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The Australia-European Union Free Trade Agreement pp 159–184Cite as

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

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Part of the European Yearbook of International Economic Law book series (Spec. Issue)

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.

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Notes

  1. 1.

    See, for a recent snapshot of global FDI flows: OECD, ‘FDI in Figures: April 2020’ (2020) <http://www.oecd.org/investment/FDI-in-Figures-April-2020.pdf>; UNCTAD, ‘World Investment Report: 2020’ (2020) <https://unctad.org/system/files/official-document/wir2020_en.pdf>.

  2. 2.

    Australian Government Department of Foreign Affairs and Trade, ‘International Investment in Australia 2019’ (2020) 65, 67 <https://www.dfat.gov.au/sites/default/files/international-investment-australia-2019.pdf>. See, also: European Commission, ‘Commission Staff Working Document - Impact Assessment Accompanying the Document Recommendation for a Council Decision Authorising the Opening of Negotiations for a Free Trade Agreement with Australia’ (2017) 5, 8; Thangavelu and Findlay (2018), pp. 190–192, 202.

  3. 3.

    Australian Government Department of Foreign Affairs and Trade, ‘International Investment in Australia 2019’ (2020) 65, 67 <https://www.dfat.gov.au/sites/default/files/international-investment-australia-2019.pdf>. See, also: Messerlin and Parc (2018), p. 47; Drake-Brockman (2018), p. 16.

  4. 4.

    Department for International Trade, ‘Policy Paper: UK-Australia FTA Negotiations: Agreement in Principle” (17 June 2021), <https://www.gov.uk/government/publications/uk-australia-free-trade-agreement-negotiations-agreement-in-principle/uk-australia-fta-negotiations-agreement-in-principle>.

  5. 5.

    Drake-Brockman (2018), p. 15. See, also: Thangavelu and Findlay (2018), pp. 190–192, 202.

  6. 6.

    Australia/European Union, ‘Towards a Closer Australia-EU Partnership: Joint Declaration of the Australian Foreign Minister and the EU’s High Representative for Foreign and Security Policy/Vice President of the Commission’ (2015) <https://www.foreignminister.gov.au/minister/julie-bishop/media-release/towards-closer-australia-eu-partnership-joint-declaration-australian-foreign-minister-and-eus-high-representative-foreign-and-security-policyvice-president-commission>. The Framework Agreement was signed in 2017, and provisionally applied from October 2018: Framework Agreement between the European Union and Its Member States, of the One Part, and Australia, of the Other Part (signed 7 August 2017). Under Article 15 of the Agreement, the Parties ‘undertake to cooperate in securing the conditions for and promoting increased trade and investment between them’, including ‘to prevent and remove non-tariff-related obstacles to trade and investment’. Under Article 16, the Parties undertake to ‘promote an attractive and stable environment for two-way investment through dialogue, aimed at: (a) enhancing their mutual understanding and cooperation on investment issues; (b) exploring mechanisms to facilitate investment flows; and (c) fostering stable, transparent, non-discriminatory and open rules for investors, without prejudice to the Parties’ commitments under preferential trade agreements and other international obligations.’

  7. 7.

    Australia/European Union, ‘Towards a Closer Australia-EU Partnership: Joint Declaration of the Australian Foreign Minister and the EU’s High Representative for Foreign and Security Policy/Vice President of the Commission’ (2015) <https://www.foreignminister.gov.au/minister/julie-bishop/media-release/towards-closer-australia-eu-partnership-joint-declaration-australian-foreign-minister-and-eus-high-representative-foreign-and-security-policyvice-president-commission>.

  8. 8.

    European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Trade for All, Towards a More Responsible Trade and Investment Policy’, 14 October 2015, 24.

  9. 9.

    European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Trade for All, Towards a More Responsible Trade and Investment Policy’, 14 October 2015, 24.

  10. 10.

    Australia/European Union, ‘Joint Statement by President Donald Tusk, President Jean-Claude Juncker and Prime Minister of Australia Malcolm Turnbull’ (2015) <https://www.consilium.europa.eu/de/press/press-releases/2015/11/15/pec-tusk-joint-statement-australia/>.

  11. 11.

    European Commission, ‘Inception Impact Assessment: EU-Australia and EU-New Zealand Free Trade Agreements’ (2016) 2 <https://ec.europa.eu/smart-regulation/roadmaps/docs/2015_trade_040_aus_nz_trade_agreement_en.pdf>.

