Go slow on liberalizing foreign investment laws
By Ni Jianjun and Wu Menglin (China Daily)Updated: 2007-06-12 09:18 WTO's Agreement on TRIMs comes with a tag, which is "trade-related", but the boundaries of this "trade-related" qualification have become blurred over the years. Some researchers believe there are two different definitions of trade-related investment measures - one macro, the other micro.
The macro definition of trade-related measures includes government macro policies, local policies, employment policies and competition policies. The micro definition refers to measures directly affecting trade, such as requirements on real export results and local content.
The current trend is for developed countries to prefer to discuss investment issues within trade organizations, but this is opposed by developing countries.
During the 2001-06 Doha Round of WTO negotiations, developed nations proposed four topics on trade convenience and investment, competition policies and government procurement transparency. They suggested the inclusion of these four "Singapore topics" in the negotiation agenda.
But, because of opposition from developing nations, the member states only agreed to initiate the trade convenience project and begin negotiations on the issue of "further improving the mobility and customs clearance of goods".
Advancing trade and investment liberalization is one of the primary goals of Asia-Pacific Economic Cooperation (APEC). And the Non-binding Investment Principles (NBIPs) is a guiding document for all APEC members on investment liberalization, while the organization's Investment Experts' Group (IEG) is responsible for specifics such as supervision, guidance and coordination.
NBIPs covers all major areas for the promotion of investment liberalization. This includes investment laws and regulations and transparency of investment policies, non-discriminating principles for investors from members, national treatment, measures to encourage investment, lowering requirements on performance, requisition and compensation, profit remittance and free exchange of currencies, resolution of disputes, entrance and stay of foreign investors and avoiding double taxation.
The Investment Liberalization and Business Convenience Options Checklist is a package of measures designed by IEG for members to choose from when implementing investment liberalization. The menu provides different policies and measures for various goals of investment liberalization.
Policy measures listed in the Options Checklist mainly cover 12 areas, including general requirements for the implementation of investment liberalization and business convenience. The Checklist offers policy measures of different openness for each area.
For example, on Issues Concerning the Approval of Foreign Investors, the Checklist provides the following policy options:
Abolishing the requirement for prior approval and replacing it with post-investment registration;
Recommending the adoption of an automatic approval mechanism under the existing prior-approval system with the right to intervene under extraordinary circumstances;
Specifying a ceiling of investment value under which no prior approval is required and gradually raising it till prior approval is eliminated;
Maintaining the prior approval requirement only in certain special industries
or departments and replacing it with post-investment registration if possible.
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