FDI protectionism is on the rise

Over the past two decades or so, countries have liberalized their FDI regulatory frameworks and have put in place an international investment law regime that provides various protections for international investors. In the past few years, however, there are signs that countries are reevaluating their approach toward such investment. As a result, FDI protectionism is on the rise, with screening of inward M&As becoming more frequent. Typically, this is being done under the guise of"national interest"or similar concepts, often linked to strategic sectors and national champions. While the international investment law regime faces a challenge to find the right balance between the rights and responsibilities of governments and investors, care needs to be taken that the rise of FDI protectionism does not endanger a rules-based approach to FDI. An independent FDI Protectionism Observatory to monitor new protectionist measures and name and shame countries that take them is therefore needed.Debt Markets,Emerging Markets,Investment and Investment Climate,,Trade and Regional Integration

The FDI recession has begun

With $1.8 trillion (according to UNCTAD), world foreign direct investment (FDI) flows reached an all-time high last year. All major regions benefitted from increased flows. But that was then. What is, and will be, the impact of the financial crisis and the recession on FDI flows this year and next

The FDI recession has begun

With $1.8 trillion (according to UNCTAD), world foreign direct investment (FDI) flows reached an all-time high last year. All major regions benefitted from increased flows. But that was then. What is, and will be, the impact of the financial crisis and the recession on FDI flows this year and next

Outward FDI From Emerging Markets: Some Policy Issues

Outward foreign direct investment (OFDI) from emerging markets (essentially all non-OECD countries) has risen considerably during the past decade, reaching $133 billion in 2005, for a stock of some$1.4 trillion. As in the case of developed countries, the bulk of this investment is accounted for by a limited number of economies, with ten of them responsible for 83% in 2005. An increasing number of emerging market firms are joining the rank of multinational enterprises (MNEs), i.e. firms controlling assets abroad. This development raises at least two policy-oriented questions: 1. How should the policy regime for OFDI from emerging markets look like to support the competitiveness of the firms involved and the performance of their home countries? 2. How to manage the public reaction in emerging markets to their OFDI and in host countries to inward FDI from emerging markets

Report of the E15 Task Force on Investment Policy – The Evolving International Investment Law and Policy Regime: Ways forward

The presentation focussed on the need for an International Support Program for Sustainable Investment Facilitation and the need for an Advisory Center on International Investment Law, suggesting “G20 Guiding Principles for Global Investment Facilitation”

Leveling the Playing Field: Seeking Solutions

The presentation suggested that, if policies supporting outward FDI should be disciplined, then this should be done for all multinational enterprises and not only multinational enterprises that are SOEs

China moves the G20 on international investment

Under China’s leadership, the G20 adopted “Guiding Principles for Global Investment Policymaking,” put investment facilitation on the international agenda and institutionalized an additional platform for investment discussions. The challenge is now to build on these accomplishments

The regulatory framework for investment: where are we headed?

Governments throughout the world have sought, and are seeking, to attract foreign direct investment and, for that purposed, have liberalized their national regulatory frameworks for FDI and established a strong international investment law regime. However, there are signs that, as a result of a number of important developments (which are being discussed in some detail in this chapter), governments are reevaluating their stance toward FDI, or at least certain types of it. This re-evaluation has found its expression in a number of regulatory changes that may eventually lead to a regime that balances the rights of investors and host countries in a manner that places more emphasis on maintaining policy space for host country governments while still protecting foreign investor

The Negotiations of the United Nations Code of Conduct on Transnational Corporations: Experience and Lessons Learned

Many of the issues that are today part of the discussions surrounding international investment agreements were first dealt with when governments sought to negotiate a United Nations Code of Conduct on Transnational Corporations (and various related instruments) almost 40 years ago. The Code was meant to establish a multilateral framework to define, in a balanced manner, the rights and responsibilities of transnational corporations and host country governments in their relations with each other. This article looks at the origins of these negotiations, the underlying interest situations of the participating country groups, the experience of related negotiations, the actual negotiations of the Code, the reasons for the failure of the negotiations, the current situation, and factors driving change. The article concludes with lessons learned from the Code and related negotiations. These lessons may be of interest to current efforts to improve the international investment law and policy regime. What rules should govern the behavior of transnational corporations (TNCs) in the countries in which they are established, and what rules should govern the treatment of these firms by the governments of host countries? This challenge has been on the international agenda since the end of World War II. However, it was only in the late 1970s that negotiators began to formulate a comprehensive multilateral instrument, the United Nations Code of Conduct on Transnational Corporations, to tackle this challenge. In parallel to these negotiations (and subsequent to them), negotiations were also undertaken on specific aspects of the activities of TNCs, the principal private actors in international economic relations and important forces in individual economies. Although the Code negotiations – serviced by the United Nations Centre on Transnational Corporations (UNCTC) – came to naught, they crystallized the basic interest situations of the principal stakeholders and key issues associated with them, and they laid bare a number of the obstacles that governments seeking a multilateral investment instrument need to overcome. Many of these are still with us today and await an international solution

The Rise of FDI Protectionism

During the past 20 years or so, we have witnessed an impressive trend toward making the investment climate more welcoming for foreign direct investors. At the national level, the great majority of regulatory changes related to foreign direct investment (FDI) were in that direction, mostly in terms of opening more sectors to investment or reducing other market entry conditions and facilitating the operations of multinational enterprises (MNEs) once established. In fact, countries have actively sought to attract FDI, establishing investment promotion agencies to do that and, among other things, using a range of incentives to lure MNEs to their shores. These national policies have been supplemented by international investment agreements (IIAs) which, in particular, enshrine the protection of investment in internationally-binding treaties and, in a number of cases, also commit governments to liberalizing entry and operating conditions for foreign investors. The result is an international investment regime which, compared to what there was, say, 30 years ago, is quite well developed, even in the absence of a multilateral investment treaty. It is enforced, moreover, through an investor-state dispute settlement mechanism that is increasingly used by firms that seek to enforce what they see to be their rights. This dominant trend of the past two decades or so is certainly still continuing—but there are signs that the pendulum is swinging back. What is happening and why is it happening