Search Results

This chapter focuses on the creation of new independent regulatory agencies and signing of thousands of bilateral investment treaties during the era of liberalization. This was another massive experiment with the logic of discipline. But the experiment did not always produce the expected results. Governments sometimes escaped the constraints they had promised to honor. And where constraints continued to bind, troubling questions about the corrosion of democratic governance were raised.

This introductory chapter discusses the shift from politicized confrontations like the imbroglio of 1900 to legalized disputes like the more orderly affair of 2007. It advances four basic findings. First, American government intervention on behalf of U.S. foreign investors was astoundingly successful at extracting compensation through the 1980s. Second, American domestic interests trumped strategic concerns again and again, for small economic gains relative to the U.S. economy and the potential strategic losses. Third, the United States proved unable to impose institutional reform in Latin America and West Africa even while American agents were in place. Finally, the technology that the U.S. government used to protect American property rights overseas changed radically over time.

This chapter examines how equitable notions included in treaties should be construed. While in the law of the sea treaties equity is understood as reflecting general international law, the ‘fair and equitable’ treatment of foreign investors under international investment treaties is frequently denoted as autonomous treaty-based standard giving rise to new customary law on investment. The chapter examines the application of treaty interpretation methods to ‘fair and equitable treatment’ and establishes that so-called ‘autonomous’ construction cannot be sustained under the Vienna Convention on the Law of Treaties. Instead, ‘fair and equitable treatment’ reflects the general international law standard on the treatment of foreign investors. This chapter also concentrates on the construction of ‘fair and equitable treatment’ in the 2001 opinion of the NAFTA Free Trade Commission, and subsequent reaction by NAFTA Tribunals, as an issue of the agency of interpretation (above Chapter 16).

This chapter details how and why China’s interest in greater openness to trade and to new investment vehicles became more closely aligned with international norms and institutional designs. In addition to micro-level pressure from foreign investors for greater openness to trade and greater control over their investment, Chinese policy makers also were influenced by macro-level institutional requirements for World Trade Organization (WTO) accession and by their need to upgrade the technological level of foreign investment. It addresses two questions: What accounts for the rapid shift from the Joint Venture (JV) to the Wholly Foreign-Owned Enterprise (WFOE) model by foreign investors? and How does the shift to the WFOE investment structure affect the process of Chinese institutional change? The discussion begins with the heyday of the JV model, 1979–88, and explains why foreign investors relied on the JV model, as well as why foreign and Chinese parties became disenchanted with it. Next, it examines the shift toward the WFOE model, which began in the period 1988–91. Finally, it notes how the shift to the WFOE model has influenced the Chinese state’s ability to control foreign investment and the changing capacity of foreign investors to affect Chinese business institutions.

This chapter identifies common traits as well as basically different characteristics of international human rights and investment laws. Developments in both spheres reflect fundamental structural changes in international law since World War II, enhancing the legal protection of individuals as well as of various associations and legal persons that are active in these spheres. One of the most fundamental commonalities to both international human rights and investment law is the asymmetric legal relationship between sovereign states and individuals, including foreign investors. Consequently, legal rules and institutions developed in these spheres strive to compensate the inferior position of individuals and investors under the domestic law by enhancing legal protection at the international level. These two branches of international law have evolved differently along the private-public divide. The chapter discusses the case law of international investment tribunals that have encountered arguments regarding the applicability and relevance of international human rights law to investment disputes.

This chapter examines the restrictions on capital transfer in modern investment treaties. It suggests that capital transfer restrictions have been used as a means of regulating foreign investment, however, the power of the host state to impose capital transfer restrictions is constrained by general international law and modern investment treaties in order to prevent or minimize abuse of the right, and protect the interests of foreign investors. It discusses the criteria used to evaluate the legality of exchange restriction measures.

This chapter explores in detail the story of 1917 through the novel perspective of foreign bankers who were on the ground at the time and shows how and why some of the leading financiers in the world remained optimistic about Russia until the very eve of the Bolshevik coup. Three broad factors can be identified as contributing to the Western investment boom in the Russian markets from 1914 through late 1917. First, in contrast to later observers, many contemporary foreign investors did not perceive Russia as suffering from an economic crisis—even as late as 1917. Second, a remarkably high degree of risk appetite shaped investor decision making and was in turn the product of moral hazard from government guarantees and competitive pressures. Third, geopolitics and feelings of patriotism within the context of the First World War pushed investors to engage the Russian market in the hopes of advancing home-country interests. Finally, contemporary investors felt that by investing in Russia they were participating in the transformation of a society—a belief that would enable them to overlook much of the political instability and violence of the revolutionary events of 1917.

This chapter compares trends in financial integration within Asia with those in industrialized countries and other regional groups. Declines in cross-country dispersion in equity returns and interest rates suggest increased Asian integration, with the process interrupted by crises and global volatility. Cross-border equity and bond holdings have also increased, but Asian countries remain considerably more financially integrated with major countries outside the region than with those within the region. The chapter also discusses whether potential benefits of regional financial integration, such as increased risk-sharing and stability of the investor base, have materialized.

