SESSION 1 INVESTMENT FACILITATION NEGOTIATIONS AT THE WTO: SOME - - PowerPoint PPT Presentation

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SESSION 1 INVESTMENT FACILITATION NEGOTIATIONS AT THE WTO: SOME RECOMMENDATIONS FOR INDONESIA

Presenter: Wenguo Cai Director, International Programs The Conference Board of Canada Jakarta, 1-2 April 2019

Outline of Presentation

Considerations and Recommendations

Considerations and Recommendations for Indonesia

Investment Facilitation Discussions/Negotiations at the WTO

New Developments Key Elements in IF Proposals

Background

Defining “Investment Facilitation” Multilateral negotiations Investment facilitation in trade agreements

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BACKGROUND

What is “Investment Facilitation”?

Investment facilitation is the set of policies and actions aimed at making it easier for investors to establish and expand their investments, as well as to conduct their day-to-day business in host countries - defined by UNCTAD

What is “investment facilitation”?

Improving regulatory transparency and predictability, with the publication of investment- related regulations, and the creation of enquiry points;

Transparency

Streamlining and speeding up administrative procedures, by simplifying documentation requirements and approval procedures;

Simplification

Enhancing international cooperation, by exchanging best practices and providing and financial & technical assistance to developing countries

Cooperation

Source: WTO, “Investment facilitation: Relationship between trade and investment”

Through public-private collaboration

What is NOT investment facilitation?

Source: WTO, “Investment facilitation: Relationship between trade and investment”

Investment Facilitation

Market access Investment protection Investor- state dispute settlement (ISDS)

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HISTORICAL DEVELOPMENTS OF IF NEGOTIATIONS AT THE WTO

Multilateral Negotiations on Investment Facilitation

Historical Background: Ups and downs of Investment Facilitation Negotiations

Source: WTO, “Investment facilitation: Relationship between trade and investment”

1995: WTO establishment 1996: Singapore Ministerial (MC1) 2001: Doha Round (MC4) 2003: Cancun Ministerial (MC5) 2004: July Package April 2017: Informal WTO dialogue

• Dec. 2017:

Buenos Aires Ministerial (MC11) 1995-1998: failed attempts to conclude a Multilateral Agreement on Investment (MAI) Trade Facilitation Agreement concluded at MC9

Historical Background: Ups and Downs of Investment Facilitation

Source: WTO, “Investment facilitation: Relationship between trade and investment”

1995: WTO establishment 1996: Singapore Ministerial 2001: Doha Round 2003: Cancun Ministerial 2004: Members dropped investment April 2017: Informal dialogue launched

• Dec. 2017:

Buenos Aires Ministerial

• TRIMS Agreement
• GATS Mode 3

Historical Background: Ups and Downs of Investment Facilitation

Source: WTO, “Investment facilitation: Relationship between trade and investment”

1995: WTO establishment 1996: Singapore Ministerial (MC1) 2001: Doha Round 2003: Cancun Ministerial 2004: Members dropped investment April 2017: Informal dialogue launched

• Dec. 2017:

Buenos Aires Ministerial Establishment of a Working group on trade and investment to carry out analytical and exploratory discussions.

Historical Background: Ups and Downs of Investment Facilitation

Source: WTO, “The Doha Declaration explained”

1995: WTO establishment 1996: Singapore Ministerial 2001: Doha Round (MC4) 2003: Cancun Ministerial 2004: Members dropped investment April 2017: Informal dialogue launched

• Dec. 2017:

Buenos Aires Ministerial

The Declaration includes principles such as the need to balance home vs host countries’ interests, countries’ right to regulate investment, development, public interest, etc. The Doha Declaration instructs the working group to clarify the scope and definition

• f the issues, transparency, non-discrimination, development provisions, exceptions

and safeguards, consultation and dispute settlement.

Historical Background: Ups and Downs of Investment Facilitation

Source: WTO, “Investment facilitation: Relationship between trade and investment”

1995: WTO establishment 1996: Singapore Ministerial 2001: Doha Round 2003: Cancun Ministerial (MC5) 2004: Members dropped investment April 2017: Informal dialogue launched

• Dec. 2017:

Buenos Aires Ministerial No progress made in Cancun. Members accept to pursue further negotiations.

