Emerging Market Economies and International Investment Law: Turkey-Africa Bilateral Investment Treaties.

• Author: Ofodile, Uche Ewelukwa

TABLE OF CONTENTS I. INTRODUCTION 953 II. TURKEY-AFRICA RELATIONS: BACKGROUND AND ECONOMIC DIMENSIONS 962 A. Background 962 1. Turkey-Africa Relations: Before 1923 962 2. Turkey-Africa Relations: Between 1923 and 1998 963 3. Turkey-Africa Relations: After 1998 963 B. Economic Dimensions 964 1. Foreign Direct Investment 965 2. Trade 965 3. Development Assistance 966 C. Political/Diplomatic Cooperation 968 1. Bilateral Relations 969 2. Relations with Continental and Subregional 970 Organizations D. Global Governance/Multilateralism 972 III. TURKEY-AFRICA RELATIONS: EMERGING LEGAL AND INSTITUTIONAL 973 FRAMEWORK A. Legal Instruments in Turkey-Africa Relations 973 B. Principles That Underpin Turkey-Africa Relations 975 C. The Agenda for Turkey-Africa Cooperation 976 D. Turkey-Africa Relations: Emerging Institutional Framework 976 IV. TURKEY IN AFRICA: FOREIGN POLICY TOOLS AND INSTITUTIONS 977 A. Turkey s Display of Soft Power in Africa 978 B. Turkey's Foreign Policy Institutions 980 1. Turk Eximbank 981 2. Foreign Economic Relations Board (DEIK) 982 3. Turkish Cooperation and Coordination Agency (TIKA) 982 V. TURKEY-AFRICA BILATERAL INVESTMENT TREATIES 984 A. Trends of Turkey-Africa BITs 984 B. Investor Protection Elements in Turkey-Africa BITs 985 1. National Treatment 986 2. Most Favored Nation Treatment 987 3. Absolute Standard of Treatment: Fair and Equitable 987 Treatment, Full Protection and Security, and Nonimpairment 4. Protection Against Expropriation 989 5. Right to Transfer Capital 991 6. Transparency Obligations 992 7. Investor-State Dispute Settlement 993 C. Sustainable Development Elements in Turkey-African BITs 994 1. Economic Development in the Preamble 996 2. Scope of Application Clause 998 3. Postestablishment Rights: the Right of Host State to 999 Restrict Admission of Investor/Investments 4. General Exception 1000 5. Limits on Expropriation 1002 6. The "Not Lowering of Standards" Clause 1003 7. Nonderogation Clause 1004 8. Limits on Investor Rights and Guarantees 1005 VI. TURKEY-AFRICA BILATERAL INVESTMENT TREATIES: A CRITIQUE 1006 A. Turkey-Africa BITs: Missing Elements 1007 1. Sustainable Development Not Explicitly Mentioned as a 1007 Treaty Objective 2. Corporate Social Responsibility Ignored 1009 3. Lack of Policy Space in "Old-Generation" BITs 1012 4. Legal Minefields Arising from Broad and Vague 1015 Obligations 5. Variations among Turkey-Africa BITs 1020 6. Development Dimension not Prioritized 1021 7. The Right to Regulate Is Not Affirmed Explicitly 1022 B. Reforming Turkey-Africa BITs: Options for Countries in 1024 Africa 1. Termination and Renegotiation 1024 2. Consultation and Treaty Review 1026 3. Treaty Amendment 1028 4. Treaty Replacement 1030 VII. REFORMING TURKEY-AFRICA BITS: COMPLICATING POLICY FACTORS 1029 PRACTICAL CONSIDERATIONS A. Key Policy Considerations that Shape Turykey-Africa BIT 1030 Regime 1. Turkey's Desire to Be Seen as Africa's "Friend" 1030 2. Turkey's Membership in the Council of Europe 1031 3. Turkey's Self-interest 1033 4. Ankara Ability or Inability to Deliver on Its Many 1034 Promises to Countries in Africa 5. Competition for Capital From Emerging Markets 1034 6. Disturbing Questions that Critics May Dare to Ask 1035 7. Crisis in International Investment Law and Ongoing 1038 Reform Efforts B. Practical Considerations 1044 1. Turkey's Immense Experience with BITs 1044 2. Turkey's Deployment of Soft Power in the African 1045 Continent 3. Lack of Coordination on the African Side 1045 VIII. CONCLUSION 1047 I. INTRODUCTION

