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International Investment Law and EU Law pp 29–42Cite as

The Division of Competences Between the EU and Its Member States in the Area of Investment Politics

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Part of the book series: European Yearbook of International Economic Law ((Spec. Issue))

Abstract

Even though the EC competences for investment treaty-making “before Lisbon” were limited, the Commission had nevertheless already been heading towards a broad and proactive approach on this issue. The EU was making efforts in developing its own foreign investment promotion and protection policy by including rules on investment in Preferential Trade Agreements (PTAs) as well as by setting up its own “EU Minimum Platform on Investment” (MPoI). With the entry into force of the Treaty of Lisbon on 1 December 2009, multiple questions resulting from a new division of competences between the EU and its Member States in the area of international investment policy have to be answered. This paper discusses the reason for the transfer of these specific competences (theses 1 and 2) and then addresses specific issues such as the scope of application of this Article 207 competence (thesis 3), the competences for the renegotiation of existing Member States’ Bilateral Investment Treaties (BITs) and the conclusion of new EU international investment agreements (thesis 4) and for the regulation of market access of sovereign wealth funds (thesis 5). It is shown that the current division of competences is still insufficient for a coherent and efficient investment policy (thesis 6). Therefore, cooperation between the EU and its Member States is necessary. Ideas for new modes of investment protection are left for discussion by Tillmann R. Braun and Jörn Griebel, and the need for the inclusion of “non-investment issues” in investment politics is discussed by Lars Markert.

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Notes

  1. 1.

    See, in this volume, S. Hindelang and N. Maydell, The EU's Common Investment Policy – Connecting the Dots, p. 1 et seq. and C. Nowak, Legal Arrangements for the Promotion and Protection of Foreign Investments within the Framework of the EU Association Policy and European Neighbourhood Policy, in this volume, p. 105 et seq.

  2. 2.

    Minimum Platform on for the EU FTAs, revised version of 6 March 2009; on this in general N. Maydell, The European Community’s Minimum Platform on Investment or the Trojan Horse of Investment Competence, in: A. Reinisch/C. Knahr (eds.), International Investment Law in Context, 2008, pp. 73–92; M. Burgstaller, European Law and Investment Treaties, JIA 26 (2009), pp. 181 et seq. (204 et seq.); the MPoI serves as a standardized negotiation proposal for ongoing and future PTA negotiations with third states.

  3. 3.

    T.R. Braun, For a Complementary European Investment Protection, in this volume, at 95 et seq.

  4. 4.

    J. Griebel, The Great New Challenge after the Entry Into Force of the Treaty of Lisbon: Bringing About a Multilateral EU-Investment Treaty, in this volume, p. 139 et seq.

  5. 5.

    L. Markert, The Crucial Question of Future Investment Treaties: Balancing Investors’ Rights and Regulatory Interests of Host States, in this volume, at 145 et seq.

  6. 6.

    On this, see for example A. Newcombe and L. Paradell, Law and Practice of Investment Treaties, 2008, p. 41 et seq.

  7. 7.

    M. Lesher/S. Miroudot, The Economic Impact of Investment Provisions in Regional Trade Agreements, OECD Trade Policy Working Paper No. 36/2006.

  8. 8.

    On the relationship between trade and investment, see for example, the Report (1998) of the (WTO) Working Group on the Relationship between Trade and Investment to the General Council, WT/WGTI/2.

  9. 9.

    P. Gugler/J. Chaisse, Foreign Investment Issues and WTO Law - Dealing with Fragmentation while waiting for a Multilateral Agreement, in: J. Chaisse/T. Balmelli (eds.), Essays on the Future of the World Trade Organization, Vol. I, 2008, pp. 135 et seq.

  10. 10.

    S. McGuire/M. Smith, The European Union and the United States – Competition and Convergence in the Global Arena, 2008, p. 142.

  11. 11.

    See UNCTAD, Recent developments in international investment agreements (2008 - June 2009), IIA Monitor (2009) 3, p. 2 figure 1; in 2008, 59 new BITs were concluded, the total number of BITs rose to 2,676 at the end of 2008.

