Axel Berger

Do trade and investment agreements lead to more FDI? Accounting for key provisions inside the black box

The previous literature provides a highly ambiguous picture on the impact of trade and investment agreements on FDI. Most empirical studies ignore the actual content of BITs and RTAs, treating them as black boxes, despite the diversity of investment provisions constituting the essence of these agreements. We overcome this serious limitation by analyzing the impact of modalities on the admission of FDI and dispute settlement mechanisms in both RTAs and BITs on bilateral FDI flows between 1978 and 2004. We find that FDI reacts positively to RTAs only if they offer liberal admission rules. Dispute settlement provisions play a minor role. While RTAs without strong investment provisions may even discourage FDI, the reactions to BITs are less discriminate with foreign investors responding favourably to the mere existence of BITs.

More Stringent BITs, Less Ambiguous Effects on FDI? Not a Bit!

We focus on investor-state dispute settlement provisions contained in various, though far from all, bilateral investment treaties as a possible determinant of BIT-related effects on bilateral FDI flows. Our estimation results prove to be sensitive to the specification of these provisions as well as the inclusion of transition countries in the sample. Stricter dispute settlement provisions do not necessarily result in higher FDI inflows so that the effectiveness of BITs as a credible commitment device remains elusive.

The Politics of China’s Investment Treaty-Making Program

This article aims at empirically investigating the evolution of China’s BIT policy since the early 1980s and compares it with current developed country approaches. Analysing the development of substantive and procedural investment protection provisions, it argues that China has pro-actively initiated a remarkable change of its formerly restrictive BIT policy towards a liberal approach. Since 1998, Beijing is negotiating BITs that contain comprehensive investor-state dispute settlement provisions. China even abandoned its hostile stance on national treatment of foreign investors. Notwithstanding existing reservations towards unrestricted national treatment, the current Chinese model agreement is comparable to the admission model BIT adopted by European countries. The prospects of the proposed Sino-US BIT, however, are looking rather bleak. This is mainly due to fundamental differences with respect to the parties view on the protection of FDI in the pre-establishment phase and the current political environment in the US that accentuates national security concerns with regard to foreign investors from developed and emerging countries.

Attracting FDI Through BITs and RTAs: Does Treaty Content Matter?

It may appear all too obvious that the extent to which foreign direct investment (FDI) is attracted by bilateral investment treaties (BITs) and regional trade agreements (RTAs) depends on the strength of key investment provisions. Still, BITs and RTAs have typically been treated as black boxes in prior empirical literature, ignoring two important legal innovations: investor-state dispute settlement (ISDS) and re-establishment national treatment (NT) provisions. An assessment of the impact of different classes of BITs and RTAs on bilateral FDI flows between up to 28 home and 83 developing host countries (covering the period 1978-20042) yields strong evidence that liberal admission rules promote bilateral FDI.

Hesitant Embrace: China's Recent Approach to International Investment Rule-Making

China is becoming one of the key stakeholders in the international investment regime. It is the third largest source country for outward foreign investments and concluded nearly 140 investment treaties. Despite these impressive numbers, it is still unclear what role China can play – and in fact wants to play – in the ongoing reform of the international investment regime. Starting from this overall focus, this article analyses the most recent period of China’s international investment policy-making. Mapping the contents of investment treaties signed since 2008 it argues that China undertook a ‘partial NAFTA-ization’: Whilst China has adopted a number of clauses invented by the member states of the North American Free Trade Agreement, it introduced these clauses in an incoherent fashion. Looking at the drivers of this peculiar policy, this article argues that China’s practice of investment treaty-making is largely inspired by its partner countries, which helps us to understand the incoherent contents of its post-2008 treaties. Against this background, it is difficult to argue that there is a unified Chinese approach to international investment rule-making. This belies the argument that China can make a significant contribution to reforming the international investment regime.

