Wednesday, March 29, 2017

UNCTAD Investment Policy Monitor

In the March 2017 issue of its Investment Policy Monitor, UNCTAD reports that, during the review period (October 2016-February 2017), several countries took noteworthy investment policy measures at a national level. Among them are the issuance of a comprehensive circular to attract foreign investment in China. Another important featrure was new privatisation measures in France, Greece, South-Korea, The Netherlands and the Russian Federation. On the other hand, Indonesia introduced a foreign ownership limit on electronic payment service firms.

The universe of international investment agreements (IIAs) is expanding, as countries continue to sign and negotiate new IIAs, including megaregional initiatives. During the reporting period, countries concluded 11 bilateral investment treaties and 2 treaties with investment provisions, bringing the total of IIAs to over 3,300.


Entry/Establishment of investment 

18 countries - Argentina, Brazil, Canada, China, Colombia, France, Germany, Greece, India, Indonesia, (South-) Korea, Myanmar, the Netherlands, Romania, Russian Federation, United States of America, Uzbekistan ad Viet Nam -adopted new policy measures relating to the entry and establishment of foreign investors. The majority of them relaxed restrictions on foreign ownership or opened up new business opportunities.

Among the most noteworthy investment liberalisation measures are:

* China issued a circulat setting out the blueprint for its policies on attracting foreign investment. Inter alia, the Government decided to revise the "Catalogue for the Guidance of Foreign Investment industries", and to further open various industries.

* The Central Bank of India amended regulations in order to further liberalise and rationalise the investment regime for foreign venture capital investors and to encourage foreign investment in startups.

New regulatory or restrictive investment-related policy measures included:

* Indonesia imposed a 20% limit on foreign ownership in companies that offer electronic payment services

* The United States prohibited the acquisition of a U.S. subsidiary of Aixtron by a Chinese company on the basis of national security concerns.

Treatment of established investment 

10 countries - Argentina, China, Colombia, Iceland, India, Indonesia, Jordan, Myanmar, Poland and Romania - took measures with respect to the treatment of investors after establishment in the host country. For example:

* Indonesia increased the minimum local content requirement for domestically-produced 4G smartphones that are sold in the Indonesian market from 20% to 30%.

* Myanmar revoked the ceiling on the amount of funds that foreign-local joint venture trading firms can use in their operations. This removes the obligation to register any additional amounts of foreign currency required for investment purposes.


International investment agreements (IIAs) signed

During the reporting period, 11 bilateral investment treaties (BITs) were signed, including:

* BIT between Nigeria and Singapore (4 November 2016)
* BIT between Chile and Hong Kong SAR (18 November 2016) 
* BIT between Israel and Japan (1 February 2017) 

Regional Comprehensive Economic Partnership (RCEP)

On 1-10 December 2016, the 16th round of negotiations for RCEPT. involving the 10 members if the Association of Southeast Asian Nations (ASEAN), plus 6 other countries from the region, were held in Tangerang, Indonesia. Discussions focused on trade in goods, trade in services, investment, intellectual property rights, competition and e-commerce. The chapter on Small- and Medium-sized Enterprises was concluded during this round. This is the second chapter to eb concluded since the inclusion of the chapter on Economic and Technical Cooperation at the 15th round in Tianjin, China. The 17th round of RCEP negotiations took place in Kobe, Japan, from 27 February - 3 March 2017.

Trans-Pacific Partnership Agreement (TPP)

On 30 January 2017, the United Stats issued a letter to signatories of the Trans-Pacific Partnership Agreement (TPP) that it has formally withdrawn from the agreement and that it has no legal obligations arising from its signature on 4 February 2016. The TPP was originally signed between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Viet Nam on 4 February 2016. 

Lima Declaration of the Free Trade Area Asia-Pacific 

On 20 November 2016, the Asia-Pacific Economic Cooperation (APEC) Leaders' Meeting was held in Lima, Peru, where the Declaration on advancing quality growth and human development was adopted. Annex A to the Declaration, entitled "Lima Declaration on Free Trade Area of the Asia-Pacific (FTAAP)". encourages the "conclusion of comprehensive and high-quality" regional trade agreements and free trade agreements. 

Bilateral Trade and Investment Agreement between the EU and India

On 20 February 2017, EU Parliamentarians visited India to discuss matters cncerning EU-India ties, in particular, India BITs with EU member states, which will cease having effect on 31 March 2017. However, investments made prior to the termination would enjoy continued protection under the sunset clauses of the old BITs. The EU delegation discussed with India the possibility of extending the effective termination dates of the BITs by at least 6 months. Discussions also focused on the negotiations of the Bilateral Trade and Investment Agreement with India, which have been ongoing since 2007.