*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment**
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
| p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask]
| w: | t: @CCSI_Columbia

* Formerly the Vale Columbia Center on Sustainable international Investment.

“The negotiations of the United Nations Code of Conduct on
Transnational Corporations: Experience and lessons learned” and K. P.
Sauvant and F. Ortino, *Improving the International Investment Law and
Policy Regime: Options for the Future are* available at

View this email in your browser
*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 159   October 26, 2015
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Alex Weaver ([log in to unmask])
*Brazil’s bilateral investment treaties: More than a new investment treaty
Nicolás M. Perrone and Gustavo Rojas de Cerqueira César***

Brazil has finally become a player in the international investment regime,
but it represents a peculiar case in foreign investment relations. In the
1990s, Brazil did not ratify its 14 signed bilateral investment treaties
(BITs) because of concerns about national sovereignty. Ultimately, this was
not an obstacle to becoming the main foreign direct investment (FDI)
recipient in Latin America and the fifth largest in the world. Two decades
later, Brazil has begun signing BITs again, but this time things are
different. Brazil has signed – and is negotiating – treaties with countries
that either have already received Brazilian investment or are potential
destinations for it. These treaties have attracted the attention of
practitioners and academics due to the inclusion of
cooperation-facilitating mechanisms and the omission of the fair and
equitable treatment standard and investor-state arbitration.

This is a dramatic change with respect to current negotiations, including
the Transatlantic Trade and Investment Partnership. It poses the question
to what extent Brazilian BITs are not just a new treaty model, but rather
represent an alternative FDI policy. To explore this question one must look
at the political economy and institutional setting of these new treaties.

At least since the 2006 expropriation of Petrobras in Bolivia, Brazil has
been reconsidering its investment-treaty policy. The 2001 Argentine crisis
confirmed Brazil’s concerns about investor-state arbitration and national
sovereignty. At the same time, the country was considering options to
prioritize its South-South relations. Brazil’s first move was not directed
at Africa but at South America, where most of its outward FDI is located.
Negotiations in MERCOSUR based on a Brazilian proposal stalled due to
Argentine opposition. Later, Brazil decided to advance its agenda in
Africa, signing BITs with Angola, Mozambique and Malawi[1]
<#150a57031b13272e__edn2> and negotiating with Algeria, Morocco, South
Africa, and Tunisia. Recently, Brazil has turned back to Latin America,
concentrating on the Pacific Alliance countries (Chile, Colombia, Mexico,
Peru) as future investment treaty partners. A treaty with Mexico was signed
in May 2015, and a treaty with Colombia was signed in October 2015.

As Minister of External Relations Mauro Vieira explained, Brazil is relying
on its investment-treaty policy not only to protect Brazilian FDI, but also
to regain the initiative as an emerging capital exporter, which it lost
after the financial crisis.[2] <#150a57031b13272e__edn3> The strategy is to
underline the differences between Brazil and China with respect to their
policies toward countries in Africa and South America. Brazil claims to
have no neo-imperial ambitions, as it promotes the creation of local jobs
and training for local residents.

The way in which Brazil sees its overall FDI policy is, in fact, quite
different from the usual narrative of the international investment regime,
which describes BITs as a means to advance the rule of law and the respect
of property rights in developing countries. The Brazilian agenda focuses
instead on consolidating economic relations with its partners and
establishing political mechanisms to promote FDI. A look at the Brazilian
treaties confirms that, while FDI protection is a key part of these deals,
they are more ambitious than the United States and European ones when it
comes to promoting FDI and preventing disputes.

The Brazilian treaties strengthen state politics in FDI relations. Brazil
asserts that BITs should be the basis for a permanent intergovernmental
dialogue to both promote and protect FDI. State-to-state arbitration is a
solution consistent with a paradigm of FDI relations where states recover
part of the prominent role lost since the 1970s. The core of Brazil’s model
is not investment arbitration, but rather the Focal Points (i.e., a foreign
investment ombudsperson) and the Joint Committee between the two treaty
partners.[3] <#150a57031b13272e__edn4> This committee is in charge of
promoting technical cooperation, exploring mutual investment opportunities
and dealing with foreign investor complaints about host country treatment.

With this model, Brazil plans to continue doing what it has been doing for
the past decade or so: representing the interests of its firms as national
interests, sometimes having been actively involved in designing their
business strategies and financing projects. The Brazilian investment
treaties respond to the Brazilian model of capitalism, where state politics
continue to play a large role despite current fiscal challenges.

In sum, the Brazilian BITs are arguably part of an alternative FDI policy.
They go beyond alternative treaty drafting. In the Brazilian approach,
states have more power over foreign investors and their activities.

