1

I am not familiar with the legal structure of the investor protection provisions foreseen in TTIP, but this is an idea that crossed my mind.

These provisions basically give foreign businesses the right to sue a country for damages caused by actions of that country, such as new legislation. But as I understand it, this is a right granted exclusively to foreign businesses. A company from the same country does not have that privilege (I could be wrong here, but I couldn't find any information ruling this out).

If I had a company seated in the US and serving mainly US customers, wouldn't it make more sense for me to relocate my business to Europe? Or vice versa? Then my investments in my main area of operation would be seen as foreign investments and I could sue the country if it passes legislation that hurts my business. If I remained in my original country I would just have to accept it.

Would the foreign investment provisions of trade agreements lead to such a migration of businesses or am I missing something obvious?

  • I don't know other countries, but in Spain companies (including foreign ones) already can sue the government due to revenue loss due to actions of the government; and most of the cases I know about (like Argentina nationalization of IPF) show the same pattern; I took it for granted that most countries following the rule of law did the same. Obviously, business will not need to migrate if they are already protected by local law. – SJuan76 Aug 31 '16 at 13:33
  • This makes sense. But what would be the purpose of these investment protection provisions if you can already sue the government? Or is all the fuss just about the fact that these provisions foresee a (possibly biased) arbitration court? – Sentry Aug 31 '16 at 18:47
  • I have cited a few examples, I do not claim that they apply everywhere (countries with law discriminating against foreign business, or where the judiciary is controlled by the government); note the rule of law part of my comment. It will not give you much if you already are covered by the laws of the USA or EU, so there will not be incentives for business to incorporate outside. But It will give you some safeties if you are investing in, say, Russia or Saudi Arabia. It also helps by stating which organism has the right to judge the issues. – SJuan76 Aug 31 '16 at 23:11
  • Re "as I understand it, this is a right granted exclusively to foreign businesses.": citation needed. – agc Apr 20 at 13:48
0

But as I understand it, this is a right granted exclusively to foreign businesses.

That's true as far as the TTIP is concerned. This is an international trade pact which relates specifically to international companies. Generally speaking, national companies already have the right to sue their own governments. The TTIP doesn't change that. It makes transnational operations easier, but it doesn't create positive incentives for companies to become transnational who do not already have reasons to do so.

| improve this answer | |

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .