FDI has undergone a process of liberalisation over the last three decades. However, and despite the existing position in favour of this attitude, states have always maintained barriers of different natures and scopes to control it. The reasons for these barriers may have varied over time, and likewise the level of restriction on investment flows from abroad, but they have always existed. Nevertheless, as a general trend, barriers to foreign investment have been lowered steadily in recent years and there is now an attitude in favour of the liberalisation of FDI.

However, and despite this positive approach to FDI, some major changes have been taking place worldwide in recent times. The economic crisis, the atmosphere of increasing securitisation, and the geostrategic changes that have come about since 2007 have led many countries to ‘reassess their investment policies’, in many cases on the basis of national security or national essential security interests grounds. Reasons for limits on FDI, which have always existed and are present in many IIAs, have gained further strength in the past decade, to the extent that national security and related grounds are nowadays considered one of the primary justifications for barriers to FDI.

Indeed, it is in the field of FDI, more than in international trade, that national security interest exceptions may be truly tested. As national security concerns of all kinds multiply, more and more countries, even developed countries, are tempted to create – or have actually created – obstacles to foreign investment based on these kinds of grounds. Host states fear that foreign investors will gain control of essential security-related technology, compromise access to it or act in a way that advances the goals of foreign states. These fears are not new. Moreover, they are not related solely to FDI, either private or sovereign-driven, but also to other areas of the economy, and they have been to some extent anticipated by existing IIAs. As previously mentioned, the notion of ‘national security’ has evolved and now includes national interests or similar, concepts very closely linked to strategic sectors and national champions.

IIAs already address the economic, political or security concerns that FDI, both private and public, poses.