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> View this email in your browser > <https://mailchi.mp/law/perspective-270?e=adf597b321> > > 哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看： > http://ccsi.columbia.edu/publications/columbia-fdi-perspectives. > *Columbia FDI Perspectives* > Perspectives on topical foreign direct investment issues > No. 270 January 27, 2020 > Editor-in-Chief: Karl P. Sauvant ([log in to unmask]) > Managing Editor: Alexa Busser ([log in to unmask]) > *Learning from Brazil’s bilateral investment treaties* > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=fb0bfe9f07&e=adf597b321> > * <#m_-4964933018733497397_m_-7418095688907021366__edn1> > by > Paulo Cavallo** <#m_-4964933018733497397_m_-7418095688907021366__edn2> > > The surge in FDI over the past three decades has been accompanied by a > surge in bilateral investment treaties (BITs). The latter could be seen as > a reaction to the former—or its cause, due to the protections that BITs > offer to foreign investors. The rise in BITs has also caused a surge in > the scholarly literature investigating their impact on FDI flows, which > still provides mixed findings.[1] > <#m_-4964933018733497397_m_-7418095688907021366__edn3> Yet, the > literature has neglected the case of Brazil, a country that has attracted > increased FDI flows despite not ratifying any BIT. Consequently, Brazil has > been used as an example that BITs do not have any effects on FDI inflows > and, hence, that countries can do without them. > > Even though Latin American countries were reticent to negotiate BITs, > influenced by the Calvo doctrine’s underlying belief that foreign investors > should receive the same treatment as domestic investors, all countries in > the region eventually ratified multiple BITs. Brazil signed fourteen BITs > in the early 1990s, yet the Brazilian Congress never ratified them. The > opposition feared that most-favored-nation provisions jeopardize Brazil’s > sovereignty by offering preferred terms to foreign investors and, most > importantly, that investor-state dispute settlement (ISDS) was incompatible > with the constitution. Brazilian officials argued at the time that the > inexistence of BITs had not affected the country’s position as an important > FDI destination. Brazil’s stable domestic legal regime and the strength of > Brazil’s economy were arguably the reasons why. In the absence of a clear > negative impact on FDI inflows, Brazil did not seem to have the crucial > pressure other countries had when considering entering into BITs. Brazil > became the example that a major host country does not need BITs to attract > FDI if it has a strong economy and proper domestic protections for foreign > investors. > > Analyzing Brazil’s BITs position on FDI inflows meets with the obstacle > that there are no two countries that resemble each other in all factors > that impact FDI inflows. The synthetic control method allows construction > of a hypothetical version of Brazil as a weighted average of the available > control units, consequently enabling a better comparative analysis.[2] > <#m_-4964933018733497397_m_-7418095688907021366__edn4> The factors > considered in this analysis are the main covariates used in the literature, > [3] <#m_-4964933018733497397_m_-7418095688907021366__edn5> the strength > of domestic institutions and the level of property-rights protection. The > donor pool, i.e., the countries from which the weights are selected, is > comprised of all developing countries that have received FDI before 1990 > and enacted BITs after 1990. The synthetic Brazil is constructed then as > the convex combination of countries in the donor pool that most closely > resemble pre-1990 Brazil considering 20 years pre- and post-periods. > > Importantly, this counterfactual analysis shows that Brazil would have > received additional FDI inflows had it enacted BITs, i.e., it had not > achieved its full potential in terms of attractiveness. This suggests that > not all foreign investors were willing to trust Brazil’s institutions, but > if the economic determinants are right, some investors were willing to take > the risk. One would need to weigh the “benefit” of that additional FDI > against the related risk in terms of increased exposure to ISDS. > > The fact that Brazil, an increasingly important home country, is now > pursuing its own brand of BITs (Cooperation and Facilitation Investment > Agreements) is