2007/SOM2/IEG-GOS/WKSP/002a Services in International Investment Agreements (IIA) - Presentation

Transcription

1 2007/SOM2/IEG-GOS/WKSP/002a Services in International Investment Agreements (IIA) - Presentation Purpose: Information Submitted by: Workshop on the Relationship Between Investment and Trade in Services in Regional Trade Agreements and Other International Investment Agreements Adelaide, Australia 18 April 2007

2 Services in IIAs Joint IEG/GOS workshop on Investment and Trade in Services Anna Joubin-Bret Senior Legal Advisor IA programme The share of services FDI inward stock In 2004 and 2005 services sectors accounted for at least $ 6 trillion FDI inward stock representing about 57% of global FDI inward stock Finance and Business sectors alone accounted for $ 3.4 trillion in 2004 and 2005 APEC countries (based( on responses from 9 countries): In 2004 and 2005 alone, at least $ 3.5 trillion FDI inward stock in the services sector Finance and business sectors alone accounted for over $ 2 trillion FDI inward stock in 2004 and

3 Foreign banks invested about $12 billion in 2005 in China s banking industry, compared to $3 billion in 2004 The top targets of cross-border M&As were finance, transport, storage and communications, and business services (mostly real-estate) Rising FDI in Asian real estate Real estate market in Asia attracted considerable FDI Investors enter real estate market through various channels, including establishing new real estate developers, and acquiring local ones FDI into China real estate industry was at least $5.4 billion in 2005 Foreign investment now accounts for 15% of China s real estate market Source:, World Investment Report

4 Services sectors that attracted most FDI inward stock in 2004 and 2005, (based on responses from 9 APEC countries) (cumulative) Community, social and personal service activities Health and social services Education Public administration and defence Business activities Finance Transport, storage and communications Hotels and restaurants Trade Construction Electricity, gas and water (Millions U.S.$) Additional patterns of the shift of FDI towards services Shift towards services in all country groups Shift is fastest in developed countries Wide variations among individual economies Inward stock: More than 80%: Denmark, Hong Kong (China), Luxembourg, Switzerland 30% or less: Bangladesh, Sweden, Venezuela Outward stock: More than 70%: Austria, Colombia, Denmark Less than 40%: Australia, Croatia, Sweden. 3

5 What services attract the most FDI? Traditionally: Financial services (40% in 1990, 29% in 2002) Trading (25% in 1990, 18% in 2002) Emerging industries: Telecommunications Electricity Business services Services IIAs Broad definition of international investment agreements (IIAs): agreements at the bilateral, regional and multilateral levels that address investment issues. Substantive criteria IIAs cover, in varying degrees, FDI in services: «Services IIAs». 4

6 Services IIAs Some IIAs deal only with investment: e.g. BITs. Investment in services is covered. Some IIAs cover a broader range of issues and single out services. Investment is one of the issues. Most FTAs/RTAs fall into this second category. Approaches to services in IIAs Three approaches for IIAs coverage of FDI in services: Evolution over time? The FDI-based approach: FDI is exclusively covered by the disciplines of the investment chapter or agreement. The services-based approach: services FDI is exclusively covered by the services chapter or agreement The mixed approach: services FDI is covered by both the investment and the services chapter of an agreement. 5

7 The FDI-based approach The NAFTA: the agreement covers services and non-services investments without differentiating between them. Services investment in BITs: nondifferentiation. BITs with liberalization commitments: market access for services. The services-based approach The GATs: mode 3 «Commercial presence: any type of business of professional establishment, including through (i) the constitution, acquisition or maintenance of a juridical person, or (ii) the creation or maintenance of a branch or a representative office, within the territory of a Member for the purpose of supplying a service. Narrower definition, «entreprise-based», no protection, Perf.requirements allowed, State-state dispute settlement. The 1995 ASEAN Framework Agreement on Services 6

8 The mixed approach A growing number of FTAs/RTAs in the APEC region Japan-Singapore Agreement: a special provision in the investment chapter exclude services FDI from the scope of a specific discipline or more generally from the investment disciplines. Key: interaction. Techniques to avoid overlaps. Salient features Structure and architecture Definition: broad asset-based for protection, Mode3/enterprise based for liberalization. Negative vs. Positive list reservations Protection: in mixed approach: liberalization rules in the services chapter, investment protection rules in investment chapter. Both apply to services FDI. 7

9 Provisions covering specific industries Industry specific commitments. NAFTA: separate chapter for financial services Some EU agreements: special provisions for maritime transport. Energy-related services Air transport The network of BITs continues to grow rapidly, there are now over 2500 BITs Annual BITs Cummulative BITs BITs/years BITs cumulative 8

10 Number of BITs concluded by APEC countries, cumulative and annual, Annual BITs Annual Cumulative Cumulative BITs There are over 240 economic integration agreements with investment provisions (EIAs) Number of investment-related agreements Years Number of agreements by period cumulative 9

11 Intra-APEC EIAs with investment provisions, end 2006 There are currently 36 intra-apec EIAs with investment provisions Most recent EIAs include the U.S.- Peru FTA, the Japan-Philippines EPA and Japan-Chile EPA. Intra-APEC BITs, end 2006 There are over 75 intra-apec BITs China, the Republic of Korea and Viet Nam have the highest numbers of intra- APEC BITs. 10