  12. 12.

    European Commission, ‘Inception Impact Assessment: EU-Australia and EU-New Zealand Free Trade Agreements’ (2016) 2 <https://ec.europa.eu/smart-regulation/roadmaps/docs/2015_trade_040_aus_nz_trade_agreement_en.pdf>.

  13. 13.

    European Commission, ‘Online Public Consultation on the Future of EU-Australia and EU-New Zealand Trade and Economic Relations’ (2016) <http://trade.ec.europa.eu/consultations/index.cfm?consul_id=195>.

  14. 14.

    European Commission, ‘Recommendation for a COUNCIL DECISION Authorising the Opening of Negotiations for a Free Trade Agreement with Australia {SWD(2017) 292} {SWD(2017) 293}’ 13 September 2017 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2017:472:FIN>.

  15. 15.

    European Commission, ‘Online Public Consultation on the Future of EU-Australia and EU-New Zealand Trade and Economic Relations: Online Contributions – Published Results’ (2016) <https://ec.europa.eu/eusurvey/publication/AUZ_NZ>.

  16. 16.

    European Commission, ‘Recommendation for a COUNCIL DECISION Authorising the Opening of Negotiations for a Free Trade Agreement with Australia {SWD(2017) 292} {SWD(2017) 293}’ 13 September 2017 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2017:472:FIN>.

  17. 17.

    European Commission, ‘Commission Staff Working Document - Impact Assessment Accompanying the Document Recommendation for a Council Decision Authorising the Opening of Negotiations for a Free Trade Agreement with Australia’, Section 1.2.

  18. 18.

    European Commission, ‘Commission Staff Working Document - Impact Assessment Accompanying the Document Recommendation for a Council Decision Authorising the Opening of Negotiations for a Free Trade Agreement with Australia’, Section 3.2.

  19. 19.

    European Commission, ‘Recommendation for a COUNCIL DECISION Authorising the Opening of Negotiations for a Free Trade Agreement with Australia {SWD(2017) 292} {SWD(2017) 293}’ 13 September 2017 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2017:472:FIN>.

  20. 20.

    European Commission, ‘Recommendation for a COUNCIL DECISION Authorising the Opening of Negotiations for a Free Trade Agreement with Australia {SWD(2017) 292} {SWD(2017) 293}’ 13 September 2017 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2017:472:FIN>.

  21. 21.

    Council of the European Union, ‘Negotiating Directives for a Free Trade Agreement with Australia (25 June 2018)’ (2018).

  22. 22.

    Council of the European Union, ‘Negotiating Directives for a Free Trade Agreement with Australia (25 June 2018)’ (2018).

  23. 23.

    Council of the European Union, ‘Negotiating Directives for a Free Trade Agreement with Australia (25 June 2018)’ (2018).

  24. 24.

    Council of the European Union, ‘Draft Council Conclusions on the Negotiation and Conclusion of EU Trade Agreements – Adoption’ (2018) 8622/18 <https://data.consilium.europa.eu/doc/document/ST-8622-2018-INIT/en/pdf>.

  25. 25.

    Australian Government Department of Foreign Affairs and Trade, ‘Australia-European Union Free Trade Agreement: Objectives’ (2018) <https://www.dfat.gov.au/trade/agreements/negotiations/aeufta/Pages/australia-european-union-fta-objectives>.

  26. 26.

    Australian Government Department of Foreign Affairs and Trade, ‘Summary of Negotiating Aims and Approach’ <https://www.dfat.gov.au/trade/agreements/negotiations/aeufta/Pages/summary-of-negotiating-aims-and-approach>.

  27. 27.

    Australian Government Department of Foreign Affairs and Trade, ‘A-EUFTA Submissions’ <https://www.dfat.gov.au/trade/agreements/negotiations/aeufta/submissions/aeufta-submissions>.

  28. 28.

    ANZ, ‘Submission from ANZ: Australia-European Union Free Trade Agreement’ (2016) <https://www.dfat.gov.au/sites/default/files/anz-eufta-submission.PDF>; Australian Food & Grocery Council, ‘AFGC Submission: Australia European Union Trade Negotiations’ (2016); Business Council of Australia, ‘Submission – Australia-European Union Free Trade Agreement’ (2018) <https://www.dfat.gov.au/sites/default/files/business-council-of-australia-eufta-submission.pdf>.

