Thursday, November 29, 2018

Soft law versus hard rule approaches - Investment Facilitation

Investment Facilitation is a much discussed topic in international trade and investment circles. While it conjures up the old debates on investment protection, trade and investment linkages, it also brings up the issue of enforceability and soft law approaches.

A detailed piece by Anuradha in the Commonwealth Library website on Investment Facilitation charts the existing legal landscape and lays down two possible approaches - soft law, non-enforceable guideline based rules or legally binding rules.

A crucial aspect for consideration for countries, therefore, is the nature of the legal approach and the consequences of the obligations undertaken. Some of the issues that arise for consideration are outlined below:  
1. Option 1: Should investment facilitation be addressed as a ‘covered agreement’ under the WTO, which is enforceable through the WTO’s dispute settlement mechanism? Or, 
2. Option 2: Should investment facilitation be addressed through a set of guidelines and recommendations, which are implemented with technical assistance and capacity-building programmes? What should be the institutional mechanism that administers such guidelines: the UNCTAD or WTO – or should it be both in conjunction and cooperation with each other?
Either way trade negotiators need to equip themselves with alternatives. 

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