Investment provisions in preferential trade agreements: Evolution and current trends

Our analysis covers 230 PTAs of which 111 contain substantive provisions on investment. Over the past 60 years or so, States have created an extensive network of Bilateral Investment Treaties (BITs) that govern and protect international investment. The number of BITs concluded annually continues to increase, although this rate has tapered off over the past decade. The rise in the number of BITs has been accompanied by an increasing trend among States to include investment provisions in preferential trade agreements (PTAs). In order to capture this trend we constructed a matrix of 57 investment provisions located in the investment chapter. The analysis covers provisions on scope and definition of the investment framework, investment liberalization and protection, social and regulatory goals, institutional framework, and dispute settlement. We find that the scope and depth of investment provisions has increased over time though at a modest rate. Regional groupings of PTAs demonstrate a number of common characteristics particularly with regard to the scope and definitions of the investment framework and the provisions relating to investment liberalization and protection. Host-state flexibilities are ensured in a majority of PTAs through the inclusion of a broad "right to regulate" provision. Provisions aimed at the protection of the environment occur in more than three quarters of PTAs.