Working Paper: NBER ID: w27012
Authors: Ralph Ossa; Robert W. Staiger; Alan O. Sykes
Abstract: International investment agreements employ dispute settlement procedures that differ markedly from their counterparts in trade agreements along three key dimensions: standing (i.e., the right to file grievances), the nature of the remedy, and the remedial period. In the state-to-state dispute settlement procedures of a typical trade agreement, only governments have standing, while private investors also have standing in the investor-state dispute settlement procedures employed by investment agreements. Trade agreements typically employ tariff retaliation as the remedy for violation of the agreement, while the award of cash damages is the norm in investment disputes. And trade agreements typically provide for only prospective remedies covering harm done subsequent to a ruling, while the damages awarded in investment disputes routinely cover past as well as future harms. We develop parallel models of trade agreements and investment agreements and employ them to study these differences. We argue that the differences can be understood as arising from the fundamentally different problems that trade and investment agreements are designed to solve.
Keywords: dispute settlement; international investment; trade agreements; ISDS; SSDs
JEL Codes: F02; F1; F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Standing (Y20) | SSDs (Y40) |
| Standing (Y20) | ESDS (C55) |
| Standing to foreign investors (F23) | ISDS (J80) |
| Nature of Remedies (K41) | Cash damages for investment treaties (F21) |
| Nature of Remedies (K41) | Retaliatory sanctions for trade agreements (F13) |
| Remedial Period (C41) | Retrospective remedies in investment disputes (F21) |
| Remedial Period (C41) | Prospective remedies in trade disputes (F13) |