Handbook on Trade and the Environment
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Handbook on Trade and the Environment

Edited by Kevin P. Gallagher

In this comprehensive reference work, Kevin Gallagher has compiled a fresh and broad-ranging collection of expert voices commenting on the interdisciplinary field of trade and the environment. For over two decades policymakers and scholars have been struggling to understand the relationship between international trade in a globalizing world and its effects on the natural environment. The authors in this Handbook provide the tools to do just that.
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Chapter 22: Investor Rights and Sustainable Development

Chris Tollefson and W.A.W. Neilson


Chris Tollefson and W.A.W. Neilson Introduction Controversy surrounding the protection of investor rights through international investment agreements (IIAs) is longstanding. This has been particularly so in the context of the relationship between developed countries (DCs) and their less developed country (LDC) counterparts. From an LDC perspective, such protections have traditionally been seen as a substantial derogation from state sovereignty, fettering not only the ability of a host state to determine domestic policy priorities (most notably with respect to resource management and development) but also, more generally, its ability to regulate the activities of transnational corporate investors. The constraining impact of IIAs on domestic policy space has also been a thorny issue within the more developed economies. Here the overriding concern has been the impact of IIAs on the ability of governments to enact measures to protect the environment and public health. Given these various concerns, it is perhaps not surprising that, over the last 20 years, three successive initiatives to broker broad-based multilateral investment treaties (under the auspices of the United Nations, the OECD and most recently the WTO) have ended in failure. Yet despite this pervasive skepticism about and resistance to IIAs, the last two decades have nonetheless seen a dramatic consolidation of investor rights in the realm of international law, accompanied by an unprecedented expansion in global foreign direct investment (FDI). During this period, both FDI flows and FDI stock have expanded over 15-fold (UNCTAD, 2006). In keeping with historical patterns, the predominant share (approximately 60%) of FDI...

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