Exploring Foreign Direct Investment in International Trade Law

This essay delves into the intricacies of foreign direct investment (FDI) within the realm of international trade law, emphasizing its role as a key driver of global economic growth. It highlights the significance of the investment policy framework, particularly policies related to investment facilitation, performance requirements, ownership restrictions, and incentives, while also considering related policies such as labor market regulation, tax policy, and intellectual property rights. The essay underscores the benefits of investor-state dispute settlement in protecting investors from expropriation, enabling efficient capital deployment, and ensuring equitable treatment. It advocates for the global trading system as the best legal framework for resolving FDI-related disputes, citing its established rules and principles, although acknowledging limitations such as the high costs and time-consuming nature of filing cases. The analysis considers the economic and political implications of FDI and the importance of a global trading system in facilitating international business and free trade among member nations.

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International Trade Law
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INTERNATIONAL TRADE LAW 2
International Trade Law
Foreign Direct Investment involves an investment made by a particular company or a
person in one particular nation in a venture in another country. Often foreign direct investment
occurs when a particular investor develops a foreign business enterprise or even makes an
acquisition of assets of foreign business (Nielsen, Asmussen & Weatherall, 2017). Moreover,
FDI entails more than capital investment, and this is because it could also include provisions of
technology as well as management. There are certain key features of foreign direct investment
such as substantial influence over and effective control of decisions to be made in the foreign
business enterprise. The open economies which provide a skilled workforce for the investors
usually provide an environment for foreign direct investment (Anyanwu & Yameogo, 2015).
I do agree with the arguments made in the document of international investment
governance relating to the investment policy framework which allows for foreign direct
investment. According to the document, there are certain vital FDI policies which allow for the
growth of such an investment. The key policies include investment facilitation and promotion,
requirements of performance, ownership restrictions and entry rules, promotion of spillovers and
linkages and incentives (Jones & Wren, 2016). Besides the FDI policies, there are also other
investment related policies which tend to influence the foreign direct investment. Such policies
include labor market regulation, tax policy, trade policy, corporate responsibility, intellectual
property policies, and competition policies among others.
Foreign investment is a significant investment which is preferred by many nations across
the world including individual business owners, and this is because it is a key driver of global
economic growth.T he investor-state dispute settlement has often been used as a tool for the fair
treatment of different investors in the foreign market. Certain benefits come hand in hand with

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the investor-state dispute settlement (Whalley, 2016). Such benefits include, it protects the
investors from expropriation through the provision of rights as stipulated in the global trading
system. Another key benefit is that t allows for the transfer of the funds which are related to an
investment-interest. The above mentioned benefit ill typically enables the foreign investor to
deploy more capital efficiently. The other benefit is that there will be prohibitions on certain
performance requirements which may include, transfer requirements, technology, and foreign
content requirements among others.
Lastly, the investor-state dispute settlement offers equitable and fair treatment of all the
investors in a particular place through the protection of all of their investments. Also, with such a
settlement scheme, an agreement is made of not to engage in discriminatory measures by all the
parties in the trading system. The best legal framework for the investor-state dispute settlement
would be the global trading system. There are certain benefits which come hand in hand with the
global trading system (Jennings, 2016). The foreign direct investment entails a number of
implications which could be both economical and political and the only legal framework which
would solve the issues is the global trading system. Further, with a global trading system, the
rules for the trade are taken into account by all the parties, and this will allow for settlement of
any particular issue using the set rules of the trade.
The various decisions made by both the government and other business owners tend to
have never ending implications on the workers and the world at large which is due to the nature
of the international trade system. The global trading system also brings together many countries
across the world to do business as a block and hence there has to be rules and principles
complied with by law (Bronckers, 2015). Additionally, the global trading system implies a free
trade area for the members who are in trade alliance. It, therefore, means that there are certain

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barriers placed upon for the non-members who are also willing to carry out trading activities
with the other members. Thus it is easier to settle any particular dispute which may arise in the
course of the business activity, and this is typically essential for foreign direct investment by an
investor in another nation.
There have however been a few cases reported in the global trading system, and this has
been contributed by the rules and principles placed by such a legal framework. One key reason
for the few cases is due to the level of expensiveness of filing the cases (Jennings, 2016). Also, it
has been considered to be time-consuming hence extremely difficult to win such a case in a court
of law. Due to the limitations of the investor-state dispute settlement scheme, it is used by most
of the investors as a last resort.

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References
Anyanwu, J. C., & Yameogo, N. D. (2015). What drives foreign direct investments into West
Africa? An empirical investigation. African Development Review, 27(3), 199-215.
Bronckers, M. (2015). Is Investor–State Dispute Settlement (ISDS) Superior to Litigation Before
Domestic Courts? An EU View on Bilateral Trade Agreements. Journal of International
Economic Law, 18(3), 655-677.
Jennings, M. (2016). The International Investment Regime and Investor-State Dispute
Settlement: States Bear the Primary Responsibility for Legitimacy. Bus. L. Int'l, 17, 127.
Jones, J., & Wren, C. (2016). Foreign direct investment and the regional economy. Routledge.
Nielsen, B. B., Asmussen, C. G., & Weatherall, C. D. (2017). The location choice of foreign
direct investments: Empirical evidence and methodological challenges. Journal of World
Business, 52(1), 62-82.
Whalley, J. (Ed.). (2016). Developing Countries and the Global Trading System: Volume 1
Thematic Studies from a Ford Foundation Project. Springer.