project ADVISORY COMMITTEE Second MEETING

Participants: Advisory Committee members: Arvind Mayaram, Karl Sauvant, Richard Eglin, Khalil Hamdani, Sabina Voogd, Farooq Sobhan,

Special invitees: Vanessa Head and Jeremy Leach, DFID, Patricia Francis, President WAIPA, Veniece Harrison, JAMPRO, Merit Janow, Columbia University, United Nations Industrial Development Organisation representative, Joseph Battat, FIAS

Pradeep S Mehta & Olivia Jensen, CUTS  

Pradeep Mehta began by introducing the IFD project and, in response to a query from one of the non-AC members present, introduced CUTS work. All CUTS work is concerned with economic equity and social justice and is conducted at the international, national and grassroots levels. CUTS aims to build capacity and understanding, especially in civil society in the globalising economy. In this regard, CUTS is conducting projects on a number of trade-related issues including competition policy and law, linkages between trade and labour standards and trade and the environment which raise awareness and inform the debate.

Richard Eglin spoke about the work programme of the WTO after the Fourth Ministerial Meeting held in Qatar in November 2001. There has been an active response to the technical assistance and capacity-building provisions of the Doha Declaration with many international institutions developing their own work programmes. Donors have also responded generously. However, there is currently gridlock at the WTO on the receipt and use of funds and it will be difficult to keep politics out of the way of designing an effective programme. A rational and coordinated work programme will be developed over the next two months.

The Directorate will be working primarily with UNCTAD on capacity-building for investment as UNCTAD has the resources and the experience to carry out this work. It will also be cooperating with other institutions such as the World Bank, WAIPA and UNIDO on the aspects of investment in which they specialise. The WTO wants to respond to the needs of countries rather than enforcing a prescribed programme of capacity-building and so is encouraging members to express their needs for different types of training. They plan to offer a ‘menu’ of training options to developing countries. One option will be country-based training programmes. However, these are very resource-intensive and it will not be possible for the WTO to carry out more than four or five of these in 2002. The preferable option is to have events at the regional or international level for trade policy-makers and negotiators.

The Doha programme calls for capacity-building not just in trade negotiating skills but also at the national level to improve capacity to design and implement successful investment policies and to create or enhance the functioning of national institutions. This is an area in which the WTO has little knowledge of experience and will be looking to UNCTAD in this area. This is also the area in which the IFD project can play a useful role.

Jo Battat mentioned the activities being conducted by FIAS that relate to the project:

(1) Work on corporate responsibility in particular on corruption, child labour and gender issues. (2) The relationship between competition policy and FDI in Tanzania. He suggested that CUTS stay abreast of the progress of this work.

Sabina Voogd mentioned the overlap between the FDI project and that being conducted by SOMO in Zambia, South Africa, Zimbabwe and Namibia. She suggested that CUTS and SOMO stay in close touch and try to cooperate where they can.

Olivia Jensen gave a brief account of the project activities and the status of these activities, namely that the first round of reports, Report A, were presented at the Launch Meeting in Jaipur in December 2001, these were now being revised and would be presented to the national reference groups (NRG). The NRG meeting had already taken place in India and was due to take place in Hungary the following week. The core researcher was working on the synthesis report.

Several useful comments were made by the participants on the design of the investor surveys. In particular,

1. Jo Battat noted that the project had a special niche in the civil society perspective and should seek to explore this in the surveys rather than replicating the work done by consultancies, the Bank and others. Therefore the survey should include questions on what investors think their impact on civil society is.

2. Patricia Francis noted the difficulties which JAMPRO has had in getting access to the businessmen who are actually taking the investment decisions. These people are located in the home country and the national agency does not have access to them. Any survey therefore needs to be realistically designed given the level of personnel that the researchers will have access to. The US State Department conducts good surveys of investor location decisions.

3. The survey should not focus on why the decision was made to invest in one country rather than another. Instead, it should look in depth and the kinds of problems that the investors actually experience and the way in which this differs from the policy on paper. It was noted that the research included interviewing failed investors and disinvestors as well as current investors.

Khalil Hamdani pointed out that the draft questionnaires look at how civil society perceives business and how business perceives government but does not cover how businesses perceive civil society although the stakeholder dialogues envisaged by the project do include all three groups. He said that all three groups agree at a general level on what FDI can offer but there are problems and failures at the micro level of experience. The project will hopefully reveal the kinds of local solutions that are needed within the broad international context and this will contribute to defining the flexibilities that developing countries would need in an international investment agreement.

There was some consideration of the value of the civil society questionnaires given low levels of knowledge and awareness. Veniece questioned whether NGOs were interested in investment. She said that they were only interested in so far as investment affects the environment, jobs, health or raises the spectre of the colonial experience. Sabina mentioned that the NGO event that SOMO had held in Windhoek in March 2001 had revealed that NGOs were very interested in investment issues but not at all knowledgeable.

Merit Janow questioned whether there might be a need to educate first, before investigating their attitudes. It was emphasised that one of the project’s main aims would be to present facts about the positive and negative impact of FDI revealed by Report B research to inform and stimulate the debate on investment by civil society. The civil society survey would just be used to identify key areas of concern.

Farooq raised several points relating to the quality of the research. (1) In the selection of the case studies care should be taken to make sure that the cases are comparable. For successful comparative analysis, the research in all the countries would have to have the same parameters. (2) There are problems in collection of data in relation to FDI which the country researchers would have to be helped to overcome (3) There may be difficulties in evaluating the application of a policy. (4) What would a realistic but sufficient survey sample size be?

Participants recognised the value of the project in encouraging a dispassionate, well-informed debate on investment issues.