The Journal of

WORLD INVESTMENT

ABSTRACTS 

Cynthia Day Wallace: International Antitrust and Foreign Direct Investment—From Bilateral Co-operation to Multilateral Convergence? 

Motivated by the increasingly pressing question of jurisdictional reach in antitrust matters, the term "international antitrust" is coming to refer also to moves toward international law solutions in regard to competition policy. The author looks at the persistent trend toward an international antitrust standard or even a multilateral agreement, as well as various contemporary efforts toward co-operation and the development of a uniform approach to international antitrust enforcement. A "round-up" of the views of scholars and practitioners on the subject suggests that, while it is clear that a process of convergence is already occurring, substantive convergence is still some way off. At the same time, now that a new round of WTO trade negotiations has been determined, in which competition rules will be considered, it falls to the WTO to provide the necessary framework and impetus for a realistic balance between convergence and national sovereignty.

Cynthia Day Wallace holds a Ph.D. in International Law from Cambridge University and has held important posts with the United Nations Economic Commission for Europe, the Center for Strategic and International Studies and the International Law Institute of Georgetown University, among others. She is currently a consultant in international economic law, specializing in foreign direct investment.

Y.Y. Kueh: Coping with Globalization in China—Strategic Implications of WTO Accession 

Accession to the WTO will trigger sweeping restructuring in major Chinese industrial and service sectors. Hitherto export-oriented foreign investors will likely retarget their output—fully or in part—to the domestic market. With increased flexibility for sourcing inputs from abroad, and especially with the expected influx of technology imports, this may accelerate the drain of China's foreign reserves. More importantly, since under WTO rules the government can no longer mandate technology transfers from foreign investors, the entire Chinese industrial system will have to restructure to accommodate Western technological supremacy. Similarly, in the wake of foreign competition, the Chinese banking industry will have to realign its operations and practices to integrate with the global banking system. Together with increased capital inflow following WTO accession, external pressures for early full convertibility of the Chinese currency will also become more pronounced.

Y.Y. Kueh is Chair Professor of Economics and Chair of the Institute of Humanities and Social Sciences at Lingnan University, Hong Kong.

H. Peter Gray: International Trade and Economic Development or Growth—A Qualification

The hypothesis that freer international trade induces more rapid growth is inadequately specified in the modern world. Interaction among countries now takes place in four dimensions, and the hypothesis must be restated in terms of "international economic involvement". This broader concept incorporates: trade; direct investment; the transfer of some factors of production under the aegis of multinational enterprises; and the potential upgrading of the national "socio-economic" infrastructure which determines the ability of a backward nation to attract modern business enterprises.

H. Peter Gray is Professor Emeritus of Economics and Finance at Rutgers University, New Brunswick, New Jersey.

M.I.M. Aboul-Enein: Issuing Interim Relief Measures in International Arbitration in the Arab States

There are three categories of Arab national arbitration laws with regard to the power to issue interim relief measures : those that do not permit arbitral tribunals to issue such measures; those that permit them to do so if the parties concerned have specifically concluded agreements to that effect; and those that have adopted Article 17 of the UNCITRAL Model Law which grants arbitral tribunals such power. Where such power exists, a number of requirements must be met before interim relief measures are considered, and arbitral tribunals should exercise certain elements of discretion before issuing them. One of the most important of the latter considerations should be the element of risk originally accepted by both parties as demonstrated by the terms and spirit of the original contract. Although practice has shown that, in the majority of cases, parties voluntarily comply with the measures ordered by arbitral tribunals, the requirements for enforcing such measures must also be considered carefully before they are issued.

M.I.M. Aboul-Enein is Director of the Cairo Regional Centre for International Commercial Arbitration and Secretary-General of the Arab Union of International Arbitration in Cairo, Egypt.

Paul Brenton: The Limits to International Trade and Economic Integration

Even within the European Union, borders continue to have a significant effect on the volume of international trade and capital flows. A range of factors, including the nature of the commercial, social and legal fabric of a country and the makeup of consumer preferences, act to constrain cross-border exchanges relative to similar internal transactions. Hence, whilst the process of globalization may continue, there are likely to be distinct limits to the extent of economic integration. This entails that the traditional roles of governments in OECD countries in providing social welfare and regulating the market economy within national boundaries will not be seriously undermined by globalization. However, the situation may be different in developing countries, where existing social and legal institutions may be compromised by globalization rather than being able to dampen its impact.

Paul Brenton holds a Ph.D. in Economic from the University of East Anglia and was a lecturer at the University of Birmingham, U.K. He is currently Senior Research Fellow and Head of the Trade Policy Unit at the Centre for European Policy Studies in Brussels, Belgium.

Matthias Busse and Georg Koopmann: The EU–Mexico Free Trade Agreement—Incentives, Context and Effects

This article evaluates the political and economic incentives to conclude the EU–Mexico Free Trade Agreement (FTA). It discusses EU and Mexican trade policy as well as the multilateral context for FTAs. In addition, using a disaggregated approach at the three-digit level of the Standard International Trade Classification, it identifies the commodities that will be particularly affected by the FTA.  The results show that considerable trade effects can be expected for a narrow range of products. Whereas the EU is likely to gain quite a bit from trade creation and diversion effects, Mexico could improve its position as a location for foreign direct investment, since European companies should be better able to use Mexico as an entry point into U.S. and Canadian markets.

Matthias Busse and Georg Koopmann are staff members of the Hamburg Institute of International Economics, specializing in the fields of international trade, investment and competition.

James McIlroy: NAFTA's Investment Chapter—An Isolated Experiment or a Precedent for a Multilateral Investment Treaty?

Given the global reach of investment and its importance to regional and multilateral trade, why does it continue to be governed by some 2,000 bilateral treaties instead of within a more multilateral framework? To respond to this question, one must understand the history of what may be the "high-water mark" of non-bilateral investment treaties—Chapter 11 of the North American Free Trade Agreement. Unlike other articles that have concentrated on the disputes which have arisen under the NAFTA's investment chapter, this article analyses the scope of Chapter 11 and the investor rights it has created. After seven years of experience with Chapter 11, it remains unclear whether it will provide the template for future multilateral treaties or become an isolated and unreplicated experiment.

James McIlroy is President, McIlroy & McIlroy, Inc., Counsel on Public Policy, in Toronto, Canada.

C. Chatterjee: Investment-Related Promissory Notes Are Investments under the ICSID Convention—Fedax N.V. v. The Republic of Venezuela

As promissory notes do not apparently seem to satisfy the traditional definition and connotation of investment, any dispute relating to them may not ordinarily come under the purview of Article 25 of the ICSID Convention. However, in a recent dispute between Fedax N.V. and the Republic of Venezuela, an ICSID Tribunal decided that a dispute emanating from investment-related promissory notes may satisfy the criteria of an investment dispute under the Convention.

C. Chatterjee holds an LL.M. from Cambridge University and an LL.M. and Ph.D. from London University. He is a Barrister and a member of the Law Department of London Guildhall University.