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US stays opposed to global investment facilitation

LiveMint logoLiveMint 16-04-2017 D. Ravi Kanth

Geneva: German-led efforts to discuss rules for global investment facilitation at an upcoming G20 meeting of ‘sherpas’ received a major blow after the US put its foot down—a stand akin to the position adopted by India, South Africa and other developing countries, according to negotiators familiar with the development.

Germany, currently holding the G20 presidency has scheduled an important meeting on 4 May in Berlin, for negotiators—called sherpas in diplomatic jargon—to discuss draft deliverables on investment facilitation.

China, Russia, Brazil, Mexico, Indonesia, Korea, Turkey and Australia, among others, strongly support the German push for a major deliverable on investment at the G20 leaders summit in July. India and South Africa, however, oppose investment facilitation on grounds that it would deny them their “policy space” for pursing developmental investment policies.

Ahead of the planned meeting of sherpas on the “draft investment package”, the US fired the first salvo by issuing a blunt communication to Germany and other G20 members. “Regarding investment, the US does not support moving forward with the draft deliverable or any alternative package on investment facilitation,” Washington told Germany on 11 April in a communication reviewed by Mint.

The US also said emphatically that it “does not believe that G20 TIWG (Trade and Investment Working Group) negotiation of detailed policy prescriptions in this area is necessary or helpful at this time, nor that the TIWG should seek to prioritize policy actions in certain areas of investment over others, including with respect to which issues should be on the agenda of separate bilateral, plurilateral, and multilateral negotiations.”

A negotiator who asked not to be named said, “Over the last several months, several countries along with the WTO Secretariat have been preparing ground at the G20 TIWG to secure a clear deliverable for launching negotiations on investment facilitation at the WTO.”

Russia, China, Brazil, and the MIKTA group—Mexico, Indonesia, Korea, Turkey and Australia—have already circulated proposals on how members at the WTO must commence discussions on investment facilitation. They wanted to use the G20 as a springboard for starting negotiations on investment, said another negotiator, who requested anonymity.

Based on the ‘Hangzhou principles on investment’ agreed upon at a G20 summit last September, Germany wants to finalize the principles for investment at the upcoming G20 leaders meeting in July. Berlin circulated a draft “non-binding G20 Investment Facilitation Package” on 29 March for discussing three major issues concerning investment facilitation.

They are: “reaffirming and complementing the G20 guiding principles for investment policymaking”, “fostering open and transparent business climates that are conducive to investment”, and “promoting inclusive economic growth, sustainable development and a level playing field for all investors, including SMEs (small and medium enterprises)”.

It has listed various “actions” that need to be adopted for investment facilitation. Under four categories such as (a) transparency,(b) predictability and consistency,(c) efficiency, and (d) stakeholder relations, Germany listed the requisite actions that G20 must agree for comprehensive investment facilitation.

As part of transparency, the draft has suggested making “publicly available clear and up-to-date information on the investment regime including timely and relevant notice to changes in applicable standards, procedures, technical regulations and conformance requirements.”

The draft says governments must “enhance predictability and consistency in the application of investment policies and other policies that have an impact on investment”.

It points to the need for clear and transparent procedures for administrative decisions affecting investment and “access to effective, fair, open and transparent mechanism for prevention and settlement of disputes”.

It also sought to harmonizing investment policies for ensuring “equal treatment in the application of laws and regulations on investment, and avoid[ing] discriminatory use of bureaucratic discretion.” Ultimately, “this investment facilitation package can serve as a reference for investment policymaking, in accordance with respective international commitments.”

Over the years, attempts by rich countries to push a multilateral investment agreement have failed because of opposition from developing countries as well as the US. Washington has opted for bilateral free trade agreements to ensure its priorities prevail.

In contrast, developing countries have opposed these rules on grounds that they would be denied “policy space” for pursuing sustainable investment policies based on their developmental goals.

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