SESSION 7 INTERNATIONAL COOPERATION ON INVESTMENT FACILITATION Presenter: Wenguo Cai Director, International Programs The Conference Board of Canada Jakarta, 1-2 April 2019 Partner: Project Executed by: Slide 1
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 Partner: Project Executed by: Slide 2
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: 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. ➢ 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. ➢ 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. 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. Slide 3
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. Slide 4
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. Slide 5
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 ➢ Category A: Measures can be implemented immediately ➢ Category B: Measures can be implemented by WTO members with a transition period ➢ 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 Slide 6
TFA Structure Institutions Section I – Preamble Substantive Art. 23.1 WTO Provisions Multilateral Trade Facilitation Committee Trade Art. 23.2 National Facilitation National Trade Facilitation Committee Agreement Section III – Section II – Institutional Special arrangements and and final Differentia provisions l Treatment Slide 7
TFA: Special and Differential Treatment to Developing Countries and LDCs 13. General ral Princi cipl ples es 14. Categor ories es of Provisio sions 15. Notificati tion on and Implementa tati tion on of Category ory A 16. Notificati tion on of Definiti tive ve Dates s for Implement entati tion on of S&D Provisions Category ory A and B B in TFA 17. Early Warning g Mechanism sm Articles 18. Implement ntatio tion n of Category ory B and C C (13-22) 19. Shiftin ting g between een Categor ories es B and C C 20. Grace Period od 21. Provi vision sion of Assist stance e and S Support ort for Capacity Building 22. Informa rmati tion on on A ASCB to be Submitt tted ed to the Committee tee Slide 8
TFA: Special and Differential Treatment 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 S&DT T in WTO Agreements ments S&DT T in TFA Extra Longer er implement entati tion on time Flexibility • • Self-Categorization period ods s Measu sure res to increase se trading g • • Timing of transition periods to be opportu rtunities ties decided by individual country Safegu guard d of trade e intere rests ts • • Category C commitments Capacity building g support ort to implementation linked with • acquisition of implementation carry out WTO w work, handle e capacity disputes, tes, and i implemen ent t technical standa dards, rds, etc. • Through provision of TA and CB including financial assistance Slide 9
TFA: Special and Differential Treatment Section I – Preamble Substantive Provisions Cat. Implementation Implementation upon Trade A entry into force Facilitation Agreement B Transition period Section III – Transition period + Institutional Categorization NOT C financial and/or technical arrangements Section II – possible ! and final assistance Special and provisions Differential Treatment Slide 10
TFA: Notifications of Category A Developing countries LDCs • • Implement upon entry Notify to the Committee into force up to one year after entry into force • Category A commitments • will then be made an And thereby be made an integral part of the integral part of the Agreement Agreement Indonesia notified Cat. A measures on 4 August 2018 Slide 11
Timeline for developing countries’ notifications 22 Feb 2017 22 Feb 2018 22 Aug. 2019 TFA + 1 year TFA + 2.5 years TFA enters into force • Provide definitive dates • Provide definitive • Notify categoriesA, B and/or C for category B designations implementation dates • Indicative date for B & C • Provide information on for category C designations • Inform of progress in TACB for • TACB requirements for C arrangements with Donors on TACB for category C category C I NDONESIA IS LAGGING BEHIND ! Slide 12
Early Warning Mechanism 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: on: if it is the first request and: • Extension requested less than 1.5 years (developing countries) Subseq eque uent nt exte tens nsion ons su submitted tted to the e Committee tee which ch will give sympatheti thetic c consider derati ation on Slide 13
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