  29. 29.

    ACTU, ‘ACTU Submission on a Proposed Australia-EU Free Trade Agreement’ (2016) <https://www.dfat.gov.au/sites/default/files/australian-council-of-trade-unions-eufta-submission.PDF>; Australian Fair Trade and Investment Network (AFTINET), ‘Submission to the Department of Foreign Affairs, Defence and Trade on the Proposed Australia-EU Free Trade Agreement’ (2016) <https://www.dfat.gov.au/sites/default/files/australian-fair-trade-and-investment-network-limited-eufta-submission.PDF>; Public Health Association Australia, ‘Public Health Association of Australia Submission on the Australian-European Union Free Trade Agreement’ (2016) <https://www.dfat.gov.au/sites/default/files/public-health-association-of-australia-eufta-submission.PDF> (also observing that: ‘The Investment Court System proposed by the EU for its trade agreement with the US, the Trans-Atlantic Trade and Investment Partnership [TTIP], does not appear to be a viable alternative. This model repeats some of the same flaws as the ISDS mechanisms it is meant to replace, including the potential for high arbitration costs and conflicts of interests.’).

  30. 30.

    Export Council of Australia, ‘Submission to the Department of Foreign Affairs and Trade on the Proposed Australia-European Union Free Trade Agreement’ (2016) <https://www.dfat.gov.au/sites/default/files/export-council-of-australia-eufta-submission.PDF>.

  31. 31.

    Umair Ghori, ‘Protection of Foreign Investor’s Investments from Expropriation – The Desired Standards within the Future Australia-EU Free Trade Agreement (AEUFTA)’ (2016) <https://www.dfat.gov.au/sites/default/files/dr-umair-ghori-bond-university-eufta-submission.PDF>.

  32. 32.

    Minerals Council of Australia, ‘Australia-EU FTA: Implications for Australia’s Mining Industry’ (2019) <https://www.dfat.gov.au/sites/default/files/minerals-council-of-australia-eufta-submission.pdf>; Gonzalo Villalta Puig, ‘Australia – European Union Free Trade Agreement Submission to the Department of Foreign Affairs and Trade Australian Government’ (2016) <https://www.dfat.gov.au/sites/default/files/professor-gonzalo-villalta-puig-eufta-submission.PDF>.

  33. 33.

    Council of the European Union, ‘Negotiating Directives for a Free Trade Agreement with Australia (25 June 2018)’ (2018), p. 2.

  34. 34.

    ‘Report of the 2nd Round of Negotiations for a Free Trade Agreement between the European Union and Australia (19–23 November 2018, Canberra)’ (2018).

  35. 35.

    ‘Report of the 3rd Round of Negotiations for a Free Trade Agreement between the European Union and Australia (25–29 March 2019, Canberra)’ (2019).

  36. 36.

    ‘Report of the 3rd Round of Negotiations for a Free Trade Agreement between the European Union and Australia (25–29 March 2019, Canberra)’ (2019).

  37. 37.

    ‘Report of the 3rd Round of Negotiations for a Free Trade Agreement between the European Union and Australia (25–29 March 2019, Canberra)’ (2019).

  38. 38.

    ‘Report of the 4th Round of Negotiations for a Free Trade Agreement between the European Union and Australia (1–5 July 2019, Brussels)’ (2019).

  39. 39.

    ‘Report of the 5th Round of Negotiations for a Free Trade Agreement between the European Union and Australia (14–18 October 2019, Canberra)’ (2019).

  40. 40.

    ‘Report of the 6th Round of Negotiations for a Free Trade Agreement between the European Union and Australia (10–14 February 2020, Canberra)’ (2020).

  41. 41.

    ‘Report of the 7th Round of Negotiations for a Free Trade Agreement between the European Union and Australia 4 – 15 May 2020’ (2020).

  42. 42.

    ‘Report of the 8th Round of Negotiations for a Trade Agreement between the European Union and Australia 14 – 25 September 2020 (Video-Conference)’ (2020).

  43. 43.

    ‘Report of the 9th Round of Negotiations for a Trade Agreement between the European Union and Australia 30 November – 11 December 2020 (Video-Conference)’ (2020).

  44. 44.

    ‘Report of the 10th Round of Negotiations for a Free Trade Agreement between the European Union and Australia 9 – 19 March 2021’ (2021).

  45. 45.

