Focus on quality investments. Ivan Ermokhin, expert Russia-OECD Center Sofia Lebedeva, expert Russia-OECD Center

Transcription

1 Focus on quality investments Ivan Ermokhin, expert Russia-OECD Center Sofia Lebedeva, expert Russia-OECD Center

2 Investment treaty practice: overview ASEAN Country BIT with Russia? Indonesia In force, since 2009 Malaysia No agreement the Philippines In force, since 1998 Singapore In force, since 2012 Thailand Brunei Signed (not in force) No agreement Cambodia In force, since 2016 Laos In force, since 2006 Myanmar Vietnam No agreement In force, since 1996 (also EEU-Vietnam FTA since 2016) Russia has 82 investment agreements (BIT) most of the Russian BIT s are old and have vague language Last developments in investment treaty practice show us the shift from the quantity of investments to the quality. The quality of investments can be encouraged by the detailed wording of the agreement, that improve the transparency, decrease administrative burden and stimulate sustainable investments.

3 How to make a better environment for investments? 1 2 Increase the transparency of the national legislation Obligation for governments of BIT to publish the drafts of the national legislation Obligation for governments of BIT to have public discussion about legislative initiatives with investors Make available current regulations at internet and keep them up to date, preferably in English Use links to international agreements that help establish transparency framework, for example Aarhus Convention 1998 Develop investment facilitation mechanisms Obligation for governments of BIT to create contact centers for investors Give the right to foreign investors apply to business ombudsman for help Metalcad v. Mexica 1997, the act of indirect expropriation by Mexica, based on company s violation of local government legislation ASEAN China FTA 2009 has the article that requires from governments to establish contact centers. These contact centers must response to any questions from legal entities and persons about investment regulations

4 How to make a better environment for investments? 3 Choose the spheres for closer cooperation Countries make statements that they will increase cooperation in chosen spheres. Increase cooperation means harmonization of national regulations based on international standards The areas for closer cooperation can be chosen based on inf. about economic cooperation, necessity to fight counterfeit products etc. Singapore v. Costa Rica 2010 has the list of spheres for closer cooperation 4 Promote responsible business conduct Singapore v. Costa Rica 2010, TPP Agreement, CETA etc promote responsible business conduct through OECD instruments

5 Responsible Business Conduct (RBC) International Standard 11 Directions RBC Implemented by OECD countries Implemented by emerging economies: China, India, Viet Nam, RSA Implemented by non-oecd countries (Non-member Adherents to OECD Declaration on International Investment and Multinational Enterprises (Argentina, Brazil, Chile, Colombia, Costa Rica, Egypt, Estonia, Hungary, Israel, Jordan, Kazakhstan, Latvia, Lithuania, Morocco, Peru, Romania, Slovenia, Tunisia, Ukraine)) Concepts and Principles General Policies Disclosure Human Rights Employment and Industrial Relations Environment Combating Bribery, Bribe Solicitation and Extortion Consumer Interests Science and Technology Competition Taxation Entails compliance with laws, even if they are poorly fixed at the national level Influence Tool Promotes the enforcement of relevant norms at the national level Implemented by MNEs and SMEs

6 Why RBC is important for investment 75% of MNEs investment fall under RBC requirements The issues of RBC can be taken into account at different stages of interaction between the state and a foreign investor: conclusion of an investment agreement between the public and private parties obtaining permits Reporting dispute resolution The RBC provisions as a special formulation are included in BITs separately from special provisions on ecology, labor, corruption, since, in essence, they are addressed to private individuals. In % of 2500 companies surveyed around the world were fined for violations in the field of legislation on environmental and social issues. More than 40 countries have adopted or are developing action plans for RBC development!! Countries are using RBC for trade restriction

7 We are not OECD members, why do we need RBC? China is not OECD-member, but in 2015 the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains was adopted (developed jointly with the OECD) The Guidelines are designed to align Chinese company due diligence with international standards and allow for mutual recognition with existing international initiatives and legislations. The Guidelines will apply to all Chinese companies which are extracting and/or using mineral resources and their related products and are engaged at any point in the supply chain of minerals. Companies using or engaged in the supply chain of other natural resources are also encouraged to use the Guidelines as a reference. IMPORTANT: in 2016 export of mineral substances from Russia to China - 14,825,455,000 USD, 13% of Russian mineral exports (ITC Trade Map)

8 Responsible business opportunities for investment Renewable energy sources (RES) responsible investments in connection with their environmental friendliness RES in figures: % of world energy consumption million jobs worldwide (an increase of 1.1% compared to 2015) More than 60% of jobs - in Asia (leader - China) 2016, new capacities: solar 47%, wind power 34%, hydropower 15.5% 2016, global investment in RES: $ billion 176 countries have set targets for transition to renewable energy sources Perspective Market CHINA $ billion in RES (36% of global investments) - the largest investor INDIA $ 10.2 billion (2nd place in Asia, 5 in the world) ASEAN The goal is to increase the share of RES in the total primary energy reserves to 23% by 2025 Perspective market!

9 Thank you! Ivan Ermokhin, expert Russia-OECD Center Sofia Lebedeva, expert Russia-OECD Center