INTERNATIONAL INVESTMENT LAW

Evaluation of the international investment laws in U.S.A and the Impact

Evaluation of the international investment laws in U.S.A and the Impact

Introduction

International trade has become one of the most important issues in domestic as well as international politics in recent decades. Although a growing number of historically oriented studies (Abu-Lughod, 1989) have shown that trade has been a salient issue among empires, states, and cities for centuries, it has become such a critical contemporary issue because countries' economies are now, more than ever, open to trade flows. They thereby create complex interdependence, defined as mutual dependence, between national economies. Technological progress has resulted in dramatically falling transportation and communication costs, whereas various liberalization policies have freed the exchange of goods and services from various tariff and no tariff barriers (Bachelet, 2012).

Representing one major area of economic globalization, trade remains a controversial topic, as recent World Trade Organization (WTO) conferences and street demonstrations in Seattle and other cities have shown (Rosenau, 2007). The controversy surrounding trade stems from the fact that interest groups and the broader public view their welfare as being directly affected by trade policy. Although export-oriented companies and societal groups that profit from export exert pressure for global and regional liberalization agreements, domestically oriented firms and civil society groups oppose efforts to further liberalize trade and expand the authority of the WTO and regional trade agreements (Bachelet, 2012). FDI has been known to provide a longer-term contribution to GDP and income growth, as against bank loans and portfolio investments. The long-term perspective of FDI makes it relatively less volatile. FDI is considered to be an important carrier facilitating the spread of technology and is said to contribute to growth in a much wider way than does domestic investment. The contribution of FDI is enhanced due to the interactions with human capital in the host country.

Furthermore, FDI is said to expand the level of know-how in the host country through training and skill acquisition. Summarily, the four basic reasons why companies establish subsidiaries in foreign countries are (1) gaining access to natural resources, (2) protecting or expanding sales in lucrative markets, (3) seeking low-cost production, and (4) acquiring strategic assets . The United Nations, the European Union, and Japan have been the main sources and recipients of FDI for the past several decades. From 1998 to 2000, these three units together accounted for 75% of global FDI inflows. In totality, a country's climate for FDI is built by factors such as relatively accommodative government policies—covering trade barriers and regulation of capital inflows; quality of governance; political stability; presence of laws and regulations; macroeconomic, fiscal, monetary, and industrial policies; and quality of infrastructure (Bederman, 2006).

The International Investment Law in USA

Regionally, the Ninth International Conference of American States adopted the agreement in 1948, which deals among other things, providing appropriate safeguards for foreign investors. § 22 of this Agreement said Foreign Minister and capital gains are treated fairly. Member States agree to make the foundation, unreasonable or discriminatory ...