The diffusion of bilateral investment treaties: the role of UNCTAD

The paper questions whether developing countries can reasonably be assumed to have made an informed decision, when entering into bilateral investment treaties (BITs) in the past. Apart from relying on interview feedback from a large sample of BIT-negotiators, it traces what information was actually available to developing countries about the implications of the treaties during the decades where the global BIT-network expanded rapidly; i.e. the late 1980s and 1990s. Particular focus is on the role of the United Nations Conference on Trade and Development (UNCTAD), which actively promoted BITs during the 1990s through publications, advisory services, and - notably - organizing actual BIT-signing sessions. The paper concludes that imperfect and inaccurate information may explain much of the popularity of BITs among developing countries, who often overestimated their benefits, and underestimated their risks. In many, though not all, cases exceptionally broad and vague treaty standards were agreed upon not as a result of careful, and fully informed cost-benefit analyses, but rather because of ignorance about the possible implications. And although better informed developing countries would not necessarily have opposed BITs outright, this does go a long way to explain the current backlash against the international investment regime.