Trad and Investment for international economy
International trade and investment are often thought of as two sides of the same coin, the relationship is complex and has evolved over time. Global value chains (GVCs), for example, have sharpened the interdependencies between trade and foreign direct investment (FDI), as companies combine trade with investment to organize the supply of inputs, to expand in new markets, to access knowledge, and to provide services to consumers. The global trade and investment regime has a profound impact on human rights, given that the promotion of economic growth in itself may not lead to inclusive, sustainable and equitable development outcomes.
Trade and investment regimes also overlap and interface with intellectual property, transfer of technology, climate change, and energy regimes. Any evaluation must address the impacts of regime convergences, divergences and intersections on the realization of human rights. As such, restrictions and distortions to cross-border trade and investment have an impact beyond their respective policy areas and can have significant spill-over effects, magnifying costs in the domestic and global economy. The United States and China are the world’s two largest economies. Over the coming decades, no two countries will have a greater impact on the global economic order—the system of institutions, rules, and norms that govern international economic affairs. A global economy that delivers strong, sustainable, balanced, and inclusive growth will depend on such a well-managed order.
In this environment, it is important for policy makers to take stock of evolving business strategies and to improve the coherence of trade and investment policies. Trade agreements increasingly include investment provisions and address a broader spectrum of policy issues that also influence firm strategies, including competition policy, state intervention, taxation and subsidies, financial flows, currency exchange rates, intellectual property rights protection, the movement of professionals, and data flows. Such an approach allows for greater policy coherence within trade agreements.