World Investment Report 2016, “Investor Nationality: Policy Challenges”

By UNCTAD, Published by UNCTAD, June 2016

IIA reform is intensifying and yielding the first concrete results. About 100 countries have used UNCTAD’s Investment Policy Framework and its Road Map for IIA reform to review their IIA networks. During this first phase of IIA reform, countries have built consensus on the need for reform, developed new model treaties and started to negotiate new, more modern IIAs. Despite significant progress, much remains to be done. Phase two of IIA reform will require countries to focus more on the existing stock of treaties. Promoting and facilitating investment is crucial for the post-2015 development agenda. The report presents a Global Action Menu for Investment Facilitation to further enhance the enabling environment for investment in sustainable development. The report also looks at the policy challenges arising out of investor nationality. Indirect ownership structures and mailbox companies have the potential to significantly expand the reach of IIAs. The blurring of investor nationality has made the application of rules and regulations on foreign ownership more challenging. About one-third of investor–state dispute settlement (ISDS) claims are filed by claimant entities that are ultimately owned by a parent in a third country. About one-third of apparently intra-regional foreign affiliates in major mega-regional treaty areas, such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), are ultimately owned by parents outside the region. Available at http://UNCTAD.org/wir.