Skip to main content Accessibility help
  • Print publication year: 2019
  • Online publication date: August 2019

14 - Heading for Divorce?

from Part IV - Diffusion across Economic Treaties


After three decades of companionship, investment protection rules and trade agreements are heading for a divorce. Investment chapters have been included in preferential trade and investment agreements (PTIAs) since the late 1980s, but they have recently come under fire. The U.S. administration considers privately enforceable investment protection obligations as an unwanted incentive to offshore American jobs, and the EU Commission seeks to omit them to benefit from the accelerated ratification process reserved for trade agreements that fall under exclusive EU competency. After decades of coexistence, investment protection rules and trade agreements are thus likely to go their separate ways. This chapter empirically evaluates the impact of their thirty-year companionship to assess the implications of their looming split. It finds that investment chapters remain little more than a bilateral investment treaty plugged into a trade agreement. PTIAs and self-standing investment treaties do not vary systematically in investment protection content, and the wider trade agreement context does little to affect the interpretation of investment rules in PTIAs. In spite of their coexistence in the same treaty, there is thus little evidence of cross-fertilization between trade and investment protection rules in PTIAs. This absence of normative convergence suggests that their looming split merely formalizes the continuous normative distinction between trade liberalization and investment protection.

Related content

Powered by UNSILO
Alford, R. P. 2014. “The Convergence of Investment Arbitration and International Trade,Santa Clara Journal of International Law 12(1):35–63.
Alschner, W. 2013. “Americanization of the BIT Universe: The Influence of Friendship, Commerce and Navigation (FCN) Treaties on Modern Investment Treaty Law,Goettingen Journal of International Law 5(2):455–86.
Alschner, W. 2017a. “The Impact of Investment Arbitration on Investment Treaty Design: Myth Versus Reality,Yale Journal of International Law 42(1):1–66.
Alschner, W. 2017b. “Investment Barriers to Entry,” in: Cottier, T. and Nadakavukaren Schefer, K. (Eds.), Elgar Encyclopedia of International Economic Law. Cheltenham and Northampton: Edward Elgar Publishing, pp. 379–81.
Alschner, W. and Skougarevskiy, D.. 2015. “Consistency and Legal Innovation in the BIT Universe,” Stanford Public Law Working Paper No. 2595288,, accessed September 25, 2018.
Alschner, W. and Skougarevskiy, D.. 2016a. “The New Gold Standard? Empirically Situating the Trans-Pacific Partnership in the Investment Treaty Universe,Journal of World Investment and Trade 17(3):339–73.
Alschner, W. and Skougarevskiy, D.. 2016b. “Rule-Takers or Rule-Makers? A New Look at African Bilateral Investment Treaty Practice,”, Transnational Dispute Management 4.
Alschner, W. and Skougarevskiy, D.. 2016c. “Convergence and Divergence in the Investment Treaty Universe – Scoping the Potential for Multilateral Consolidation,Trade, Law & Development 8(2):152–83.
Alschner, W. and Skougarevskiy, D.. 2016d. “Mapping the Universe of International Investment Agreements,Journal of International Economic Law 19(3): 561–88.
Alschner, W., Seiermann, J. and Skougarevskiy, D.. 2017. “Text-as-Data Analysis of Preferential Trade Agreements: Mapping the PTA Landscape,” UNCTAD Research Paper No. 5.
Alschner, W., Seiermann, J. and Skougarevskiy, D.. 2018. “Text of Trade Agreements (ToTA) – A structured corpus for the text-as-data analysis of preferential trade agreements,Journal of Empirical Legal Studies 15(3):648–66.
Antoni, A. and Ewing-Chow, M.. 2013. “Trade and Investment Convergence and Divergence: Revisiting the North American Sugar War,Latin American Journal of International Trade Law 1(1):321–325.
