[PPT] - SESSION 7 INTERNATIONAL COOPERATION ON INVESTMENT FACILITATION PowerPoint Presentation

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Project Executed by: Partner:

SESSION 7 INTERNATIONAL COOPERATION ON INVESTMENT FACILITATION

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

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Project Executed by: Partner:

OUTLINE OF PRESENTATION

Why an “Investment Facilitation Agreement” -

Technical assistance Required for Developing Countries?

The Trade Facilitation Agreement (TFA) as a model

multilateral framework for technical assistance in IF negotiations & implementation

What technical assistance Indonesia requires for

investment facilitation negotiations and implementation? – a Group Discussion

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Technical Assistance in Investment Facilitation for Developing Countries?

Investment facilitation is not a negotiating issue yet at the WTO.

Therefore, the WTO, UNCTAD and other international organizations do not have the mandate to provide technical assistance to developing and least developed countries on investment facilitation.

It is still controversial to include investment facilitation in the WTO

negotiating agenda. There are many concerns from some WTO members. These include:

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Once investment facilitation is brought into the WTO, other investment-related issues could get into the WTO later, for example, market access, treatment for investment, investment protection, etc.

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Some members do not think that the WTO is the right forum for investment facilitation because the WTO focuses on binding rules and dispute settlement, while investment facilitation is intended to use the cooperative approaches and efforts.

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Some members think that the WTO mandate and core focus was trade – not investment and sustainable development – by including investment facilitation in the WTO, it will divert the attention away from DDA.

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Some argue that it is unnecessary to bring investment facilitation into the WTO because UNCTAD and UNCITRAL are dealing with the issue.

Therefore, there is no consensus on technical assistance in investment

facilitation for developing countries and LDCs.

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FIFD Positions on IF: Some Thoughts for Consideration

Investment and trade are interlinked so investment facilitation

belongs to the WTO.

Countries need to integrate into the global value chains (GVCs),

so FDI should be encouraged to increase exports and jobs.

Services are playing more important roles in economic

development, and in fact, many services exports are delivered via Mode 3 - commercial presence, i.e. through foreign investment.

Digital economy requires more interactions between trade and

investment.

133 of 260 regional/bilateral trade agreements include investment

provisions in their FTAs.

The private sector is calling on governments to address trade and

investment issues in an integrated manner.

SDGs recognize the significant role of investment and there is a

need for FDI – importance of investment policies too – so WTO has a say.

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FIFD Positions on IF: Some Thoughts for Consideration

Private sector companies indicate that regulatory uncertainty is a

barrier to foreign investment – therefore, more stable and predictable investment environment is a top priority – WTO can play a role here

Investment facilitation can reduce the costs of doing business

and an IFA could be win-win for all WTO members

Reduced transaction costs make it easier for investors to invest
Locking in WTO commitments will send a positive signal to

investors

It does not make sense to have a single window on IF for one

trading partner, so the WTO is the logical place for the IF negotiations

Many countries are already implementing some IF measures.
It is important to link with Member’s ability to implement the IF

measures – therefore, technical assistance and capacity building is required for developing and least developed countries

Technical assistance in investment facilitation could be similar to

that in the WTO Trade Facilitation Agreement.

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Can TFA be Used as a Model for Technical Assistance for Developing Countries?

The Trade Facilitation Agreement (TFA) was the only trade

agreement concluded under the WTO since 1995

It was signed in the Bali Ministerial Conference in December 2013

and became effective in February 2017.

There are several provisions in the TFA to provide technical

assistance to developing and least developed countries

The WTO TFA divides 36 trade facilitation measures into three

categories (Category A, B, and C) by each WTO member

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Category A: Measures can be implemented immediately

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Category B: Measures can be implemented by WTO members with a transition period

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Category C: Measures can be implemented by WTO developing members with transitional period and technical and financial assistance provided by other WTO members and international organizations

Developing and least developed countries need technical and

financial assistance for the implementation of Category C commitments

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TFA Structure

Trade Facilitation Agreement

Preamble Section I – Substantive Provisions Section II – Special and Differentia l Treatment Section III – Institutional

arrangements

and final provisions Institutions Multilateral

Art. 23.1 WTO

Trade Facilitation Committee National

Art. 23.2 National

Trade Facilitation Committee

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TFA: Special and Differential Treatment to Developing Countries and LDCs

13. General

ral Princi cipl ples es

14. Categor
ries

es of Provisio sions

15. Notificati

tion

n and Implementa

tati tion

n of Category
ry A
16. Notificati

tion

n of Definiti

tive ve Dates s for Implement entati tion

n of

TFA: Special and Differential Treatment

S&DT T in WTO Agreements ments S&DT T in TFA

Longer

er implement entati tion

n time

period

ds

s

Measu

sure res to increase se trading g

pportu

rtunities ties

Safegu

guard d of trade e intere rests ts

Capacity building

g support

rt to

carry out WTO w work, handle e disputes, tes, and i implemen ent t technical standa dards, rds, etc.

