Abstract

In  this  chapter  we  present  an  informal  cost-benefit  analysis  of  the  inclusion  of investment  protection  provisions,  including  investor-state  arbitration,  in  an investment chapter in TTIP. The analysis is conducted from the perspective of the EU and its member states. We argue that there is little evidence to suggest that investor-state  arbitration  will  provide  the  EU  with  meaningful  benefits,  such  as  increased foreign  investment  from  the  US.  In  contrast,  investor-state  arbitration  may  impose non-trivial costs, in the form of  litigation expenses and reduced policy space. This is due  to  the  huge  volume of  US  investment  that  would  be  covered by  the investment chapter,  as  well  as  the  fact  that  an  investment  chapter  would  almost  certainly  give foreign investors greater rights than they currently enjoy under EU and member state law. We conclude that, from the perspective of the EU, the case for including investor-state arbitration in TTIP is weak. Although we do not conduct a cost-benefit analysis from the perspective of the US, such an analysis would likely raise similar issues.