To change a BIT is not enough
On the need to create sound policy frameworks for investment.
By Burghard Ilge, Both Ends, September 2015
The international legal system that governs international investment flows is shaped by a network of about 3000 Bilateral Investment Treaties (BITs) and other International Investment Agreements (IIAs).
This system no longer serves its purpose and needs to be changed profoundly. Not only is it questionable whether IIAs at all encourage international investment flows in support of sustainable development, but the current generation of IIAs has also failed to address the uneven balance of rights and responsibilities between foreign investors and host governments. Foreign investors enjoy numerous legal rights without needing to worry about corresponding responsibilities. This reality, and especially the fact that 60% of all Investor-to-State Dispute Settlement (ISDS) claims are brought against developing countries, has serious repercussions for poverty reduction, inclusive growth and sustainable development.
At the UN Sustainable Development Summit in New York (25-27 September 2015), the international community will agree on the Sustainable Development Goals (SDGs) that are to replace the Millennium Development Goals once they expire at the end of 2015. The SDGs, like the MDGs, are a set of internationally agreed targets relating to future international development . The reform of international investment policies is one of the tasks the international community has given itself in order to achieve SDG 1: ‘To end poverty in all its forms everywhere.’ In order to live up to this goal it has been agreed to ‘Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions’ (SDG 1b).
This policy briefing paper aims to contribute to an urgently needed international debate on how to reshape the international policy framework and rules for investment in order to ensure that these indeed support the globally agreed ambition of inclusive and sustainable development for all by 2030.
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