KATHMANDU: Despite the global financial and economic crisis, countries continue to rely on the conclusion of international investment agreements (IIAs) as a means of promoting foreign investment and attendant benefits, UNCTAD’s latest IIA (International Investment Agreement) Monitor reports.

The first six months of 2009 saw the conclusion of 25 bilateral investment treaties (BITs) and six other international agreements with investment provisions — a development that further strengthens and expands the current international investment regime. This is line with the last year’s trend, when the network of IIAs continued to expand, with the number of newly concluded double taxation treaties (DTTs) (75) and other IIAs (16) exceeding those for 2007 (69 and 13, respectively). With 59 new agreements, the number of BITs concluded in 2008 also was significant.

This suggests that there may be a role for the international investment regime to play in responding to the global economic and financial crisis. Among other things, IIAs may be a way of effectively promoting foreign direct investment (FDI) — this is particularly the case for agreements that contain effective and operational provisions on investment promotion — and by stemming the rising tide of protectionist dangers during the financial crisis. To play such a role, the IIA Monitor says, numerous substantive and procedural questions should be dealt with, including how to ensure a balance in IIAs that grants policy makers sufficient flexibility to respond to the financial crisis and how to ensure that investor-State dispute settlements involving crisis-response measures can be handled in a manner responsive to their particular challenges.

The report says that at a broader level, key systemic considerations also need to be addressed regarding the interaction between the global financial system and the international investment regime, with a need for coherence between the two regimes, regulating the inter-woven and inter-related global long-term and short-term capital movements.

Break-up

KATHMANDU: According to ‘Recent developments in international investment agreements (2008-June 2009)’ agreements signed in 2008

• Developed countries

signed 38 new BITs (bringing the total of their BITs to 1,687 or 63 per cent of worldwide BITs), 63 new DTTs, and 13 other IIAs

• SEE and CIS countries signed 19 new BITs (for a total of 613 BITs; 23 per cent), 25 new DTTs, and one other IIA

• Among developing countries, those from Asia and Oceania led, signing 31 new BITs (total 1,112 BITs; 41 per cent), 24 new DTTs and 6 other IIAs

• African countries signed

12 new BITs (total 715; 27

per cent), 8 new DTTs, and

3 other IIAs

• Latin American and Caribbean countries

signed 8 IIAS. — HNS