We currently observe a renaissance of the debate about a multilateral investment agreement (MIA). The last attempts to establish such an agreement failed in 1998 at the Organisation for Economic Co-operation and Development (OECD) and in 2003, as part of the Doha Development Agenda of the World Trade Organization (WTO). Proponents argue that
– the rebalancing of global investment flows as a result of increasing investments from emerging countries;
– a growing consensus between the US and the EU regarding investment rule-making;
– and the increasing regionalisation of investment rulemaking – the Transpacific Partnership and the Transatlantic Trade and Investment Partnership are the most obvious examples – can facilitate the leap to the next-higher, multilateral level.
In a recent policy paper, published in the Briefing Paper series of the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), I argue that this discussion does not lead us anywhere.
The main question driving the international debate should not be whether it is possible to establish an MIA. What is more important is the question whether the institutional form of an MIA is suitable for effectively solving the most pressing challenges in the current investment regime. This is not very likely, since an MIA is unlikely to lead to significantly more FDI flows or to give stronger consideration to the interests of the developing countries. An MIA will most likely also not lead to greater coherency between the investment rules and other policy areas.
It is more promising to tackle these challenges in the context of regional co-operation, since this permits better accommodation of the treaty contents to the specific needs of the countries involved. Negotiations at the regional level should be supplemented by co-ordination efforts on the global level. The G-20 is the appropriate orchestrator for talks about these systemic questions, talks which in turn should be carried on with the inclusion of the OECD, WTO, UNCTAD and other stakeholders.