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Investment policy

The Future of Investment Treaties

 

Investment treaties are an important component of the framework governing the conditions for foreign investment in many countries. About 2500 such treaties are in force today, including investment provisions of trade agreements. Many of them were designed decades ago with a different global economy and concerns in mind.

Interest in reshaping investment treaties has been growing steadily in the face of challenges from the COVID crisis to achieving the Sustainable Development Goals. The OECD work programme on the Future of Investment Treaties explores how the investment treaties of tomorrow could help address these challenges and how to deal with existing agreements in a pragmatic way. The overriding importance of confronting the climate crisis forms a core part of the work.

 

What does the OECD contribute?

The OECD convenes governments, stakeholders and experts from OECD and non-OECD countries to examine whether new or alternative content would lead to better outcomes on objectives including the optimal allocation of capital, regulation in the public interest, and promoting sustainable development.

This includes:

  • ensuring treaties contribute to sustainable development and do not hamper legitimate regulation in the public interest
  • providing a framework to support market openness, facilitate investment and promote responsible business conduct
  • considering a more flexible range of procedures and remedies when treaties are implemented
  • examining which issues may be best addressed in treaties, and which may be better suited for regulation through domestic law, international guidance or other tools.

Newer treaties have been designed in light of litigation experience to better achieve government intents. However, the vast majority of older treaties do not have these features. Governments meeting at the OECD are considering the implications and opportunities for older treaties of the convergence of designs in newer treaties.

OECD work on the future of investment treaties and reform complements ongoing work at UNCITRAL, UNCTAD and the WTO.

 

Why is this work important?

Today’s challenges such as climate change, COVID-19, the digital transformation, and achieving the Sustainable Development Goals can only be met through international and domestic investment. Poorly-designed treaties may impede progress, while well-designed investment treaties can help societies meet today’s challenges.

 

What is the process?

An initial two-year work programme will encompass discussions in two tracks:

  • Track 1 discussions will consider the challenges that treaties should address in the future as well as desirable changes to current approaches
  • Track 2 will consider whether it would be better if specific substantive provisions of older treaties were more similar to those now almost universally used in newer treaties

 

Learn more

Download The future of investment treaties: background note on potential avenues for future reform

Investment treaties and climate change

The overriding importance of confronting the climate crisis forms a core part of the OECD work programme on the Future of Investment treaties. The OECD Conference on Investment Treaties and Climate Change took place on 10 May 2022.

Agenda

Read background paper on Investment treaties and climate change: The Alignment of finance flows under the Paris Agreement

The Conference contributes to ongoing government-led work on investment treaties and climate change at the OECD. 

Watch all conference sessions

 

The OECD has also conducted a consultation on investment treaties and climate change, with a view to helping government policy makers respond to the climate change in their investment treaty policies, including alternative or complementary policies, with the benefit of a broad range of inputs.

Compilation of consultation submissions (compiled 13 April 2022)

Consultation document

 

Related work

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OECD Conference on Investment Treaties and Climate Change

On 10 May 2022, the 2022 OECD Conference on Investment Treaties will address investment treaties and the climate crisis. The conference will contribute to ongoing government-led work on investment treaties and climate change at the OECD.

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Freedom of Investment at the OECD

Through the Freedom of Investment process, governments develop guidance for open, transparent and non-discriminatory investment policies. Unbiased policy monitoring and analysis support accountability and frank and open exchange.

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Harnessing investment for sustainable development

The OECD FDI Qualities Initiative provides advice on how governments can enhance FDI’s contribution to achieving the SDGs. We engage in policy dialogue and stakeholder consultations with development partners, international organisations, businesses and civil society.

 

See also

The international investment law webpage features a comprehensive library of the OECD’s work on international investment law.

 

The OECD Centre for Responsible Business Conduct uses responsible business conduct standards and recommendations to shape government policies and help businesses minimise the adverse impacts of their operations and supply chains, while providing a venue for the resolution of alleged corporate, social, environmental, labour or human rights abuses. 

 

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