1. WTO 2015 Public Forum FABRIZIO SARDELLI PANZINI INTERNATIONAL NEGOTIATIONS UNIT NATIONAL CONFEDERATION OF INDUSTRY BRAZIL - CNI GENEVA, 1ST OF OCTOBER, 2015 THE RETURN OF INVESTMENT AGREEMENTS TO BRAZIL’S TRADE POLICY AGENDA

2. SUMARY 1. The international revisional movement of IIAs 2. Brazil’s IIAs case history 3. Brazil’s new IIAs model 4. Final considerations

3. What’s being reviewed in IIAs? 1. Definition of investment Social responsibility Umbrella clause Indirect expropriation

4. 1. Investor State Dispute Settlement Appellation body Transparency External participation Arbitrators Permanent court Forum shop Non usage of ISDS What’s being reviewed in IAs?

5. The history case of Brazil: IIAs signed during the 1990s 2. 1994 1995 1997 to 1999

6. Executive vs. Congress 2. Definition of IIAs Investment State Dispute Indirect Expropriation Clause Liberalization measures and large domestic market The need for Foreign Direct Investment (new economic plan and currency)

7. What’s new? 3. FDI Inflows Stock (US$ billions) FDI Outflows Stock (US$ billions) Country199020002014199020002014Growth OF China20.691193.3481.085.3934.45527.768729.5852527% Brazil37.143122.250754.76941.04451.946316.339509% South Korea5.18643.738182.0372.30121.497258.5531103% South Africa9.21043.451145.38415.01027.328133.936390% Mexico22.424121.691337.9742.6728.273131.2461486% India1.65716.339252.3311241.733129.5787377% Source: UNCTAD 2015.

8. What’s new? 3. Brazilian MNEs Main Policy Recommendations to Support FDIImportance 1Eliminate automatic profit taxation of companies abroad3,85 2Increase the number of double taxation agreements3,81 3Adjust double taxation agreements in force according to international practices3,67 4Eliminate fiscal authority restrictions to deduct losses of operations abroad3,62 5Increase diplomatic support to Brazilian companies abroad3,52 6Recognition of fiscal incentives granted by the country of destiny of investments3,41 7Celebrate protection investment agreements3,35 Source: Survey CNI 2013.

9. What’s new? 3. Source: Survey CNI 2013.

10. Brazil’s new IIA’s model 3. Preamble and definitions Language regarding policy space, except Mexico No mention to protection, except with Mexico Definition: exclusion of portfolio investments. Long lasting relations for goods and services production. Mexico: IP and loans Pillar 1 - Institutional governance Joint committee (monitor, inform, amicable resolution and prevention) Ombudsman (focal point to support investments, interact with other government agencies, address claims and facilitate resolution of complains – highlighted in IA with Mexico )

11. 3. Pillar 2 – Prevention and mitigation of risks (protection pillar) CFIA includes: National treatment and most favored nation Direct expropriation and compensation (Mexico more developed) Transfer of capital (Mexico more detailed) Transparency, publicity (in the case of Mexico) CFIA does not include: Indirect expropriation Investor – state dispute settlement Fair and equitable treatment Brazil’s new IIA’s model

12. 3. Pillar 2 – Prevention and mitigation of risks (protection pillar) The state state dispute settlement Evaluation of claims by the joint committee (until 120 days) Only after all internal judicial resources are used State to State dispute (mentioned all but detailed in BIT Mexico) Mexico: create tribunal or submit to a permanent one Criteria for arbitrators (experienced, independent and code of conduct for WTO DS) Brazil’s new IIA’s model

13. 3. Pillar 3 – Thematic agenda and social corporate responsibility Social responsibility clause: local community and development of labor force (professional degree) Thematic agenda: - Facilitation of transfers - Facilitation of visa for executives - Facilitation of licenses and certificates: quicker and more transparent - Cooperation and exchange of information (more developed in Mozambique BIT) Brazil’s new IIA’s model

14. Brazil’s new IIAs model: Status 3. Countries under negotiation:  Latin America: Chile, Colombia, Peru;  Africa: Algeria, Morocco, Nigeria and South Africa CFIA signed in 2015:

15. Final considerations 4. Context: Based on past experiences with congress Addresses some of the current BITs concerns It is a positive step in recognizing the importance of Brazil’s FDI outflow Challenges: Implementation and operation of committee and Ombudsmen Level of private sector participation (+ notitication) Concerns about how policy space would be interpreted in a dispute Follow discussions on ISDS and expropriation to be included Biased or slow internal judicial process Multilateralization: Focal points (TFA), prevention of disputes, DS credibility, specialized arbitrators, cooperation (TFA) and common definition of investment.