The Need for a Supranational Organization in Foreign Investment

While the World Trade Organization (“WTO”) does not regulate the field of foreign investment, the WTO has tried to negotiate multilateral rules on foreign investment in the past, and there are other current international agreements that contain investment provisions designed to regulate foreign investment. Even though the previous multilateral investment agreement negotiations did not come to fruition, some scholars still believe there are several practical reasons for the WTO to regulate investment. Most significantly, trade and investment are strongly linked in our globalizing world and both are complements one another, with an increase in one corresponding to an increase in the other. But history has divided these two pillars of our global economy, as trade is regulated through a multilateral regime under the WTO while investment is instead regulated by thousands of international investment agreements (IIAs), primarily bilateral investment treaties (“BIT”), and decentralized arbitral disputes. This Article proposes the creation of a separate supranational investment organization to serve as a multilateral regulatory body on investment and a forum for investment negotiations while still maintaining the economic link between investment and trade—namely, the institution of a World Investment Organization. This Article will start by comparing trade and foreign investment to better understand the arguments that the WTO should in theory regulate foreign investment. Trade and investment are strongly linked, but there are still distinct differences between the two international legal fields. Additionally, this Article will focus on the compelling reasons for a multilateral regime on foreign investment and why a de jure rather than a de facto multilateral investment agreement is needed. This Article will also argue for the necessity of a WIO, particularly focusing on the past attempts of the WTO to regulate foreign investment. Finally, it will focus on the creation and structure of the WIO and drawbacks to this proposal, focusing particularly on the legitimacy challenges to the organization and the hold-out problem confronting its establishment