Trade Policy Note Final-rev08 - Development
Trade Policy Note Final-rev08 - Development
Trade Policy Note Final-rev08 - Development
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A “New Generation” of Bilateral Investment Treaties<br />
There are now over 2000 Bilateral Investment Treaties (BITs) in force 72 . Traditionally<br />
used as instruments for the protection of investments, BITs are acquiring different<br />
characteristics. Some developed countries are pursuing a “new generation” of BITs<br />
which incorporate trade provisions, notably obligations on entry and establishment,<br />
and prohibitions on performance requirements. These usually apply to both goods and<br />
services and thus undermine the commitments included in the GATS services<br />
schedules. They also employ a wider definition of investment, including portfolio<br />
investment and cover a wide range of domestic regulation that can be challenged by<br />
the foreign investor. They also identify dispute settlement and arbitration mechanisms<br />
that allow foreign investors to bypass the national judicial system to a larger extent<br />
than was previously possible. Sometimes lack of coordination between the<br />
government ministry responsible for trade policy and that responsible for investment<br />
policy can lead to less than optimal results.<br />
FTAs are being used to impose more stringent disciplines over the scope of<br />
investment polices. As will be discussed in Section 8, many FTAs make national<br />
treatment a general obligation for both goods and services, reducing or eliminating<br />
the various policy tools listed in GATS Article XVI. Often this is accomplished<br />
through the technique of dissecting the Services Chapter of such FTAs, and bringing<br />
all investment policy, on both goods and services, under the scope of an Investment<br />
Chapter. FTAs can also include mechanisms for promoting investment amongst the<br />
concerned parties. In fact, many developing countries believe that FTAs with major<br />
trading partners will attract FDI. However, evidence shows that, with few exceptions,<br />
BITs and FTAs generally have little impact on attracting FDI. 73<br />
VIII. MNP – ACCESS TO THE WORLD EMPLOYMENT<br />
MARKET<br />
Movement of national persons (MNP) across frontiers to supply services provides a<br />
major source of potential employment and export income for many developing<br />
countries. However, it can also have negative social and economic impacts. What are<br />
the elements of a coherent strategy to maximize the contribution of MNP to<br />
development and the achievement of the MDGs?<br />
MNP and the MDGs<br />
The movement of persons across frontiers to supply services is a major potential<br />
source of employment for poor people and an opportunity to dramatically increase<br />
their earnings. 74 MNP provides a means for developing countries to draw upon their<br />
competitive advantage of lower wage costs in trade in services as they have<br />
72 UNCTAD World Investment Report 2002.<br />
73 See Stiglitz and Charlton, op.cit., pp 149-152.<br />
74 We use the GATS acronym “MNP” rather than ”labour movement” (which would suggest unskilled<br />
workers) or “movement of persons” (which could imply permanent migration ), so as to cover the<br />
whole range of the provision of services that involves suppliers moving temporarily from one country<br />
to another from unskilled agricultural workers to highly skilled medical, engineering and IT<br />
professionals.<br />
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