    ‘Report of the 11th Round of Negotiations for a Free Trade Agreement between the European Union and Australia 1 – 11 June 2021’ (2021).

  46. 46.

    ‘Report of the 7th Round of Negotiations for a Free Trade Agreement between the European Union and Australia 4 – 15 May 2020’ (2020). This article was drafted and finalised prior to any further negotiating rounds being held between the EU and Australia.

  47. 47.

    Drake-Brockman (2018), p. 15.

  48. 48.

    Drake-Brockman (2018), p. 16.

  49. 49.

    TFEU, Articles 3(1)(e) and 206. See, further, on the EU and Member State competences vis-a-vis investment prior to the Lisbon Treaty: Moskvan (2017), p. 244; Basedow (2016), pp. 745–748, 755–758; Waibel (2013), p. 4; Meunier (2014), p. 2; Fina and Lentner (2016), p. 425; Shan and Zhang (2010), p. 1050; Soderlund (2007), p. 462; Leal-Arcas (2010), pp. 487, 504–505; Titi (2015), pp. 642–643; Perez de las Heras (2018), pp. 80–81; Hindelang (2015), p. 69; Chaisse (2012), p. 69; Reinisch (2014).

  50. 50.

    See, for example: OECD, Benchmark Definition of Foreign Direct Investment (4th edn, 2010) para. 11; IMF, Balance of Payments Manual (5th edn, 1993) para. 362; See, similarly: Meunier (2014), p. 11.

  51. 51.

    European Commission, ‘Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: Towards a Comprehensive European International Investment Policy’ (2010) COM(2010)343 2 <https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0343:FIN:EN:PDF>.

  52. 52.

    European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council Establishing a Framework for Managing Financial Responsibility Linked to Investor-State Dispute Settlement Tribunals Established by International Agreements to Which the European Union Is Party’ COM/2012/0335 para. 1.2 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52012PC0335>.

  53. 53.

    European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council Establishing a Framework for Managing Financial Responsibility Linked to Investor-State Dispute Settlement Tribunals Established by International Agreements to Which the European Union Is Party’ COM/2012/0335 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52012PC0335>. See, further: Reinisch (2014), pp. 137–138; Devuyst (2011), p. 655; Kendra and Kozyreff (2013), p. 253.

  54. 54.

    European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council Establishing a Framework for Managing Financial Responsibility Linked to Investor-State Dispute Settlement Tribunals Established by International Agreements to Which the European Union Is Party’ COM/2012/0335 para. 1.2 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52012PC0335>, referring to Articles 3(2) and 63 TFEU.

  55. 55.

    See, for example: German Constitutional Court, 2 BvE 2108, 30 June 2009, para. 379 (‘Much, however, argues in favour of assuming that the term “foreign direct investment” only encompasses investment which serves to obtain a controlling interest in an enterprise … The consequence of this would be that exclusive competence only exists for investment of this type whereas investment protection agreements that go beyond this would have to be concluded as mixed agreements.’). See, further: Reinisch (2014), p. 136; Kleimann and Kübek (2016), p. 13; Sharma (2011), pp. 282–283; Meunier (2014), p. 11; Chaisse (2012), pp. 57–58; Bungenberg et al. (2011), p. 2.

  56. 56.

    See, further: Chaisse (2012), p. 61; Moskvan (2017), p. 255; Kendra and Kozyreff (2013), p. 253; Waibel (2013), pp. 15–16.

  57. 57.

    Opinion 2/15 of the Court (Full Court), 16 May 2017 [83].

  58. 58.

    Opinion 2/15 of the Court (Full Court), 16 May 2017 [109].

  59. 59.

    Opinion 2/15 of the Court (Full Court), 16 May 2017 [292]–[293].

  60. 60.

    Opinion 2/15 of the Court (Full Court), 16 May 2017 [305].

  61. 61.

    Department of Foreign Affairs and Trade, ‘JSCOT Hearing on the Australia-EU Framework Agreement, 7 May 2018: Questions On Notice’ (2018) <https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Treaties/EUFrameworkAgreement/Submissions>.

  62. 62.

    Department of Foreign Affairs and Trade, ‘JSCOT Hearing on the Australia-EU Framework Agreement, 7 May 2018:: Questions On Notice’ (2018) <https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Treaties/EUFrameworkAgreement/Submissions>.

  63. 63.

    Gantz (2017), p. 381.

