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Investment related provisions in regional trade agreements

Research reports

Written by Dirk Willem te Velde

This paper discusses the expected effects of investment related provisions in regional trade agreements and assesses the way in which they have been implemented for a number of key regions: ASEAN (AFTA, or ASEAN Free Trade Area), NAFTA, MERCOSUR, CARICOM, ANDEAN, COMESA and SADC. Trade rules are present in all Regional Trade Agreements (RTAs). We show that regions differ in two fundamental respects: 1) over time when one region can change or add investment related provisions; and 2) across regions when investment related provisions differ at one single point in time. Evidence shows that investment related provisions in key regions differ significantly, including differences in: extent of regional tariff preferences; restrictiveness of rules of origin; investment rules, including national treatment for pre and post establishment and presence of effective dispute settlement mechanisms; and regional co-ordination on investment. Other differences relate to the different type of membership: North-North, South-South, North-South, South-South-North.

Dirk Willem te Velde and Miatta Fahnbulleh