Designing an Approach for Capital-Exporting States to Assess SDG-Alignment of Their IIAs

Policy makers and other stakeholders are currently asking fundamental questions about whether and to what extent international investment agreements (IIAs) are consistent with and are helping to advance sustainable development objectives at home and abroad. These questions are being driven by the convergence of two significant trends: one is the increased public debate regarding the objectives, costs and benefits of IIAs, which is being driven by negotiation of new “megatreaties” by countries around the world and a continued rise in investor-state arbitrations initiated under these IIAs; the second is convergence among world leaders on the need to ensure that government policies – both at the domestic and international level – catalyze private sector activity in order to achieve sustainable development objectives as recently defined by the Sustainable Development Goals.

This report provides a framework to help answer those questions about whether and to what extent IIAs can and do support sustainable development, and applies that framework to a review of Swiss IIAs. The objective of the review is to help inform discussions regarding whether and how to shape policies regarding existing and future IIAs. The framework identifies five principles that should guide the content and application of IIAs (if and when the treaties are concluded) in order to align them with sustainable development objectives:

1. Maintain legitimate policy space and allow legal and regulatory frameworks to evolveover time to address new challenges and changing circumstances;
2. Do no harm;
3. Advance labor standards, human rights, and environmental protection;
4. Increase cross-border investment flows; and
5. Ensure policy coherence across relevant government policy spheres.

This study reviews 40 Swiss IIAs – agreements concluded over roughly the past 50 years with countries from different geographic regions and different income levels – in light of those five principles. Based on that review, this report concludes both that Swiss IIAs often risk frustrating sustainable development outcomes, and also represent missed opportunities to proactively advance progress under the sustainable development goals. Nevertheless, the report also identifies feasible, concrete steps that the government can take to address these issues in both their existing and future treaties

Authors

Lise Johnson

Senior Fellow

Themes

• International Investment Law