  12. 12.

    WTO approach see WT/MIN(01)/DEC/1 of 20 November 2001, point 20.

  13. 13.

    CONV 685/03, Document of 23 April 2003, comments on Article 23.

  14. 14.

    See CONV 707/03, 13 May 2003; CONV 821/03, 27 June 2003.

  15. 15.

    See as the first ones examining this new development J. Ceyssens, Towards a Common Foreign Investment Policy? – Foreign Investment in the European Constitution, Legal Issues of Economic Integration (2005), pp. 259 et seq. (278 et seq.); J. Karl, The Competence for Foreign Direct Investment, JWT&I 5 (2006), pp. 413 et seq.

  16. 16.

    See for example, P. Sauvé, Multilateral Rules on Investment: Is forward Movement possible, J Int Economic Law 9 (2006) 2, pp. 325 et seq.; on the Cancun Ministerial Summit in general see, for example. J. Bhagwati, Don’t Cry for Cancún, Foreign Affairs 83 (2004), pp. 52 et seq., R. Sally, The End of the Road for the WTO? World Economics 5 (2004), pp. 1 et seq.

  17. 17.

    Decision Adopted by the General Council on 1 August 2004, Doc. WT/L/579; on the “July Package” see F. Ismail, A Development Perspective on the WTO July 2004 General Council Decision, JIEL 8 (2004), pp. 377 et seq.

  18. 18.

    See on this A. van Aaken, Fragmentation of International Law: The Case of International Investment Protection, Finnish Yearbook of International Law (2008), pp. 93 et seq.

  19. 19.

    R. Dolzer/C. Schreuer, Principles of International Investment Law, 2008, pp. 11 et seq.

  20. 20.

    J. Griebel, Internationales Investitionsrecht, 2008, pp. 14 et seq.

  21. 21.

    For an explanation of the regulatory factors liable to channel economic activities to certain locations, see C. Tiebout, A pure Theory of Local Expenditures, J. Pol. Econ. 64 (1956), pp. 416 et seq.; for an overview on the economic theory on interjurisdictional competition and legal federalism see S. Sinn, Competition for Capital, On the Role of Governments in an Integrated World Economy, 1993; H. Siebert (ed.), Locational Competition in the World Economy, 1995; L. Gerken, Der Wettbewerb der Staaten, 1999; V. Vanberg/W. Kerber, Institutional Competition Among Jurisdictions, Constitutional Political Economy 10 (1994), pp. 219 et seq. Especially on the role of economic law in the competition of systems, see K.M. Meessen, Economic Law as an Economic Good, in: K.M. Meessen/M. Bungenberg/A. Puttler (eds.), Economic Law as an Economic Good: The Rule and the Tool Function in the Competition of Systems, 2009, p. 5.

  22. 22.

    K.M. Meessen, Economic Law in Globalizing Markets, 2004, p. 9.

  23. 23.

    F. Bergsten, Competitive Liberalization and Global Free Trade: A Vision for the Early 21st Century, Institute for International Economics Working Paper 96-15.

  24. 24.

    W. Kerber, The Theory of Regulatory Competition and Competition Law, in: K. Meessen/M. Bungenberg/A. Puttler (eds.), Economic Law as an Economic Good: The Rule and the Tool Function in the Competition of Systems, 2009, p. 28.

  25. 25.

    On the OECD approach see Chapter III Article 1 MAI Negotiating Text, http://www1.oecd.org/daf/mai/pdf/ng/ng987r1e.pdf; see on this P. Muchlinski, The Rise and Fall of the MAI: Lessons for the Regulation of International Business. in: I. Fletcher/L. Mistelis/M. Cremona (eds.), Foundations and Perspectives in International Trade Law, 2001, pp. 114 et seq.

  26. 26.

    On this, see also S. Woolcock, European Union policy towards free Trade Agreements, ECIPE Working Paper No. 03/2007.

  27. 27.

    On this, see P. Khanna, The Second World, Empires and Influence of the New Global Order, 2008.

