Investment - the pillars
The EU’s international investment policy is based on three key pillars
Investment facilitation is a broad concept which has gained increased recognition in investment circles over the past years as an important means of attracting investment.
Facilitation measures focus on making it easier for investors to establish, operate and expand investments. Overall, these measures address improving the transparency and predictability of the investment environment, simplifying and streamlining investment and administrative procedures/requirements and providing for appeal and review procedures.
In concrete terms, such measures include various publication and information requirements regarding the entry and operation of investment, establishment of contact and enquiry points, requirements regarding documentation and treatment of incomplete applications, one-stop shop type mechanisms to mention a few. Investor surveys have highlighted these areas as critical factors in their decision to invest.
Investment liberalisation seeks to level the playing field for foreign investors on third country markets.
Liberalisation covers principles (e.g. market access, national treatment and most-favoured nation treatment) and commitments, which allow for the opening of third country markets for EU investors. Such rules aim to permit or facilitate the setting up of enterprises (subsidiaries, branches, representative offices) in services and non-services (e.g. manufacturing, agriculture, extraction, energy production).
For example, market access rules can include the elimination of limitations on the number of operators or value of transactions (e.g. quotas, monopolies, and economic needs tests), reduction or elimination of foreign ownership requirements or joint ventures requirements.
Investment protection standards provide guarantees to investors and their investments as well as the right by the host governments to regulate for legitimate public policy objectives.
The commitments in investment protection agreements include principles such as non-discrimination, fair and equitable treatment (FET) for investors or compensation in case of expropriation in relation to the assets of investors in third countries.
Investment protection agreements can help reducing the perceived risks of investing in certain countries. Since the entry into force of the Lisbon Treaty in 2009, the EU has exclusive competence for investment protection of foreign direct investment. In its most recent agreements, the EU has introduced clearer rules on the right to regulate for public policy objectives and has also significantly revised the mechanism of dispute resolution (Investment Court System).
Traditionally, investment protection agreements included investor-to-state dispute settlement (ISDS) mechanisms that give investors direct access to arbitration against States.