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Breaking the BIT Mold: Brazil's Pioneering Approach to Investment Agreements

  • Henrique Choer Moraes (a1) and Felipe Hees (a2)
Extract

Brazil only recently joined the collection of states that have adopted international investment agreements (IIAs), but in doing so it developed a noteworthy approach in the form of the Cooperation and Facilitation Investment Agreement (CFIA). In this essay, we explore the characteristics and merits of this particular treaty model, making three points: First, the CFIA exhibits unique features that set it apart from traditional bilateral investment treaties (BITs), including the state-to-state management of investment relations and an emphasis on investment facilitation rather than investment protection. Second, the CFIA displays a degree of “interoperability” that has made it possible for Brazilian partners to sign these agreements while simultaneously holding BIT portfolios, despite significant differences between the two approaches. Finally, one of the CFIA's key features—that of investment facilitation—is a promising basis for reform in multilateral settings such as the World Trade Organization (WTO). In short, we believe that the CFIA offers an innovative and attractive option for states looking to supplement or revise traditional BITs, both bilaterally and multilaterally.

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This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
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The views and opinions expressed in this essay are the sole responsibility of the authors and do not necessarily reflect the positions of the government of Brazil.

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References
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2 Id., art. 18.4 (c).

4 Daniela Campello & Leany Barreiro Lemos, The Non-Ratification of Bilateral Investment Treaties in Brazil: A Story of Conflict in a Land of Cooperation, 22 Rev. Int'l Pol. Econ. 1055 (2015).

5 Martino Maggetti & Henrique Choer Moraes, The Policy-Making of Investment Treaties in Brazil: Policy Learning in the Context of Late Adoption, in Learning in Public Policy: Analysis, Modes and Outcomes 295 (Claire Dunlop et al. eds., 2018).

6 In 2017, Brazil was the fourth-ranked destination for foreign direct investment in the world. See UN Conference on Trade & Dev., World Investment Report 2018 – Investment and New Industrial Policies.

7 Michelle Ratton Sanchez Badin & Fabio Morosini, Navigating Between Resistance and Conformity with the International Investment Regime: The Brazilian Agreements on Cooperation and Facilitation of Investments (ACFIs), in Reconceptualizing International Investment Law from the Global South 218, 248 (Fabio Morosini & Michelle Ratton Sanchez Badin eds., 2017).

8 Brazilian Model, supra note 1, art. 16.

9 Id., art. 15.

10 Id., art. 14.

11 Jonathan Bonnitcha et al., The Political Economy of the Investment Treaty Regime 14 (2017).

12 MERCOSUR Protocol on Cooperation and Facilitation of Investments art. 13, Apr. 4, 2017. Pursuant to Article 23(3)(c), occasional breaches by the investor may be raised in a report prepared in the process of dispute prevention.

13 See, e.g., id., art. 4(3).

15 Brazilian Model, supra note 1, art. 17.

16 For a recent account with evidence-based arguments supporting this claim, see Geoffrey Gertz et al., Legalization, Diplomacy, and Development: Do Investment Treaties De-politicize Investment Disputes?, 107 World Dev. 239 (2018); Joachim Pohl, Societal Benefits and Costs of International Investment Agreements: A Critical Review of Aspects and Available Empirical Evidence 50–54 (OECD Working Papers on Int'l Inv. 2018).

17 Similarity to the WTO system is also apparent in the purpose of dispute settlement under the CFIAs, which is to bring those measures deemed inconsistent with the agreement into conformity with it.

18 The most recent number as of August 2018 is 2,952 BITs signed. See UNCTAD Investment Policy Hub.

20 Wolfgang Alschner, The Impact of Investment Arbitration on Investment Treaty Design: Myth Versus Reality, 42 Yale J. Int'l L. 1, 51 (2017).

21 Anthea Roberts, Investment Treaties: The Reform Matrix, 112 AJIL Unbound 191 (2018).

23 World Trade Org., Joint Ministerial Statement on Investment Facilitation for Development, WTO Doc. WT/MIN(17)/59 (Dec. 13, 2017).

24 Id. at para. 4.

25 UN Conference on Trade & Dev., UNCTAD Global Action Menu for Investment Facilitation, UN Doc. TD/B/63/CRP.2 (Sept. 16, 2016).

26 G20 Guiding Principles for Global Investment Policymaking, G20 Trade Ministers Meeting Statement, Shanghai, ann. III (July 9–10, 2016).

27 World Trade Org., supra note 23, at para. 4.

28 Anthea Roberts, UNCITRAL and ISDS Reform: Not Business as Usual, EJIL: TALK! (Dec. 11, 2017).

29 World Trade Org., Structured Discussions on Investment Facilitation, Communication from Brazil, WTO Doc. JOB/GC/169 (Feb. 1, 2018).

30 Anthea Roberts, UNCITRAL and ISDS Reform: Pluralism and the Plurilateral Investment Court, EJIL: TALK! (Dec. 12, 2017).

The views and opinions expressed in this essay are the sole responsibility of the authors and do not necessarily reflect the positions of the government of Brazil.

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AJIL Unbound
  • ISSN: -
  • EISSN: 2398-7723
  • URL: /core/journals/american-journal-of-international-law
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