  64. 64.

    On which see, further: Kendra and Kozyreff (2013), pp. 254–255; Devuyst (2011), pp. 643–644; Kleimann and Kübek (2016), p. 11; Gantz (2017), pp. 370–371; Lopez-Rodriguez (2017), p. 163; Reinisch (2014), p. 137; Kerneis (2018), p. 99; Fontanelli and Bianco (2014), p. 230.

  65. 65.

    Kendra and Kozyreff (2013), pp. 254–255; Reinisch (2014), p. 125.

  66. 66.

    See, for example: European Commission, ‘Key Elements of the EU-Japan Economic Partnership Agreement - Memo’ (2018) para. 11 <https://trade.ec.europa.eu/doclib/press/index.cfm?id=1955>.

  67. 67.

    See, for example: Drake-Brockman (2018), p. 16 (noting an expectation that “in due course”, the EU would “achieve a new follow-up FTA negotiating mandate for a supplementary deal with Australia on investment”).

  68. 68.

    European Commission, Investment in TTIP and Beyond – the Path for Reform: Enhancing the Right to Regulate and Moving from Current Ad Hoc Arbitration towards an Investment Court (2015) <http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF>.

  69. 69.

    See, generally: Dickson-Smith and Mercurio (2018).

  70. 70.

    See, for example: Trade and Foreign Investment (Protecting the Public Interest) Bill 2014.

  71. 71.

    Australian Senate, ‘Official Hansard: 25 November 2019’ p. 4121 (Senator Whish-Wilson).

  72. 72.

    Australia-United States Free Trade Agreement (2005) ATS 1 (signed 18 May 2004, entered into force 1 January 2005).

  73. 73.

    Office of the United States Trade Representative, ‘Summary of the U.S.-Australia Free Trade Agreement’ <https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/archives/2004/february/summary-us-australia-free-trade-agreement>. See, further: Chaisse and Renouf (2018), pp. 297–298; Dickson-Smith and Mercurio (2018), pp. 223–224; Dodge (2006).

  74. 74.

    Chaisse and Renouf (2018), p. 298.

  75. 75.

    Approximately 20 EU Member States have developed a model investment treaty: Calamita (2012), pp. 316–318. The European Parliament in 2011 requested that the Commission develop “a strong EU template for investment agreements, which would also be adjustable according to the level of development of the partner country”: European Parliament, ‘European International Investment Policy: European Parliament Resolution of 6 April 2011 on the Future European International Investment Policy’ (2010/2203(INI)) para, 9. The Commission has resisted developing a model investment treaty, on the basis that a ‘one-size-fits-all model … would necessarily be neither feasible nor desirable’: European Commission, ‘Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions: Towards a Comprehensive European International Investment Policy’ (2010) COM(2010)343 2 <https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0343:FIN:EN:PDF>.

  76. 76.

    It also forecloses the benefits to both treaty partners of having developed a model, including the potential for a model to set out a general policy approach to investment liberalisation/protection, garner the support of stakeholders (including from different levels or areas of government), refine textual approaches to key issues, or achieve consistency across treaty commitments. On the potential benefits of developing a model treaty see, further: Calamita (2012), pp. 316–318; Chaisse (2012), p. 63; Dickson-Smith and Mercurio (2018), p. 215.

  77. 77.

    See, for example: Australian Senate, ‘Official Hansard: 25 November 2019’, pp. 4120–4122 (Senator Whish-Wilson).

  78. 78.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf>.

  79. 79.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.1(1).

  80. 80.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.2(1).

  81. 81.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.3(1) (“Each Party shall accord to investors of the other Party and to covered enterprises treatment no less favourable than that it accords, in like situations, to its own investors and to their enterprises, with respect to establishment in its territory.”).

  82. 82.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.3(2) (“Each Party shall accord to investors of the other Party and to covered enterprises treatment no less favourable than that it accords, in like situations, to its own investors and to their enterprises, with respect to operation in its territory.”).

  83. 83.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.4(2) (“Each Party shall accord to investors of the other Party and to covered enterprises treatment no less favourable than that it accords, in like situations, to investors of a third country and to their enterprises, with respect to operation in its territory.”).

  84. 84.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.6. See, also, Article 2.5.

  85. 85.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.7.

  86. 86.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.8.

  87. 87.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf> Article 2.3(3).

  88. 88.

