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Part I
Rules and regulations on investment
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1 Investment in the Trans-Pacific Partnership
Possible impacts on ASEAN member states
Junji Nakagawa*
1. Introduction
This chapter analyses Chapter 9 of the Trans-Pacific Partnership (TPP) document titled āInvestmentā.1 Its main purpose is to clarify the obligations of the TPP parties on the liberalisation and protection of foreign investment so that member states of the Association of Southeast Asian Nations (ASEAN), which are parties to the TPP, may prepare domestic legal reforms to meet these obligations when the TPP enters into force. For ASEAN member states that are not parties to the TPP, this chapter will serve as a useful reference in considering what kind of domestic legal reforms will be needed when they join the TPP.
The United States (US), which initiated the negotiations on the TPP, intended to make the TPP āa new kind of trade agreement for the 21st centuryā,2 with a high level of trade and investment liberalisation and a wide range of rules for streamlining trade and investment amongst the parties. The TPP investment chapter builds on the 2012 US Model Bilateral Investment Treaty (BIT),3 and carefully calibrates balance between providing strong investor protections and preserving the governmentās ability to regulate in the public interest. It also promotes the liberalisation of foreign investment through the negative list approach, whereby each party liberalises foreign investment, as a rule, with the exceptions enumerated in its country-specific list of non-conforming measures. Accordingly, three stages of analysis are needed.
The first is the analysis of the general obligations as provided in Chapter 9. The second is the analysis of country-specific obligations with respect to liberalisation of investment, which are provided in country-specific lists of non-conforming measures. The third is a comparison of country-specific obligations and the existing restrictions on foreign investment of each member state. This chapter focuses on the first stage of analysis, leaving the second and third stages of analysis to separate country-specific surveys.
This chapter (i) conducts a comprehensive analysis of the general obligations as provided in Chapter 9; (ii) briefly explains the structure of Chapter 9 and compares it with that of the ASEAN Comprehensive Investment Agreement (ACIA),4 as the latter can serve as a common framework of reference for ASEAN member states, regardless of whether they are parties to the TPP; (iii) analyses the substantive obligations of the TPP parties on the liberalisation and protection of investment, as provided under Section A of Chapter 9, and compares the provisions of Chapter 9 of the TPP with those of ACIA so that the potential impact of Chapter 9 on ASEAN member countries may be clarified; (iv) analyses the procedural obligations of TPP parties on the investorāstate dispute settlement (ISDS), using ACIA as a reference to clarify the real impact of TPP Chapter 9 on ASEAN member countries with respect to the ISDS; and (v) explains the basic structure of the country-specific lists of non-conforming measures, and presents an analytical framework for the country-specific survey of investment liberalisation under the TPP.
2. Structure of the TPP investment chapter
2.1. Article headings of the TPP investment chapter
Chapter 9 of the TPP is composed of two sections consisting of 30 articles. Section A covers definitions of terms, scope, and substantive obligations regarding liberalisation and protection of investment. Section B provides for the procedure of the ISDS. Table 1.1 shows the article headings of Chapter 9, including annexes.
Table 1.1 Article headings of chapter 9, including annexes | Section A | |
| Article 9.1 | Definitions |
| Article 9.2 | Scope |
| Article 9.3 | Relation to Other Chapters |
| Article 9.4 | National Treatment |
| Article 9.5 | Most-Favoured-Nation Treatment |
| Article 9.6 | Minimum Standard of Treatment |
| Article 9.7 | Treatment in Case of Armed Conflict or Civil Strife |
| Article 9.8 | Expropriation and Compensation |
| Article 9.9 | Transfers |
| Article 9.10 | Performance Requirements |
| Article 9.11 | Senior Management and Boards of Directors |
| Article 9.12 | Non-conforming Measures |
| Article 9.13 | Subrogation |
| Article 9.14 | Special Formalities and Information Requirements |
| Article 9.15 | Denial of Benefits |
| Article 9.16 | Investment and Environmental, Health, and Other Regulatory Objectives |
| Article 9.17 | Corporate Social Responsibility |
| Section B | Investorāstate dispute settlement |
| Article 9.18 | Consultation and Negotiation |
| Article 9.19 | Submission of a Claim to Arbitration |
| Article 9.20 | Consent of Each Party to Arbitration |
| Section B | Investorāstate dispute settlement |
| Article 9.21 | Conditions and Limitations on Consent of Each Party |
| Article 9.22 | Selection of Arbitrators |
| Article 9.23 | Conduct of the Arbitration |
| Article 9.24 | Transparency of Arbitral Proceedings |
| Article 9.25 | Governing Law |
| Article 9.26 | Interpretation of Annexes |
| Article 9.27 | Expert Reports |
| Article 9.28 | Consolidation |
| Article 9.29 | Awards |
| Article 9.30 | Service of Documents |
| Annexes to Chapter 9 |
| Annex 9-A | Customary International Law |
| Annex 9-B | Expropriation |
| Annex 9-C | Expropriation Relating to Land |
| Annex 9-D | Service of Documents on a Party under Section B (InvestorāState Dispute Settlement) |
| Annex 9-E | Transfers |
| Annex 9-F | DL600 |
| Annex 9-G | Public Debt |
| Annex 9-H | No title (exceptions to the dispute settlement provisions under Section B, Investor-State Dispute Settlement, or Chapter 28, Dispute Settlement) |
| Annex 9-I | Non-conforming Measures Ratchet Mechanism |
| Annex 9-J | Submission of a Claim to Arbitration |
| Annex 9-K | Submission of Certain Claims for Three Years after Entry into Force |
| Annex 9-L | Investment Agreements |
To elucidate on the legal impact of Chapter 9 of the TPP on ASEAN member states, this chapter compares Chapter 9 with the provisions of ACIA because the latter can serve as a common framework of reference for ASEAN member states. Tables 1.1 and 1.2 compare the article headings of Chapter 9 of the TPP and ACIA. Article headings of the US 2012 Model BIT are also listed to show their similarity with those of the TPP. Table 1.1 compares the general provisions and substantive obligations while Table 1.2 compares the procedures for an ISDS.
We may draw two observations from these tables. First, there are many similarities between the article headings of Chapter 9 of the TPP and ACIA. These similarities exist both in the general provisions and in the substantive obligations, and in the ISDS procedures. Second, an elaborate comparative analysis of these two documents is needed to clarify the real, legal impact of implementing Chapter 9 of the TPP amongst ASEAN member states. There may be differences in their scope and content ā even if they use similar terms or have the same subject matter, such as ānational treatmentā or āsubmission of a claim to arbitrationā.
Table 1.2 Comparison of the contents of chapter 9 of the TPP, ACIA, and the US 2012 Model BIT | Part 1: General provisions and substantive obligations |
| Topic | TPP | ACIA | US 2012 Model BIT |
| Objectives | | Article 1 | |
| Guiding principles | | A... |