Baetens, F. 2013. “Preferential Trade and Investment Agreements and the Trade/Investment Divide: Is the Whole More Than the Sum of Its Parts?,” In: Hofmann, R., Tams, C. and Schill, S. W. (Eds.), Preferential Trade and Investment Agreements: A New Ordering Paradigm for International Investment Relations? Frankfurt, Germany: Frankfurt University Press, pp. 91–128.
Baldwin, R. 2016. The Great Convergence: Information Technology and the New Globalization. Cambridge, MA: The Belknap Press of Harvard University Press.
BCSC 664. 2001. The United Mexican States v. Metalclad Corporation,, accessed April 2, 2018.
Berger, A. 2013. “Investment Rules in Chinese PTIAs – A Partial ‘NAFTA-ization’,” in: Hofmann, R., Schill, S. and Tams, C. (Eds.), Preferential Trade and Investment Agreements. Baden-Baden: Nomos, pp. 297–334.
Berger, A. et al. 2010. “Do Trade and Investment Agreements Lead to More FDI? Accounting for Key Provisions Inside the Black Box,, accessed March 31, 2018.
Bermingham, F. 2017. “TPP Faces Fresh Crisis over New Zealand Opposition to ISDS,” Global Trade Review,, accessed April 2, 2018.
Bernasconi-Osterwalder, N. and Hoffmann, R. T.. 2012. “The German Nuclear Phase-Out Put to the Test in International Investment Arbitration? Background to the New Dispute Vattenfall v. Germany (II),” IISD Brief Notes 14.
Broude, T. 2011. “Investment and Trade: The ‘Lottie and Lisa’ of International Economic Law?Transnational Dispute Management 8.
Broude, T. 2014. “Toward an Economic Approach to the Consolidation of International Trade Regulation and International Investment Law,Jerusalem Review of Legal Studies 9(1):24–35.
Cameron, M. A. and Tomlin, B. W.. 2002. The Making of NAFTA: How the Deal Was Done. Ithaca, NY, and London: Cornell University Press.
Chakraborty, S. 2017. “Why India Has Opposed Investment Facilitation Talks at WTO,” Business Standards,, accessed April 2, 2018.
Charlotin, D. 2017. “The Place of Investment Awards and WTO Decisions in International Law: A Citation Analysis,Journal of International Economic Law 20(2):279–99.
Corporate Europe Observatory. 2012. “Profiting from Injustice,”, accessed April 2, 2018.
Daly, J. 1993. “Has Mexico Crossed the Border on State Responsibility for Economic Injury to Aliens – Foreign Investment and the Calvo Clause in Mexico after the NAFTA,St. Mary’s Law Journal 25:1147–94.
Davis, B. 2017. “U.S. Bid to Exit Nafta Arbitration Panels Draws Ire from Businesses,” Fox Business,, accessed April 2, 2018.
De Brabandere, E. 2013. “Co-existence, Complimentarity or Conflict? Interaction between Preferential Trade and Investment Agreements and Bilateral Investment Treaties,” in: Hofmann, R., Schill, S. and Tams, C. (Eds.), Preferential Trade and Investment Agreements. Baden-Baden: Nomos, pp. 37–70.
DiMascio, N. and Pauwelyn, J.. 2008. “Nondiscrimination in Trade and Investment Treaties: Worlds Apart or Two Sides of the Same Coin?The American Journal of International Law 102(1):48–89.
Donnan, S. August 2017. “Business Groups Fire Warning Shot over Nafta Shake-up,” Financial Times,, accessed April 2, 2018.
EU Commission. 2015. “Commission Proposes New Investment Court System for TTIP and other EU Trade and Investment Negotiations,”, accessed November 10, 2017.
EU Commission. 2017. “Proposed New Architecture for Splitting EU FTAs and EU Investment Agreements,”, accessed April 2, 2018.
EU Council. May 8, 2018. “Draft Council conclusions on the negotiation and conclusion of trade agreements-Adoption”, 8622/18., accessed November 26, 2018.
EU Press Release. December 8, 2017. “EU and Japan Finalise Economic Partnership Agreement,”, accessed April 2, 2018.
