The States Parties of the MERCOSUR (Argentina, Brazil, Paraguay and Uruguay) signed in April 2017 the Protocol on Investment Cooperation and Facilitation (“MERCOSUR Protocol”).
As discussed in this post, the Protocol draws significantly on the Brazilian model investment agreement (the Agreement on Cooperation and Facilitation of Investments – ACFI), which stands out for departing from the traditional design of Bilateral Investment Treaties (BITs), particularly – but not only – by excluding the possibility of investor-State dispute settlement (ISDS).
The emergence of the MERCOSUR Protocol has implications at the level of investment policy, as it represents a step towards the regionalization of the Brazilian model. It reflects the attempt to include in a single document the realities of four countries with important political, economic and investment policy differences, as expressed by the varying trajectories of Argentina and Brazil in the investment area.
It also raises interesting questions from an international law perspective. It highlights the legal challenges faced by Brazil, which not only joined the network of international investment agreements (IIAs) as a late-comer but also opted for embracing a particular approach to investment treaties. Accordingly, aside from provisions that innovate in investment law-making, the MERCOSUR Protocol incorporates provisions whose intention seems to be to insulate Brazil from applying protection standards often found in the over 3,000 treaties that now comprise the network of BITs, but which have been deliberately absent in the ACFI.