They build on WTO rules and obligations, thereby improving the framework for cross-border economic trade and creating added value in terms of reducing barriers to trade and providing legal certainty. The EFTA States see free trade agreements as a complement to, not a substitute, for the multilateral trading system. Free trade agreements are international agreements concluded between two parties (countries or transnational groups) in order to guarantee free trade. The Court of Justice of the European Communities has ruled that the provisions of investor-state arbitration (including a special tribunal provided for in certain free trade agreements) fall within the competence of the European Union and its Member States and that, for this reason, their ratification should be approved by both the EU and each of the 28 States.  International investment flows are an essential part of the global economy. In both developed and developing countries, foreign direct investment (FDI) can be a key component of economic growth by stimulating employment, wage levels and knowledge transfer. There is a growing consensus that there is a close link between international trade and foreign direct investment. Although they can be substituted, trade and foreign direct investment are often complementary means for companies to access foreign markets. It is therefore not surprising that investment issues are gaining importance in international trade negotiations. More broadly, private investment decisions are influenced by a large number of institutional factors, some of which can be addressed in investment agreements.