A third structural element to be taken into account when considering FDI refers to the changing environment that surrounds it. A certain change in the traditional atmosphere surrounding FDI is now taking place. ‘ Red tape has not replaced red carpet’ – at least not yet – but FDI access to certain markets has become more difficult in a growing number of countries. It is not yet possible to speak of the existence of an FDI-unfriendly overall investment climate, but signs of the existence of a less welcoming attitude towards certain FDI is increasingly ascertainable in some countries.

Greater emphasis has recently been put by host states on the achievement of certain legitimate domestic policy objectives. States are increasingly concerned about the ability of international investment law to place undue constraints on their sovereign regulatory powers in different ways, and they have attempted to respond to this situation in various ways. All these concerns may finally give way to changes in the level of protection awarded by IIAs to foreign investors or to the use of certain general exceptions in IIAs, at a time when their number is increasing steadily, as well as to the introduction of limitations on market access or to the wider use of screening mechanisms for FDI projects by governments, mainly those focused on M&As. The preservation of the host state's ‘public order’, ‘public security ’, ‘national essential security interests’ or similar notions is gaining in importance.

WORLDWIDE EMERGING CONCERNS

When referring to FDI, authors tend to differentiate between several types of FDI: market-seeking FDI, efficiency-seeking FDI, resource-seeking FDI, and strategic asset-seeking FDI. However, regardless of the type, the very nature and goals of FDI make it much more likely to raise national security concerns than trade. FDI has always created a range of concerns in host states. No country has been immune to such feelings, and the effects of FDI on both national security and national sovereignty have been present to a greater or lesser extent in the FDI regulation of almost every country around the world, even in those states traditionally open to FDI; the US Trading with the Enemy Act of 1917, which has been in force since its enactment, with some modifications, is a good example of this.