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US
Goes Out Hard on Investment Negotiations
“It’s
all or nothing” seems to be the US attitude toward the controversial
issue of negotiations of an international investment agreement at the WTO.
Washington has recently stated at the WTO Working Group on the
Relationship between Trade and Investment that it will not be interested
in a WTO investment agreement unless the agreement covers not only foreign
direct investment (FDI) but also portfolio investment and
pre-establishment commitments. Its experience, “based on negotiation of
more than forty bilateral investment treaties (BITs), the NAFTA, and the
ongoing FTAA and bilateral FTAs with Chile and Singapore, is that a broad,
open-ended definition is necessary to maximize the benefits of investment
liberalisation and protection”. This, of course, follows the general US
approach adopted in its bilateral approaches to investment.
Investment negotiation at the
WTO is already a controversial issue, even without such bold moves from
the US. China immediately countered the US, saying that this will not be
acceptable. It was supported by other developing countries, including
India, Malaysia. Many of them feel that the WTO is supposed to deal with
trade, but is turning into a forum for negotiations on just about
anything. The US proposals compatibility with the commitments made at Doha
can also be questioned. According to the Doha declaration, WTO’s work on
investment should focus on “modalities for pre-establishment commitments
based on a GATS-type, positive list approach”, that is an investment
agreement should only cover those sectors where countries have made
specific commitments. If ‘investment’ is defined to include portfolio
investment, such sector restrictions will of course come to practically
make little sense.
Of course the US knew that its
bold proposal was going to cause some countries to dig their heels in
resisting WTO negotiations. So what explains this step by the US? Possibly
a part of the explanation lies in the fact that the US, unlike the EU, was
never really a demandeur of WTO
investment negotiations. The US had already burnt its hands in the aborted
OECD MAI negotiations. It has been successfully promoting
investment
protection its own way, through BITs and NAFTA. Hence the US finds itself
well served by its makeshift international investment framework and can
afford to ask for a wide and inclusive definition of investment, clearly
risking putting some countries off the idea of negotiating altogether.
For
those critical towards investment negotiations, the US’ move could in
fact prove to be a lifeline. Unless the US gets it way, it is not
interested in negotiations. If the US does
get its way on the scope of investment, negotiations are likely to be
stalled by those that have already protested against a wide definition of
investment. Hence a step away from the negotiations-threat, towards a
stalemate on the issue, has just been taken.
The
IFD Project
About
the Project
The
‘Investment for Development’ (IFD) project aims to create awareness
and build capacity of the civil society on investment regimes and
international investment issues of developing and transition economies.
For more www.cuts-international.org/ifd-indx.htm
Project
Update
Reports
The
following reports of the project are available on our website. www.cuts-international.org/ifd-cr-lm-htm
1.
Finalised Investment Policy Country Reports (Report A).
2.
Draft Synthesis Report A.
3.
Draft Performance and Perceptions Country Reports (Report B)
National
Reference Group (NRG) Meetings
Second
NRG meetings have been held in Bangladesh, Hungary, India and Brazil and
South Africa. The reports of the NRG meetings are available on our website
www.cuts-international.org/ifd-indx-htm
Regional
Seminars
Three
Regional Seminars are being planned under the IFD project. The Africa
Regional Seminar will be held in Nairobi, Kenya, on the 18th-19th
of October 2002. The Asia Regional Seminar will be held in New Delhi,
India on the 25th-26th of November 2002 and the
Latin America Regional Seminar will be held in Sao Paolo, Brazil on the 4th
–6th of December 2002.
News
UNCTAD
launches World Investment Report 2002
UNCTAD
has recently launched its World Investment Report (WIR) 2002, which
focuses on Transnational Corporations and Export Competitiveness. The WIR
also looks at recent trends in international trade, and identifies
countries whose export performance has been driven by TNCs. For more
information see http://www.unctad.org/wir/index.htm
Trade
and Investment Summit 2002
The
International Trade Group is holding an FDI Summit on 12-14 November 2002,
in Johannesburg, South Africa, where policy and business decision-makers
will meet. For further information visit http://www.inttg.com.
Can
Human Rights and GATS go Together?
The UN
High Commissioner for Human Rights has in a recent report cautioned that
progressive liberalisation of services involves possible negative effects
on access to essential services (e.g. water, health and education) for the
poor and could hence conflict with human rights obligations. A human
rights approach to trade sets the enjoyment of all human rights above the
objectives of trade liberalisation, and in this sense any assessment of
whether a certain measure is unnecessarily trade restrictive should take
into account States’ obligations under human rights law. The report is
available on www.unhchr.ch (Doc
E/CN.4/Sub.2/2002/9)
SRI
Yields High Investor Interest
A recent
survey reveals that socially responsible investment (SRI) attracts high
investment interest, particularly in retirement plans. Almost
three-quarters of the survey respondents say that recent world and
economic events have affected their investing behaviour and that as a
result they seek more disclosure about their investments. The full article
is available on http://www.socialfunds.com/news/article.cgi/article933.html.
Publications
Foreign
Direct Investment in Developing Countries: What Economists (Don’t) Know
and Policymakers Should (not) Do!
This
monograph, written for CUTS by Dr Peter Nunnenkamp of the Kiel Institute
of World Economics, Germany, is a stocktaking of recent trends in growth
and distributions of FDI, as well as an overview of recent studies on the
economic growth effects of FDI in developing
and newly industrialised countries. The study also offers some useful
policy conclusions.
WTO
and India: An Agenda for Action in Post Doha Scenario
This
book, written by CUTS’ Secretary General Pradeep S. Mehta, contains a
collection of articles with pre- and post-Doha analysis of the Indian
domestic as well as international agenda. The book also includes an
article on “India at Doha:
Retrospect and Prospect” written
by Prof Arvind Panagariya of the University of Maryland.
For Subscription and Orders Please Write To
CUTS
Centre for Competition, Investment and Economic Regulation
D-217, Bhaskar Marg, Bani Park, Jaipur 302016, India
Ph: 91.141.2282821
Fax: 91.141.2282823/220 3998
Email: ifd_cuts@rediffmail.com
& cuts@cuts.org
Web:
www.cuts-international.org
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