Which Agreement Is Concerned with Globalization of International Investment

Bilateral investment treaties deal mainly with the authorization, treatment and protection of foreign investments. They generally include investments by companies or individuals of a country in the territory of its counterparty. Preferential trade and investment agreements are agreements between countries on cooperation in the economic and trade fields. As a rule, they cover a wider range of topics and are concluded bilaterally or regionally. To be classified as IIAs, APAs must include, among other things, specific provisions on foreign investment. International tax treaties deal primarily with the issue of double taxation in international financial activities (e.g. B the regulation of taxes on income, capital or financial transactions). They are usually concluded bilaterally, although some agreements also concern a larger number of countries. Members were required under Article 5.2 of the TRIMs Agreement to eliminate TRIMs notified in accordance with Article 5.1. Such elimination should have taken place within two years of the date of entry into force of the WTO Agreement in the case of a member of an industrialized country, within five years in the case of developing countries and within seven years in the case of a least-developed member State. In the past, several initiatives have been taken to introduce a more multilateral approach to international investment rule-making. These attempts include the Havana Charter of 1948, the draft United Nations Code of Conduct for Transnational Corporations in the 1980s, and the Multilateral Agreement on Investment (MAI) of the Organisation for Economic Co-operation and Development (OECD) in the 1990s.

None of these initiatives have been carried out due to disagreements between countries and, in the case of the MAI, also in the face of strong opposition from civil society groups. Other attempts have been made in the WTO to advance the process of concluding a multilateral agreement, but without success. Concerns were raised about the specific objectives that such a multilateral agreement would achieve, who would benefit from it and how, and the impact that such a multilateral agreement would have on countries` broader public policies, including those related to environmental, social and other issues. Developing countries, in particular, may need “policy space” to develop their regulatory frameworks, for example in the area of economic or fiscal policy, and a major concern was that a multilateral investment agreement would reduce that policy space. As a result, the current international investment regime lags behind a single system based on a multilateral agreement. [17] In this respect, investment differs, for example, from trade and finance, as the WTO serves to create a more unified global trading system and the International Monetary Fund (IMF) plays a similar role compared to the international financial system. Unlike investment protection, investment promotion provisions are rarely formally included in the IIA and, where this is the case, these provisions generally remain non-binding. Nevertheless, improving the protection formally afforded to foreign investors by an IIA should encourage and encourage cross-border investment.

The benefits that increased foreign investment can bring are important for developing countries that wish to use foreign investment and IIAs as tools to improve their economic development. Finally, paragraph 2(c) concerns measures which impose restrictions on the export or sale of exports by a company, whether expressed in relation to specific products, the quantity or value of products or part of the volume or value of its local production. Since paragraph 2 applies the provisions of Article XI(1) of the GATT 1994, it concerns only measures restricting exports. Other export-related measures, such as export incentives and export performance requirements, are therefore not covered by the TRIM Agreement. The scope of the Agreement is set out in Article 1, which stipulates that the Agreement applies only to investment measures relating to trade in goods. Thus, the TRIMs agreement does not apply to services. International tax treaties focus on the elimination of double taxation, but may at the same time address related issues such as the prevention of tax evasion. The international legal aspects of relations between countries and foreign investors are largely dealt with bilaterally between two countries.

The conclusion of BITs has evolved since the second half of the 20th century, and today these agreements are a key element of contemporary international foreign investment law. The United Nations Conference on Trade and Development (UNCTAD) defines BITs as “agreements between two countries for the mutual encouragement, promotion and protection of investments in their respective territories by companies based in one of the two countries”. [3] Although the basic content of BITs has remained largely the same over the years, emphasizing investment protection as a central issue, issues that reflect public policy concerns (e.g. B, health, safety, essential safety or environmental protection) have been included more frequently in BITs in recent years. [4] The term “trade-related investment measures” (TRIMs) is not defined in the Agreement. However, an Annex to the Agreement contains an explanatory list of measures inconsistent with Article III(4) or Article XI(1) of the GATT 1994. Prior to the Uruguay Round negotiations, little attention was paid to the link between trade and investment under gatt. By providing additional security and security under international law to investors operating abroad, IIAs can encourage companies to invest abroad. Although there is scientific debate about the extent to which BAIs increase the volume of FDI flows to host countries, policymakers tend to assume that IIA promotes cross-border investment and therefore also supports economic development. Among other things, foreign direct investment can facilitate the flow of capital and technology to host countries, contribute to job creation and have other positive spillover effects. Accordingly, governments of developing countries will endeavour to establish an appropriate framework to encourage such entries, including through the conclusion of IIAs. There are many examples of PTIA.

The North American Free Trade Agreement (NAFTA) is a notable element. While NAFTA deals with a very wide range of issues, including cross-border trade between Canada, Mexico and the United States, Chapter 11 of the AGREEMENT deals with detailed foreign investment provisions similar to those of the BIT. [6] Other examples of bilateral PIAs can be found in the Japan-Singapore EPA[7], the Republic of Korea-Chile Free Trade Agreement[8] and the United States-Australia Free Trade Agreement. [9] As an agreement based on existing GATT disciplines for trade in goods, the agreement does not deal with the regulation of foreign investment. The disciplines of the TRIMs Agreement focus on investment measures that violate GATT Articles III and XI, i.e. discriminate between imported and exported products and/or create import or export restrictions. For example, a local content requirement imposed on domestic and foreign companies in a non-discriminatory manner is inconsistent with the TRIMs Convention as it implies discriminatory treatment of imported goods in favour of domestic goods. The fact that there is no discrimination between domestic and foreign investors in the imposition of the requirement is not relevant to the TRIMs Convention.

The main purpose of international tax treaties is to regulate the distribution among countries of taxes levied on the global income of multinational corporations. In most cases, this is done by eliminating double taxation. The crux of the matter lies in disagreements between countries over who is responsible for the taxable income of multinational enterprises. Most often, these conflicts are dealt with by bilateral agreements that deal exclusively with the taxation of income and sometimes capital. Nevertheless, some multilateral tax agreements have also been concluded in the past, as well as bilateral agreements dealing with taxation and other issues. One of the most important organizations dealing with the development dimension of IIAs is the United Nations Conference on Trade and Development (UNCTAD), which is the single point of contact for the United Nations (UN) to address issues related to IIAs and their development dimension. The organization`s IIA program supports developing countries in their efforts to participate effectively in the complex system of investment rules. UNCTAD provides capacity-building services, is widely recognized for its research and policy analysis on IIAs, and provides an important forum for intergovernmental discussions and consensus-building on issues of international investment and development law. .