  28. 28.

    On the USA and the EU as superhubs, see P.J. Lloyd/D. MacLaren, The EU’s New Trade Strategy and Regionalisation in the World Economy, Aussenwirtschaft (2006), pp. 423 et seq.

  29. 29.

    S. McGuire/M. Smith, The European Union and the United States – Competition and Convergence in the Global Arena, 2008, p. 142; See on this A. Capling/K.M. Nossal, Investor-State Dispute Mechanisms in International Trade Agreements, Governance 19 (2006) 2, p. 57.

  30. 30.

    United States–Australia Free Trade Agreement (AFTA), 18 May 2004.

  31. 31.

    United States–Dominican Republic–Central America Free Trade Agreement (CAFTA), 5 August 2004. In addition to the Dominican Republic and the U.S., the parties are Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua.

  32. 32.

    United States–Morocco Free Trade Agreement (MFTA), 14 June 2004.

  33. 33.

    United States–Oman Free Trade Agreement (OFTA), 19 January 2006.

  34. 34.

    United States–Peru Trade Promotion Agreement (PTPA), 12 April 2006.

  35. 35.

    United States–Colombia Trade Promotion Agreement (CTPA), 22 November 2006.

  36. 36.

    United States–Republic of Korea (KORUS FTA), 30 June 2007.

  37. 37.

    United States–Panama Trade Promotion Agreement, 11 July 2007.

  38. 38.

    USTR-release Preliminary Analysis of KOREA-EU Free Trade Agreement, October 2010 (http://www.ustr.gov/about-us/press-office/press-releases/2009/october).

  39. 39.

    EU Commission, Global Europe: Competing in the World, COM (2006) 567 final.

  40. 40.

    Commission, Upgrading the EU Investment Policy, Note for the Attention of the 133 Committee, Brussels, 30 May 2006.

  41. 41.

    OJ 2002 L-352, signed on 18 November 2002.

  42. 42.

    European Commission, Staff Working Document SEC (2006) 1230, 18.

  43. 43.

    J. Karl, The Competence for Foreign Direct Investment – New Powers for the European Union? JWT&I 5 (2006) 3, pp. 413 et seq. (420).

  44. 44.

    IMF Balance of Payments Manual (1993).

  45. 45.

    Council Directive 88/361/EEC, 1988 OJ L-187/5: “Direct investments: Investments of all kinds by natural persons or commercial, industrial or financial undertakings, and which serve to establish or to maintain lasting and direct links between the person providing the capital and the entrepreneur to whom or the undertaking to which the capital is made available in order to carry on an economic activity. This concept must therefore be understood in its widest sense. …”

  46. 46.

    J. Karl, The Competence for Foreign Direct Investment – New Powers for the European Union? JWT&I 5 (2006), pp. 413 et seq. (421).

  47. 47.

    Council Directive 88/361/EEC, 1988 OJ L-187/5

  48. 48.

    See Communication from the EC and its Member States to the WTO Working Group on Trade and Investments, WT/WGTI/W/115, point 8.

  49. 49.

    See R. Dolzer/C. Schreuer, Principles of International Investment Law, 2008, p. 64.

  50. 50.

    J. Karl, The Competence for Foreign Direct Investment – New Powers for the European Union?, JWT&I 5 (2006) 3, pp. 413 et seq. (422).

  51. 51.

    European Commission, Draft Articles Concerning External Action, CONV 685/03, 23 April 2003.

  52. 52.

    J. Karl, The Competence for Foreign Direct Investment – New Powers for the European Union? JWT&I 5 (2006) 3, pp. 413 et seq. (425).

  53. 53.

    See also C. Herrmann, Die Zukunft der mitgliedstaatlichen Investitionspolitik nach dem Vertrag von Lissabon, EuZW (2010), pp. 207 et seq. (211).

  54. 54.

    See on this I. Brinker, Artikel 295, in: J. Schwarze (ed.), EU-Kommentar, 2000, Rn. 6.

  55. 55.

