Roy M, Marchetti J, Lim H (2007) The liberalisation of services in the new generation of preferential trade agreements: what is the scope of the GATS? World Trade Rev 6 (2):155-192 Miroudot S (2009) Economic impact of investment provisions in Asia RTA. In: Chaisse J, Gugler P (eds) Expansion of trade and di in Asia. Routledge, London, p. 186-211 UNCTAD (2009) The role of international investment agreements in attracting foreign direct investment to developing countries. UNCTAD series on international investment policy for development. New York and Geneva (United Nations) Blonigen BA, Davies RB, Waddell GR, Naughton HT (2007) IDE in space: self-aggressive spatial relationships in the context of foreign direct investment. European Economic Review 51 (5): 1303-1325 Second, clauses authorising exceptions or derogations from treatment and protection rules are essential, particularly in cases of dispute between the host country and foreign investors. In fact, some TDTs contain exceptions for health, safety, public morality or environmental protection. This is the case, for example, with the 2004 US ILO model, which allows parties to take the necessary measures where such measures do not constitute « arbitrary or unjustified discrimination or a disguised restriction on trade or investment ». In any case, the more clearly the exception, the better.

The exceptions, which are generally formulated, provide the courts with a great deal of discretion. Tobin J, Rose-Ackerman S (2005) Foreign direct investment and the business environment in developing countries: the effects of bilateral investment agreements. Yale Center for Law, Economics and Public Policy. The discussion paper. New Haven, Conn Specifically, gravitational models suffer from integrated distortions of « normal » business models — down for relatively remote countries and upwards for closer countries – unless bilateral distances are weighted by the size of trading partners. We are very grateful to an anonymous expert for drawing our attention to Polak`s (1996) contribution. The embedded distortions are perhaps less severe in gravity models for gravity models for direct gravity models, compared to trade-based gravity models, considering that the effects of distance on dis are generally considered ambiguous: as with trade, FDIs tend to be deterred by distance-related transaction costs.