Mapping the Universe of International Investment Agreements
Introduction
The universe of international investment agreements (IIAs) continues to surprise us, despite extensive interpretation by investment tribunals and scholarly analysis. The revision of the Finnish model bilateral investment treaty (BIT) in the late 1990s and Japan’s radical redesign of its investment treaty template in 2002 are just a few examples. Additionally, the consistency of the United Kingdom’s treaty network compared to Egypt or Pakistan, and the similarities between the Trans-Pacific Partnership’s (TPP) investment chapter and the United States-Colombia free trade agreement (FTA) from 2006 are noteworthy. These surprises were discovered through the mappinginvestmenttreaties.com project, which aims to provide a more sophisticated understanding of the IIA universe and open-access web-based tools for analysis.
Measuring Consistency of Treaty Language
Consistency is a key objective for countries in their investment treaty networks. From a host country perspective, consistency simplifies compliance by ensuring a single set of commitments for investors from different partner countries. From a home country perspective, a consistent treaty network provides investors with predictable protection. Model treaties are often used to achieve consistency, as they represent an ideal investment treaty for a country. To measure consistency, we analyze the textual similarity between treaties using the Jaccard distance, which compares the overlap of five-character components. Similar language indicates legal consistency, while differences suggest legal divergence.
Figure 1: Illustration of our text-as-data procedure
System Level: Rule-takers and Rule-makers
Our metric allows us to investigate the claim that developed countries have more influence in investment treaty negotiations than developing countries. By analyzing 1628 English-language full texts of BITs, we found that wealthier countries have more consistent treaty networks compared to less wealthy countries. The United Kingdom stands out as the global champion with an average consistency of over 70% across its extensive network of BITs. This suggests that wealthier countries are the rule-makers, while less wealthy countries are the rule-takers in the BIT universe.
Figure 2: Heat map representation of the BIT universe
(a) sorted by wealthier party in the treaty pair | (b) sorted by less wealthy party in the treaty pair |
Figure 3: Consistency across countries’ IIAs and their economic development
Our research suggests that small developing countries with a coherent investment policy and technical expertise can have success in ensuring their preferences prevail in bilateral negotiations. For example, Mauritius has established itself as a hub for foreign investment in Africa and India. While Mauritius is a rule-taker in negotiations with developed countries, it has more similar treaties with India, Ghana, and Egypt than its more powerful negotiation partners. This demonstrates that even less powerful countries can influence negotiation outcomes with a well-defined investment strategy and expertise.
Country Level: Evolution in National IIA Programs
Our metric can also analyze consistency and innovation in national treaty networks. While consistency is important, countries may need to adjust their investment policy over time. The revisions of the U.S. model BIT and the evolution of the Canadian BIT program are well-documented examples. Using the Jaccard distance, we can identify changes in investment treaty-making reflected in heat map representations of U.S. and Canadian treaties on our website. Additionally, our analysis reveals that Japan and Finland made significant changes to their BIT programs in 2002 and the late 1990s, respectively. Understanding patterns in national BIT networks is valuable for researchers, practitioners, and policy-makers to identify inconsistencies and streamline their investment commitments.
Treaty Level: The TPP and Copy-and-Paste Agreements
Our metric can situate individual agreements within the wider treaty universe. For example, when the TPP was signed, we used our metric to assess its similarity to existing agreements. We found that 81% of the TPP’s investment chapter overlaps with the United States-Colombia FTA from 2006. This analysis allows us to identify what is new and what is not in a given agreement. Furthermore, our metric can trace instances of copy and paste, such as Israel’s similarity to British agreements and Cameroon’s identical agreements with Guinea, Mali, and Mauritania. This demonstrates the diffusion of norms from one treaty to another.
Conclusion
The universe of IIAs continues to surprise us, and our research has uncovered hidden consistency trends. Our website and research aim to assist scholars, policy-makers, and practitioners in understanding and streamlining investment treaty networks. By analyzing the textual similarity between treaties, we can reveal patterns in treaty-making and provide valuable insights for policy-making.
Authors
Wolfgang Alschner is a post-doctoral research fellow in international law at the Graduate Institute in Geneva and the World Trade Institute in Bern. Dmitriy Skougarevskiy is a doctoral candidate at the Graduate Institute and a researcher at the Institute for the Rule of Law (EUSPb). The authors acknowledge funding support from the SNF Project “Convergence versus Divergence? Text-as-data and Network Analysis of International Economic Law Treaties and Tribunals” and the SNIS Project “Diffusion of International Law: A Textual Analysis of International Investment Agreements.”