    ECJ, Case 182/83 – Fearon, (1984) ECR, p. 3677.

  56. 56.

    ECJ, Case C-92/92 and C-326/92 – Phil Collins, (1993) ECR I, p. 5155, para. 22; Case C-30/90 – Commission v. UK, (1992) ECR I, p. 829, para. 18.

  57. 57.

    A. Dimopoulus, The Common Commercial Policy after Lisbon: Establishing Parallelism between Internal and External Economic Relations?, Croatian Yearbook of European Law and Policy 4 (2008), pp. 101 et seq. (text at footnote 48).

  58. 58.

    On this, see, for example, C. Herrmann, Die Zukunft der mitgliedstaatlichen Investitionspolitik nach dem Vertrag von Lissabon, EuZW (2010), pp. 207 et seq.

  59. 59.

    A. Dimopoulus, The Common Commercial Policy after Lisbon: Establishing Parallelism between Internal and External Economic Relations?, Croatian Yearbook of European Law and Policy 4 (2008), pp. 101 et seq. (text at footnote 46); see also J. Karl, The Competence for Foreign Direct Investment – New Powers for the European Union?, JWT&I 5 (2006) 3, pp. 413 et seq. (421); J. Ceyssens, Towards a Common Foreign Investment Policy? – Foreign Investment in the European Constitution, Legal Issues of Economic Integration (2005), pp. 259 et seq. (278 et seq.).

  60. 60.

    See, for example, J. Karl, The Competence for Foreign Direct Investment – New Powers for the European Union? JWT&I 5 (2006) 3, pp. 413 et seq. (422).

  61. 61.

    See, for example, H.G. Krenzler/C. Pitschas, Die Gemeinsame Handelsolitik im Verfassungsvertrag, in: C. Herrmann/H.G. Krenzler/R. Streinz (eds.), Die Außenwirtschaftspolitik der Europäischen Union nach dem Verfassungsvertrag, 2006, pp. 11 et seq. (27).

  62. 62.

    On the role of the ECJ in international dispute settlement, see ECJ, Case C-459/03, Commission v. Ireland (MOX Plant decision), [2006] ECR I, p. 4635.

  63. 63.

    See, for example, M. Bungenberg, Going Global? The EU Common Commercial Policy After Lisbon, in: C. Herrmann/J. Terhechte (eds.), European Yearbook of International Economic Law 2010, pp. 123 et seq. (147); J. Karl, The Competence for Foreign Direct Investment – New Powers for the European Union?, JWT&I 5 (2006) 3, pp. 413 et seq.; A. de Mestral, The Lisbon Treaty and the Expansion of EU Competence over Foreign Direct Investment, in. K. Sauvant (ed.), Yearbook on International Investment Law and Policy 2009/2010.

  64. 64.

    http://www.europarl.europa.eu/hearings/static/commissioners/cre/de_gucht.pdf.

  65. 65.

    ECJ, Case C-249/06, Commission v. Sweden, (2009) ECR I, p. 1335; Case C-205/06, Commission v. Austria, (2009) ECR I, p. 1301.

  66. 66.

    See also C. Herrmann, Die Zukunft der mitgliedstaatlichen Investitionspolitik nach dem Vertrag von Lissabon, EuZW (2010), pp. 207 et seq. (209).

  67. 67.

    On this, see T. Müller-Ibold, Foreign Investment in Germany: Restrictions Based on Public Security Concerns and Their Compatibility with EU Law, in: C. Herrmann/J. Terhechte (eds.), European Yearbook of International Economic Law 2010, pp. 103 et seq.

  68. 68.

    See ECJ, Opinion 1/78, (1979) ECR, p. 2871, para. 44.

  69. 69.

    Council Regulation (EC) 1061/2009 establishing common rules for exports, OJ 2009 L 291, pp. 1 et seq.

  70. 70.

    Council Regulation (EC) 116/2009 on the export of cultural goods, OJ 2009 L 39, pp. 1 et seq.

  71. 71.

    Council Regulation (EC) 428/2009 setting up a Community regime for the control of exports of dual-use items and technology, OJ 2009 L 134, pp. 1 et seq.