Self-Categorization
Timing of transition periods to be

decided by individual country

Category C commitments

implementation linked with acquisition of implementation capacity

Through provision of TA and CB

including financial assistance

Deve velopin ing g countries ntries and LDCs s have e favour urable le treatm tment ent as s compared red to De Deve veloped ped WTO Member bers

Extra Flexibility

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TFA: Special and Differential Treatment

Trade Facilitation Agreement

Preamble Section I – Substantive Provisions Section II – Special and Differential Treatment Section III – Institutional

arrangements

and final provisions Cat. Implementation A Implementation upon entry into force B Transition period C Transition period + financial and/or technical assistance Categorization NOT possible !

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Developing countries LDCs

Notify to the Committee

up to one year after entry into force

And thereby be made an

integral part of the Agreement

Implement upon entry

into force

Category A commitments

will then be made an integral part of the Agreement

TFA: Notifications of Category A

Indonesia notified

Cat. A measures on

4 August 2018

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Timeline for developing countries’ notifications

TFA enters into force

Notify categoriesA, B and/or C
Indicative date for B & C
TACB requirements for C

TFA + 1 year

Provide definitive dates

for category B designations

Provide information on

arrangements with Donors on TACB for category C TFA + 2.5 years

Provide definitive

implementation dates for category C designations

Inform of progress in TACB for

category C

22 Feb 2017 22 Feb 2018 22 Aug. 2019 INDONESIA IS LAGGING BEHIND !

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If a a M Member ber experi perience nces difficul culti ties implementi menting ng by t the defini niti tive ve dates it e esta tabli blishe hed, it should ld notify y the Committee: tee:

Developing Countries: no later than 120 days

before the expiration date Notify fy new w dates and indicate te reasons ns for delay Automa mati tic c exte tens nsion:

n: if it is the first request and:
Extension requested less than 1.5 years

(developing countries) Subseq eque uent nt exte tens nsion

ns su

submitted tted to the e Committee tee which ch will give sympatheti thetic c consider derati ation

n

Early Warning Mechanism

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14

Shifting between Cat. B and C Dispute Settlement – Grace Period

Devel elop

ping

g members rs and LDC would have option

n to shift

t between een categories

ries
Through notification to Committee

Shiftin ting g from B t to C w would contain informa rmati tion

n on
Technical Assistance
Capacity building and
Financial needs

Extens ension

n in t

time frame, if n needed ded, through “Early Warning Mechanism”

For Cat A measures
Developing: 2 years after entry into force
LDCs: 6 years after entry into force
For Cat B&C measures
8 years after implementation of the provision

for LDCs only

Opportunity for consultation during the

grace period

For discussing issues relating to

implementation

TFA: Other S&DT Measures

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What Technical Assistance Required for IF Negotiations and Implementation by Indonesia?

A Group Discussion

What are the key areas in which Indonesia needs TA in

IF negotiations? For example:

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IF negotiation training and capacity building

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Impact studies of IF negotiations on Indonesia

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Comparative studies of IF measures with other peer countries

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Others???

What are the substantial areas (or measures) in which

Indonesia needs technical and financial assistance in IFA implementation? For example:

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Online publication of current investment- related laws and regulations

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Notification of new investment-related measures to the WTO/APEC and others

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Enquiry points for foreign and domestic investors

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What Technical Assistance Required for IF Negotiations and Implementation by Indonesia?

A Group Discussion (Cont.)

What are the substantial areas (or measures) in which

Indonesia needs technical and financial assistance in IFA implementation? For example:

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Mechanism to streamline and simplify investment application and approval process

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Review of licensing and qualifications, and formalities and documentation requirements

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One-stop shop/single window for foreign investors

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Inter-agency cooperation and exchange of information among competent agencies

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Investor/state dispute prevention mechanism

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Investor’s obligations and corporate social responsibility

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Public-private consultation for investment facilitation reforms

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Others???

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