Integrating Sustainable Development into International Investment Agreements

A Guide for Developing Country Negotiators

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As International Investment Agreements (IIAs) continue to evolve and become increasingly complex, a key challenge for developing countries is how to maintain coherent investment obligations that are consistent across any overlapping treaty provisions. An even greater challenge is the effective negotiation of trade in services and investment commitments in Preferential Trade Agreements to make foreign investment supportive of development.

This guide is designed to assist developing countries to negotiate IIAs that are more effective in promoting their sustainable development. It identifies and consolidates emerging best practices from existing treaty models, evaluating the costs and benefits of different approaches; suggesting new and innovative provisions to encourage foreign investment flows; and outlining how states can achieve coherence among their IIAs.

A useful reference tool for developing country negotiators and interested parties, including investment promotion agencies, policy-makers, legislative drafters and officials in government legal departments.



Appendix 1. Review of Evidence Regarding Whether IIAs Encourage Investment Inflows to Signatory Countries

The views of those who have written about the anticipated effects of international investment obligations on FDI flows vary widely. Some, such as Sornarajah, suggest that ‘in reality attracting foreign investment depends more on the political and economic climate for its existence rather than on the creation of a legal structure for its protection’.1 Many others simply assume that international investment obligations will promote FDI inflows.2 Proponents of IIAs as strategies to promote inward investment, however, have had to confront the fact that some developing countries, of which Brazil is the best example, have been extremely successful in attracting FDI from countries with which they do not have IIAs.3 Other countries have signed IIAs and attracted little investment. Recently, researchers have tried to determine empirically whether international investment agreements actually result in increased foreign investment flows into signatory countries. Unfortunately, the empirical studies that have been done to date have not come to consistent conclusions regarding the effects of IIAs on investment flows.


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