ABSTRACT
Most preferential trade agreements (PTAs) signed over the past two decades should more appropriately be called preferential trade and investment agreements (PTIAs). Not only do investment chapters form an integral part and signature element of deep economic partnership treaties that follow the design of the North American Free Trade Agreement (NAFTA) and its more recent counterparts, but investment plays a major role in the rules, political economy and public perception of trade agreements. Even though by mid-2017 only a quarter of the 450 preferential trade treaties notified to the World Trade Organization (WTO) contained an investment chapter, measured in words, investment provisions occupied more space in the corpus of trade agreements than any other issue area, thus reflecting the high level of attention devoted to it by states.1 In part, this is a reflection of the growing importance of including investment norms in trade governance instruments, as global value chains require both trade liberalization and asset protection in order to thrive. At the same time, investment rules have also rendered trade agreements more controversial. Investment chapters typically allow private investors to sue sovereign host states and have their cases ruled on by international arbitration tribunals potentially winning damages valued at many millions of dollars. Criticized for privileging the interests of wealthy multinational companies over those of taxpayers, this potent enforcement mechanism is one of the most contentious elements of trade agreements today. In short, any consideration of trade agreements would be incomplete without an assessment of their investment component.
