26
Jun
Growing unease with the current functioning of the global international investment agreement (IIA) regime, together with today’s sustainable development imperative, the greater role of governments in the economy and the evolution of the investment landscape, have triggered a move towards reforming international investment rule making to make it better suited for today’s policy challenges. As a result, the IIA regime is going through a period of reflection, review and revision.
As evident from UNCTAD’s October 2014 World Investment Forum (WIF), from the heated public debate taking place in many countries, and from various parliamentary hearing processes, including at the regional level, a shared view is emerging on the need for reform of the IIA regime to ensure that it works for all stakeholders. The question is not about whether to reform or not, but about the what, how and extent of such reform.
WIR15 responds to this call by offering an action menu for IIA reform. It builds on UNCTAD’s earlier work in this area, including UNCTAD’s Investment Policy Framework (WIR12), UNCTAD’s reform paths for investment dispute settlement (WIR13), and its reform paths for IIA reform (WIR14), as well as on contributions by others.
The chapter addresses five main reform challenges (safeguarding the right to regulate for pursuing sustainable development objectives, reforming investment dispute settlement, promoting and facilitating investment, ensuring responsible investment, and enhancing systemic consistency). It offers policy options for key areas of IIA reform (i.e. substantive IIA clauses, investment dispute settlement, and systemic issues) and for different levels of reform-oriented policymaking (national, bilateral, regional and multilateral).
The policy options provide reform-oriented formulations for standard IIA elements. They include mainstream IIA provisions as well as more idiosyncratic options that have so far been used by fewer countries or are only found in model agreements.
This WIR takes a holistic approach. It covers, in a single chapter, all the key aspects of IIA reform (i.e. substantive, procedural and systemic). It identifies reform objectives, areas and solutions in the form of an action menu, outlining a common road map for the reform process and inviting countries to use the action menu and to define their own, individual road maps for IIA reform.
This WIR takes an approach that focuses on policy coherence. It proposes that reform be guided by the need to harness IIAs for sustainable and inclusive growth. It suggests that the investment promotion and facilitation function of IIAs should go hand in hand with their function of protecting investment. And, it emphasizes that IIAs must be coherently embedded in countries’ overall sustainable development strategies.
Finally, this WIR stresses the importance of a multilateral approach towards IIA reform. Given the large number of existing IIAs, the only way to make the IIA regime work for all is to collectively reform its components. In today’s dynamic environment, where one change reverberates throughout the whole system, it is important to work towards a common vision and common rules of engagement. Only a common approach can ensure that reform does not lead to further fragmentation and incoherence, but is for the benefit of all, without leaving anyone behind. And only a common approach will deliver an IIA regime in which stability, clarity and predictability help achieve the objectives of all stakeholders, effectively harnessing international investment relations for the pursuit of sustainable development.
The chapter first takes stock of 60 years of international investment rule making, draws lessons learned and identifies today’s reform needs and objectives. It then develops the design criteria and strategic choices, pinpoints the reform areas and tools, and advances detailed policy options for reform in the five identified reform objectives.
The chapter closes with Guidelines for IIA Reform and suggested possible actions and outcomes at the national, bilateral, regional, and multilateral levels.
Access and download the complete Chapter IV of the UNCTAD World Investment Report 2015: Reforming the International Investment Regime, at: http://unctad.org/en/PublicationChapters/wir2015ch4_en.pdf