The number of bilateral investment treaties between countries increased from slightly over 1,000 to more than 2,500 between 1995 and 2006, and recent trends show these agreements are broader in scope and contain progressively greater detail, a new UNCTAD report reveals.
While the total number of such treaties, widely known as BITs, has grown over the past decade, the number of new BITs signed each year has been declining.
Among other findings, the report says more countries concluding these treaties are placing greater emphasis on public concerns such as health, environment, core labour rights, national security, transparency in information exchange and rulemaking.
“Bilateral Investment Treaties 1995-2006: Trends in Investment Rulemaking,” released last week, also says a number of such treaties have addressed investor-State dispute settlement procedures in greater detail.
While BITs in general in recent years have become more complex and have covered broader sets of issues, the report finds that “a considerable degree of conformity has emerged in terms of the main contents of BITs.” On the other hand, BITs have more diversity with regard to details of individual provisions.
The report also notes that there is a need for further exploration of how the development concerns of host countries can be best expressed in the future evolution of BITs.
Overall, the study provides an in-depth analysis of the recent evolution of substantive provisions found in BITs. The study uses numerous examples from BITs concluded between 1995 and 2006 to support its analysis.
ACP regions to liberalise their tariffs
We will negotiate the tariff reductions necessary for a WTO compatible Free Trade Agreement but this has to be on the basis of mutual agreement, not EU imposition.
ACP countries and the EU have already agreed to revamp their trade relations and progressively remove barriers to trade between them. This is necessary to stop ACP marginalization and contribute to ACP growth and poverty eradication. It is also a prerequisite if ACP-EU trade relations are to be legally secure by being compatible with World Trade Organisation rules on non-discrimination.
The backdrop of this is that most of ACP exports to the EU already enter into Europe at zero tariff duty under a preferential treatment. EU products exported into the ACP, on the other hand, do not benefit from the same treatment. Obtaining such access to ACP markets is not an EU interest; the EU seeks only the treatment necessary to comply with WTO rules. Nevertheless, the experience seen in emerging economies in Asia also shows that a progressive and targeted reduction of customs tariffs benefits consumers and companies (that need cheaper machinery, raw materials and parts for assembly) and local products become more competitive when exposed to well design foreign competition.
The European Union has never proposed either a total elimination of tariffs, nor that ACP should open their markets as widely or as the EU has already done nor at reckless speed. It has also never proposed that the lowest applied rates by any ACP state become the basis for regional liberalization, or for a single external tariff.
On the contrary, the EU has clearly said that long transition period, a phased introduction of tariff dismantling, exemptions from liberalization for sensitive products and a strong asymmetry between EU and ACP opening are perfectly acceptable and reasonable.
This question is not as acute as some would have it and answers are available. Replacing customs tariffs by other sources of fiscal revenue is a reform most countries have made because other fiscal revenues are more efficient both for the economy as a whole and the government.
A much better long term solution is to shift dependence from tariff revenues to fiscal revenues (through excise duties, sales taxes or taxes on revenues) but also by increasing the tax base through boosting trade and economic growth. These other forms of taxes are a more sustainable tax base to finance much needed basic social services such as health and education.
Some studies have overestimated the impact of tariff reduction on fiscal revenues, without considering other aspects. The assumption of rapid liberalization on the ACP side is clearly mistaken. Current high tariffs encourage smuggling and corruption, and theoretical revenues are often lost through derogations and irregularities. Lower tariffs would reduce the incentive for these practices. Customs revenues would also increase by an increase in trade and these benefits would largely compensate the initial losses.
This said, the EU is ready to assist with fiscal reform and adjustment to any net fiscal losses observed as a result of EPAs and has the means to do so. We have increased our budget support, which is the most appropriate way to assist in this transition. We are also ready to discuss regional financing mechanisms to that effect.
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