Changes in International Investment Suggested
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Columbia Law School Professor Katharina Pistor guided a round-table discussion on international investment agreements on Tuesday, Oct. 30, the opening day of the Second Columbia International Investment Conference.
Opening the discussion, Karl P. Sauvant, executive director of the Columbia Program on International Investment, said that most countries stood to profit from direct foreign investment (DFI). But recently, first-world countries, the traditional advocates of DFI, have begun to re-examine this position, he said. “Now you see countries like the United States taking a hard look at DFI aimed at America,” Sauvant said. “They do so in the interest of protecting national firms and often cite national security [considerations].” (The public and Congressional outrage that arose when Dubai made a bid to operate U.S. ports is a recent example.)
“It’s ironic, because the United States and also Europe were the countries that led the trade liberalization movement,” Sauvant said. Meanwhile, other countries, such as Bolivia, are opting out of international trade arrangements that have been pushed by the U. S., he added.
Susan Franck, assistant professor of law at the University of Nebraska, discussed the current state of investment protection standards to see if the developing world faired worse than the developed world. The panelists suggested that the developing world faired better, generally, than the developed world in disputes between investors and their host countries. “So, we have cautiously good news, that investment protection measures are not a tool of international economic oppression,” Franck said.
In the final segment of the discussion, Peter T. Muchlinski, a University of London law professor, said that multinational corporations are responsible for lifting up the countries where they operate. “Investors in emerging markets enter into a social contract with their host country,” he said. “In exchange for making a profit, they have to give back to the community.” To that end, Muchlinski said he would like to see a strengthening of laws that would allow host countries to hold multinational firms liable for any deleterious consequences of their operations in the developing world.
The two-day investment conference was hosted by Columbia Law School, Columbia’s Earth Institute and Inter-American Development Bank.