| This thesis challenges the conventional postulate of trade and foreign direct investment (FDI) as parallel and comparable international business modes. This thesis, based on the nature and function of FDI, argues that FDI is a neutral capital flow that underpins both international production and independent intra-firm trade, and therefore, FDI always supports trade in international production and distribution. Then, this thesis examines the impact of trade measures on FDI and FDI measures on trade respectively. It concludes that except for liberal trade and FDI measures, restrictive and incentive trade and FDI measures restrict or distort both trade and FDI and therefore reduce domestic and/or worldwide economic welfare. Therefore, governments should abandon restrictive and incentive trade and FDI measures, or endeavor to discipline these measures through multilateral arrangements. Lastly, this thesis argues for a Multilateral Agreement on Investment (MAI) under the WTO regime, and demonstrates that the proposed MAI is compatible with the WTO regime. |