Moving the G20’s investment agenda forward

Abstract This article argues that it is of paramount importance that the G20 pays attention to the mounting challenges faced by the international investment regime. This is all the more important because international investment is crucial to advance sustainable development, especially in developing countries. For both immediate and long-term reasons, investment policies should therefore be a core item on the agenda of the G20 and the Trade and Investment Working Group in particular. The present article makes two sets of recommendations: first, the G20 should continue its work on international investment policy reform and initiate steps to operationalise the Guiding Principles for Global Investment Policymaking; second, the G20 should support ongoing WTO discussions on investment facilitation suggesting that they should aim not only at facilitating more foreign direct investment (FDI), but sustainable FDI. The policy recommendations provide an input for the Japanese G20 presidency in 2019.

Neue Paradigmen der Entwicklungspolitik: Urbanisierung im Zeitalter des Klimawandels

Im Jahr 2011 uberschritt die Weltbevolkerung die Schwelle von sieben Milliarden Menschen. Bis zur Mitte des Jahrhunderts werden neun Milliarden Menschen die Erde bevolkern. Schon heute lebt die Mehrheit dieser Menschen in Stadten, ein Trend der weiter zunehmen wird. Insbesondere Entwicklungslander werden zu urbanen Brennpunkten. Neben den Megatrends wirtschaftliche Globalisierung, Machtverschiebungen im internationalen Staatensystem und Klimawandel wird Urbanisierung somit zu einem der wichtigsten Treiber soziookonomischen Wandels in den kommenden Dekaden.

What Opportunities Do the New EU International Investment Agreements Offer for Developing Countries

The issue of how foreign direct investment (FDI) can contribute to sustainable development processes is becoming increasingly important for many developing countries. For a long time now the issue from a development policy point of view has no longer been around how to increase the quantity of investment inflows. The quality of FDI and the contribution they make to environment-friendly and inclusive growth processes is just as important. This is accompanied by a desire on the part of many developing countries to more strongly regulate their investment inflows in order to increase their positive effects on development. This shift in focus is not just a consequence of the disillusionment that many developing countries have experienced given the minor economic benefits stemming from the liberalization of their investment regimes in the 1980s and 1990s. It is also a result of the economic success of emerging countries which frequently do not implement these recommendations for liberalization one-on-one. Furthermore, the coherence of investment agreements also has to play a greater role in light of new systemic risks such as global finance and climate risks and increased interlinking between different areas of policy. Against this backdrop, the role and substance of international investment agreements (IIA) have been subject to intense discussion in recent times. IIAs were traditionally negotiated as tools to protect from western companies’ FDI in politically unstable developing countries. This one-sided focus for IIAs is no longer appropriate today: the global investment regime is in a period of change which calls the traditional North-South logic behind IIAs into question. It is no longer just North American, European and Japanese companies that invest abroad but also their Chinese, Brazilian and Indian competitors. The need for better consideration of public and private interests in IIAs is also growing in industrialized countries as a result of the increase in reciprocal investment flows. Against this background the European Union (EU) has implemented a far-reaching institutional reform of its Common Commercial Policy as a result of the Lisbon Treaty: negotiating European IIAs now falls under the overall competency of the EU and no longer just the Member States. This merging of trade and investment policy making at EU level provides new starting points for future IIAs to be drafted in a more development-friendly manner. Development policy actors should pay greater attention to this policy area in order to increase the potential for FDI to promote sustainable development processes. The formal options for pressing for greater coherence between investment and development policy have increased as a result of Lisbon. In order to use this room to manoeuvre more effectively developing countries need additional support to increase their negotiating capacities.

China–Europe Relations in Climate Change Mitigation: A Conceptual Framework

Despite the large-scale investments of both China and the EU in climate change mitigation and renewable-energy promotion, the prevailing view on China–EU relations is one of conflict rather than cooperation. In order to evaluate the prospects of cooperation between China and the EU in these policy fields, empirical research has to go beyond simplistic pictures. This paper suggests a conceptual apparatus that will help researchers better understand the complexities of the real world. The relevant actors operate at different levels and in the public and private sectors. The main message of the paper is that combining the multi-level governance and value-chain approaches helps clarify the multiple relationships between these actors.