There was no consensus on international investment agreements (IIAs) at the World Investment Forum (WIF) held recently in Xiamen, China.

Government trade and finance ministers from around the world, with a remarkable showing from African nations, met at various panel discussions to discuss the issues surrounding IIAs and bilateral investment treaties (BITs). The current international investment regime has more than 5980 IIAs at numerous levels, and it was hoped that the conference could spark some sort of consensus.

Slow progress

However, Robert Hunter, a partner at law firm Hogan Lovells who attended the conference, expressed a degree of disappointment that more progress had not been made and noted that he felt many ministers around him came away with a similar reaction. Mr Hunter added that he was not especially surprised because trade topics such as these are usually highly controversial and complicated.

He said: “There was no real degree of conclusiveness. It all felt rather fragmented, but I guess this should not be much of a surprise. But everyone agrees on certain principles and everyone understands how important foreign investment is. There are big implications here and there is a will to get this right.”

Coming from a firm that has represented China in three World Trade Organisation (WTO) disputes, Mr Hunter is very familiar with the issues surrounding BITs and IIAs. Before the conference his company produced a paper on IIAs that highlighted a continuing trend towards negotiation and renegotiation of contracts. While the paper did not make any specific recommendations on how to resolve these trade issues, it did express optimism that these subjects were being discussed, leaving the door open to a possible solution. Its main area of concern was over standards of protection, which it deemed potentially insufficient, and the quality and consistency of decisions over investment disputes.

Three key issues

The three main IIA discussions at the WIF conference included the interaction of the involved parties in an IIA regime, its evolution, and solutions for achieving higher co-operation and a more coordinated collective approach to IIAs.

While the number of bilateral relationships is increasing, participants on the panel differed on definitions of basic investment concepts. Several used the platform to grandstand and advertise their countries as the top FDI destination. Felix Mutati, Zambia’s minister of commerce, trade and industry, went as far as proclaiming that in the near future a few African organisations such as COMESA and SADC would “collapse” into one all-encompassing entity. Even though most participants would not make specific references, there were many participants who expressed frustration that the discussions often veered away from their topics and objectives.

However, many ministers also took issue with the stance taken by the WTO’s director-general, Pascal Lamy, who argued that the best strategy would be a state-by-state approach where each country has its own set of rules. While there was no clear consensus on a framework for a universal IIA, there was certainly agreement that this approach would create more disagreements and confusion.

IIAs have come under increasing focus with the rise of the larger transitional economies of Asia and Latin America and their development into significant exporters and importers. There have been many issues on IIAs surrounding investor protection and investor-state disputes.