The European Commission announces the following today:
The European Commission today took the first step towards a comprehensive European international investment policy with two initiatives. A policy paper lays out how the new EU competence on foreign direct investment can be used to boost competitiveness and trade resulting in growth and jobs. At the same time a draft regulation sets up transitional arrangements offering guarantees on existing or pending bilateral investment treaties concluded between EU and Non-EU countries.
The policy paper and draft regulation don't seem to be available yet, but there is a Q & A that provides some details.
On existing member State BITs:
My investment abroad is protected by a BIT. What will happen to that BIT now?
Nothing.
The more than 1200 Bilateral Investment Treaties concluded by MS remain valid under international law. However their existence may raise a question of compatibility with the EU law and the common commercial policy in particular. The proposed regulation makes it 100% clear that the benefits and rights available under Bilateral Investment Treaties cannot be denied (for example, under investor-state arbitration) even with the development of a comprehensive EU-level policy role on investment. The Commission has chosen a "zero-risk" approach to reassure investors that their rights are not affected. This is intended to build confidence and pave the way for the EU to exercise its new EU role on foreign direct investment....
Why can the Commission withdraw the authorisation for existing MS BITs?
The Commission will review the existing MS BITs. If it finds clauses that are incompatible with EU law (e.g. transfer clauses that would hamper the implementation of EU financial restrictions against a certain third country), it would ask the Member State to renegotiate such clause. If this proves impossible, the authorisation may be withdrawn as a matter of last resort.
Likewise, authorisations can be withdrawn if the EU negotiates an investment treaty at European level, and recourse to Member State BITs with the same third country is not necessary anymore.
Will investment become part of trade agreements:
With whom will the EU negotiate investment protection agreements in the future?
The EU should prioritise, including on the basis of investor needs. Therefore important determinants for defining priority countries for investment protection negotiations will include magnitude of investment flows to and from prospective candidate and its market potential for future investments, as well as stability and predictability of investment climate as guaranteed by political and institutional setting in that country. The EU will also be receptive in case our trading partners wish to engage in investment protection negotiations.The best prospects for integration of investment protection into the common commercial policy arises in ongoing trade negotiations, where the EU has so far only focused on market access for investors, thus in the short run the Commission intends to consider to propose broadening the scope of ongoing negotiations with India, Singapore, Canada and Mercosur to the complete investment area. In parallel the EU will explore the desirability and feasibility of stand-alone investment agreements with countries which receive high proportion of EU investments, such as China and Russia.
Sounds like the answer is yes, although some countries (Canada) may be more receptive than others (India), and where trade agreements are not being negotiated, a separate investment agreement may still be used.
What will be in these agreements:
Does the Commission envisage developing an EU Model Investment Treaty?
The Commission will define a check-list of elements that need to be included in a future agreement on investment. These elements would be inspired by best practices of Member States and be tailored to specific trading partner's needs.What protection standards are to be offered to investors in the EU investment agreements?
The objective of the EU common investment policy will be to ensure that no European investor would be worse off than he would be under Member State's Bilateral Investment Treaties. Therefore in implementing its policy, the EU will follow the best available practices as developed by Member States. The key standards of investment protection for the EU investment agreements will include: the guarantee of fair, equitable and non-discriminatory treatment, full protection and security, as well as guarantee of protection against unlawful expropriation and free transfer of funds. In order to ensure effective enforcement; the EU investment agreements should also feature investor-to-state dispute settlement, which permits an investor to take a claim against a government directly to binding international arbitration.
Looks pretty much like most existing investment agreements/chapters in terms of the substance, and includes investor-state dispute settlement. So, with all of this in there, what about that "policy space" issue critics are always complaining about:
How does the EU intend to ensure "policy space" in its investment agreements?
The EU common investment policy needs to fit with the way the EU and its Member States regulate economic activity within the Union and across its borders. EU investment policy has to be consistent with the other policies of the Union and its Member States, including policies on the protection of the environment, health and safety at work, consumer protection, cultural diversity, development policy and competition policy. Investment policy will continue to allow the EU, Member States and its trading partners to adopt and enforce measures necessary to pursue public policy objectives.
So investment policy will "continue to allow" these other polices. Do they think the existing rules are sufficient, and the new EU rules will simply maintain the status quo? Or will the new rules be specifically designed to take these concerns into account?
