[This event was organised by MEI’s Transsystemic Law Research Cluster as part of their monthly internal seminar series.]

Abstract

Since the US’ withdrawal from the TPP, the remaining 11 States have decided to move forward with a slightly revised CPTPP. Our paper investigated the impact of the US’ departure and its future implications for the investment chapters of Asian FTAs. We explored three central queries: (i) whether the gap left by the US’ departure would provide a propitious space for Asian States to coalesce around a common trade vision, or build regional FTAs around a distinctly ‘Asian’ way of approaching ISDS, specifically, and international law more generally; (ii) whether key Asian States – e.g. China and India – would assume a more active role as ‘rule-makers’, or confine themselves to the passive perspective of ‘rule-takers’ in designing or finalising the investment chapters in new regional trade deals; and (iii) whether the body of post-NAFTA jurisprudence and resulting shifts in treaty drafting practice would inform this process and, if so, what this influence would reveal about the US’ reach in Asian treaty-making during the Trump Administration, and beyond. Our thesis was that the form and content of the CPTPP’s procedural and substantive investment provisions would continue to bear the mark of American influence despite the US’ absence, and that it would continue to serve as a template for ISDS provisions in Asia-relevant FTAs, as seen in the draft RCEP. This prediction was grounded in the CPTPP investment chapter’s origins; namely, in its embodiment of many hard lessons learned from post-NAFTA practice. The precise contours of the CPTPP’s investment chapter, and particularly its ISDS mechanism, were important for assessing current prospects and limits of trade and investment mega-regionals.

Our discussion began with a survey of the political climate in which multilateral trade and investment currently operate, with a particular focus on the US’ approach to these issues and its impact on the CPTPP and beyond. We then turned to the ‘Asian values’ debate, critically assessing its potential as a framing theme, and finding it impossible to glean and cobble together a pattern of discernible values from this diverse region with respect to ISDS, beyond those embodied by individual States or mini regional groupings. Absent such ‘Asian values’, and building on the hypothesis that US influence remains a key driver in the investment chapters of most recent FTAs, we identified enduring lessons from the post-NAFTA practice that have been continually evolving through US-led shifts in treaty drafting practice. We then compared and contrasted the CPTPP’s and RCEP’s investment chapters, which revealed word-for-word similarities, as well as India in RCEP as a key proponent of strengthening States’ right to regulate and narrowing its consent to be sued by investors. A brief case-study on China’s and India’s investment treaty practice was then undertaken to test whether these two States also reflect the general ‘auto-pilot’ adoption of US-led ideas, or whether they exhibit more ‘rule-making’ tendencies in their existing FTAs with other countries. Finally, we looked beyond CPTPP and RCEP to possible pathways for Asian States to develop shared understandings specific to their region and strategic interests.