Investment Provisions in Economic Partnership Agreements

• Author: Gus Van Harten
• Pages: 296-307

INVESTMENT PROVISIONS IN

ECONOMIC PARTNERSHIP AGREEMENTS

Gus Van Harten1

21

Summary

The African, Caribbean and Pacif‌ic

(ACP) group of countries are negotiating

trade agreements with the European Union

in six regional blocs. In December 2007, the

CARIFORUM region was the f‌irst to conclude

a full ‘Economic Partnership Agreement’

with Europe. The Agreement includes

provisions on trade in goods, services and

investment, intellectual property, competition,

and government procurement. This report

examines the investment provisions of the

CARIFORUM Economic Partnership

Agreement as an illustration of the EPA model.

Key f‌indings of the report are:

• The CARIFORUM Agreement

requires the Parties to remove

restrictions on foreign ownership of

their economy in sectors where they

undertake positive commitments

to liberalise. It prohibits a variety

of instruments that are commonly

used to limit or screen foreign

investment with a view to enhancing

its benef‌its for the host economy.

It also establishes an obligation of

national treatment which is likely to

preclude performance requirements

that encourage economic linkages or

protect domestic enterprises.

• The EPA model, represented by the

Agreement, appears not to account

for the potentially adverse impacts of

foreign investment on development

and regional integration or

acknowledge the role of government

in preventing and limiting these

impacts. It sidelines domestic tools

that can be used to encourage foreign

investment, thus displacing the

greater f‌lexibility and adaptability

that domestic instruments offer.

• The Agreement establishes an

obligation of most favoured nation

(MFN) treatment which could be

read expansively to incorporate into

the Agreement post-establishment

obligations from other investment

treaties, including access to investor-

state arbitration.

• By combining provisions on

services and investment, the

Agreement expands upon market

access commitments in other trade

agreements by including non-service

(i.e., investment) sectors, and raises

the prospect of future claims by

foreign investors in the service and

non-service sectors alike.

• Although the Agreement does not

contain an investor-state mechanism,

its market access commitments

will trigger post-establishment

protections, including access to

investor-state arbitration, that are

available to European investors

in other investment treaties. This

exposes CARIFORUM states to

major liabilities arising from the