East Asia, Investment, and International Law: Distinctive or Convergent?

International investment agreements (IIAs) are the primary legal instruments designed to protect and encourage foreign direct investment world-wide. This article argues that Asian countries have used IIAs just as much as have other regions of the world to attract foreign direct investment, but that their pattern of agreement provisions is somewhat distinctive. States in East and Southeast Asia have tended to enter into agreements that strike a balance somewhat more favorable to host states than to foreign firms, at least when compared to the rest of the world. This may be due to high growth in the region, which tends to strengthen host states’ bargaining power, and the availability of a wider range of macroeconomic tools available to many governments in the region to stimulate growth. A better bargaining position leads to less constraining IIAs, which may in turn help to account for the relative dearth of investment disputes involving East and Southeast Asian states, since weaker protections give foreign investors slimmer grounds to dispute their treatment. There is some evidence, however, that the terms of Asian IIAs are beginning to converge with investment agreements elsewhere in the world.