Originally from Investment Treaty Arbitration and International Law - Volume 4

The explosion of trade and investment agreements in the Asia-Pacific region is one of the most significant developments in international economic law in recent years.1 On the first day of January 2010, two significant additions to the legal and economic landscape in the region entered into force. The Agreement Establishing the Association of Southeast Asian Nations (ASEAN)-Australia-New Zealand Free Trade Area (AANZFTA) was signed on February 27, 2009 in the beach town of Hua Hin, Thailand.2 It entered into force on January 1, 2010, for eight of the twelve signatory countries, namely: Australia, Brunei, Burma, Malaysia, New Zealand, the Philippines, Singapore and Vietnam.3 Since then, it has also entered into force for Thailand and is expected to enter into force for Cambodia, Indonesia, and Laos later in 2010.4 Once it is in force for all 12 economies, it will cover 600 million people representing a combined gross domestic product of US$2.8 trillion.5 The China-ASEAN Free Trade Agreement (CAFTA) also entered into force on the first day of 2010. It forms the world's largest free trade area by population (covering nearly 1.9 billion people) and the third largest by economic value after the European Economic Area (EEA) and North American Free Trade Agreement (NAFTA).6

Bilateral Investment Treaties (BITs) and Preferential Trade and Investment Agreements (PTIAs) are the main types of IIA entered into by Asia-Pacific Economic Cooperation member states.7 This paper considers the role of IIAs in promoting and protecting foreign investment in the region with particular reference to the AANZFTA, itself a PTIA. Part I considers the objectives of states in seeking to attract foreign investment and the kind of treaty provisions likely to promote such investment, as well as the challenges associated with establishing a link between IIAs and the promotion of investment. It goes on to discuss some provisions of the AANZFTA which may lead to the promotion of investment. Part II examines the role of IIAs in protecting foreign investment, noting that protection may indirectly promote investment flows, and, again, focuses on the relevant provisions of the AANZFTA. These bear interesting comparison with those of Chapter 11 of the NAFTA. Part III seeks to draw conclusions about the role of IIAs in the promotion and protection of investments in the Asia Pacific in general and about the AANZFTA specifically.