*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment**
Columbia Law School - The Earth Institute, Columbia University
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* Formerly the Vale Columbia Center on Sustainable international Investment.

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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 163  December 21, 2015
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Maree Newson ([log in to unmask])

*Toward balanced Arab regional investment regulations*
Moataz Hussein *** <#151cb2cb92870820__edn1>

The economic challenges that affected the business climate in the Arab
region in the post-Arab Spring era have prompted many countries to revise
their investment policies and regulations. The main objective of this
revision was to attain a balance between maintaining attractiveness to
foreign direct investment (FDI) on the one hand, while responding to
demands for sustainable development and human rights on the other.

These balancing efforts include amendments of national legal frameworks
regulating FDI. Examples of Arab countries that started these efforts
include Jordan, Tunisia and Egypt. While the first issued its new
investment code in 2014, the second drafted a new law in 2013 that still
awaits ratification. As for Egypt, it has provided crucial amendments to
the legislations related to investment, companies and taxation in March

However, similar success regarding the regional legal frameworks has been
missing. In this respect, two regional experiences have posed substantial
challenges for Arab states, either at the inter-Arab level or at the
Euro-Mediterranean level.

At the first level, an attempt to amend the Unified Agreement on the
Investment of Arab Capital in Arab States (“Agreement”)*[1]*
<#151cb2cb92870820__edn2> has ended with the adoption of an imbalanced
amended version.*[2]* <#151cb2cb92870820__edn3> Instead of adopting a new
agreement that would reflect recent developments in international
investment rulemaking, Arab countries have chosen to amend their timeworn
Agreement through prioritizing investment protection over maintaining
sufficient policy space for countries to regulate FDI. The primary reason
behind this was a conflict of interests between a “pro-investment
protection” group of capital exporting Gulf Cooperation Countries on one
side, and a group of non-oil exporting Arab states that are “pro-regulatory
flexibility” on the other.

At the Euro-Mediterranean level, the Agadir countries*[3]*
<#151cb2cb92870820__edn4> are candidates to negotiate Deep and
Comprehensive Free Trade Agreements (DCFTAs) of investment chapters with
the European Union (EU). There are indications that these countries are
likely to face similar challenges that could lead to additional imbalanced
regional investment regulations. In particular:

   - The negative impacts of the EU's negotiation approach, which rests
   mainly on imbalanced bilateral negotiations with its individual partners
   who lack comparable bargaining power.
   - The experience of negotiating investment provisions in the
   Comprehensive Economic and Trade Agreement*[4]* <#151cb2cb92870820__edn5>
   between the EU and Canada.*[5]* <#151cb2cb92870820__edn6>
   - The fear that future negotiations will not pay sufficient attention to
   the findings of the Trade Sustainability Impact Assessments that raised
   skepticism about the alleged positive impacts of DCFTAs on sustainable
   development.*[6]* <#151cb2cb92870820__edn7>
   - The questions raised about the full implementation of the EU
   parliament’s resolution adopted in April 2011; it advised the Commission to
   create balanced future international investment agreements (IIAs) that
   should avoid the shortcomings of the current European IIAs to achieve
   sustainable development. *[7]* <#151cb2cb92870820__edn8>

Against this background, the Arab countries should embark on negotiations
for a new pan Arab IIA*[8]* <#151cb2cb92870820__edn9> that would balance
the objectives of promotion and protection with the people's aspirations
and the sovereign right of states to regulate investments to achieve their
legitimate public policy objectives.

As for the negotiation of future DCFTAs, the Agadir countries should try to
overcome the problem of bilateral negotiations through joint coordination
to reach a common understanding of their objectives for trade and
investment negotiations. This coordination effort could be achieved through
regular regional meetings dealing with regional investment policies and

More generally, Arab governments should pursue a tridimensional approach to
reform investment regulations and policies. Besides making the needed
changes at the national level, they should create a regional institutional
mechanism to coordinate investment policies. Also needed is an Arab
regional platform to exchange experiences on IIAs and treaty-based claims.
Finally, an effective regional investment dispute-settlement mechanism is
required. At the international level, Arab countries should contribute to
discussions on international investment policies and regulations within the
concerned international organizations.


