The Energy Charter Treaty and EU-Growth Policies

International economic integration can promote growth in various ways. For instance, foreign direct investment (FDI) can foster growth by contributing to capital formation and by increasing productivity through spillovers of technology and other know-how.

The basic policy tool for increasing FDI is international investment agreements (IIAs), state-to-state treaties that protect FDI against host country policy measures. This note focuses on the IIA of most relevance from an EU growth perspective, the Energy Charter Treaty (ECT), which protects FDI in the energy sector. Since fossil energy use is a main source of CO2 emissions, the EU should be highly sensitive to any restrictions that the ECT might impose on EU energy policies.

In this paper, author Henrik Horn suggests that the ECT should be thoroughly revised to not become an obstacle to the EU ambition to transform the EU economy toward carbon-neutrality.

About the author

Henrik Horn, Professor of International Economics, is at the Research Institute of Industrial Economics (IFN), Stockholm. He is Non-Resident Senior Fellow at Bruegel, Research Fellow in the International Trade Programme and the Industrial Organization Programme of the Centre for Economic Policy Research, London, and Senior Programme Associate, Global Economics Programme, Robert Schuman Centre for Advanced Studies. His work focuses on issues at the intersection of Economics and Law, in particular with regard to trade agreements and investment treaties. He also works on competition and regulation problems.

About the editor

Anna Willman is a Climate Policy Expert at Fores and holds a Master’s degree in Environmental Economics and Climate Change from London School of Economics.

About ELF

The European Liberal Forum (ELF) is the official political foundation of the European Liberal Party, the ALDE Party. Together with 46 member organisations, we work all over Europe to bring new ideas into the political debate, to provide a platform for discussion, and to empower citizens to make their voices heard.

ELF was founded in 2007 to strengthen the liberal and democrat movement in Europe. Our work is guided by liberal ideals and a belief in the principle of freedom. We stand for a future-oriented Europe that offers opportunities for every citizen. ELF is engaged on all political levels, from the local to the European.

We bring together a diverse network of national foundations, think tanks and other experts. At the same time, we are also close to, but independent from, the ALDE Party and other Liberal actors in Europe. In this role, our forum serves as a space for an open and informed exchange of views between a wide range of different actors.

About Tankesmedjan Fores

Fores – Forum for reforms, entrepreneurship and sustainability – is the green and liberal think tank based in Sweden. With one foot in academia and the other in the public debate, Fores works every day towards solutions and policies that strengthen the liberal democracy. Through our three work groups we seek scientifically based, forward-looking policies on Growth, Security and Trust.