Geneva 6 July 2009 -- Despite the global financial and economic crisis, countries continue to rely on the conclusion of international investment agreements (IIAs) as a means of promoting foreign investment and attendant benefits, UNCTAD´s latest IIA (International Investment Agreement) Monitor reports.
The first six months of 2009 saw the conclusion of 25 bilateral investment treaties (BITs) and six other international agreements with investment provisions - a development that further strengthens and expands the current international investment regime. This is line with the last year´s trend, when the network of IIAs continued to expand, with the number of newly concluded double taxation treaties (DTTs) (75) and other IIAs (16) exceeding those for 2007 (69 and 13, respectively). With 59 new agreements, the number of BITs concluded in 2008 also was significant.
This suggests that there may be a role for the international investment regime to play in responding to the global economic and financial crisis. Among other things, IIAs may be a way of effectively promoting foreign direct investment (FDI) -- this is particularly the case for agreements that contain effective and operational provisions on investment promotion -- and by stemming the rising tide of protectionist dangers during the financial crisis. To play such a role, the IIA Monitor says, numerous substantive and procedural questions should be dealt with, including how to ensure a balance in IIAs that grants policy makers sufficient flexibility to respond to the financial crisis and how to ensure that investor-State dispute settlements involving crisis-response measures can be handled in a manner responsive to their particular challenges.
The report, subtitled "Recent developments in international investment agreements (2008-June 2009)" and released this week, records the agreements signed in 2008, offering details per type of agreement and per country group.
The report notes these regional trends for 2008:
- Developed countries signed 38 new BITs (bringing the total of their BITs to 1,687 or 63% of worldwide BITs), 63 new DTTs, and 13 other IIAs;
- SEE and CIS countries signed 19 new BITs (for a total of 613 BITs; 23%), 25 new DTTs, and one other IIA;
- Among developing countries, those from Asia and Oceania led, signing 31 new BITs (total 1,112 BITs; 41%), 24 new DTTs and 6 other IIAs;
- African countries signed 12 new BITs (total 715; 27%), 8 new DTTs, and 3 other IIAs;
- And Latin American and Caribbean countries signed 8 new BITs (total 483; 18%), 8 new DTTs and 5 other IIAs. The cumulative worldwide totals of agreements stood at 2,675 BITs, 2,805 DTTs and 273 other IIAs by end of 2008.
Three notable trends characterized the development of the BIT regime in 2008:
- Numerous intra-EU BITs were terminated; these were treaties EU Member countries had concluded with individual EU countries before their own accession to the EU;
- There was noteworthy renegotiation of European BITs with third countries, aimed at bringing the countries´ BITs into conformity with EU law;
- And there was a trend of denunciation of BITs, a process mainly involving Latin American countries, possibly motivated by questions about the effects that BITs have on a country´s economic development and the objective of ensuring compatibility between IIAs and domestic laws.
The report says that at a broader level, key systemic considerations also need to be addressed regarding the interaction between the global financial system and the international investment regime, with a need for coherence between the two regimes, regulating the inter-woven and inter-related global long-term and short-term capital movements.
Building on the acknowledgement of G 20 leaders (as stated at the 2 April London G 20 summit) that a global problem requires a global solution, the report says there is a need to strengthen international coordination and cooperation on international investment policy making, with the ultimate objective of maximizing the contribution of foreign investment to financing the recovery and re-establishing growth and stability.
