Originally from World Arbitration And Mediation Review (WAMR)

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WHY ARE WE "RE-CALIBRATING"

OUR INVESTMENT TREATIES?

José E. Alvarez*

The United States has been re-calibrating its Model Bilateral
Investment Treaty ("BIT") and investment chapters of its free
trade agreements ("FTAs") since 2004.1 Indeed, the investment
chapter of the NAFTA, concluded in 1994, had already contained
changes as compared to earlier U.S. BITs, such as that concluded
with Argentina (1991).2 Other prominent BIT negotiators, such
as Canada and China, are following the U.S. lead, while other
governments, like Norway’s, having recently attempted recalibration,
have for now given up trying to please both backers of
BITs and their critics.3

As noted elsewhere, most of the changes in the U.S. BIT (as
others) have been in the direction of narrowing investors’ rights
and expanding the host state’s "policy space" -- as with respect to
the narrowing of the fair and equitable treatment ("FET")
standard, the newly "balanced" clause on indirect takings, and the
United States’ now clearly self-judging essential security
exception.4 Canada has even turned to a broader list of
exceptions reminiscent of those in the GATT’s Article XX, as well
as a new exception for "prudential" measures to protect its
banking system.5 If past is prologue, any new changes to the U.S.
Model BIT under the Obama Administration will not take us back
to the "golden age" of U.S. BITs, that is, the supremely investorfriendly
U.S. Model BITs of 1984-87. This essay seeks to explain
these developments in terms of broader trends and phenomena in
international law.

So, why has the United States, particularly under extremely
business friendly Republican administrations, made its principal
international instrument for the protection of business less likely
to do just that? Here are five explanations.