On The Possible (Re-) Negotiation of BITs by the European Union and its Potential Impact on Latin America

In the last decade, global markets expanded significantly via trade agreements, regional and bilateral investment treaties. This trend will not stop, even with the global economic turmoil. Thus, the IMF has estimated that, over the next ten years, 90% of the world demand will be generated outside the EU. On 9 January 2013, Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 entered into force. The EU adopted this regulation in order to ensure a smooth transition towards a new EU investment policy and to clarify the legal status of EU Member States’ BITs under EU law. The same EU Regulation establishes transitional arrangements for bilateral investment agreements between Member States and third Countries. In particular, the Regulation clarifies how Member States and the EU will apply existing extra-EU BITs and negotiate new extra-EU BITs. All that in view of the negotiation by the European Commission of future bilateral investment treaties that will replace existing bilateral investment treaties concluded by member States with third Countries. The Regulation is a welcome development of the EU’s investment policy as far as it confirms the validity of existing bilateral investment treaties concluded by Member States with Latin American countries until the EU decides to replace them. In the second part of this chapter, the analysis will be focused on the status of the BITs in force – or at least signed - between EU Member States and Latin American Countries - on the one hand, and of the EU Free Trade Agreements (FTAs) signed or in force between EU and Latin American Countries, on the other hand. As for the former, an overview of the existing treaties will be provided, along with the presentation of the outcomes of the first notification procedure established by the EU regulation no. 1219/2013. Turning to the FTAs, a particular clause inserted in the mixed agreements concluded in 2012 with Peru and Colombia, and with Central American Countries, will deserve much of the attention. The FTA between EU and Central America contains for example an obligation of States parties to review the investment legal framework, the investment environment, and the flow of investment between the parties no later than three years after the entry into force of the agreement. This investment review clause may be defined as a “rendez-vous” clause which implies an obligation to negotiate future agreements or future amendments to the present ones. The treaties, which belong to a “new generation” of FTAs inaugurated by the European Commission in 2006, will be also highlighted with reference to the recent on-going negotiations of EU free trade and investment agreements with third Countries. Even though it is difficult to speculate on the outcome of the ongoing negotiations on investments, in particular on the level of protection granted to investors and on the settlement of State-investor disputes, we will conclude that (at the minimum) the level of protection for investors achieved at the EU level and the respect for principles such as the precautionary principle shall improve.