Slowly, steadily, and silently, the Republic of Turkey (Turkey) is concluding important and far-reaching BITs with countries in Africa. (1) To date, Turkey has concluded BITs with about twenty-eight different countries in Africa. (2) While much attention has focused on China-Africa economic relations, (3) economic cooperation arrangements between African states and other emerging market economies have largely flown under the radar. Relations between Turkey and countries in Africa have been deepening and widening since 1998 when Ankara adopted an Africa Action Plan (4) and stepped up in 2005 when Turkey launched its "Opening to Africa" policy (5) and declared the year the "Year of Africa." (6) The result is that, although Turkey is still relatively new in African politics, trade, and aid circles, "it has already expanded its area of influence in the continent by linking its soft power tools of transportation links, trade, and education closely with its foreign policy." (7) Once limited to North Africa, Ankara's interest in Africa is now extending to all parts of the continent. (8) From every indication, African countries, individually and collectively, are responding positively to Ankara's overtures. (9) The African Union (AU), a continental union consisting of fifty-five countries, (10) granted Turkey "Observer Status" in 2005. (11) In 2008, the AU declared Turkey a "Strategic Partner" of the African Continent. (12) In January 2013, Turkey became the twenty-sixth nonregional member of the African Development Bank and the twenty-sixth State Participant to the African Development Fund. (13) Since 2003, Turkey has concluded BITs with more than half of the countries in Africa. (14) Turkey has concluded more bilateral investment treaties with countries in Africa than partners, such as the United States (nine BITs with countries in Africa) (15) and Japan (three BITs with countries in Africa). (16)

Turkey-Africa economic engagements underscore the shifting, and growing role of emerging market economies in the global economy (17) and in the economies of many developing countries. (18) Over the last two decades, emerging market economies have slowly and steadily established themselves as key players in the world economy and as major players on the foreign direct investment (FDI) scene. (19) According to the World Bank's Global Economic Prospects 2018, capital flows to emerging economies strengthened in 2016 and again in 2017. (20) In turn, emerging market economies are exporting more and more capital to developed countries, to other emerging market economies, and to developing economies. (21) Outward FDI from emerging economies has grown even as emerging market multinationals (EMNCs) have become more dominant on the global stage. (22) Since 1990, emerging market economies have launched more than seventeen thousand large companies according to McKinsey Global Institute (McKinsey). (23) In 2013, emerging market multinationals accounted for 26 percent of the Fortune 500, up from 5 percent between 1980 and 2000. (24) Experts predict that by 2025, emerging market multinationals will "account for more than 45 percent of the Fortune Global 500." (25)

Turkey and countries in Africa are concluding BITs at a time when international investment law is in crisis and is witnessing defections (26) and facing multiple calls for fundamental overhaul. (27) While some countries are exiting the system, (28) many others are keen on reforming the system. (29) The United Nations Conference on Trade and Development (UNCTAD) has long acknowledged this crisis and led the movement for reform. (30) In its 2012 Investment Policy Framework for Sustainable Development (updated in 2015), UNCTAD presented the organization's vision on designing international investment policies for sustainable development. (31) In 2016, the Group of Twenty (G20) Ministers adopted the G20 Guiding Principles for Global Investment Policymaking and essentially acknowledged the need for reform. (32)

This Article underscores a new normal for countries in Africa--increased engagement with emerging partners in Asia, the Middle East, and Latin America. (33) Thanks to emerging partners, the patterns of trade, investment, and aid to Africa are shifting. (34) Is Africa ready to engage emerging partners and, if so, on what terms? Does the shift in global wealth really spell the end of postcolonialism? (35) Does Africa have a strategy for engaging with emerging partners? Does Africa need a strategy? Is Africa effectively harnessing its emerging partnerships for sustainable development?

The changing role of emerging market economies in the global economy is raising a number of interesting questions for international lawyers and for international economic law. For example, as emerging markets' economies are transforming the global economy, are they also transforming or attempting to transform international economic law and policy? And if emerging markets' economies are transforming international economic law and policy, to what degree? (36) In their engagements with other developing countries, are emerging market economies using and asserting the same norms and principles that Western nations developed and have deployed for years? (37) In 2011, an editorial in the OECD Observer aptly asked: "Before the talk was in dollars. Now leaders speak equally of Chinese renminbi, Indian rupees and Brazilian reals. Are the last shackles of colonialism finally being broken? Or is another form of dependence taking over, this time based on commodity hungry emerging markets?" (38)

Against the backdrop of the changing role of emerging markets in the global economy and the renewed emphasis on sustainable development among world leaders, (39) this Article takes a look at the BITs that Turkey has concluded, and is still concluding, with countries in Africa. (40) In the BITs with countries in Africa, is Turkey merely conforming to the norms and standards established by developed countries, or is Turkey changing these norms in fundamental ways? Compared to BITs between Western nations and countries in Africa, do Turkey-Africa BITs espouse purposes other than investor protection, and are Turkey-Africa BITs more oriented towards sustainable development? (41) Are Turkey-Africa BITs designed to provide sufficient policy space for host states?

Since 2003, Turkey has concluded thirty-one BITs with twenty-eight countries in...