Bilateral investment treaties: the foreclosure of domestic policy space

Bilateral investment treaties (BITs) potentially expose host countries to a wide range of negative political consequences. Yet despite the risks, more countries are signing such treaties than ever before. The proliferation of BITs is mainly attributable to the fact that host countries believe they will increase foreign direct investment, coupled with the fact that host countries are simply not aware of the negative consequences that flow from BIT obligations. This article examines what impact BITs have on domestic political processes and decisions. Using South Africa as an example, the article assesses whether the BITs signed by the South African government hinder or foster the achievement of the country's defined developmental objectives. The article argues further that host governments of foreign investment should be questioning what the broader sustainable developmental impacts their BITs have beyond those related to investment flows, and that they should be investigating what safeguards can be put in place to secure the necessary policy space to enable them to achieve their development objectives.