Author: Juergen Kurtz
A General Investment Agreement in the
At the recent Ministerial Conference at Doha in Qatar, the WTO member states agreed to commence investment negotiations at the next Ministerial Conference in 2003. Yet it was only in 1998 that similar negotiations in the OECD towards a Multilateral Agreement on Investment (MAI) ended without result. The MAI provisions in turn were heavily influenced by the detailed investment provisions in Chapter 11 of the North American Free Trade Agreement (NAFTA).
This paper examines the experience of both NAFTA Chapter 11 and the MAI to draw some suggestions for the investment negotiations within the WTO. The paper argues that there are two fundamental challenges negotiators face in creating investment rules in the WTO. Firstly, it is argued that a WTO agreement must reflect the interests of developing countries. In this respect, WTO negotiators should avoid a MAI-type scenario of simply replicating the very strong investment liberalization and protection provisions of NAFTA Chapter 11. The paper examines the way in which host states typically regulate foreign investment as a means to suggest realistic ways in which to craft an investment agreement broadly reflective of both North and South members of the WTO. The paper also puts forward a second formidable challenge for WTO negotiators. This is to address some of the concerning jurisprudence that has emerged from the NAFTA Chapter 11 arbitral case law. The paper focuses on the way in which some arbitral cases have extended the coverage of NAFTA Chapter 11 beyond de jure discriminatory measures to encompass seemingly legitimate regulations with little adverse impact on foreign investors.
The paper concludes with a modest but realistic set of recommendations for a WTO investment agreement.
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Last updated on September 9th, 2004