What remains to be seen is whether the Brazilian approach will remain a
peculiarity of one country, or whether the emergence of this alternative
will have an impact on the global governance of FDI and, in particular, on
the current transatlantic and transpacific negotiations. This will probably
depend on the success of the Brazilian investment-treaty program, as well
as on the increasing backlash against investor-state arbitration.

* <#150a57031b13272e__ednref1> Nicolás M Perrone (
[log in to unmask]) is an Assistant Professor at Universidad
Externado de Colombia; Gustavo Rojas de Cerqueira César ([log in to unmask])
is a Fellow at the Centre for Analysis and Diffusion of the Paraguayan
Economy (CADEP) and a private consultant in trade policy and development
strategy. The authors are grateful to Martin Dietrich Brauch, Daniela
Campello and Catharine Titi for their helpful peer reviews. *The views
expressed by the authors of this Perspective do not necessarily reflect the
opinions of Columbia University or its partners and supporters. Columbia
FDI Perspectives (ISSN 2158-3579) is a peer-reviewed series.*
[1] <#150a57031b13272e__ednref2> The official versions of these treaties
are available at
Unofficial translations are available at
[2] <#150a57031b13272e__ednref3> Press conference of the Brazilian Minister
of Foreign Affairs, Brasília, March 26, 2013, available at
[3] <#150a57031b13272e__ednref4> Rabih Nasser and Nathalie Tiba Sato, “O
novo modelo brasileiro de acordos de investimento,” *Valor *
*Economico, *May 12, 2015.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Nicolás M. Perrone and Gustavo Rojas de
Cerqueira César, ‘Brazil’s bilateral investment treaties: More than a new
investment treaty model?’ Columbia FDI Perspectives, No. 159, October 26,
2015. Reprinted with permission from the Columbia Center on Sustainable
Investment ( <>).” A copy
should kindly be sent to the Columbia Center on Sustainable Investment at
[log in to unmask] <[log in to unmask]>. *
For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Maree Newson, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 158, Blerina Xheraj, “A reading of intra-EU BITs in light of
   recent developments of EU law,” October 12, 2015.
   - No. 157, Kathryn Gordon, Joachim Pohl and Marie Bouchard, “Investment
   treaty law, sustainable development and responsible business conduct: A
   fact-finding survey,” September 28, 2015.
   - No. 156, Robert Milbourne, “The case for harmonizing the international
   regulation of mining,” September 14, 2015.

*All previous FDI Perspectives are available at *
*. *

*Other relevant CCSI news and announcements*

   - CCSI's Fall 2015 International Investment Law and Policy Speaker
   Series, co-sponsored by Crowell & Moring LLP and Baker & McKenzie LLP,
   continues with a talk by *Simon Lester* and *Julian Ku *on *“ISDS, Free
   Markets, and the Rule of Law”* on *November 5, 2015* at Columbia Law
   School, Jerome Greene Hall, Room 546 (435 W 116th Street, between Amsterdam
   and Morningside Avenues) from 12:10pm-1:00pm.* For more information and
   the full schedule of talks, please see our website
   - CCSI and the Global Economic Governance Programme at Oxford University
   launched a new online forum in June, 2015 on New Thinking on Investment
   Treaties, a series of short presentations by academics, practitioners, and
   civil society on key topics in international investment law. The next talk
   will be by *Nathalie Bernasconi-Osterwalder *on* November 2, 2015
*on “Developing
   a New Investment-Related Dispute Resolution Facility.” *For more
   information and for the schedule of speakers, please visit our
website **here
   *. **All presentations will be posted **here
   Please subscribe to the channel and visit our website for updates*.
   - *On November 10-11, 2015*, CCSI will host the 10th Annual Columbia
   International Investment Conference: “Investment Treaty Reform: Reshaping
   Economic Governance in the Era of Sustainable Development,” at Columbia
   University in New York. In light of the Sustainable Development Goals
   (SDGs) and multilateral efforts to catalyze Financing for Development, this
   year's Conference will look at steps countries have taken to reshape their
   International Investment Agreements (IIAs). *Registration is free, but
   required. Please register **here
   * Please **check **our website
   more information**.*

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2015 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
[log in to unmask]

*Our mailing address is:*
Columbia Center on Sustainable Investment (CCSI)
Columbia Law School - Earth Institute, Columbia University
435 West 116th Street
New York, NY 10027

Add us to your address book

unsubscribe from this list
update subscription preferences

[image: Email Marketing Powered by MailChimp]

AIB-L is brought to you by the Academy of International Business.
For information:
To post message: [log in to unmask]
For assistance:  [log in to unmask]
AIB-L is a moderated list.