Fontanelli, F. and Bianco, G.. 2014. “Converging Towards NAFTA: An Analysis of FTA Investment Chapters in the European Union and the United States,Stanford Journal of International Law 50(2):211–359.
Footer, M. E. 2013. “On the Laws of Attraction: Examining the Relationship between Foreign Investment and International Trade,” in: Echandi, R. and Sauvé, P. (Eds.), Prospects in International Investment Law and Policy: World Trade Forum. Cambridge: Cambridge University Press, pp. 105–38.
Fuseworks Media. March 9, 2018. “NZ Signs Side Letters Curbing Investor-state Dispute Settlement – Parker,” Voxy,, accessed November 30, 2017.
Gáspár-Szilágyi, S. 2017. “Opinion 2/15: Maybe It Is Time for the EU to Conclude Separate Trade and Investment Agreements,” European Law Blog,, accessed April 2, 2018.
GATT Panel Report. Canada – Administration of the Foreign Investment Review Act, BISD 30S/140, adopted February 7, 1984.
Hamamoto, S. 2011. “A Passive Player in International Investment Law: Typically Japanese?,” in: Nottage, L. and Bath, V. (Eds.), Foreign Investment and Dispute Resolution Law and Practice in Asia. London and New York: Routledge, pp. 53–67.
Harding, R. July 1, 2017. “EU and Japan Set to Agree Trade Deal after Talks Progress,” Financial Times,, accessed April 2, 2018.
Hirschfeld Davis, J. 2017. “Trump Sends Nafta Renegotiation Notice to Congress,” New York Times,, accessed April 2, 2018.
ICTSD. 2018. “Brazil Circulates Proposal for WTO Investment Facilitation Deal”, Bridges 22(4),, accessed April 2, 2018.
Kleimann, D and Kübek, G.. Mai 23, 2017. “The Singapore Opinion or the End of Mixity as We Know it”, Verfassungsblog,, accessed April 2, 2018.
Kurtz, J. 2009. “The Use and Abuse of WTO Law in Investor-State Arbitration: Competition and Its Discontents,European Journal of International Law 20(3):749–71.
Kurtz, J. 2016. The WTO and International Investment Law: Converging Systems. Cambridge: Cambridge University Press.
Lester, S. March 2017a. “Making NAFTA More Like the TPP,” USTR Draft Notice to Congress in relation to NAFTA renegotiation objectives, International Economic Law and Policy Blog,, accessed April 2, 2018.
Lester, S. September 21, 2017b. “Lessons from Europe for U.S. Trade Policy: Is it Time to Separate Trade Liberalization and Investment Protection?” Huffington Post,, accessed April 2, 2018.
Levy, , Ph. October 2017: “Critique of NAFTA Provision Highlights Team Trump’s Misconceptions on Investment Abroad,” Forbes,, accessed April 2, 2018.
Lighthizer, R. September 2017. “U.S. Trade Policy Priorities,” Speech at the Center for Strategic and International Studies,, accessed April 2, 2018.
Lighthizer, R. March 2018. “Brady–Lighthizer ISDS Exchange,” Responses to questions from Congressmann Kevin Brady, House Ways and Means Committee Hearing (unofficial transcript), International Economic Law and Policy Blog,, accessed April 2, 2018.
Meunier, S. 2017. “Integration by Stealth: How the European Union Gained Competence over Foreign Direct Investment,Journal of Common Market Studies 55(3):593–610.
Meunier, S. and Morin, J. F.. 2017. “The European Union and the Space-Time Continuum of Investment Agreements,Journal of European Integration 39(7):891–907.
Mishra, A. R. 2018. “WTO: India May Drop Opposition to Investment Facilitation Treaty”, Livemint,, accessed April 2, 2018.
Muchlinski, P. 2010. “Trends in International Investment Agreements: Calls for Reforms of Model Bilateral Investment Treaties in Norway, South Africa and the United States,” in: Sauvant, K.P. (Ed.), Yearbook on International Investment Law and Policy 2009–2010. New York: Oxford University Press, pp. 41–85.