In Cancun Declaration, WTO members agree to:

• intensify investment-related negotiations
• provide strengthened and adequately resourced technical assistance to developing countries and LDCs.

Historical Background: Ups and Downs of Investment Facilitation

Source: WTO, “Decision Adopted by the General Council

• n 1 August 2004” WT/L/579, 2 August 2004

1995: WTO establishment 1996: Singapore Ministerial 2001: Doha Round (MC4) 2003: Cancun Ministerial 2004: July Package April 2017: Informal dialogue launched

• Dec. 2017:

Buenos Aires Ministerial

The WTO General Council decides to drop investment as a negotiation issue. Investment “will not form part of the Work Programme set out in [Doha] Declaration and therefore no work towards negotiations on any of these issues will take place within the WTO during the Doha Round.”

Historical Background: Ups and Downs of Investment Facilitation

Source: WTO, “Investment facilitation: Relationship between trade and investment”

1995: WTO establishment 1996: Singapore Ministerial (MC1) 2001: Doha Round 2003: Cancun Ministerial 2004: Members dropped investment April 2017: Informal WTO dialogue

• n

investment facilitation

• Dec. 2017:

Buenos Aires Ministerial In April 2017, the "Friends of Investment Facilitation for Development" (FIFD) – currently 17 members, majority developing– proposed an Informal WTO Dialogue on Investment Facilitation for Development. FIFD: Argentina, Brazil, Chile, China, Colombia, the Gambia, Hong Kong China, Guatemala, Kazakhstan, Korea, Liberia, Mauritania, Mexico, Nigeria, Pakistan, Qatar, and Uruguay.

Historical Background: Ups and Downs of Investment Facilitation

Source: WTO, “Joint Ministerial Statement on Investment Facilitation for Development” 13 December 2017

1995: WTO establishment 1996: Singapore Ministerial 2001: Doha Round (MC4) 2003: Cancun Ministerial 2004: July Package April 2017: Informal dialogue launched

• Dec. 2017:

Buenos Aires Ministerial (MC11) Joint Ministerial Statement on Investment Facilitation for Development by 70 WTO members calling for “call for beginning structured discussions with the aim of developing a multilateral framework on investment facilitation.”

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WTO INVESTMENT FACILITATION AGREEMENT (IFA): NEW DEVELOPMENTS AND NEGOTIATING PROPOSALS

Developments and Key Elements in Investment Facilitation Negotiations

Investment Facilitation Agreement in the WTO?

❖ New Developments on an IFA in the WTO

❑ Inspired by the WTO Trade Facilitation Agreement (TFA)

concluded in Bali in December 2013

❑ In 2015, ICTSD and WEF proposed the idea to consider the IFA

negotiations in the WTO

❑ In 2016, China took the issue under the G20 – a new working

group on trade and investment and non-binding guiding principles for IFA negotiations were established and endorsed by the G20

❑ In 2017, the Friends of Investment Facilitation for Development

(FIFD) was created to start informal discussions and workshops

• n IFA

❑ In 2017, MIKTA (Mexico, Indonesia, Korea, Turkey and Australia)

also began to hold informal discussions on IF

❑ Before December 2017, a number of proposals on IF were

submitted before the 11th WTO Ministerial Conference

❑ In Buenos Aries, 70 WTO members issued a joint statement,

calling for “structured discussions with the aim of developing a multilateral framework on investment facilitation at WTO”

Investment Facilitation in the WTO: FIFD and MIKTA

❖ Friends of Investment Facilitation for Development (FIFD) ❑ 16 WTO members are FIFD members ❑ Argentina; Brazil; Chile; China; Colombia; HK, China;

Kazakhstan, Korea, Mexico, Nigeria, Pakistan, Qatar, ??

❑ No developed countries in the group ❑ Promote the inclusion of an Investment Facilitation

Agreement under the WTO

❑ Organizes Informal discussions and workshops on IF ❖ MIKTA (Mexico, Indonesia, Korea, Turkey and Australia) ❑ an informal partnership among the five countries ❑ Created in 2013 at UN to support global governance ❑ Led by foreign ministries; Indonesia was the chair in 2018 ❑ broader interests from security to climate change, to

good governance and to trade and investment, etc

❑ MIKTA organizes workshops/discussions on IF and E-

Commerce, etc.

