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1 1 (September 23, 2016)

handle is hein.crs/govcevu0001 and id is 1 raw text is: TPP: Investment Provisions gognpo goo g , q 'S a X 11LULANJILiN, September 23, 2016 The Trans-Pacific Partnership (TPP) is a proposed free trade agreement (FTA) among the United States and 11 Asia-Pacific countries that would reduce and eliminate tariff and non-tariff barriers on goods, services, and agriculture. TPP also would establish trade rules and disciplines that expand on commitments at the World Trade Organization (WTO), such as on investment, and address new 21s' century issues, such as digital trade and state- owned enterprises. In 2015, the United States was the largest source of and destination for foreign direct investment (FDI). TPP covers about 20% of U.S. FDI abroad, and includes major U.S. investment partners, such as Japan and Canada. The United States has FTAs in force with six TPP countries, all with investment obligations (Fig. 1). Still, concerns remain over investment barriers in the TPP region, such as sectoral restrictions, discriminatory treatment, and local content requirements. Figure I. U.S. FTAs with Proposed TPP Partners .. . . . . . . . . . ... . . . ... ,..:........ . . . . . . . . .- . .... ~ ~ ~ ~ .... ............:::::::::::::: ! ~ ~ ~ ~ . ............. ........:i ... . ~.................. .....~ ~ ~ ~ ~ ~..... .. .NY::::::::::: t . . . . . . . . ........ . . . . . . . . . . . . . . . . . .. . . . . . . , , ' .,' 4., ', . .. . -'.... . .. ..... ...... ' A Pi chate . asss ttid .E of ...mtha.m TInvestmentuis a rs-utigise2adohrchpesi TPPals Thddrss invesm. eTPP investmenrulslagl TPsinvesmethe21 chapte mdefinaea investment broadya whIle, bualcnteeals wirth inoteicyobecivs Investmnt is crosscuttin.issueand.oter.chaters.i TPP als addres invetment.TPP.inestmen.ruleslargel mirro the 012 US. moel biatera.invetmenttreat (BIT), ut als conta..certa..innoations Co n c w w P otecki',&, TPP maintains core investor protections reflecting U.S. law and found in prior U.S. FTAs, such as obligations for governments to provide investors with non-discriminatory treatment, a minimum standard of treatment, and protections against uncompensated expropriation. Other protections include a prohibition on imposing performance requirements as a condition of investment (e.g., local content requirements) and a requirement for the free movement of capital. These obligations are subject to certain general exceptions, such as for prudential and essential security interests, as well as country-specific exceptions. TPP also establishes procedures for investors to take host governments to binding arbitration through investor-state dispute settlement (ISDS) to resolve disputes over alleged violations by host governments of their investment obligations. Clarification of minimum standard of treatment (MST). TPP requires parties to provide MST in accordance with applicable customary international law (e.g., due process). New in TPP is clarification that a party's action or inaction that may frustrate an investor's expectations is not, on its own, a breach of the MST, even if loss or damage to the investment follows. Industry groups argue that the change narrows investor protections too much, while civil society groups argue that the scope of protection remains too broad. Reaffirmation of governments' right to regulate. TPP carries over language found in prior U.S. FTAs that states, except in rare circumstances, non-discriminatory regulatory action by a government does not qualify as indirect expropriation. In addition, TPP more explicitly states that nothing in the Investment Chapter shall be construed to prevent parties from taking action otherwise consistent with the chapter to pursue environmental, health, or other regulatory objectives. Such provisions target ongoing concerns in U.S. investment policy raised by certain stakeholders, but continue to elicit debate such as about how to balance investor protections with governments' right to regulate, particularly in the context of investor-state arbitration. Other new features. TPP contains new prohibitions on performance requirements, including banning requirements related to the purchase, use, or preferential treatment of a country's technology. TPP is also the first U.S. FTA to make explicit that the investment obligations apply to state- owned enterprises (SOEs). While such issues are a concern in the TPP region, the provisions also could be relevant to any future multilateral rules-setting. .O 'T

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