Host States’ Logic of Balance in Applying the Right to Regulate Foreign Investment Admission

Abstract

Foreign investment admission is concerned with whether foreign investment is admitted or in which manner foreign investment can access host states’ markets. Recent changes of international investment rules focus on the rules of foreign investment admission. Those changes reflect host states’ reconsideration on the way in which they regulate foreign investment admission. It argues that host states, as rational persons, tend to apply the logic of balance in regulating foreign investment admission, with three dimensional implications as to balancing the “quantity” and “quality” of foreign investment, balancing foreign investors’ and host states’ interests, and balancing investment liberalization and government regulation. Nevertheless, some states may break the logic of balance in exceptional cases, such as the US employed the FIRRMA as a tool to contain China’s rising and challenge to its hegemony. Therefore, the logic of balance does not apply to the states with the intention of manipulating the right to regulate foreign investment admission.