A comprehensive approach to investment protection

Foreign direct investments (FDI) are becoming the new 'frontier of commercial policy'. Despite the current economic crisis the EU remains the largest global investor and the world’s largest destination for investment. However, the rules-based international investment system is undergoing profound changes, with emerging economies taking up a larger share and starting to invest in Europe.

But while the system of international dispute settlement is increasingly being challenged or disregarded, EU institutions do not share a common approach how to reform the international investment system and how to develop a European approach to investment protection.

In a new policy brief Jonas Parello-Plesner and Elena Ortiz de Solorzano suggest ways the EU could improve its own coherence and strengthen global rules on investment protection:

The EU should create a model bilateral investment treaty (BIT) which could set the standards both for investment protection and for other important concerns such as environmental, social, and human rights standards.

The EU should create a joint EEAS/European Commission task force to develop a comprehensive approach to investment protection.

The EU should create a set of transparent, proportional, and rule-bound tools that it can use in situations where governments do not comply with international rules.

The EU should use the various financial institutions linked to the World Bank and the IMF to put pressure on non-compliant states.