Investment rules in trade agreements: Developments and issues in light of the TTIP debate

The foreign direct investment (FDI) stocks of EU entities in the US and of US entities in the EU both amount to over €1.6 trillion. Investment access and protection is therefore critical to EU-US economic relations. On both sides of the Atlantic, criticism has been growing regarding the interpretation of certain investment protection rules found in either free trade agreements or in bilateral investment treaties, and of their potential constraints on the regulatory capacity of the states party to them. The US and the EU alike are revising these rules to ensure states maintain the freedom to regulate for legitimate public purposes. Often, the US and EU approach to reform investment chapters is similar and could be complementary. The need for a solution that works for both has become an essential component of the negotiations on a Transatlantic Trade and Investment Partnership (TTIP).