  72. 72.

    ECJ, Case 41/76 - Donckerwolcke, (1976) ECR, p. 1921, paras. 31/37; Case 174/84 – Bulk Oil, (1986) ECR, p. 559; Case C-70/94 – Werner, (1995) ECR I, p. 3189; Case C-83/94 – Leifer, (1995) ECR I, p. 3231.

  73. 73.

    See Schaefer, Die nationale Kompetenz zur Ausfuhrkontrolle nach Art. 133 EG, 2009, pp. 113 et seq.

  74. 74.

    European Commission, Draft Articles Concerning External Action, CONV 685/03, 23 April 2003.

  75. 75.

    See above thesis 1 and 2.

  76. 76.

    J. Karl, The Competence for Foreign Direct Investment – New Powers for the European Union? JWT&I 5 (2006) 3, pp. 413 et seq. (425).

  77. 77.

    U.S.C.S. § 3801.

  78. 78.

    On this see M. Kantor, The New Draft Model U.S. BIT: Noteworthy Developments, Journal of International Arbitration 21 (2004), pp. 383 et seq.; critical on this approach see S.M. Schwebel, The US 2004 Model Bilateral Investment Treaty, in: Liber amicorum in honour of R. Briner, Global Reflections on International Law, 2005, pp. 815 et seq.

  79. 79.

    http://www.ustr.gov/assets/Trade_Sectors/Investment/Model_BIT/asset_upload_file847_6897.pdf.

  80. 80.

    P. Gugler/V. Tomsik, The North American and European Approaches in International Investment Agreements, NCCR Working Paper No. 2006/04, p. 5.

  81. 81.

    See C. Tietje, Die Außenwirtschaftsverfassung der EU nach dem Vertrag von Lissabon, Beiträge zum Transnationalen Wirtschaftsrecht (2009), Heft 83 p. 16, http://www.wirtschaftsrecht.uni-halle.de/Heft83.pdf; M. Burgstaller, The Future of Bilateral Investment Treaties of EU Member States, in this volume, at p. 66.

  82. 82.

    S. Hindelang/N. Maydell, The EU`s Common Investment Policy – Connecting the Dots, in this volume, at p. 1.

  83. 83.

    On this, see L. Markert, The Crucial Question of Future Investment Treaties:Balancing Investors’ Rights and Regulatory Interests of Host States, in this volume, at p. 145.

  84. 84.

    On this, see M. Bungenberg, Going Global? The EU Common Commercial Policy After Lisbon, in: C. Herrmann/J. Terhechte (eds.), European Yearbook of International Economic Law 2010, pp. 123 et seq. (128); S. Woolcock, EU Trade and Investment Policymaking After the Lisbon Treaty, Intereconomics 2010, pp. 1 et seq. (p. 2).

  85. 85.

    On this topic, see J. Griebel, Überlegungen zur Wahrnehmung der neuen EU-Kompetenz für ausländische Direktinvestitionen nach Inkrafttreten des Vertrags von Lissabon, RIW 55 (2009), pp. 473 et seq.

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  1. Public International Law and International Economic Law, University of Siegen, Siegen, Germany

    Marc Bungenberg (Chair for Public Law, European Law)

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Correspondence to Marc Bungenberg .

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  1. , Business Economics and Business Law, University of Siegen, Hölderlinstr. 3, Siegen, 57068, Germany

    Marc Bungenberg

  2. , International Investment Law Centre Colo, University of Cologne, Albertus Magnus Platz, Köln, 50935, Germany

    Joern Griebel

  3. , Juristische Fakultät, WHI, Humboldt-University of Berlin, Unter den Linden 6, Berlin, 10099, Germany

    Steffen Hindelang

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Bungenberg, M. (2011). The Division of Competences Between the EU and Its Member States in the Area of Investment Politics. In: Bungenberg, M., Griebel, J., Hindelang, S. (eds) International Investment Law and EU Law. European Yearbook of International Economic Law(). Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-14855-2_2

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