This chapter examines bilateral relations with external economic powers and private foreign investors. External interest in Central Asia during the 1990s centered on pipeline politics. Russia continued to be the dominant economic and political partner, but the government was focused on domestic issues. The USA opened embassies in all the new independent states, but Central Asia was a low foreign policy priority. Meanwhile, the EU became a major trading partner, but relations were characterized by lack of clear strategic goals, and EU technical assistance had limited impact. China and Central Asia, amidst mutual suspicion, focused on border demarcation and demilitarization. The twenty-first century saw dramatic changes in external relations. Indeed, in the first decade of the twenty-first century, the EU was Central Asia's largest trade partner and China was the fastest growing.

The most pertinent findings of this book are drawn together with a view to providing some final observations on the role of the EU as an international actor in the field of international law and regulation of foreign investment. Based on the developments of primary EU law and international investment law, this chapter provides forward-looking projections for building a comprehensive EU foreign investment policy in the future. Moreover, it discusses whether a comprehensive EU foreign investment policy would serve better the regulatory interests of the EU, Member States and third countries as capital importing and capital exporting countries and finally foreign investors.

This chapter describes the development of China’s changing orientation to globalization and its concomitant evolving interests. It specifically analyzes shifts in interests and policy expressions such as laws and regulations to detail shifts in the Chinese state’s approach to guiding its globalization course. Most of the account focuses on central policies and debates about how to harness foreign investors’ contributions in China to meet policy makers’ goals. Additionally, China’s grand strategic goal of becoming an international power led it to push for World Trade Organization (WTO) membership and to join other multilateral organizations, which, in turn, gave China a set of guideposts for their institutional reforms, including how to open their economy to trade and investment. Domestic leaders and their strategies worked in tandem with foreign ideas and actors to alter the course of China’s open-door policy.

Investment treaties and ISDS serve not just to resolve disputes between states and foreign investors. Through interpreting foreign investor rights, they also help structure foreign investment relations. This chapter leaves the norm entrepreneurs of the late 1950s and 1960 aside to develop an analytical framework for examining how the rights of foreign investors can contribute to defining their role in and relations with states and local communities. It examines the type of rights that make foreign investment projects, their purpose, and different ways of looking at the interface between these rights, states’ right to regulate, and local communities. A transnational and socio-legal approach to property and contracts informs the analysis. The remainder of the chapter focuses on the importance of ISDS for foreign investor rights, examining the normative and distributive implications of this dispute resolution mechanism.

This chapter reviews the principle obligations of multilateral treaties. It first provides an overview on a proposed Multilateral Agreement on Investment in Services (MAIS). It then outlines the major obligations contained in the proposed global foreign direct investment (FDI) in services treaty. The MAIS aim to regulate investment in services only. It will not deal with double taxation issues. All forms of intellectual property should be included in the definition of ‘investment’ in the MAIS. In addition, a definition of ‘services’ must be supplied. The MAIS should also state that parties have the right to expropriate foreign investments. It must elaborate that host states are not under any obligation to compensate for inherent disadvantages that foreign investors may suffer. The MAIS would be advantageous, since it would be sector-specific in its focus. Its purpose would also be to liberalise FDI.

This chapter analyzes the advantages and disadvantages of capital flows for the international financial market. It explains the benefits of capital mobility which include reduction of the cost of capital, improvement in corporate governance and differentiation of a country's capital from its investments. This chapter considers the issue of whether the costs of sudden withdrawals of capital by foreign investors can offset the benefits of capital mobility. It also argues that the appropriate policies to eliminate the fragility of emerging economies are policies that foster better financial structures, so that long-term contracting can be supported.

This chapter demonstrates how both international organizations and foreign states define international legal norms for adoption by states at the macro level and how foreign investors and foreign law firms transmit information about international legal norms to China’s micro and meso levels. It specifically explores how US and Japanese investors and lawyers influenced China’s legal development. In addition, it addresses how the prevalence of guanxi or “social ties” has regulated foreign investors’ behavior. The examples presented demonstrate several aspects of China’s process of reforming commercial arbitration. It can be stated that the process of legal development in China and, specifically, reform of Chinese International Economy and Trade Arbitration Commission (CIETAC) highlights several key points about the dynamics of state-guided globalization.

This chapter addresses the issue of economic engagement and China’s evolving relationship to international institutions. The study of China’s state-guided globalization directs the attention to a key point of contention in this debate: institutional change. An overview of the politics of China’s deepening engagement with the global economy is given. It also examines how international engagement is affecting China’s compliance with three crucial areas of analysis: security norms, human rights, and rule of law. It is confirmed that foreign investors, lawyers, business consultants, and organizations have helped Chinese officials and average citizens to improve their institutional compliance with foreign and international institutions.

This chapter assesses the validity of the new emerging market risk indicators. by discussing the home-bias and foreign-bias puzzles, two phenomena that have dogged researchers for decades. Two simple experiments are conducted. First, from annual surveys conducted jointly by the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, and the US Treasury Department since 1994, data is collected on aggregate portfolio holdings of foreign bonds and equities by US residents in 2012. These treasury international capital (TIC) surveys are done at the individual security level through the largest US custodians. The second experiment examines similar data on foreign portfolio holdings but of global institutional investors using data from the FactSet (Lionshares) Ownership database. The risk indicators explain a good fraction of the variation in foreign biases across emerging market countries.