After the BITs: The uncertain future of international investment governance

Global economic governance has several pillars, including a monetary system overseen by the IMF and a trading system managed by the WTO. However, there is no equivalent for international investment policy. Cross-border investment is instead governed by thousands of bilateral or regional treaties concluded mostly in the 1990s and early 2000s. In recent years, these agreements have come under challenge and their numbers started declining. This article reviews the evidence on the success of the existing international investment policy regime, before outlining the contours of the ongoing transformation and possible future trajectories. It argues that the push for reform is driven by a perception in many countries that the benefits and costs of signing investment treaties had been misjudged. The reformed treaties reduce the rights granted to foreign investors, rebalancing some power back to nation states, especially in emerging markets. The emphasis on protecting foreign investors from expropriation is being replaced by market access provisions that seek to level the playing field for domestic and foreign investors. Fewer and fewer countries are likely to resist the transformation, as globalisation blurs the distinction between capital exporters and importers. While this improves the prospects for a multilateral agreement - and some progress has been achieved - a global investment regime governed by a "World Investment Organisation" is not in sight.