This Chapter discusses legal and policy options for reforming security exceptions through implementing substantive and procedural mechanisms to maximize joint gains from international trade and investment and the protection of the national security interests of WTO members. In particular, relying on the theories and concepts relevant to this book and the conducted comparative research, this Chapter attempts to reconsider the role of security exception clauses in international economic law and contemplates additional institutional responses to remedy the current flaws in their interpretation and application. What is needed, and what this book seeks to provide, is an analytic perspective for assessing when more restraint on the application of security measures is desirable and when it is not.

As a monetary capital provider, creditors play an important role in external governance with shareholders, although they have no legal voting right outside of the bankruptcy process. Chapter 8 will compare the legal institutions and practices regarding the roles of creditors in the three countries by dividing them into ex ante monitoring of solvent firms, renegotiation in financially distressed firms, legal bankruptcy, and debtor directors’ fiduciary duty during the zone of insolvency. In the United States, banks play an active role in the governance of the firm whose business stumbles, by using the loan agreements for the revolving credit facilities. In Japan, contingent governance by main banks as representative of monetary capital providers worked well during Japan’s rapid economic growth era, but was not able to monitor their client companies’ use of free cash flow after the economic growth stopped. Although China is a bank-centered economy and state banks keep a dominant position, Chinese banks play a limited role in monitoring borrowers, especially borrowers who are SOEs, which can be supported financially by the government with cheap credit.

The starting point is the observation that some states are and have been unhappy with certain BITs that include ISDS provisions. Based on a dataset on renegotiated and terminated BITs, the authors ask if this is the case. The initial evidence indicates that states have not made a systematic effort over the years to recalibrate their BITs for the purpose of preserving more regulatory space. In fact, most renegotiations either leave ISDS provisions unchanged or render them more investor-friendly. Nevertheless, the authors find that this is beginning to change, as recent renegotiations are more likely to circumscribe ISDS in ways that preserve more state regulatory space.