The recent developments in the European Community evoked by
the Single European Act and commonly referred to as the creation
of "Fortress Europe" by the end of 1992 have been attracted
considerable attention with respect to economic and political
integration in the international arena. Similarly, the
conclusion of the U.S.-Canada Free Trade Agreement aiming at a
loose form of economic integration received significant
recognition.
These two agreements cover not only liberalization of trade
in goods and services but moreover, include foreign direct
investment. This is of particular significance since little
progress has been made in its regulation on an international
level in comparison to the regulation of trade in goods. Due to
the fact that direct investment is primarily exercised by large
multinational enterprises it has a larger political impact on the
host countries than trade in goods and services. Foreign
ownership of local industry creates the concern of economic
dependence and of a loss of sovereign powers among host
governments. Consequently, governments introduce laws and
regulations aiming at the restriction of direct investment of
foreign investors.
However, as foreign investment augments economic growth, it
is of common benefit to both investors and host countries to
provide an investment climate which balances the conflict of
interest between the need of legal certainty and flexibility for
foreign investors arid the safeguard of economic independence and
political freedom of host country governments to introduce and
maintain measures deemed necessary for the benefit of their
national economies.
This thesis will demonstrate the most effective regime to
solve this conflict through comparison of the Free Trade
Agreement with the Treaty of Rome as amended by the Single
European Act. These agreements have been chosen since they
involve two of the triad world economic powers and thus,
represent industrialized nations with the highest degree of
foreign direct investment aiming at the liberalization of direct
investment in their "enlarged" markets.
The thesis is divided into three parts. The first and
second parts will discuss the degree of liberalization of foreign
investment within the Common Market including the progress made
under the Single European Act of 1986 and within the free trade
area established by the U.S.-Canada Free Trade Agreement in 1989.
The analysis will centre around the issues of free establishment
of companies, the National Treatment Principle, capital movement,
and mergers and acquisitions. The third part consists of the
comparative analysis and will provide the final conclusions.
The conclusions will show that the two agreements share few
similarities but they are characterized by their divergent
approach to direct investment liberalization. It is submitted
that the more comprehensive form of liberalization is reached in the Common Market due to its broad restraint on sovereign powers
of its Member States and coherently implemented elimination of
restrictions on foreign investment. In contrast, the Free Trade
Agreement only imposes selected obligations on the parties to
liberalize direct investment. It will become clear that the Free
Trade Agreement stands for a settlement of the most vexing
investment issues between the parties rather than a commitment to
virtually liberalize investment between the U.S. and Canada.
In view of this result, recommendations are made to further
liberalize investment under the Free Trade Agreement. These have
to be seen, however, in the light of numerous economic and
political divergencies between the Common Market and the U.S.-
Canadian free trade area. / Law, Peter A. Allard School of / Graduate
| Identifer | oai:union.ndltd.org:UBC/oai:circle.library.ubc.ca:2429/42049 |
| Date | January 1991 |
| Creators | Sievers, Monika |
| Publisher | University of British Columbia |
| Source Sets | University of British Columbia |
| Language | English |
| Detected Language | English |
| Type | Text, Thesis/Dissertation |
| Rights | For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use. |
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