designed to promote investment, much less to contribute to sustainable development. Existing IIAs contain mainly broadly-worded investor protection provisions enforceable through investor-state arbitration. Despite IIAs’ strong investor protections, however, investment inducing effects have not been clearly demonstrated. As well, investor protections have been interpreted in some investor-state cases to constrain the ability of states to regulate to achieve sustainable development. Experience with investor-state arbitration and the changing context in which IIAs are being negotiated has created an awareness of the strong bite of IIAs and encouraged increasing innovation in treaty models and some actual treaties that enhance the prospect that they will contribute to investment-led sustainable development. But many challenges impair the ability of countries, especially developing countries, to ensure that the treaties they sign support their sustainable development in light of their distinctive circumstances. In some cases, this is due to a lack of the technical capacity to assess the desirability of particular kinds of provisions, despite capacity building efforts of UNCTAD, the World Bank, and NGOs. As well, power imbalances continue to define the outcome of treaty negotiations between developed and developing countries. For many developing countries, competition for investment with similarly situated countries may also discourage an aggressive approach to IIA negotiations. This paper surveys some of the continuing systemic challenges for developing countries regarding the negotiation of and compliance with investment treaty obligations.
Keywords: international investment agreements, globalization, investor-state arbitration, global economic regulation
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