Foreign direct investment
The investment issue in trade agreements: a development perspective
There should be no investment chapter in free trade agreements
Authors:
M. Khor
Publisher:
Third World Network , 2006
This paper argues that there should not be an investment chapter in free trade agreements. If there must be such a chapter, it should take the form of cooperation in order to promote appropriate flows of foreign direct investment (FDI) between partners. It should not take the form of a legally binding agreement for securing establishment rights and national treatment for foreign investment and investors, and especially it should not allow for investor-state dispute settlements.
The principles on trade relations (e.g. in GATT and WTO) were meant for trade in goods and are therefore inappropriate when applied to investment. When applied to investment they are damaging to the development interests of developing countries. The author suggests that a more appropriate framework must be a balanced one, with the main aim of regulating corporations (instead of regulating governments); it could be one that is not legally binding; and it could be one that is located in the UN and not the WTO.The paper also includes annexes on ‘Foreign investment, its effects, management and regulation’ and ‘Implications and possible impacts of an investment agreement or and investment chapter (in FTA) on developing countries’.
