WORKSHOP ON KEY SUBSTANTIVE ISSUES RELEVANT TO THE ANALYSIS AND
NEGOTIATION OF BILATERAL INVESTMENT TREATIES
Organized jointly by
the Secretariat of the United Nations Conference on Trade and Development (UNCTAD),
and the Department of International Economic Affairs, Ministry of Foreign Affairs of Thailand
Recent Trends in foreign direct investment (FDI) and
international investment agreements
Anna Joubin-Bret, Senior Legal Adviser
Division on Investment
UNCTAD
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Trends in FDI
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Key messages: FDI trends and
prospects
 Global foreign direct investment (FDI) flows rose moderately to $1.24 trillion
in 2010, but were still 15 per cent below their pre-crisis average.
 For the first time, developing and transition economies together attracted more
than half of global FDI flows.
 Some of the poorest regions continued to see declines in FDI flows.
 International production is expanding.
 State-owned TNCs are an important emerging source of FDI.
 UNCTAD estimates that global FDI will recover to its pre-crisis level in 2011,
increasing to $1.4–1.6 trillion, and approach its 2007 peak in 2013.
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Billions of dollars
Global FDI inflows rose moderately in 2010, but were
still 15 per cent below their pre-crisis average
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Billions of dollars
For the first time, developing and transition economies
together attracted more than half of global FDI flows
In 2010
 Developing countries: $574 billion, 12% increase
 Developed: $602 billion, 0.2% decline
 Transition (South-East Europe and the CIS): $68 billion, 5% decline
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FDI flows to major emerging markets (East and South-East Asia
and Latin America) rose strongly, while flows to some of the
poorest regions (LDCs, LLDCs, SIDS and Africa) continued to
decline
Billions of dollars
(Billions of dollars)
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6
Per cent
Outward FDI from developing and transition economies reached
record highs, with most of their investment directed towards other
countries in the South
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Top 10 home and host countries for FDI
FDI inflows
FDI outflows
(Billions of dollars)
(Billions of dollars)
Note: The number in bracket after the name of the country refers to the ranking in 2009.
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Thailand FDI flows in 2009
(million of dollars)
•
•
Total Inward FDI: 4 492
Total Outward FDI: 2 182
Inflows
559
Outflows
-4
7
-
551
-4
3 886
171
170
- 17
51
98
Coke, petroleum products and nuclear fuel
196
-7
Chemicals and chemical products
286
52
Non-metallic mineral products
10
-2
Metal and metal products
33
1
Machinery and equipment
2 419
27
91
- 63
- 203
2 014
22
36
327
317
-1 065
942
1
944
Business activities
728
94
Real estate
728
94
Primary
Agriculture and hunting
Mining and quarrying
Secondary
Food products and beverages
Textiles
Electrical and electronic equipment
Tertiary
Construction
Trade
Finance
Financial Intermediation
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Trends in IIAs
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Core Elements in international investment
agreements (IIAs)
 Preamble
 Definitions (investment/investor)
 Admission and establishment
 Core standards of protection:
Principle of fair and equitable treatment
Principle of non-discrimination (NT/MFN)
Expropriation
Transfer of funds
 Dispute settlement
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The network of International Investment
Agreements (IIAs)
 Bilateral investment treaties (BITs)
 Free trade agreements / economic partnership
agreements with investment provisions (FTAs/EPAs)
 Regional integration agreements (EU, ECOWAS,
CARICOM, MERCOSUR, COMESA, Arab investment
agreement, ASEAN)
 Multilateral agreements dealing with investment (GATS,
TRIMs, TRIPs)
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Thailand's IIA Network
• 39 BITs
• 62 DTTs
• 23 other IIAs (including ASEAN
agreements and ASEAN +1 FTAs)
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A. Bilateral Investment Treaties
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The network of BITs continues to grow,
there are now over 2600 BITs
200
3000
180
BITs annual
140
2000
120
100
1500
80
1000
60
40
BITs cummulative
2500
160
500
20
0
0
1999
2000
2001
2002
BITs Annual
2003
2004
2005
2006
2007
2008
2009
BITs cumulative
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The top ten signatories of BITs in the
world, January 2010
Germany
China
Switzerland
United Kingdom
France
Egypt
Netherlands
Belgium and Luxembourg
Italy
Korea, Republic of
0
20
40
60
80
100
120
140
160
Number of BITs
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Increased sophistication and complexity
• United States and Canadian model BITs (2004)
• Tend to be increasingly sophisticated in content
• Clarifying in greater detail the meaning of a number of
standard clauses
• Putting more emphasis on the protection of national
security, health, safety, the environment, and labour
rights
