Investment Liberalization: Some Key Elements and Issues in Today’s Negotiating Context 1 st ANNUAL FORUM OF DEVELOPING COUNTRY INVESTMENT NEGOTIATORS Singapore October, 2007 Investment Liberalization: Some Key Elements and Issues in Today’s Negotiating Context 1 st ANNUAL FORUM OF DEVELOPING COUNTRY INVESTMENT NEGOTIATORS Singapore October, 2007 Howard Mann Senior International Law Advisor International Institute for Sustainable Development

Agenda Investment liberalization w/o BITS/FTAs Investment liberalization w/o BITS/FTAs Basic forms of liberalization provisions Basic forms of liberalization provisions Options for liberalization Options for liberalization Performance requirements Performance requirements

Liberalization without BITs/FTAs Domestic law Domestic law Customary international law Customary international law GATS GATS “commercial presence” “commercial presence” MAI MAI WTO WTO

Basic Forms Top down/negative list/list out Top down/negative list/list out A general obligation to liberalize investment in all sectors (service and/or non-services); A general obligation to liberalize investment in all sectors (service and/or non-services); An exclusion list that excludes the application of this commitment to the listed sectors; and An exclusion list that excludes the application of this commitment to the listed sectors; and A second list identifying laws, regulations and policies that will continue to apply, even if discriminatory, to liberalized sectors. A second list identifying laws, regulations and policies that will continue to apply, even if discriminatory, to liberalized sectors. Bottom up/positive list/list in Bottom up/positive list/list in A section on what obligations will apply to the listed-in sectors (service and/or non-services); A section on what obligations will apply to the listed-in sectors (service and/or non-services); A list of the sectors to be covered; and A list of the sectors to be covered; and A list identifying laws, regulations and policies that will continue to apply, even if discriminatory, to the liberalized sectors A list identifying laws, regulations and policies that will continue to apply, even if discriminatory, to the liberalized sectors

Basic Forms Additional elements: Additional elements: How lists can be changed How lists can be changed Application to sub-federal levels of government Application to sub-federal levels of government Applied through national treatment provisions Applied through national treatment provisions non-discriminatory national law applies non-discriminatory national law applies “each Party shall accord to investors of another Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments.” “each Party shall accord to investors of another Party treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments.”

Options for liberalization No provision No provision A provision on investment “in accordance with the laws of each party” A provision on investment “in accordance with the laws of each party” Cooperation only provisions Cooperation only provisions Developing linkages to development provisions in a sequential fashion Developing linkages to development provisions in a sequential fashion A non-binding list of commitments (advertising approach) A non-binding list of commitments (advertising approach) A binding list with provisions for unilateral changes A binding list with provisions for unilateral changes A binding list with provisions for renegotiating or approvals procedures for unilateral changes A binding list with provisions for renegotiating or approvals procedures for unilateral changes a provision for temporary safeguards measures a provision for temporary safeguards measures

Performance Requirements Provisions of national law that allow directing of certain functions of an investment Provisions of national law that allow directing of certain functions of an investment Levels of local investment, research Levels of local investment, research Minimum or maximum import/export of inputs or products Minimum or maximum import/export of inputs or products … Treaty provisions ban such requirements Treaty provisions ban such requirements Efficiency of business impaired Efficiency of business impaired NAFTA, US BITs especially NAFTA, US BITs especially Primarily associated with investment liberalizations: ban ulterior conditions Primarily associated with investment liberalizations: ban ulterior conditions Key point: if have liberalization, need to preserve legal measures that allow imposition of performance requirements or will breach NT, MFN Key point: if have liberalization, need to preserve legal measures that allow imposition of performance requirements or will breach NT, MFN