    Council of the European Union, ‘Negotiating Directives for a Free Trade Agreement with Australia (25 June 2018)’ (2018), p. 2.

  89. 89.

    European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council Establishing a Framework for Managing Financial Responsibility Linked to Investor-State Dispute Settlement Tribunals Established by International Agreements to Which the European Union Is Party’ COM/2012/0335 para. 1.2 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52012PC0335>. See, further: McClay (2016), p. 269; Reinisch (2014), pp. 119–120, 133–134; Fina and Lentner (2016), p. 437.

  90. 90.

    See, for example, the approach adopted in: Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Such approaches carry their own risks, including by creating: negotiating difficulties due to their creation of asymmetrical treaty obligations for central and decentralised States; the risk of piecemeal or even conflicting regulatory regimes at the central and sub-national levels vis-à-vis investment protection, which in turn increase regulatory opacity and compliance costs; and enforcement gaps which remove ‘international accountability for local governments at the same time that local governments are increasingly exercising their authority in a way that produces international effects’: Meyer (2017), p. 261.

  91. 91.

    See, for example: European Commission, ‘Commission Staff Working Document – Impact Assessment Accompanying the Document Recommendation for a Council Decision Authorising the Opening of Negotiations for a Free Trade Agreement with Australia’, p. 8. See, further, Sect. 2 above.

  92. 92.

    See, further: Meunier (2014), p. 2.

  93. 93.

    Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 Establishing a Framework for the Screening of Foreign Direct Investments into the Union.

  94. 94.

    The EU and Australia are not alone in imposing screening requirements on foreign investment. At the time of writing, some 29 States had adopted inbound investment screening policies. These have been collated at: UNCTAD, ‘Investment Policy Hub’ <https://investmentpolicy.unctad.org/investment-laws>. Even those States without a dedicated screening law may regulate the admission of investment through other means, including through restrictions on the foreign ownership of assets of certain types (for example, land) or in certain sectors.

  95. 95.

    Foreign Investment Review Board, ‘Significant Actions and Notifiable Actions [GN35]’ <https://firb.gov.au/resources/guidance/gn35>.

  96. 96.

    The Act defines ‘foreign person’ as: (i) an individual not ordinarily resident in Australia; (ii) a corporation, trustee of a trust or general partner of a limited partnership where an individual not ordinarily resident in Australia, foreign corporation or foreign government (together with its associates) holds an equity interest of at least 20%; (iii) a corporation, trustee of a trust or general partner of a limited partnership in which two or more foreign persons (together with their associates) hold an aggregate equity interest of at least 40%; or (iv) a foreign government or foreign government investor: Foreign Acquisitions and Takeovers Act 1975 (Cth) s 4.

  97. 97.

    Foreign Acquisitions and Takeovers Act 1975 (Cth) s81.

  98. 98.

    Foreign Investment Review Board, ‘Monetary Thresholds’ <https://firb.gov.au/exemptions-thresholds/monetary-thresholds>.

  99. 99.

    See, for example: Foreign Acquisitions and Takeovers Act 1975 (Cth) s 42 (agribusinesses).

  100. 100.

    Foreign Investment Review Board, ‘Monetary Thresholds’ <https://firb.gov.au/exemptions-thresholds/monetary-thresholds>.

  101. 101.

    Australian Government Department of Foreign Affairs and Trade, ‘Summary of Negotiating Aims and Approach’ <https://www.dfat.gov.au/trade/agreements/negotiations/aeufta/Pages/summary-of-negotiating-aims-and-approach>.

  102. 102.

    Article 207(1) TFEU.

  103. 103.

    Article 205 TFEU. See, further: European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Trade for All, Towards a More Responsible Trade and Investment Policy’, 14 October 2015, para. 4.2.

  104. 104.

    Council of the European Union, ‘Negotiating Directives for a Free Trade Agreement with Australia (25 June 2018)’ (2018).

  105. 105.

    European Union, ‘EU-Australia Free Trade Agreement: Trade and Sustainable Development’ (2019) <https://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157865.pdf>.

  106. 106.

    European Union, ‘EU-Australia Free Trade Agreement: Trade and Sustainable Development’ (2019) <https://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157865.pdf> Article X.1(3).

  107. 107.

    European Union, ‘EU-Australia Free Trade Agreement: Trade and Sustainable Development’ (2019) <https://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157865.pdf> Article X.2(3).

  108. 108.

