December 15, 2000
The number of bilateral treaties for the promotion and protection of foreign investments (BITs) increased dramatically during the 1990s, according to the new compilation released by UNCTAD today on the UNCTAD website. Their number rose from 385 at the end of the 1980s to a total of 1,857 BITs, involving 173 countries, at the end of the 1990s. Significantly, the number of such treaties concluded between developing countries; between developing countries and countries in Central and Eastern Europe; and between Central and Eastern European countries grew sharply, from 63 at the end of the 1980s to 833 at the end of the 1990s. (figure 1)
UNCTAD's data suggest that the role of BITs as an instrument for the international protection of foreign investment has increased over the years, especially in the context of South-South cooperation.
Initially BITs were signed mostly between a developed and a developing country, at the initiative of the former, in order to secure high standards of legal protection and guarantees for the investments of their firms. The developing countries signed such treaties as one way to provide a favourable climate for foreign investment. Since the late 1980s, however, and especially during the 1990s, developing countries and economies in transition began signing BITs within their own groupings and with each other, in great numbers. Today, many BIT partners -- whether developed, developing, or Central and Eastern European countries -- approach these treaties with the dual purpose of protecting their outward investments in, and attracting inward investment from, their co-signatories.
Overall, the Western European countries have concluded the largest number of BITs (904), representing 49% of the total. Canada, Japan and the United States are relative latecomers to the practice, but have picked up speed over the past two decades, especially during the 1990s, having concluded 75 BITs in all (24, 8 and 43, respectively). Among developing regions, the countries of Asia and the Pacific lead the way (842 at the end of 1999). African countries have been actively involved in BIT practice since the 1960s, and by the late 1990s had signed 428 treaties.
The Latin American countries, on the other hand, did not start signing BITs until the late 1980s, when changes in the region's development strategies led to rapid growth (300 treaties in all). Together with the Caribbean countries (which had actually started signing such treaties much earlier), they have concluded a total of 366 BITs. The Central and Eastern European countries have signed 633 bilateral treaties, most of them during the 1990s. Germany continues to be the country with the largest number of BITs (124), followed by Switzerland (95) and France and the United Kingdom (92 each). Among developing and Central and Eastern European countries, China has concluded the largest number (94), followed by Romania (90) and Egypt (84).(figure 2)
Figure 2. Ranking of the Top 25 Countries in Terms of the Number of BITs Concluded, January 1,2000
As examined in a recent UNCTAD publication, the basic features of BITs – including their objectives, format and broad underlying principles – have changed little over the years. They typically include provisions on the scope and definition of foreign investment; admission of investments; national and most-favoured-nation treatment; fair and equitable treatment; guarantees and compensation in respect of expropriation and compensation for war and civil disturbances; guarantees of free transfer of funds and repatriation of capital and profits; subrogation on insurance claims; and dispute settlement, both State-to-State and investor-to-State.
In recent years, however, some bilateral treaties have added new provisions relating to transparency of national laws, performance requirements, entry and sojourn of foreign personnel, general exceptions, and extension of national and most-favoured-nation treatment to the entry and establishment of investments. The exact content of BITs varies considerably even among those signed by a single country, reflecting different approaches and bargaining positions.
FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.
