0 Cross-Strait Bilateral Investment Protection and Promotion Agreement Investment Commission, MOEA Executive Secretary Mr. Fan Liang-Tung

1 Background (1/5) 1.Mainland China is the largest recipient of Taiwan’s outward investment. In order to protect Taiwanese investors in Mainland China in response to their long-term expectations, our government repeatedly used cross-strait negotiation channels to ask Mainland China to include the Cross-Strait BIA in our topics of negotiation. 2.Taiwan Business Associations in Mainland China and Taiwanese industry associations also appealed to the government to enter into Cross-Strait BIA talks as soon as possible in order to protect Taiwanese investors with respect to their investments in Mainland China as well as their property and personal safety. 3.The Cross-Strait BIA is part of the Economic Cooperation Framework Agreement (ECFA). Negotiations between the governments of Taiwan and Mainland China have resulted in an agreement on the Cross-Strait BIA, which provides rules for investment-related matters of common concern to investors on both sides. The BIA will become an important mechanism for protecting cross-strait investments in the future.

2 Framework (2/5) Definition Investment Treatment Investment Promotion National Treatment and Most-Favoured-Nation Treatment (including limitations on the application of these two requirements) Investor (including natural persons and juridical persons as well as investors who invest indirectly via third areas) Investment (broadly defined in order to protect investors) Fair and equitable treatment Investors protection (i.e. personal freedom and safety) Transparency, gradual elimination of investment restrictions, and investment facilitation (statement of basic principles) Investment Protection Expropriation (including direct expropriation and indirect expropriation, with the conditions of expropriation and methods of compensation clearly stipulated) Denial of benefits (prevention of other countries from free-riding the benefits accorded under the Cross-Strait BIA) Dispute Settlement Mechanisms For disputes between private parties related to investments (P-P, parties to the disputes may choose arbitration institutions in Taiwan or Mainland China, and arbitration venue, upon mutual consent) For disputes between the two governments (G-G) For disputes between an investor and the host government (P-G, including negotiation, coordination, conciliation, mediation, and administrative/judicial proceedings) Contact Mechanism Transfer (investors may freely transfer their investments and/or profits) Compensation for losses, subrogation Cross-Strait Economic Cooperation Committee will be in charge of subsequent matters related to the Cross-Strait BIA Others Format of communication, amendment, entry into force Protocol Rules on mediation procedures for investment disputes

3 Personal Freedom and Safety (3/5) The Cross-Strait BIA covers and provides protection on personal freedom and safety, including the following: 1.Clear principles for protection of the personal freedom and safety of investors and related personnel. Both sides have agreed that whenever a restriction is placed on the personal freedom of a Taiwanese investor, Mainland China should notify his/her family members or enterprise within 24 hours. 2.Timely notification of Taiwan’s competent authorities on the basis of the existing notification mechanism provided in the “Cross-Strait Joint Crime- Fighting and Judicial Mutual Assistance Agreement.” 3.Facilitation of family/attorney visits in order to effect protection of the personal freedom, safety, and investment rights of Taiwanese investors.

4 Dispute Settlement Mechanisms (4/5) The Cross-Strait BIA also provides a variety of dispute settlement mechanisms: 1.Disputes between governments (G-G): Disputes between the two governments regarding the interpretation, execution, and application of the Cross-Strait BIA will be handled in accordance with Article 10 of the ECFA. 2.Disputes between an investor and the host government (P-G): Five dispute settlement channels are provided: negotiation, coordination, conciliation, mediation, and administrative/judicial proceedings. Taiwanese investors can choose any of the above channels to resolve disputes over matters covered by the Cross-Strait BIA, which provides more options than Taiwanese investors currently have in Mainland China. 3.Disputes between private parties related to investments (P-P): Investors of both sides, with mutual consent, may go for arbitration under the auspices of arbitration institutions in Taiwan or Mainland China to resolve their commercial disputes and conduct arbitration at a place agreeable to both.

5 Benefits of the Cross-Strait BIA 1.Beneficial to Taiwan’s trade and economic development: Taiwan businesses’ investments in Mainland China contribute to Taiwan’s international trade and domestic industry, and related employment. The signing of the Cross-Strait BIA is not only a crucial step for the trade and economic relationship across the straits, but also brings a positive benefit to Taiwan’s trade and economic development in the future. 2.Developing Taiwan into a regional operations center: The implementation of the Cross-Strait BIA helps Taiwan become a gateway to the market of Mainland China, attract foreign investment to Taiwan, and further develop itself into a regional operations center. 3.Assuring protection of Taiwanese investors’ rights: The MOEA has established the “Joint Taiwanese Business Service Center ” to serve as a contact point for handling Taiwanese investors’ disputes and to provide legal consultation services to Taiwanese investors to help them better understand how to protect their rights through the Cross-Strait BIA. Benefits of the Cross-Strait BIA (5/5)