Seminar Prof. Janina Witkowska (University of Lodz)
“Implications of TTIP for Investment Flows Between the European Union and the USA”
Transatlantic Trade and Investment Partnership (TTIP) currently negotiated is a subject of controversies but at the same time it is perceived to be the most comprehensive international agreement on free trade and investment protection. Among the topics that evoke criticism of different social groups is the investor-state dispute-settlement (ISDS) as well as its legal consequences for the EU states. A less discussed issue seems to be potential implications of the agreement provisions on the state of economic co-operation between the European Union and the USA in the field of investment flows, with special reference to foreign direct investment (FDI).
In this context some questions arise, namely:
(1) whether the agreement provisions could influence a current state of FDI flows between the negotiating partners
(2) whether the ISDS provisions could change the policy of both partners towards FDI
(3) to what extent creation and diversion investment effects might occur as a result of the creation of a free trade area.
The aim of the presentation is to examine some economic, political and legal implications of TTIP provisions for FDI flows between the EU and the USA.
The structure of the presentation is as follows:
(1) Main provisions of TTIP
(2) Investment pillar of TTIP with special reference to standards of investment protection and issue of resolution of investment disputes
- a) Public concerns in Europe over ISDS
- b) Investment pillar of TTIP – opinions on the EU proposals
(3) Recent trends in ISDS
(4) The position of the EU and the USA in the global FDI
(5) Geographical distribution of FDI outward stocks of the EU-27
(6) Geographical distribution of the US FDI outward stocks
(7) Dynamics of FDI flows into and out of the EU and the USA
(8) FDI flows between the USA and the EU/selected countries
- A problem of ISDS within the negotiated TTIP Agreement should be perceived in a broader context of a tendency observed in the world by UNCTAD that many countries try to modernize IIAs and terminate some of their BITs.
- The growing number of ISDS cases in the world economy should be treated as a rather natural process when FDI flows and stocks grow simultaneously.
- Nevertheless, a leading position of US investors as claimants under ISDS procedures might suggest that American companies are able to protect their interests better than investors from other countries. This might fuel some public fears in Europe that states would not be able to overcome ‘regulatory chill’.
- The proposal of the European Commission to change an investment protection system might be treated as an attempt to make system of arbitrage more transparent, convincing to societies and safer for states.