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B. Free Trade Agreements
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B. Free Trade Agreements with
Investment Chapters
 International investment rules are increasingly being
formulated as part of agreements that encompass a
broader range of issues (including trade, services,
competition, intellectual property)
 Regional integration with investment disciplines:
ASEAN investment liberalization and protection
 The total number of such economic agreements with
investment provisions exceeded 290, as of end 2009
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Over 300 economic cooperation
agreements with investment provisions
Number of IIAs (other than BITs and DTTs)
350
300
250
200
150
100
50
0
1957 – 1967
1968 – 1978
By period
1979 – 1989
1990 – 2000
2001 – 2009
Cumulative
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Multiple overlapping FTAs with
investment provisions
• IIAs proliferate at all levels
•Constituting a complex system of multi-layered and
multi-faceted investment rules
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Recent developments in
investor-State dispute
settlement
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The increase in IIAs has been paralleled by an
increase in investor-State disputes
In 2010, at least 25 new cases were filed, bringing the total
number of known treaty-based cases to 390
Of the total 390 known disputes:
•
245 were filed with ICSID (or the ICSID Additional Facility)
•
109 under the United Nations Commission on International
Trade Law (UNCITRAL) arbitration rules
•
19 with the Stockholm Chamber of Commerce
•
six with the International Chamber of Commerce and four
were ad hoc.
•
One further case was filed with the Cairo Regional Centre
for International Commercial Arbitration.
•
In six cases, the applicable arbitration rules are unknown
so far.
Thailand: 1 case - Walter Bau v. Thailand, UNCITRAL (Germany/Thailand BIT).23
Some disputes in 2010…
•
In Latin and Central America, Bolivia and Venezuela responded to three new claims
each as a result of nationalization measures aiming at strengthening state control
over strategic sectors.
•
Uruguay is responding to its first claim arising from consumer protection legislation
involving marketing restrictions and labeling requirements of cigarettes
•
In Central Asia, Kazakhstan and Turkmenistan responded to two new cases each
relating to energy and power facilities and construction projects
•
In Africa, Zimbabwe responded to two new cases relating to timber processing and
commercial farms while Tanzania faced one new case dealing with a power purchase
agreement.
•
In Europe, Lithuania, Romania and Slovakia responded to a new case each relating
to alcohol industry, press distribution and claims arising out of alleged reversal of
health insurance policy.
•
Canada faced one NAFTA case dealing with an investment in a pulp and paper mill.
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Known investment treaty arbitrations
(cumulative and newly instituted cases
50
450
45
400
350
35
300
30
250
25
200
20
150
15
Cumulative number of cases
Annual number of cases
40
100
10
5
50
0
0
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
Non-ICSID
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
ICSID
All cases cumulative
25
Known investment treaty claims, by
defendants
Argentina
Mexico
Czech Republic
Ecuador
Venezuela
Canada
United States
Ukraine
Poland
Egypt
0
10
20
30
40
50
60
Number of cases
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international investment agreements in
investment treaty arbitrations, end 2009
CAFTA
2%
ASEAN
2%
NAFTA
5%
Energy Charter Treaty
7%
Bilateral investment treaties
84%
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Key issues and challenges
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Challenges
 Developing countries and economies in transition often lack the necessary human
resources to negotiate agreements that appropriately reflect their interests and
needs
 Risk of overlapping and sometimes conflicting commitments in IIAs (always keep
in mind national investment laws)
 How to strengthen the development dimension of IIAs (investment promotion V.S.
investment protection)
 Many capital importing countries becoming capital exporters: implications with
regard to their negotiation position in IIAs. These countries now have to attract
inward FDI, but also protect their own investors abroad
 Result: developing countries and economies in transition need to ensure policy
coherence between their various international investment commitments, including
those at the national level.
 This entails coherence with national strategies on investment and how it can
contribute to sustainable development.
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Overarching principles
•
•
•
•
•
•
•
•
•
•
•
Investment in sustainable development
Policy coherence
Good governance
Policy making dynamics
Balanced rights and obligations
Right to regulate
Openness to investment
Investment protection
Corporate responsibility
Outward investment
International cooperation
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Thank you
www.unctad.org/iia
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