Preserving Flexibility in IIAs

The Use of Reservations

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Reservations in International Investment Agreements are a key technique for balancing flexibility of national authorities with international commitments in the field of investment, especially for developing countries. This paper studies the use of such reservations at two levels. First, it assesses the various means that signatories have at their disposal when attempting to preserve flexibility and regulatory autonomy. Second, it explores the revealed preferences for flexibility emerging from the reservation lists of eight International Investment Agreements employing a negative list approach to scheduling non-conforming measures.



Concluding remarks

It is the very nature of IIAs to constrain the policy options available at the national level. Despite such constraints, host country governments in developed and developing countries alike have entered into an ever-increasing number of IIAs at the bilateral, regional and interregional levels. To a considerable degree, they have done so because they view IIAs as useful tools for enhancing domestic investment climates, for locking-in recently enacted (and typically liberalizing) policy reforms and for signalling the future direction of their investment policies. While legally binding obligations can indeed prove beneficial for consolidating ongoing reform efforts and for increasing the transparency and predictability of national investment regimes, IIAs have long recognized, in various forms, the need of host countries to preserve flexibility for putting in place national development policies.


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