Anders Aslund of the Peterson Institute proposes a Mutilateral Investment Agreement (MIA) (not to be confused with the failed 1990s Multilateral Agreement on Investment (MAI)). I found his proposal intriguing because, as I read it, he may be making subtle suggestions about how to approach international investment issues in a way that addresses some current controversies.
First off, and this part isn't so subtle, he is proposing a multilateral approach, which -- it will probably not surprise anyone to learn -- I like a lot better than a bilateral or regional one.
Second, and here is where the subtelty comes in, he talks about what the MIA should contain. In doing so, he starts by referring back to past precedents: "The content of an MIA is relatively easy to outline because of the many existing treaties with investment protection. One source is the numerous, rather similar BITs. Another source is the investment chapters in FTAs, notably the North American Free Trade Agreement (NAFTA). A third source is the lengthy draft MIA negotiated by the OECD (1998)."
So this would be just like all the previous investment agreements, right? Well, maybe not. His next sentence, referring to the OECD's MAI, seems to focus on a few provisions as more important than others: "It contains 12 chapters, most of which are formal, but three are essential." Here are the 3 "essential" provisions he points to:
- Treatment of investors and investments. Specifications on national treatment and MFN, two similar principles, are pretty straightforward. In its new model BIT, the United States demands national treatment also of prior investment, which some countries find that controversial.
- Investment protection. The essence is simple: compensation at full market value in the case of expropriation. Although most investment is commonly recognized, intellectual property rights raise a question. The United States considers them investment, while China and India are reluctant to agree.
- Dispute settlement. It falls into two categories, state-state procedures and investor-state procedures, and is the most complicated and controversial issue. There is no commonly agreed system for dispute resolution but multiple alternatives exist. Two-thirds is handled by ICSID or its additional facility. Other arbitration alternatives are the United Nations Commission on International Trade Law (UNCITRAL), the Stockholm Chamber of Commerce, the Permanent Court of Arbitration in The Hague, the International Chamber of Commerce, or ad hoc resolution (UNCTAD 2010).
If these 3 are essential, does that mean some of the others are non-essential? For example, would minimum standard of treatment, a key provision in most investment agreements, be taken out? How about provisions on capital controls?
He then goes on to talk about dispute settlement a bit:
In the last few years, the number of arbitration cases has increased sharply. Venezuela has taken the lead, and it has notified that it wants to withdraw from the ICSID Convention, which Bolivia and Ecuador have already done. These and other countries complain arbitration is biased, exceedingly expensive, and nontransparent. The penalties are also increasing sharply (UNCTAD 2012, 86–88). Other countries, such as Australia, refute foreign arbitration in principle. Thus, the dispute settlement mechanism has not become easier but more complex, and it is likely to be the most difficult question to settle in a negotiation on an MIA. However, there are many options to reach a solution, and the MIA should leave several of them open.
Again, you could take this as suggesting that perhaps some parts of current investment agreements are non-essential, including investor-state. But he is a little vague on the details, and maybe I'm reading too much into this.
However, if I am reading this correctly, does this provide a compromise solution to move forward with a multilateral investment agreement?