Sustainable Development in International Investment Agreements: Bridging the Gap with Developing Nations
Wright Thembani
International Trade & Investment Law Practitioner | Capital Markets | Economic Governance | LLB | LLM
World Trade Organization ICTSD International Centre for Trade and Sustainable Development United Nations
The global discourse on sustainable development has manifested itself in numerous international legal agreements. These agreements, designed to be cornerstones of a harmonious and equitable world, carry the promise of shared prosperity, environmental stewardship and social justice. However, a critical examination reveals that the implementation of sustainable development provisions within these legal frameworks may not be commensurate with the diverse and intricate needs of developing countries.
This article seeks to dissect the inherent inadequacies of these provisions, exploring how they fall short of addressing the unique challenges faced by developing countries. Through this analysis, it becomes evident that the pursuit of sustainable development on a global scale demands not only a re-evaluation of existing legal instruments but a fundamental reconsideration of the power dynamics, inequalities, and systemic barriers that hinder the effective translation of sustainable development into tangible progress for nations striving to overcome historical disadvantages.
To begin with, sustainable development is defined as “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”(1) This commitment to sustainable development is emphasised in the preamble of the World Trade Organisation (WTO) Agreement(2), highlighting the importance of the concept in seeking to reform international economic law through the provision of guidelines for the processes and priorities of development.
It is pivotal to note that the approaches towards sustainable development are largely determined by the level of economic development which the State has achieved. There are considerable differences between developed and developing countries concerning the scope and purpose of sustainable development. Developing countries are primarily concerned with economic growth and poverty eradication whereas developed countries are concerned with environmental protection and intergenerational equity(3). To this end, the generally accepted pillars of sustainable development were codified by the Earth Summit of 1992 which categorised sustainable development as development that fulfils three criteria namely, economic sustainability, environmental protection and social factors (4). However, these provisions present a complex terrain where the realities of developing nations often clash with the ideals enshrined in international agreements.
The following section will analyse each of these pillars as they relate to the needs of developing countries.
a)Economic Sustainability
Within the framework of international cooperation, economic sustainability finds expression in treaties, agreements, and policies crafted to foster a global economic system that is not only robust but also fair and inclusive. Despite the noble intentions embedded in these legal instruments, a critical examination reveals that economic sustainability provisions within international agreements often grapple with inherent inadequacies.
For instance, scholars such as Van de Bossche argue that the inclusion of more specific and obligatory provisions may interfere with the core mandate of international economic law, which is liberalisation (5). Provisions which restrict liberalisation may be detrimental to developing countries which rely on export markets in developed countries for economic growth. For example, the WTO’s Technical Barriers to Trade (TBT) Agreement permits arbitrary discrimination between physically similar products based on economically unsound production methods. (6)
In addition, obligatory provisions may interfere with the ability of developing States to guide development. (7) They cause the “straitjacket effect” which is essentially limiting the policy space of developing countries. Moreover, mandated commitments may constrain governments from implementing policies tailored to their specific circumstances and needs. Economically, the provisions may restrict the ability of developing nations to adopt protectionist measures or strategies for nurturing infant industries, potentially impeding their industrialisation efforts. Furthermore, meeting these requirements often demands significant financial and human resources, which in most cases, developing countries lack and may lead to the diversion of crucial funds away from essential social and economic development projects (8).
b)Environmental Protection
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The concept of ‘sustainable development’ attempts to bring economic development on the one hand and due regard for environmental concerns (including responsible use of natural resources) on the other into balance (9). Environmental protection encompasses a spectrum of practices, policies, and regulations aimed at preventing, mitigating, and adapting to the adverse impacts of human activities on the environment. The urgency to address environmental challenges, ranging from climate change and biodiversity loss to pollution and resource depletion, has underscored the critical role of robust environmental protection measures.
However, the inclusion of obligatory environmental protection provisions in international economic law treaties has given rise to tension between developed and developing countries(10). Firstly, developed countries advocate for stringent environmental standards, arguing that they are essential for global sustainability. Developing countries on the other hand argue that historical contributions to environmental degradation have been predominantly from developed nations.(11). Secondly, developing countries face challenges in adopting environmentally friendly technologies due to financial constraints (both in implementation and enforcement) and limited access to advanced technologies. This is considered a form of regulatory dumping (high environmental protection standards, which are unattainable for developing countries) by developed countries.
Thirdly, environmental provisions in trade agreements are perceived as potential trade barriers. Developing countries fear that stringent environmental standards imposed by developed nations could limit their market access thus exacerbating economic inequalities(12). Lastly, developing countries may view obligatory environmental provisions as encroaching on their sovereignty and policy autonomy. This is especially so when the requirements set by international agreements limit the ability of nations to design and implement environmental policies in a way that suits their specific socio-economic context (13)
c)Social Factors
Sustainable development involves not only economic and environmental aspects but also social factors, including human rights, inclusivity and cultural sensitivity. The international community has recognized the centrality of social factors in various global frameworks, including the United Nations' Sustainable Development Goals (SDGs). The SDGs explicitly integrate social dimensions, emphasizing goals such as eradicating poverty, ensuring gender equality, and promoting inclusive and sustainable communities.
However, the effective integration of social factors into international agreements faces multifaceted challenges. International legal agreements may not consistently prioritise or enforce human rights considerations, potentially leaving vulnerable populations without adequate protection. In addition, developing countries may find it challenging to ensure that the benefits of sustainable development reach all segments of their populations.
In conclusion, as the international community endeavours to address complex global challenges and promote sustainable development, it is imperative to recognise the nuanced realities of developing countries. Striking a balance between global standards and the unique developmental needs of these nations is essential. Therefore, there is a need for a more collaborative and consultative approach which prioritises the concerns of developing countries to create a more inclusive, fair, and effective framework for global cooperation (14). Addressing the challenges of obligatory provisions and fostering a spirit of partnership, will ensure that the international community can work towards creating a more equitable and sustainable world that accommodates the diverse needs and aspirations of all nations.
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