Think Piece

International Investment Obligations and Industrial Policy: Evolution in Treaty Practice

September 2018
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As industrial policies become more widespread and controversial, the relationship between international investment agreements (IIAs) and industrial policy measures has taken on particular importance. This paper addresses this relationship in light of two competing and strengthening influences: heightened scrutiny of industrial policy measures and heightened expectations for sustainable development. Analysing the IIA–industrial policy relationship requires consideration of the regulatory, national security, and strategic aspects of industrial policy measures, and the legal significance of those differences under international investment law. The paper develops a framework for analysing the different aspects of such measures and the legal consequences that flow from those distinctions. It argues that providing guidance on the relationship between IIA obligations and strategic industrial policy measures—including guidance on how the policy goal of sustainability affects that relationship—policymakers can reduce uncertainty for states agreeing to IIA obligations and for investors considering potential investments abroad.

The RTA Exchange, jointly implemented by the International Centre for Trade and Sustainable Development (ICTSD) and the Inter-American Development Bank (IDB), is a platform that convenes purposeful multi-stakeholder dialogues that work in the interest of constructing better trade and investment agreements for sustainable development at the regional and multilateral levels.

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