Notes
- Allee, T., & Peinhardt, C. (2010, March). Delegating differences: Bilateral investment treaties and bargaining over dispute resolution provisions. International Studies Quarterly, 54(1), 1–26; Poulsen, L. (2014, March). Bounded rationality and the diffusion of modern investment treaties. International Studies Quarterly, 58(1), 1–14.
- To illustrate the approach, consider the case of France. This country has seven English-language BITs, with a mean Jaccard distance of 0.59. However, it also has 92 French-language treaties with a Jaccard distance of 0.37. Therefore, the total coherence across three languages is (0.59*7 + 0.37*92 + 0*0) / (7 + 92 + 0) ≈ 0.39. The resulting similarity is 1 – 0.39 = 0.61.
- Kantor, M. (2004). The new draft model U.S. BIT: Noteworthy developments. Journal of International Arbitration, 21(4), 383–396; Vandevelde, K. J. (2009). A comparison of the 2004 and 1994 U.S. model BITs: Rebalancing investor and host country interests. In K. P. Sauvant (Ed.), Yearbook on International Investment Law and Policy 2008-9 (pp. 283–317). New York: Oxford University Press.
- McIlroy, J. (2004). Canada’s new foreign investment protection and promotion agreement. Journal of World Investment and Trade, 5(4), 621–646; Lévesque, C., & Newcombe, A. (2011). The evolution of IIA practice in Canada and the United States. In A. L. C. De Mestral & C Lévesque (Eds.), Improving international investment agreements (pp. 25–41). New York: Routledge.
- United Nations Conference on Trade and Development. (2001, May 17). 29 Bilateral investment treaties signed by least developed countries in Brussels. UN. Doc. LDCIII/PRESS/08/Rev.1. Retrieved from http://UNCTAD.org/en/pages/PressReleaseArchive.aspx?ReferenceDocId=2914
SDGs, Targets, and Indicators
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 8: Decent Work and Economic Growth
- SDG 10: Reduced Inequalities
- SDG 16: Peace, Justice, and Strong Institutions
- SDG 17: Partnerships for the Goals
The article discusses the international investment agreements (IIAs) and their impact on countries’ investment policies. These issues are connected to SDG 8 as they relate to economic growth and the creation of decent work. The article also mentions the influence of developed countries on investment treaty negotiations, which can contribute to reduced inequalities (SDG 10). Additionally, the article touches upon the need for consistency and predictability in treaty networks, which aligns with SDG 16’s goal of promoting peace, justice, and strong institutions. Lastly, the article emphasizes the importance of collaboration and open-access tools for analyzing IIAs, which relates to SDG 17’s focus on partnerships for achieving sustainable development.
2. What specific targets under those SDGs can be identified based on the article’s content?
- Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries.
- Target 10.3: Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies, and practices and promoting appropriate legislation, policies, and action in this regard.
- Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all.
- Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources.
Based on the issues discussed in the article, the following targets can be identified. Target 8.1 is relevant as it focuses on sustaining economic growth, particularly in least developed countries. Target 10.3 is applicable as it aims to reduce inequalities and promote equal opportunity. Target 16.3 is connected to the need for promoting the rule of law and ensuring equal access to justice. Lastly, Target 17.16 aligns with the emphasis on enhancing global partnerships and collaboration for sustainable development.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- Indicator for Target 8.1: Gross domestic product (GDP) growth rate
- Indicator for Target 10.3: Gini coefficient or income inequality index
- Indicator for Target 16.3: Access to justice index or legal aid availability
- Indicator for Target 17.16: Number of partnerships formed for analyzing investment treaties
The article does not explicitly mention indicators, but based on the identified targets, the following indicators can be used to measure progress. For Target 8.1, the indicator would be the gross domestic product (GDP) growth rate, which can reflect sustained economic growth. For Target 10.3, the Gini coefficient or an income inequality index can be used to measure progress in reducing inequalities of outcome. For Target 16.3, an access to justice index or the availability of legal aid can be used to assess equal access to justice. Lastly, for Target 17.16, the indicator would be the number of partnerships formed specifically for analyzing investment treaties, indicating progress in enhancing global partnerships.
SDGs, Targets, and Indicators Table
SDGs | Targets | Indicators |
---|---|---|
SDG 8: Decent Work and Economic Growth | Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries. | Gross domestic product (GDP) growth rate |
SDG 10: Reduced Inequalities | Target 10.3: Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies, and practices and promoting appropriate legislation, policies, and action in this regard. | Gini coefficient or income inequality index |
SDG 16: Peace, Justice, and Strong Institutions | Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all. | Access to justice index or legal aid availability |
SDG 17: Partnerships for the Goals | Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources. | Number of partnerships formed for analyzing investment treaties |
Source: iisd.org