Preferential Trade and Investment Agreements and the Trade/Investment Divide: Is the Whole More than the Sum of Its Parts?

Abstract

Since the 1990s, the number of preferential trade agreements has exponentially risen – many of which encompass provisions relating to the regulation of foreign investment. By the end of 2010, over 300 of such preferential trade and investment agreements [PTIAs] were in existence. This paper looks at how and why PTIAs combine trade- and investment-related provisions and analyzes the impact of that combination on both international trade and international investment law. The author has opted to approach this issue from three angles: first, the differences between PTIAs and classic bilateral investment treaties [BITs] are examined in order to determine which, if any, (dis)advantages are created through the establishment of a regime of international investment law based on PTIAs as compared to regulating investment under separate agreements. The second angle focuses on the question whether PTIAs are heralding a more unified international economic regime through the integration of international investment and trade law; or whether this combination creates unnecessary friction in the light of the different objectives of each respective field. It will be argued that the structural differences between the international trade and investment regime do not necessarily render the quest for unity illusory. The third and final angle assesses the potential implications of a unified approach on the investment regime. More specifically it is submitted that PTIAs could bring about a more comprehensive regulation of foreign direct investment that (i) is less focused on the post-establishment phase of investments, thereby allowing for coordination between trade and investment rules regulating the liberalisation of the services market, and (ii) is better able to balance State/investor rights and duties, with special focus on policy coherence, regulatory flexibility and facilitating development.