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EDITORIAL
“You
cannot design regulation for the regulated”, said one participant at our
last Regional Seminar on Investment for Development in Sao Paulo. At first
the comment seemed rather obvious, regulation of one part of a society is
normally there to protect the interests of another part of the society,
not the interests of the regulated part itself. Regulation should be in
the “public interest”. But when it comes to the so-called
“regulation” of the foreign investor, the rationale seems to be the
opposite. Countries are asked to enact the kind of regulation that will
attract foreign investment, hence regulation for the regulated.
Some
countries have not yet jumped on this bandwagon. In China, a new law to
protect private investment is being debated. Up until now, following the
general communist paradigm, private investment fell into a legal gray
area, i.e. it was neither forbidden nor permitted. Recently it was
predicted that China would surpass the US as the world’s number one
foreign investment destination. It does not seem to have been too bothered
about regulation to attract investment.
Perhaps
designing regulation, or the lack of regulation as the case may be for the
investor, makes little or no difference, but is an extra bonus for the
investor? In fact, the latest World Bank Global Economic Prospects Report
suggests that investment treaties, where countries wholeheartedly promise
to protect the foreign investor against all evils (the state included) do
little to add to the attractiveness of those countries as investment
destinations.
When
talking about investment for development, one needs to remember that the
investment in itself does not necessarily lead to development, unless
certain regulations are in place to regulate the investor’s behaviour,
both foreign and domestic. Now if this very same regulation discourages
foreign investment, are we then back to square one?
No.
One solution could be found in all countries committing themselves to
putting some minimum obligation on investors, which would mean there is no
flexibility in regulation for the investor. Hence offering non-regulation
as an extra incentive for investors, appears to be rather bad. This idea
was elaborated in a recent submission to the WTO Working Group on Trade
and Investment, where large developing countries like China and India,
proposed that an agreement on investment
should include obligations on investors and their home countries.
The move is a victory for the
civil society, as it has for long been advocating it. Now that it comes
from countries, some being the world’s most important investment
destination, is quite significant. This submission tries to do something
different, regulate the regulated, not the regulator.
The
IFD 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
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).
Since
the last e-news NRG meetings have been held in Hungary and The reports of the NRG meetings are available on our website www.cuts-international.org/ifd-indx-htm
Three
Regional Seminars have been held under the IFD project. The Africa
Regional Seminar was held in Nairobi, Kenya, on the 18th-19th
of October 2002. The Asia Regional Seminar was held in New Delhi, India on
the 25th-26th of November 2002 and the Latin America
Regional Seminar was held in Sao Paolo, Brazil on the 4th –6th
of December 2002. Members from civil society, academics and policymakers
discussed investment issues with relevance to the various regions. The
proceedings from these meetings will be published on our homepage shortly.
The
partners of the IFD project met in New Delhi in November 2002 to discuss
the progress of the project, and the quality of its outputs. At the same
time the International Project Advisory Committee also met.
News
World
Bank Doubts the use of Investment Agreements
The
World Bank, in its recently launched “Global Economic Prospects and
Developing Countries Report 2003”, questions whether investment treaties
in fact make any difference to countries efforts to attract new investment
flows. The report is available on www.worldbank.org/prospects/gep2003/.
Call for
Investor and Home State Obligations
In
a recent submission to the WTO Working Group on Trade and Investment some
developing countries, among them China and India, call for any agreement
on investment to include obligations on home countries and investors, as
well as host countries. The submission (WT/WGTI/W/152) can be found on
www.wto.org.
Publications
Multilateral
or Bilateral Investment Negotiations? Where can Developing Countries Make
Themselves Heard?
This
briefing paper, written by CUTS, explores the current state of
international law of the protection of foreign investment and discusses
the pros and cons of multilateral negotiations on investment.
Market
Access Implications of SPS and TBT: Bangladesh Perspective
This
Research Report, written for CUTS by Prof. Mustafizur Rahman, Director,
Centre for Policy Dialogues, Bangladesh, examines the effects of the EU
ban of fishery products from Bangladesh as an example of how the TBT and
SPS agreements are used to restrict market access for developing country
exporters.
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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