International Investment Agreements: Investor Protections and Foreign Direct Investment *
International Investment Agreements: Investor Protections and Foreign Direct Investment *
This chapter reviews the provisions in BITs and PTAs that grant foreign investors greater predictability on the policy framework regulating their investment, enumerates their purported benefits of increased investment flows, and considers the costs associated with disputes lodged under these agreements. These agreements typically provide for transparency, non-discrimination among foreign and domestic investors, and guarantees against expropriation. Some agreements do prevent contracting parties from imposing trade-related investment measures (TRIMS), such as local content requirements and local hiring requirements. Nearly all provide for some sort of dispute settlement. There is some tentative evidence that provisions in these arrangements have contributed to increased flows, especially towards stable countries with otherwise less-developed property rights or those initiating reforms, and they appear to be most helpful in attracting foreign investment when undertaken in combination with multilateral or preferential trade agreements.
Keywords: Investment provisions, protection, bilateral investment treaties, BITs, trade-related investment measures, TRIMS, investor-state dispute settlement
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