APLN2006Acuerdosfina l2 11 06

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Trade and Investment Agreements

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I. Free Trade Agreements

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Facts and Figures: The proliferation of RTAs/FTAs can be attributed, among other factors, to: the slow progress of WTO negotiations, the relative sluggishness of regional integration processes and the bilateral search for market diversification: 325 RTAs/FTAs worldwide have been registered with the GATT / WTO. Of these more than 200 have been signed over the last eleven years.  The WTO estimates that in 2005 more than 51% of the world’s goods were traded under preferential agreements.

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RTAs/FTAs Worldwide Source: WTO

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Asia-Pacific Region Early ’90s: the only existing preferential agreements were regional arrangements in the form of FTAs (ASEAN, ASEAN+3, Bangkok Agreement), customs unions (MERCOSUR) and the GSP. 1990-1995: intraregional trade was gradually liberalized within the framework of LAIA agreements in the Americas, ASEAN and APEC plurilateral agreements, and multilateral agreements (Uruguay Round). 1995-2000: emergence of agreements with extra-regional trade partners such as the United States and Canada. 2000-2005: dynamic growth of preferential trade and investment agreements: FTA: United States-Australia-New Zealand and Chile were the most active ones. RTA: ASEAN+China, ASEAN+USA, Japan’s proposal was to create the Comprehensive Economic Partnership in East Asia (CEPEA), ASEAN+India. At intra- and extra-regional level, basically the countries that were not dependent on trade with the United States. Different trade structures have an impact on regional blocs 34 RTAs/FTAs in the APEC Region.

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Trends Growing agreement diversification: FTA/RTA/TIFA/TEF Map of agreements in Asia-Pacific: 12 regional/plurilateral agreements 50 FTA (TIFA.TEF,CER) 18 under negotiation. 14 under consideration North-South Agreements: FTA/TIFA/TEF: United States, Australia, New Zealand and Japan actively involved in the signing of trans-Pacific agreements with Canada, Chile, Peru, Mexico. South-South Agreements: FTA: Chile, Peru, Taiwan (3 FTAs with Central American countries), Singapore (3 FTAs), Philippines, Thailand, Korea, China. Proposal to create a Latin American Pacific free trade area made up by CAN countries and Chile. Chile signed a FTA with Peru and invited it to join the P4 (Trans-Pacific Strategic Economic Partnership Agreement- Brunei/Singapore/New Zealand). Chile is also finalizing negotiations with Colombia and has accepted to join CAN as an associate member. Ecuador has stated its interest in joining APEC and has received support from Thailand, Malaysia and Indonesia. RTA: Chile-CAN, Chile-MERCOSUR, Russia-MERCOSUR, India-MERCOSUR, SACU-MERCOSUR. Impact of the deadlock of WTO negotiations: EU shows interest in negotiating with Asian countries and APEC members. Switzerland begins studies for future negotiations with Japan, Canada and Thailand. India announces future agreements with China, the EU, Brazil and South Africa. FTA negotiations with the United States revolve around the “multilateral agenda”:chapter on agriculture.

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FTA/RTA: Early ´90s Source: WTO

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FTA/RTA: Early ´90s Source: WTO

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FTAs/RTAs and Economic Cooperation Forums in the Asia-Pacific Region 2006 APEC China SACU DR-CAFTA NAFTA CSN MERCOSUR SICA CARICOM CAN EU ASEAN P4 ChilePeru NZ,Brunei Singapore Peru Japan Thailand more than 51% of the world’s goods were traded under preferential agreements TIFAs Corea Singapure Philipinness Taiwán Vietnam GCC

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Agreements between APEC Members Source: APEC

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Source: APEC Agreements between APEC Members

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Agreements with Non-APEC Members Source:APEC

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Source: APEC Agreements with Non-APEC Members

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Source: APEC Agreements with Non-APEC Members

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Signed Closed negotiation Under negotiation Under consideration

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11 Regional Agreements associated with the Asia-Pacific Region

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Bilateral Agreements

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Non APEC Member

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II. Bilateral Investment Treaties

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5500 Bilateral, Regional and Interregional Investment Treaties UNCTAD

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Dramatic Growth of the Number of BITs Worldwide in the ’90s Between 1959 and 1999 the number of BITs increased fivefold Source:UNCTAD

Number of BITs Signed:1990-2005: 

Number of BITs Signed:1990-2005

Total BITs Concluded by Country Group, End 2005: 

