[PPT] - UNCTADs Investment Policy Framework for Sustainable Development PowerPoint Presentation

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UNCTAD’s Investment Policy Framework for Sustainable Development (IPFSD)

Towards a new generation of investment policies Joerg Weber Head, Investment Policies Branch Division on Investment and Enterprise July 10, 2012 Geneva, Switzerland

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FDI inflows up across all major economic groupings

FDI inflows by group of economies, 1990–2011

(Billions of dollars)

51%

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National investment policies continued to be favourable to foreign investors

National investment policy changes, 2000 – 2011

(Per cent of measures)

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International investment policies see a shift from the bilateral to the regional level

Trends of BITs and “other IIAs”, 1980 – 2011

(Number of treaties)

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UNCTAD’s Investment Policy Framework for Sustainable Development helps policymakers address these challenges

Core Principles "Design criteria" for investment policies and for the other IPFSD components National investment policy guidelines Concrete guidance for policymakers on how to formulate investment policies and regulations and on how to ensure their effectiveness IIA elements: policy options Clause-by-clause options for negotiators to strengthen the sustainable development dimension of IIAs

Structure and components of the IPFSD

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…address shared investment-for-development challenges … avoid investment

protectionism International cooperation

…promote adoption of and compliance with best international practices of CSR …

Corporate governance and responsibility

…aligned with sustainable development goals … minimize risk of harmful competition for

investment Investment promotion and facilitation

…adequate protection to established investors … non-discriminatory

Investment protection and treatment

…in line with development strategy … open, stable and predictable entry conditions …

Openness to investment

…in the interest of the public good and to minimize potential negative effects

Right to regulate

…setting out rights and obligations of States and investors in the interest of development

Balanced rights and

bligations
…regular reviews for effectiveness and relevance …

Dynamic policymaking

…involving all stakeholders … standards of public governance … predictable, efficient

and transparent procedures for investors Public governance and institutions

…grounded in a country’s overall development strategy … coherent and synergetic …

Policy coherence

…overarching objective of investment policymaking …

Investment for sustainable development

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Core principles for investment policymaking

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National investment policy guidelines: how it works

1. Investment and

sustainable development strategy

2. Investment

regulation and promotion

3. Investment-

related policies

4. Investment policy

effectiveness 1.1 Strategic investment policy priorities 1.2 Investment policy coherence for productive capacity building

Human resource

development

Technology and know-how
Infrastructure
Enterprise development

1.1.1 Investment policy should be geared towards the realization of national sustainable development goals and grounded in a country’s development

strategy. It should set out strategic

priorities, including: ... 1.1.2 Strategic investment policy priorities may be effectively formalized in a published document (e.g. investment strategy), making explicit the intended role of private and foreign investment in the country’s sustainable development strategy and development priorities, and …

Sections Sub-sections Policy Guideliness

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Access to land

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Sustainable development features of the IPFSD’s national investment policy guidelines

Section on investment policy effectiveness, including guidance on public governance and

institutional capacity-building

Guidance on the measurement of policy effectiveness, with reference to quantitative

investment impact indicators and UNCTAD tools (FDI Attraction and Contribution Indices) Ensuring investment policy relevance and effectiveness

Specific guidelines for the design of investment-specific policies and regulations, including not
nly establishment and operations, treatment and protection of investments, and investment

promotion and facilitation, but also investor responsibilities

Guidance on the encouragement of responsible investment and on guaranteeing compliance

with international core standards

Guidance on investment promotion and use of incentives in the interest of inclusive and

sustainable development

Specific guidelines aimed at minimizing potential negative effects of investment, such as tax

avoidance, anti-competitive behaviour, core labour standards, environmental impact

A sub-section on access to land, incorporating the Principles for Responsible Agricultural

Investment (PRAI) Incorporating sustainable development objectives in investment policy

Section on strategic investment priorities and investment policy coherence for productive

capacity building, including sub-sections on investment and: Human resource development, Infrastructure (including section on PPPs), Technology, Enterprise development

Attention to investment policy options for the protection of sensitive industries
Sections on other policy areas geared towards overall sustainable development objectives to

ensure coherence with investment policy Integrating investment policy in development strategy

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The IIA elements table: how it works

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An excerpt from the IPFSD framework

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IPFSD policy options – some examples

Carefully craft scope and definitions clause.
Structure FET as an exhaustive list of State obligations.
Distinguish legitimate regulations from regulatory

takings.

Make full protection and security commensurate with a

country’s level of development.

Limit the scope of the transfer of funds clause.
Include exceptions to protect human rights, health,

labor standards, and the environment.

Consider no ISDS, or last resort ISDS jurisdiction.
Create an institutional setup that makes the IIA

adaptable to changing development contexts.

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Policy options to operationalize sustainable development objectives in IIAs

Options Adjust existing/common provisions through clauses that safeguard policy space and limit State liability. Add new provisions that balance investor rights and responsibilities, promote responsible investment, and strengthen home-country support Introduce special and differential treatment to calibrate the level of

bligations to the country’s level of

development Mechanisms

Hortatory language
Clarifications
Qualifications/limitations
Reservations/carve outs
Exclusions from coverage/exceptions
Omissions
Investor obligations and responsibilities
Institutional set-up for SD impact
Home country measures to promote responsible

investment

Lower levels of obligations
Development-focused exceptions from
bligations/commitments
Best endeavor commitments
Asymmetric implementation timetables

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IPFSD-inspired clauses in 2011 IIAs

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2011 IIAs Number of IPFSD Clauses

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IPFSD: a reference point, common language, and platform for discussion with investment stakeholders

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UNCTADs Investment Policy Framework for Sustainable Development - - PowerPoint PPT Presentation