an interesting change in direction. Brazil, which was > swimming against the tide before by resisting the enactment of BITs, is > swimming against the tide again as its BITs advocacy comes at a time when a > number of countries are abrogating such treaties. Brazil is still not a > member of ICSID, and its BIT model neither follows its rules nor provides > for ISDS. These abrogating countries are now accepting Brazil’s initial > position that potential increases in FDI are not worth exposure to ISDS. > [4] <#m_-4964933018733497397_m_-7418095688907021366__edn6> Yet, the fact > that these countries are not necessarily rejecting BITs completely, coupled > with the results of the counterfactual analysis and Brazil’s late push > toward investment treaties, reveal the importance to FDI inflows of > protecting the property rights of foreign investors. Thus, policy-makers > frustrated with the system should be careful when abrogating BITs if they > want to continue attracting a maximum of foreign capital. They can pressure > ICSID for change and reform the system,[5] > <#m_-4964933018733497397_m_-7418095688907021366__edn7> but they should > not underestimate the importance of investor protection. Or they can > imitate Brazil and pursue alternatives. > > ------------------------------ > * <#m_-4964933018733497397_m_-7418095688907021366__ednref1> *The Columbia > FDI Perspectives are a forum for public debate. The views expressed by the > author(s) do not reflect the opinion of CCSI or Columbia University or our > partners and supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a > peer-reviewed series.* > ** <#m_-4964933018733497397_m_-7418095688907021366__ednref2> Paulo > Cavallo ([log in to unmask]) is a PhD candidate in Public Policy > and Political Economy at the University of Texas at Dallas. This *Perspective > *is based on “Brazil, BITs and FDI: A synthetic control approach,” > forthcoming in *The Journal of World Investment & Trade*, 2019, 20(1). > The author is grateful to Clint Peinhardt for his advice and to Pedro > Cavalcante, Carlianne Patrick and Jason Yackee for their helpful peer > reviews. > [1] <#m_-4964933018733497397_m_-7418095688907021366__ednref3> For a > collection of studies, see Karl P. Sauvant and Lisa Sachs, eds., *The > Effect of Treaties on Foreign Direct Investment *(New York: OUP, 2009). > [2] <#m_-4964933018733497397_m_-7418095688907021366__ednref4> For a > detailed explanation of the method, see Alberto Abadie et al., “Synthetic > control methods for comparative case studies: Estimating the effect of > California’s tobacco control program,” *Journal of the American > Statistical Association*, vol. 105 (2010), pp. 493-505. > [3] <#m_-4964933018733497397_m_-7418095688907021366__ednref5> Population > size, GDP per capita, GDP growth, urban population, trade openness, and > population skill level. > [4] <#m_-4964933018733497397_m_-7418095688907021366__ednref6> Clint > Peinhardt and Rachel Wellhausen, “Withdrawing from investment treaties but > protecting investment,” *Global Policy*, vol. 7 (2016), pp. 571-576. > [5] <#m_-4964933018733497397_m_-7418095688907021366__ednref7> Meg > Kinnear, “Moving with the times: amending the ICSID rules,” *Columbia FDI > Perspectives, *no. 233, August 27, 2018. > *The material in this Perspective may be reprinted if accompanied by the > following acknowledgment: “Paulo Cavallo, ‘Learning from Brazil’s bilateral > investment treaties,’ Columbia FDI Perspectives, January 27, 2020. > Reprinted with permission from the Columbia Center on Sustainable > Investment (**www.ccsi.columbia.edu <http://www.ccsi.columbia.edu>**).” 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, Alexa Busser, [log in to unmask] > > *Most recent Columbia FDI Perspectives* > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=b6e86e71da&e=adf597b321> > > > - No. 269, Orlando F. Cabrera C., ‘The US-Mexico-Canada Agreement: the > new gold standard to enforce investment treaty protection?,’ January 13, > 2020 > - No. 268, Xavier M. Forneris, ‘Political risk: Not just the > investor’s affair,’ December 30, 2019 > - No. 267, Maria Laura Marceddu, ‘Another brick in the wall: the > EU-India investment-facilitation mechanism,’ December 16, 2019 > > *All previous FDI Perspectives are available at **http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/ > <http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/>**. * > > *Other relevant CCSI news and announcements* > > - *On February 24, 2020*, CCSI and the European Institute at Columbia > University are co-sponsoring a Weatherhead East Asian Institute Lectures > and Panels event, "The Global Rush to Foreign Direct Investment > Screenings > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=b9e3f739de&e=adf597b321>," > with Giulio Napolitano*, *Professor, *Roma Tre University, *moderated > by Karl P. Sauvant, *Columbia University Law School.