A Changing Landscape: “Facilitation” of Foreign Investments for Sustainable Development

The relationship between foreign investment and sustainable development has attained harsh criticism in the last 25 years. ISDS procedures have demonstrated a scarce attention by arbitrators to issues such as the protection of the environment, the right to water, the treatment of indigenous people, public health; investors have been frequently allowed to challenge national regulations by Host States aimed at pursuing the social and environmental dimensions of sustainable development. Literature has also demonstrated that the current international legal framework on foreign investments does not recognize in a comprehensive and explicit manner the urgency of ensuring respect for the values and interests as those just mentioned: practically, international agreements on investments – at least until recently – lack specific rules specifically designed for the protection of such objectives that are strictly connected to the UN Sustainable Development Goals. However, it must be noted that States have recently proposed and concluded new international agreements, which express a model that intends to better combine the issues of sustainable development and the protection of non-economic concerns with the protection and promotion of investments, and which is also characterized by greater attention to Governments’ prerogatives. Such developments are not brand new: evidence can indeed be found in the treaties concluded in the last 20 years, even if some innovations are still far from being found in the majority of treaties. At the same time, these provisions give rise to a series of application problems, which generate questions about the ability to effectively strike a balance between investment protection and promotion of sustainable development. The proposed paper will focus on the recent attempt to promote treaties aimed at the “facilitation” of investment operations, departing from the traditional model of agreements aimed at promoting and protecting foreign investors and their investments (thus, the “changing of landscape” mentioned in the title of this abstract). Such notion derives from trade facilitation, which first became a topic at the WTO 1996 Ministerial Conference in Singapore. While trade facilitation means streamlining and simplifying international trade procedures, investment facilitation is still a broader notion, not always clearly defined: this concept might be understood as referring to a set of policies and actions that seek to make it easier for investors to establish and expand their operations, as well as to conduct their day-to-day business in Host Sates, eliminating or reducing obstacles to investment. The need to put investment facilitation at the heart of a broader policy agenda has featured prominently in the G20, OECD, UNCTAD agendas, and, since September 2020, also at WTO level, where members have been negotiating a new agreement on investment facilitation disciplines. The discussion on this Investment Facilitation for Development Agreement (IFDA) have completed on July 2023. In the text, WTO Members have specifically agreed on a specific Section on Sustainable Investments: under these provisions, for example, a member would be required to encourage foreign investors and businesses entering or operating in its territory to voluntarily incorporate international standards, guidelines, or principles focused on responsible business conduct into their own business practices and policies. Members would also be required to develop government measures aimed at tackling corruption and possibly money laundering. This proposal, therefore, offers an analysis of this initiative, which has finally relaunched regulation at multilateral level on investments, an area of international law which has developed predominantly by bilateral treaties. The paper will thus address the main obligations contained in such agreement, where transparency, predictability and efficiency can be seen as the underlying principles and the rationale of the agreed text. Also, this paper intends to parallel the IFDA with other agreements of similar content, such as the notorious Cooperation and Facilitation Model Agreement endorsed by Brazil since 2015, and the recent Protocol on Investment (POI or Protocol) to the Agreement Establishing the African Continental Free Trade Area (AfCFTA) and Sustainable Investment Facilitation Agreement concluded between the EU and Angola, both concluded during 2023. The aim, therefore, is to identify a new model of investment agreement which clearly supports new-generation investment policies for inclusive growth and sustainable development, and contributes significantly to poverty reduction and human development, encouraging investment activities that benefit local communities, indigenous peoples, and underrepresented groups. Indeed, if finalized, such multilateral agreement would fix common principles, actions and measures to complement the promotion of investment, provide a strong and concrete guidance to investment policymaking and contributing to the global development agenda and its paradigm of sustainable development.