Total BITs Concluded by Country Group, End 2005

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Bilateral Investment Treaties 2,495 BITs 232 Regional Trade Agreements including a chapter on Investment account for 40% of FDI of OECD countries in non-OECD countries. They go beyond the Doha agenda, They include agreements on competition policy, government procurement and trade facilitation. 464 BITs in the Americas, half of them concluded with Asian and Pacific countries. Previous experiences in Europe in the 50s and in the Americas in the ’80s (USA/Panama, 1982)

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Bilateral Investment Treaties 2,495 BITs 232 Regional Trade Agreements including a chapter on Investment account for 40% of FDI of OECD countries in non OECD countries. They go beyond the Doha agenda, They include agreements on competition policy, government procurement and trade facilitation. 464 BITs in the Americas, half of them concluded with Asian and Pacific countries. Previous experiences in Europe in the 50s and in the Americas in the ’80s (USA/Panama, 1982)

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Bilateral Investment Treaties 2,495 BITs 232 Regional Trade Agreements including a chapter on Investment account for 40% of FDI of OECD countries in non OECD countries. They go beyond the Doha agenda, They include agreements on competition policy, government procurement and trade facilitation. 464 BITs in the Americas, half of them concluded with Asian and Pacific countries. Previous experiences in Europe in the 50s and in the Americas in the ’80s (USA/Panama, 1982)

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Bilateral Investment Treaties 2,495 BITs 232 Regional Trade Agreements including a chapter on Investment account for 40% of FDI of OECD countries in non OECD countries. They go beyond the Doha agenda, They include agreements on competition policy, government procurement and trade facilitation 464 BITs in the Americas, half of them concluded with Asian and Pacific countries. Previous experiences in Europe in the 50s and in the Americas in the ’80s (USA/Panama, 1982)

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Top 10 Signatories of BITs, end 2005

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Cumulative Number of Investment Treaties by Region 2005 Source: UNCTAD

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BITs Concluded by Developing Countries The total number of BITs among developing countries leapt from 42 in 1990 to 644 by the end of 2005. Asian countries are particularly engaged as parties in approximately 40% of all BITs. Recent IIAs tend to become more sophisticated in content, clarifying in greater detail the meaning of certain standard clauses and procedural rules relating to dispute settlement. International investment rules are increasingly adopted as an essential part of free trade agreements (FTAs) and other treaties on economic cooperation: services, intellectual property, competition, labor, environment, government procurement, temporary entry for business persons and transparency, among others. The recent increase in developing country BITs reflects a greater emphasis on South-South cooperation on investment, as well as the rise of outward FDI from developing countries.

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Bilateral Investment Treaties in APEC 1990-2005 Source: UNCTAD

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Source: UNCTAD 2006 Rising International Arbitration 1987-2005

2006 Revision of Rules of International Arbitration: 

2006 Revision of Rules of International Arbitration Member governments of the Vienna-based United Nations Commission on International Trade Law (UNCITRAL) have met for their first round of discussions on revising the UN body’s signature rules of arbitration (September 11-15). The UNCITRAL Rules of Arbitration, one of the most widely used in investment disputes, are being updated for the first time since they were adopted in 1976. The International Centre for Settlement of Investment Disputes (ICSID) will play host to an arbitration colloquium on November 17 in Washington DC. The event is co-hosted by the American Arbitration Association (AAA) and the International Chamber of Commerce (ICC) and will feature panel discussions on a range of issues of interest to the three host organizations, including new challenges regarding confidentiality, and selected substantive issues arising from arbitration involving State parties.

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ICSID Members in APEC Source: World Bank.

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Impact on Development: Objectives and Goals BITs 90s´ They meet trade liberalization goals: opening up of specific sectors to FDI with few or no references to development. Eliminate restrictions that exclude specific economic sectors. ban “performance requirements” (national content, X/M). Do they create more FDI flows or are they determined by FDI? Open discussion: Brazil, China, Cuba, Central America. Liberal approach to the elimination of barriers to trade and investment. They focus on present and future investors’ rights rather than on their impact on development (FDI quantity and quality). Growing protection of investment interests vs. governments’ capability to regulate development-oriented investments serving the public interest. Limit the space for public policy and are irreversible (financial cost). Absence of the environmental and socio-labor dimensions. Dispute settlement established as a binding arbitration process initiated by a foreign investor against one State. Mechanisms that have not been designed for public policy arbitration cases. Mechanisms that have not been designed for a globalized economy. Mechanisms that resort to international arbitration.

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Progress towards Deregulation of FDI at a National Level in Developed and Developing Countries during the 1990s Source: World Investment Report (1998 and 2006)

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Regulatory Changes in 2005 by Nature and Region Source: UNCTAD 2006

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Thanks