    European Union, ‘EU-Australia Free Trade Agreement: Trade and Sustainable Development’ (2019) <https://trade.ec.europa.eu/doclib/docs/2019/april/tradoc_157865.pdf> Article X.5.

  109. 109.

    See, for example: Australia-Hong Kong Free Trade Agreement and associated Investment Agreement (entered into force 17 January 2020).

  110. 110.

    Markovic (2012) (quoting a 1996 statement of Australia’s then-Foreign Minister Alexander Downer).

  111. 111.

    European Union, ‘EU-Australia Free Trade Agreement: Energy and Raw Materials’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/july/tradoc_157188.pdf>.

  112. 112.

    European Union, ‘EU-Australia Free Trade Agreement: Energy and Raw Materials’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/july/tradoc_157188.pdf> Article X.2(1).

  113. 113.

    European Union, ‘EU-Australia Free Trade Agreement: Energy and Raw Materials’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/july/tradoc_157188.pdf> Article X.8(1).

  114. 114.

    European Union, ‘EU-Australia Free Trade Agreement: Public Procurement’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/july/tradoc_157189.pdf> Article X.2(1).

  115. 115.

    European Union, ‘EU-Australia Free Trade Agreement: Public Procurement’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/july/tradoc_157189.pdf> Article X.2(2).

  116. 116.

    Agreement between Australia and the Czech Republic on the Reciprocal Promotion and Protection of Investments (entered into force 29 June 1994); Agreement between Australia and the Republic of Hungary on the Reciprocal Promotion and Protection of Investments (entered into force 10 May 1992); Agreement between the Government of Australia and the Government of the Republic of Lithuania on the Promotion and Protection of Investments (entered into force 10 May 2002); Agreement between Australia and the Republic of Poland on the Reciprocal Promotion and Protection of Investments (entered into force 27 March 1992); Agreement between the Government of Australia and the Government of Romania on the Reciprocal Promotion and Protection of Investments (entered into force 22 April 1994).

  117. 117.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf>, Article 2.4(4).

  118. 118.

    European Union, ‘EU-Australia Free Trade Agreement: Investment Liberalisation and Trade in Services’ (2018) <https://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157572.pdf>, Article 2.4(5).

  119. 119.

    See, for example: Australia – Peru Free Trade Agreement (signed 12 February 2018, entered into force 11 February 2020) Article 8.5(3) (‘For greater certainty, the treatment referred to in this Article does not encompass international dispute resolution procedures or mechanisms, such as those included in Section B.’).

  120. 120.

    See, generally: Bronckers (2015), pp. 8–10; Dodge (2006), pp. 24–25; Semertzi (2014).

  121. 121.

    Bronckers (2015), p. 9.

  122. 122.

    See, for example: Australian Senate, ‘Official Hansard: 25 November 2019’, p. 4133 (Senator Patrick); Bronckers (2015), pp. 8–10; Trakman (2014), p. 164.

  123. 123.

    See, further: Caron and Shirlow (2018); Shirlow (2016).

  124. 124.

    Article 3(1)(e) TFEU.

  125. 125.

    Opinion 2/15 of the Court (Full Court), 16 May 2017 [248].

  126. 126.

    Article 2(1) TFEU.

  127. 127.

    Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries.

  128. 128.

    Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries, Article 3.

  129. 129.

    Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries, Article 5.

  130. 130.

    Australian Government Department of Foreign Affairs and Trade, ‘Discussion Paper: Review of Australia’s Bilateral Investment Treaties’ <https://www.dfat.gov.au/trade-and-investment/discussion-paper-review-australias-bilateral-investment-treaties>.

  131. 131.

    European Commission, ‘Commission Staff Working Document - Impact Assessment Accompanying the Document Recommendation for a Council Decision Authorising the Opening of Negotiations for a Free Trade Agreement with Australia’, p. 8.

  132. 132.

    See, for example: Senate, ‘Official Hansard (Tuesday, 26 November 2019)’, pp. 4163–4164 (Senator Gallagher).

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    Esmé Shirlow

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Shirlow, E. (2022). Investment Protection in the AEUFTA: Missed Opportunities or Strategic Exclusions?. In: Bungenberg, M., Mitchell, A. (eds) The Australia-European Union Free Trade Agreement. European Yearbook of International Economic Law(). Springer, Cham. https://doi.org/10.1007/978-3-030-91448-6_8

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