O’Sullivan, B. J. 1980. “Canada’s Foreign Investment Review Act Revisited,Fordham International Law Journal 4(1):175–98.
Pauwelyn, J. 2006. “Editorial Comment: Adding Sweeteneres to Softwood Lumber: The WTO-NAFTA ‘Spaghetti Bowl’ Is Cooking,Journal of International Economic Law 9(1): 197–206.
Pauwelyn, J. and Alschner, W.. 2015. “Forget about the WTO: The Network of Relations between Preferential Trade Agreements (PTAs) and ‘Double PTAs,’” in: Dür, A. and Elsig, M. (Eds.), Trade Cooperation. Cambridge: Cambridge University Press.
Pérez-Aznar, F. and Choer Moraes, H.. 2017. “The MERCOSUR Protocol on Investment Cooperation and Facilitation: Regionalizing an innovative approach to investment agreements,” EJIL: Talk!, European Journal of International Law,, accessed April 2, 2018.
Price, D. M. 1993. “An Overview of the NAFTA Investment Chapter: Substantive Rules and Investor-State Dispute Settlement,The International Lawyer 27(3):727–36.
Puig, S. 2015. “The Merging of International Trade and Investment Law,Berkeley Journal of International Law 33(4):1–59.
Puig, S. 2016. “Tobacco Litigation in International Courts,” Harvard International Law Journal 57(2):383–432.
Raby, J. 1990. “The Investment Provisions of the Canada-United States Free Trade Agreement: A Canadian Perspective,” American Journal of International Law 82(2):394–404.
Rankin, J. 2016. “Belgian Politicians Drop Opposition to EU-Canada Trade Deal,” The Guardian,, accessed November 10, 2017.
Reinisch, A. 2013. “The Future Shape of EU Investment Agreements,ICSID Review 28(1):179–96.
Skovgaard Poulsen, L. N. 2015. Bounded Rationality and Economic Diplomacy: The Politics of Investment Treaties in Developing Countries. New York: Cambridge University Press.
Smellie, P. 2017. “Jacida Ardem Lays Ground for Defeat on TPP Investor Dispute Clauses,” New Zealand Herald,, accessed April 2, 2018.
Sourgens, F. G. 2013. “Keep the Faith: Investment Protection Following the Denunciation of International Investment Agreements,St. Clara Journal of International Law 11(2): 335–96.
Titi, C. 2016. “International Investment Law and the Protection of Foreign Investment in Brazil,” 13 Transnational Dispute Managagement TDM,, accessed April 2, 2018.
Trump, D. 2016. “Declaring America’s Economic Independence,” Politico, June 28,, accessed April 2, 2018.
UNCTAD. 2009. “The Role of International Investment Agreements in Attracting Foreign Direct Investment to Developing Countries”,, accessed on September 25, 2018.
USTR. May 2017. “Draft Notification of NAFTA Renegotiation,”, accessed April 2, 2018.
USTR. February 2018a. “2018 ‘America First’ Trade Policy Agenda,”, accessed April 2, 2018.
USTR. March 2018b. “Putting America First: The President’s 2018 Trade Policy Agenda,”, accessed on April 2, 2018.
Van Harten, G. 2016. “The European Union’s Emerging Approach to ISDS: A Review of the Canada-Europe CETA, Europe-Sinagapore FTA, and Europe-Vietnam FTA,University of Bologna Law Review 1(1): 138–165.
Von der Burchard, H. 2017. “Juncker Proposes Fast-Tracking EU Deals,” Politico, August, accessed April 2, 2018.
Von der Burchard, H. and Hanke, J.. 2017. “Juncker’s Risky Bid to Rescue EU Trade Policy,” Politico, September 12,, accessed April 2, 2018.
Walker, H. 1958. “Modern Treaties of Friendship, Commerce and Navigation,” Minnesota Law Review 42(5):805–24.