The net result on FDI in a RIA of these tariffs adjustments therefore depends on which
effects will prevail, the pro-FDI or the anti-FDI one. Since it is not clear from the
theoretical point of view, it becomes an empirical issue, as pointed out by Winters (1997).
Of course I am not considering other tools to protect members of a bloc from non-bloc
investors here, as for example the rules of origin set up by the EU. By imposing a ‘localcontent
requirement’, the EU can protect itself from imports of Korean goods produced in
Eastern Europe, that benefit from free-trade under the Europe Agreements. The effect is
to discourage such investment by non-members and it would not be picked up only by
looking at the level of the tariffs.