International Rules Governing Foreign Direct Investment in Services: Investment Treaties versus the GATS

Abstract

The obligations that governments assume under investment treaties tend to overlap and interact in various ways with their obligations and commitments under the General Agreement on Trade in Services (GATS). Though the overlap is potentially significant, given that investments in services account for close to two-thirds of the world investment stock, it has drawn relatively little attention in both the literature and government circles. This article seeks to trace commonalities as well as specificities and mutual inconsistencies of the two systems, identify scope for conflict-preventing initiatives, and define issues for further exploration. One critical question remains open, nevertheless: Who would initiate the discussion, provide a forum for interested governments, and generate sufficient tailwind for conceptual clarification or, even more ambitiously, for negotiations to overcome the current divide?