Negotiating Investment in the GATT: A Call for Functionalism

In part, this article is about the conflict between literalism and functionalism in the GATT. It examines an attempt in the Uruguay Round to negotiate rules on foreign direct investment – the so-called trade-related investment measures (TRIMs) negotiations. Foreign direct investment is often a stage in the internationalization of enterprises; it is helpful to the trade of goods producers and necessary to the trade of many services providers. Affected by the output-oriented history of the GATT, however, the Contracting Parties have treated investment as though it were simply one of three legs of an economic triangle: goods, services, investment. In the Uruguay Round, this approach has yielded a hybrid: the TRIMs talks.