Key Elements in Investment Facilitation Proposals Submitted to WTO

❖ Some highlighted main principles

❑ Most favored nation treatment ❑ Right to regulate

❖ A few are out of the scope of investment

facilitation

❑ Investment protection rules ❑ Market access and right to establish ❑ Investor-state dispute settlement

Key Areas Covered in IF Proposals

❖ (1) Transparency

❑ Publish laws and regulations which affect investment ❑ Allow prior comments on those draft laws and

regulations during the notification period

❑ Establish national focal points to provide information

relevant to investment

❑ Digitize all documents and procedures on investment ❑ Operate and maintain a Single Electronic Window (SEW)

for investment to manage investment application process for a one-stop approval

❑ Create a web address of the SEW, and provide contact

information of the national focal point

❑ Establish a national investment facilitation committee ❑ Reserve right to non-disclosure of sensitive information

Source: ICTSD, Policy Brief –June 2018

Key Areas Covered in IF Proposals

❖ (2) Administrative Procedures

❑ Establish transparent and objective criteria for

investment applications

❑ Streamline and create predictable investment application

procedures – a set of timeframes

❑ Ensure application fees are transparent and reasonable ❑ Inform reasons for decision, allow possibility to resubmit

with completed information and to appeal

❑ Enhance coordination among domestic regulatory

institutions

❑ Facilitate entry and sojourn of personnel relating to

investment

❑ Enhance investor access to basic public infrastructure

Source: ICTSD, Policy Brief –June 2018

Key Areas Covered in IF Proposals

❖ (3) International Cooperation & Implementation

❑ Safeguard special and differential treatment for (L)DCs ❑ Use Trade Facilitation Agreement (TFA) type categories

to schedule and sequence implementation by (L)DCs

❑ Provide technical assistance and capacity building to

implement obligations by (L)DCs

❑ Encourage corporate social responsibility ❑ Facilitate cooperation of national focal points ❑ Establish a WTO committee on investment facilitation ❑ Establish an IF working group to discuss specific issues ❑ Allow members to self-assess ability to implement rules ❑ Create basis to discuss future market access and

treatment disciplines

❑ Improve screening efficiency and policy support of

• utward investments for (L)DCs

Source: ICTSD, Policy Brief –June 2018

WTO IF Negotiations/Proposals

Source: IISD, “Investment facilitation: Making sense of concepts, discussions and processes,” July 2018

WTO IF Negotiations/Proposals

Source: IISD, “Investment facilitation: Making sense of concepts, discussions and processes,” July 2018

Consensus on two topics: ▪ Regulatory transparency and predictability ▪ Streamlining & simplifying administrative procedures

WTO IF Negotiations/Proposals

Source: IISD, “Investment facilitation: Making sense of concepts, discussions and processes,” July 2018

Quasi-consensus on three other topics: ▪ Institutional cooperation ▪ Special & differential treatment ▪ Technical assistance

WTO IF Negotiations/Proposals

Source: IISD, “Investment facilitation: Making sense of concepts, discussions and processes,” July 2018

Brazil’s proposal is the most ambitious in terms of scope, while MIKTA’s the least.

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RECOMMENDATIONS

A few recommendations for Indonesia

Recommendations for Indonesia

Indonesia may wish to consider the following recommendations:

1.

Launching consultation with domestic and foreign private sector representatives on investment impediments in Indonesia (and abroad).

2.

Undertaking a comprehensive analysis and review of investment-related laws, regulations, procedures, and documentation requirements with the view to identifying cumbersome or unnecessary processes & procedures.

3.

Pursuing participation in discussions at the WTO for the creation of a multilateral framework of rules on investment facilitation in line with Indonesia’s national interests – to be part of the rule-making process.

4.

Reviewing the BITs and other FTAs which Indonesia has signed with other countries to find out the performance of investment provisions of these BITs and FTAs and identify the room for improvement

5.

Taking action on investment facilitation measures and reforms, with technical and financial support if needed.

Many thanks for your attention!