Ineffective Trade in Service and Investment Agreements

Abstract

This article employs behavioural effectiveness theory to show that trade in services and investment agreements are compliance-friendly but ineffective in inducing states' behaviour. Given that the level and scope of liberalization is determined by the extent of sectoral coverage under a positive list approach or the scope of carve-out under the negative list approach, many negotiating parties merely reflect existing domestic laws (status quo) or carve out policy autonomy more than their domestic laws permit (status quo minus) without inserting terms that actually induce states' behaviour, such as implement-ing domestic laws to comply with the agreements (status quo plus). This article is the first to provide three modalities of commitments in services and investment agreements (i.e., status quo, status quo minus, and status quo plus) to show that services and investment agreements are ineffective in nature as they are mostly in the form ofstatus quo or status quo minus rather than status quo plus. The article also introduces various political and economic reasons for the conclusion of ineffective agreements.