International Trade And Foreign Investment

1979 Words Aug 21st, 2016 8 Pages
1 The Interplay Between International Trade and Foreign Investment
Trade and investment are highly connected that could be illustrated as two sides of the same coin. Companies conduct cross-border trade to supply their foreign investment, and they invest abroad to bolster their trade. Moreover, in the liberalisation era, while investors produce and consume both goods and services, an open trading system will provide a bright investment climate. Equally important, international trade and foreign investment have similar dominant actors through the presence of multinational enterprises.
From a government perspective, when the government enacts policy, it is not purely designed for reaching trade or investment objectives, for example, in the case of subsidy program. In addition, the close connection of trade and investment is also reflected from the existing regulation that become more converged. Through its binding treaties, the WTO has applied many rules covering not only trade but also investment as reflected in the GATS and TRIMS Agreement. Besides, some preferential trade agreements, such as NAFTA and TPP have also separately regulated investment and investment arbitration. Contrarily, trade became integrated into investment treaties. Some existing BITs encompassing not only protection but also access or entry rights. Besides, they also forbid trade-related performance requirements, especially provision to require the use of local products and transfer…
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