Towards an Agreement on Investment in Mercosur: conflict and complementarity of international investment law and international trade-in-services law

Abstract

This article is the first to analyze the 2010 guidelines established by Mercosur’s Common Market Council for drafting an Agreement on Investment for Mercosur, which up until now has lacked any regulations for the promotion and protection of investment. This agreement is important not only because it potentially would fill a large gap in Mercosur law and strengthen Mercosur’s emergent common market, but also because it ostensibly represents the first time that Brazil has shown a real willingness to create an international system for investment protection, which represents a monumental breakthrough for Brazil. However, the guidelines (provided at the end of this article in an appendix) appear to have been created using the Protocol of Montevideo on Trade in Services as the model, as opposed to the more directly relevant norms from the realm of international investment law. This article explores whether this approach will lead to an international investment agreement that adequately promotes and protects investment in Mercosur. This article asserts that a better approach would be to use models from the realm of international investment law because these types of protections are needed in order to reassure investors. The sub-working group charged with drafting this agreement still is working on the draft agreement. Therefore, this article aims to influence that drafting process and subsequent debates over this draft agreement prior to its conclusion.