Investment Protection in the AEUFTA: Missed Opportunities or Strategic Exclusions?

Abstract

Negotiations between Australia and the European Union (EU) for a free trade agreement (the AEUFTA) appear to be nearing completion. Based on the EU’s negotiating mandate and the official reports from the negotiations so far, it is clear that the AEUFTA’s investment-related provisions will focus exclusively on market access and investment liberalisation. The AEUFTA will thus not incorporate investment protection obligations and nor will it include an investor-State dispute settlement mechanism. Despite these omissions, the conclusion of the AEUFTA will be significant from the perspective of both negotiating States, including because it reveals the policy and legal constraints guiding the approach of each to the negotiation and conclusion of investment treaties and investment chapters in FTAs. This article first introduces the contours of the bilateral investment relationship between the EU and Australia and then examines why the FTA adopts an exclusively liberalisation-focussed approach, to address whether the exclusion of investment protection and investor-State arbitration from the scope of the FTA is a strategic omission on the part of one or both parties. To consider next whether such omission is a missed opportunity, the article examines the likely focus of the investment-related provisions of the treaty, and what impact the FTA is likely to have vis-à-vis investors and existing investment treaties. Show more