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 Partner: Project Executed by:
Outline of Presentation Background Investment facilitation in Defining “Investment Multilateral negotiations trade agreements Facilitation” Investment Facilitation Discussions/Negotiations at the WTO Key Elements in IF Proposals New Developments Considerations and Recommendations Considerations and Recommendations for Indonesia
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 Partner: Project Executed by:
What is “investment facilitation”? Cooperation Transparency Simplification Enhancing Improving Streamlining and international regulatory speeding up cooperation, by transparency and administrative exchanging best predictability, with procedures, by practices and the publication of simplifying providing and investment- documentation financial & related requirements and technical regulations, and approval assistance to the creation of procedures; developing enquiry points; countries Through public-private collaboration Source: WTO, “Investment facilitation: Relationship between trade and investment”
What is NOT investment facilitation? Market access Investment protection Investment Facilitation Investor- state dispute settlement (ISDS) Source: WTO, “Investment facilitation: Relationship between trade and investment”
HISTORICAL DEVELOPMENTS OF IF NEGOTIATIONS AT THE WTO Multilateral Negotiations on Investment Facilitation Partner: Project Executed by:
Historical Background: Ups and downs of Investment Facilitation Negotiations Dec. 2017: 2001: Buenos Doha Aires 2004: 1995: WTO Round July Ministerial establishment (MC11) (MC4) Package 1996: 2003: April Singapore Cancun 2017: Ministerial Ministerial Informal (MC1) (MC5) WTO dialogue 1995-1998: failed attempts to Trade Facilitation Agreement conclude a Multilateral concluded at MC9 Agreement on Investment (MAI) Source: WTO, “Investment facilitation: Relationship between trade and investment”
Historical Background: Ups and Downs of Investment Facilitation TRIMS Agreement • • GATS Mode 3 2004: Dec. 2017: 2001: Members Buenos 1995: WTO Doha dropped Aires establishment Round investment Ministerial 1996: 2003: April 2017: Singapore Cancun Informal Ministerial Ministerial dialogue launched Source: WTO, “Investment facilitation: Relationship between trade and investment”
Historical Background: Ups and Downs of Investment Facilitation 2004: Dec. 2017: 2001: Members Buenos Doha dropped Aires 1995: WTO establishment Round investment Ministerial 1996: 2003: April 2017: Singapore Cancun Informal Ministerial Ministerial dialogue (MC1) launched Establishment of a Working group on trade and investment to carry out analytical and exploratory discussions. Source: WTO, “Investment facilitation: Relationship between trade and investment”
Historical Background: Ups and Downs of Investment Facilitation The Declaration includes principles such as the need to 2001: 2004: Dec. 2017: balance home vs host countries’ interests, countries’ right Doha Members Buenos to regulate investment, development, public interest, etc. 1995: WTO Round dropped Aires establishment (MC4) investment Ministerial 1996: 2003: April 2017: Singapore Cancun Informal The Doha Declaration instructs the working group to clarify the scope and definition Ministerial Ministerial dialogue of the issues , transparency, non-discrimination, development provisions, exceptions launched and safeguards, consultation and dispute settlement. Source: WTO, “The Doha Declaration explained”
Historical Background: Ups and Downs of Investment Facilitation In Cancun Declaration, WTO members agree to: intensify investment-related negotiations • provide strengthened and adequately resourced technical assistance to developing countries and LDCs. • 2004: Dec. 2017: Members Buenos 2001: 1995: WTO Doha dropped Aires establishment Round investment Ministerial 1996: 2003: April 2017: No progress made in Cancun. Singapore Cancun Informal Members accept to pursue further Ministerial Ministerial dialogue negotiations. (MC5) launched Source: WTO, “Investment facilitation: Relationship between trade and investment”
Historical Background: Ups and Downs of Investment Facilitation 2001: Dec. 2017: The WTO General Council decides to drop investment Doha 2004: Buenos 1995: WTO as a negotiation issue. Round July Aires establishment (MC4) Package Ministerial 1996: 2003: April 2017: Investment “will not form part of the Work Programme set out in [Doha] Declaration and Singapore Cancun Informal therefore no work towards negotiations on any of these issues will take place within the Ministerial Ministerial dialogue WTO during the Doha Round.” launched Source: WTO, “Decision Adopted by the General Council on 1 August 2004” WT/L/579, 2 August 2004
Historical Background: Ups and Downs of Investment Facilitation FIFD : Argentina, Brazil, Chile, China, Colombia, the Gambia, Hong Kong China, Guatemala, Kazakhstan, Korea, Liberia, Mauritania, Mexico, Nigeria, Pakistan, Qatar, and Uruguay. 2004: Dec. 2017: 2001: Members Buenos 1995: WTO Doha dropped Aires establishment Round investment Ministerial 1996: 2003: April 2017: In April 2017, the "Friends of Investment Facilitation for Development" Singapore Cancun Informal (FIFD) – currently 17 members, majority developing – proposed an Ministerial Ministerial WTO (MC1) dialogue Informal WTO Dialogue on Investment Facilitation for Development. on investment Source: WTO, “Investment facilitation: Relationship facilitation between trade and investment”
Historical Background: Ups and Downs of Investment Facilitation 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.” Dec. 2017: 2001: Buenos Doha 2004: Aires 1995: WTO Round July Ministerial establishment (MC4) Package (MC11) 1996: 2003: April 2017: Singapore Cancun Informal Ministerial Ministerial dialogue launched Source: WTO, “Joint Ministerial Statement on Investment Facilitation for Development” 13 December 2017
WTO INVESTMENT FACILITATION AGREEMENT (IFA): NEW DEVELOPMENTS AND NEGOTIATING PROPOSALS Developments and Key Elements in Investment Facilitation Negotiations Partner: Project Executed by:
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 on 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 11 th 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
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