UNCTAD | June 2006

INVESTMENT PROVISIONS IN ECONOMIC INTEGRATION AGREEMENTS

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Book information
UN Symbol: UNCTAD/ITE/IIT/2005/10
Date of publication: 13/06/06
No. of pages: 174

Highlights

Since the 1990s, there has been a proliferation of bilateral, regional, interregional and plurilateral agreements that seek to facilitate, among others, trade and investment - the so-called Economic Integration Investment Agreements (EIIAs).

Yet, it is still too early to identify a dominant pattern in the configuration of the EIIA network, as many forces are in play.

In theory, the inclusion of investment rules in economic integration agreements is a logical step in a process of increasing market integration. Recent EIIAs tend to address a growing list of investment issues in increasingly elaborate provisions.

But, as the study shows, EIIAs vary enormously. EIIA investment provisions have been influenced by bilateral investment treaties (BITs) and the WTO agreements. From a development perspective, a main challenge for EIIA negotiators is to strike a balance between the EIIA’s potential to increase investment flows and the member countries’ needs for policy flexibility.

Moreover, the growing proliferation of EIIAs has led to a multilayered and multifaceted web of investment rules. The full implications of this development are difficult to gauge. Will the proliferation of EIIAs result in more economic discrimination and exclusion for third countries, especially for the poorer countries? Or, will EIIAs, in the absence of a multilateral system on investment similar to the WTO multilateral trading system, contribute to the expansion of trade and investment flows worldwide by developing clear, predictable, consistent and fair international investment rules?