The regime of international investments within the Association Agreements: towards a new comprehensive regulation?

Abstract

After the failure of attempts to conclude a Multilateral Agreement on Investment (MAI), there is currently no adequate way of regulating FDI at the multilateral level. The fragmentation of the discipline is accompanied by both an excessive focus on promoting cross-border investments and a limited ability to protect public goods such as natural heritage, cultural diversity and democracy. In other words, the promotional approach prevails over the regulatory one. If the picture looks pretty bleak for the multilateral regulation of international investments, certainly the same cannot be said for development of the discipline by regional agreements. The number of these treaties notified to the WTO stands at nearly 500, ninety percent of which are represented by free trade areas. The growth of regionalism has a strong impact on the regulation of international investments, in the light of the inclusion within regional agreements of chapters governing the movement of capitals and the protection of foreign investors’ rights. From the point of view of regulatory fragmentation, this phenomenon can certainly be considered as negative by virtue of the possible legislative and jurisdictional conflicts; however, regarding the protection of certain Public Interests, this increase can be interpreted in a positive way. Specifically, in these forms of economic integration, despite the provisions included in the BITs, the liberalisation of markets, as well as the investor protection, are not the central purposes of the Agreements. They are instead part of a larger framework that views these objectives as mere instruments for the socio-economic development of the Contracting Parties. Paying particular attention to Association Agreements signed by the EU (and its Member States) with third countries, this paper argues that these treaties represent the ideal structure for the regulation of economic issues and, more particularly, for the flow of capital and investments across borders. Especially after the entry into force of the Lisbon Treaty, which brings the issue of FDI within the scope of the Common Commercial Policy.