* > - *CCSI announces a call for papers for the Global Research Alliance > for Sustainable Finance and Investment (GRASFI) 3rd Annual Conference*, > hosted by CCSI on September 10-11, 2020. The deadline for paper submission > is February 28, 2020. Themes for papers include climate-related risks and > finance, the role of the state (e.g., central banks, development banks, and > regulators) in advancing sustainable finance, and social and human rights > dimensions of sustainable finance, among others. A full list of themes, > further information about the conference and submission details can be > found on our website > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=79ac1cfb43&e=adf597b321> > . > - *CCSI is pleased to announce a call for papers for the 2019 edition > of the Yearbook on International Investment Law and Policy*, published > by Oxford University Press (OUP). The *Yearbook* monitors current > developments in international investment law and policy. Original > contributions to be considered for publication in the *Yearbook* are > accepted on a rolling basis until February 2, 2020; more information > including submission details is available on our website > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=4dc542a695&e=adf597b321> > . > - *CCSI is hiring an Economics and Policy Researcher* to help develop > and execute the Center’s applied research agenda on energy, extractive > industries and sustainable development. Specifically, the incumbent will > lead research on the economic and policy frameworks shaping investments in > oil, mining and gas globally, and their impacts on sustainable development, > as well as on implications for investment of the energy transition. For > more details and qualifications, please see our website > <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=27880dcb67&e=adf597b321> > . > > 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 © 2020 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 > <https://columbia.us6.list-manage.com/vcard?u=ab15cc1d53&id=a61bf1d34a> > > > unsubscribe from this list > <https://columbia.us6.list-manage.com/unsubscribe?u=ab15cc1d53&id=a61bf1d34a&e=adf597b321&c=90ff842727> > update subscription preferences > <https://columbia.us6.list-manage.com/profile?u=ab15cc1d53&id=a61bf1d34a&e=adf597b321> > > > [image: Email Marketing Powered by Mailchimp] > <http://www.mailchimp.com/monkey-rewards/?utm_source=freemium_newsletter&utm_medium=email&utm_campaign=monkey_rewards&aid=ab15cc1d53&afl=1> > ------------------------------ *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: www.ccsi.columbia.edu | t: @CCSI_Columbia <https://twitter.com/CCSI_Columbia> "Making FDI more Sustainable", "Facilitating Sustainable FDI by...", "Report to the Structured Discussions on Investment Facilitation", "An International Framework to Discipline Outward FDI Incentives?", "The Case for an Advisory Centre on International Investment Law", "An Advisory Centre on International Investment Law: Key Features", "Incentivizing Sustainable FDI: The Authorized Sustainable Investor", "The Potential Value-added of a Multilateral Framework on Investment Facilitation for Development", "Promoting Sustainable FDI through International Investment Agreements", "Determining Quality FDI", "Towards G20 Guiding Principles on Investment Facilitation for Sustainable Development", "Five Key Considerations for the WTO Investment-facilitation Discussions, Going Forward", "International Investment Facilitation: By Whom and for What?", "Towards an Investment Facilitation Framework: Why? What? When?", "Beware of FDI Statistics!", and "Towards an Indicative List of FDI Sustainability Characteristics", are available at https://ssrn.com/author=2461782 and http://www.works.bepress.com/karl_sauvant/. ____ AIB-L is brought to you by the Academy of International Business. For information: http://aib.msu.edu/community/aib-l.asp To post message: [log in to unmask] For assistance: [log in to unmask] AIB-L is a moderated list.