International Economic Law and the Challenges of the Free Zones

Special economic zones (SEZs) have become a permanent feature of the world trade scene. This book, the first to provide a critical and comprehensive analysis of SEZs covering a wide spectrum of countries and regions, shows how SEZs, albeit established at the domestic level by different countries, raise multiple legal issues under international economic law. This first-rate book is the product of the Asia FDI Forum IV held in Hong Kong in 2018.

Thoroughly exploring the development of the SEZ phenomenon and its players, the contributing authors (all leading economic law experts) review the issues raised by SEZs in the context of international trade law, international investment law and investment arbitration. They identify the extent to which SEZs have been coherent in their design and policymaking, in particular with regard to domestic law reforms. They address such aspects (both core themes and specific examples) as the following:

• investment protection in China’s SEZs;
• state-owned enterprises regulation;
• dispute settlement;
• under what circumstances incentives available in SEZs count as export subsidies prohibited under World Trade Organization (WTO) rules;
• compliance with internal market rules in European Union (EU) free zones;
• local populations as victims of land expropriation;
• Brazil’s Manaus Free Trade Zone;
• India’s experience with multiple SEZs;
• the administrative approval system in the Shanghai Free Trade Zone;
• economic corridors and transit routes as SEZs;
• ‘refugee cities’: SEZs for migrants;
• how China’s Supreme People’s Court serves national strategy;
• how foreign investors challenge free-zone regimes;
• impacts of the establishment of SEZs on tax revenues;
• SEZs and labour migration; and
• management models.

The chapters also include insights into the new emerging generation of international investment agreements; WTO accession, transparency, and case law materials clarifying specific trade issues associated with SEZs; and new rules to protect the environment and labour rights, as well as analysis of crucially significant cases such as Goetz v. The Republic of Burundi, Lee Jong Baek v. Kyrgyzstan and Ampal-American and Others v. Egypt.

With its critical and comprehensive analysis of the dynamic SEZ phenomenon across legal, economic, investment, regulatory and policy matrices – including a thorough analysis of the success factors and required policies for SEZs – this book takes a giant step towards answering the question whether SEZs fundamentally contradict norms of international law or whether SEZs have to be considered as laboratories which facilitate the implementation of international economic policies. Its careful examination of theory and practice and its approach to lessons learned from case studies will reward trade and investment officials, policymakers, diplomats, economists, lawyers, think tanks, business leaders and others interested in this ever more important area of law and economics.