*** <#151cb2cb92870820__ednref1> Moataz Hussein ([log in to unmask]) is
Senior International Investment Agreements Specialist at the General
Authority for Investment (GAFI) in Egypt. The author is grateful to Rainer
Geiger, Hamed El Kady and Mina Wasseem for their helpful peer reviews. *The
views expressed by the author of this Perspective do not necessarily
reflect the opinions of GAFI, Columbia University or its partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
*[1]* <#151cb2cb92870820__ednref2> The original Agreement was signed in
1980, while the amended version was adopted in January 2013 and is still
under ratification.
*[2]* <#151cb2cb92870820__ednref3> *See* Hamed El-Kady, “The amendments to
the 1980 Arab League investment agreement: implications on the right to
regulate investment in Arab countries,” *Transnational Dispute Management*,
vol. 3 (2014).
*[3]* <#151cb2cb92870820__ednref4> Members of the Arab-Mediterranean FTA
“Agadir Agreement” include Egypt, Jordan, Morocco, and Tunisia.
*[4]* <#151cb2cb92870820__ednref5> *See* European Commission, “Investment
provisions in the EU-Canada free trade agreement (CETA),” September 26,
2014, available at
*[5]* <#151cb2cb92870820__ednref6> The CETA draft shows the EU's intention
to expand the scope of investment liberalization to broad categories of
European investments and investors, despite its recognition of the right to
regulate. In our perspective, Agadir countries could not count on CETA’s
experience in evaluating its prospected draft DCFTAs since the EU’s IIA
Model is still under development.
*[6]* <#151cb2cb92870820__ednref7> *See *Trade Sustainability Impact
Assessments in support of negotiations of DCFTAs between the EU and its
partners available at
*[7]* <#151cb2cb92870820__ednref8> *See* “European parliament resolution of
6 April 2011 on the future European international investment policy,”
2010/2203(INI), April 6, 2011.
*[8]* <#151cb2cb92870820__ednref9> Such a new agreement should avoid
duplication with the current Arab IIAs and the sub-regional agreements
concluded under the auspices of the Council of Arab Economic Unity.

*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Moataz Hussein, ‘Toward balanced Arab regional
investment regulations,’ Columbia FDI Perspectives, No. 163, December 21,
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. 162, Robert Basedow, “Preferential investment liberalization under
   bilateral investment treaties: How to ensure compliance with WTO law?”
   December 7, 2015.
   - No. 161, Wenhua Shan, “The case for a multilateral or plurilateral
   framework on investment,” November 23, 2015.
   - No. 160, Mélida Hodgson, “The Trans-Pacific Partnership investment
   chapter sets a new worldwide standard,” November 9, 2015.

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

* Other relevant CCSI news and announcements*

   - Pleased note there has been *a change of date* for CCSI's Executive
   Training on Investment Arbitration for Government Officials in New York
   City, which will now take place *August 1-5, 2016*. Through an intensive
   week-long course, government officials involved in managing investment
   treaty disputes or negotiating investment treaties will increase their
   knowledge of crucial procedural and substantive aspects of investment law.
   Sessions will be taught by leading academics and practitioners and will be
   tailored to uniquely address issues relevant to governments. For more
   information about the program, including application materials, please
   visit our *website*
   Applications will be accepted on a rolling basis until March 21, 2016.
   - *On January 19, 2016 *from 6:30-8:30pm, CCSI and the Sabin Center for
   Climate Change Law will host a panel discussion at Columbia Law School on
   “What Effect Will the Transpacific Partnership Have on Domestic and
   International Climate Change Action?” Panelists include *Ben Beachey*,
   Senior Policy Advisor, Responsible Trade Program, Sierra Club and *Claire
   E. Reade*, Senior Counsel, Arnold & Porter LLP. The event will be
   moderated by *Lise Johnson*, Head, Investment Law and Policy, Columbia
   Center on Sustainable Investment. For more information, please visit our
   - *On January 29, 2016*, the CCSI/Global Economic Governance Programme
   at Oxford University online forum on New Thinking on Investment Treaties
   continues with a talk by Lauge Poulsen on “The Politics of Investment
   Treaties in Developing Countries.” *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*.

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: *(212) 854-0689* <%28212%29%20854-0689>
Fax: *(212) 854-7946* <%28212%29%20854-7946>

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