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ARTICLEServedonasilverplatterAreviewoftheUNCTADGlobalActionMenuforInvestmentFacilitationAhmadGhouriPublishedonline:10July2018TheAuthor(s)2018AbstractIncreasingdissatisfactionwithinvestor-Statedisputesettlementhasweak-enedtheadversarialapproachtointernationalinvestmentlawandpolicy.
Thisarticlearguesthatglobalinitiatives,suchastheUNCTAD'sGlobalActionMenuforInvestmentFacilitation(the''ActionMenu''),providegoodpolicypraxistoredirectthedevelopmentofinternationalinvestmentlawfromadversarialtoaconstructivepath.
TheActionMenusuggestsrebuildingoffutureinternationalinvestmentlawandpolicywithareconciliatoryspiritandbypromotinginvestmentfacilitationforsus-tainabledevelopment.
TodemystifytheActionMenu'spolicypraxis,thisarticleaddressesthefollowingkeyquestions:HowistheActionMenu'sproposedinvestmentfacilitationframeworkdifferentfromexistinginvestmentpromotionandprotectionstrategiesDoestheActionMenuproposeafundamentalchangetoexistinginter-nationalinvestmentpolicyagendaArethereothercomparableinitiativesthatmayenlightentheActionMenu'sapproachTowhatextenttheexistingdomesticpoliciesoninvestmentfacilitationreecttheActionMenu'sapproachesWouldtheActionMenu'sinvestmentfacilitationframeworkindeedpromotesustainabledevelopmentTheanalysisprimarilyhingesontheimpressionthatatthetimewheninternationalinvestmentlawisfraughtwithinternalantagonism,theActionMenu'sinvestmentfacilitationframeworkbringspositivevibestointernationalinvestmentlawandpolicymaking.
KeystrengthsoftheActionMenuareitsholistictreatmentofallprimaryforeigninvestmentpolicystakeholders(i.
e.
,foreigninvestorsandtheirhomeandhostStates)underonepolicyframework,anditswhole-of-governmentapproachforimplementationofinvestmentfacilitationpolicies.
TheapparentweaknessesarealackofattentiontocurbpossibleracetothebottomandvisiblelapsesinofferingaTheauthorwouldliketothankthereviewersofIndianJournalofInternationalLawfortheircommentsonanearlierdraft.
AhmadGhouri(&)UniversityofSussex,Brighton,UKe-mail:a.
a.
ghouri@sussex.
ac.
uk123IndianJournalofInternationalLaw(2018)58(1):139–170https://doi.
org/10.
1007/s40901-018-0086-7collaborativesustainabledevelopmentprogramme.
ThearticleconcludesthatalthoughtheActionMenusetsoutgreatpolicyinitiatives,therearemanyissuesthatremaintobeaddressed.
KeywordsInvestmentfacilitationInternationalinvestmentlawandpolicyInvestor-StatedisputepreventionSustainabledevelopment1IntroductionTheexistingproblemswithinternationalinvestmentlawarewellknown.
1Fundamentally,theseproblemsarecausedbybothsubstantiveandproceduralrulesofinternationalinvestmentlaw.
Thesubstantiverulesoninvestorrightsandtheinternationalstandardsofinvestmentprotectionarewidelycriticisedasbeingvagueandsubjecttomultipleinterpretations.
2Inadditiontouncertaintyandfragmentation,thesedecienciescreateproblemsforaState'srighttoregulatebusinessinpublicinterest.
3Ontheproceduralside,priordecisionsofinvestor-Statearbitraltribunalsarenotfollowedbysubsequenttribunalsasbindingprecedentsresultinginafragmentedandinharmoniousdevelopmentofsubstantivenorms.
4Thepossibilityofjurisdictionaloverlapofdifferentarbitralinstitutionsallowsmultipleproceedingsonthesamedisputeproducinginconsistenciesinthedecisionsofarbitraltribunalsatdifferentfora.
5Otherproceduralawsincludelackofjudicialrevieworappealsmechanismandconcernsregardingarbitratorsincludingmethodsofappointment,lackoftenureandadetailedcodeofconduct,andpotentialconictofinterest.
61See,CharlesBrower&StephanSchill,IsArbitrationaThreatoraBoontotheLegitimacyofInternationalInvestmentLaw,9(2)ChicagoJIntlL(2009)471–498;SuzanneASpears,TheQuestforPolicySpaceinaNewGenerationofInternationalInvestmentAgreements,13(4)JIntlEconomicL(2010)1037–1075;MuthucumaraswamySornarajah,AComingCrisis:ExpansionaryTrendsinInvestmentTreatyArbitration,in,KarlPSauvant(ed)AppealsMechanisminInternationalInvestmentDisputes(OUP,Oxford,2008)39–45;AriAlalo,MeaningAmbiguityandLegitimacyJudicial(Re-)constructionofNAFTAChapter11,26(2)NorthWesternJIntlLBusiness(2005)279–314,282;SusanDFranck,TheLegitimacyCrisisinInvestmentTreatyArbitration:PrivatisingPublicInternationalLawthroughInconsistentDerisions,73(4)FordhamLRev(2005)1521–1625,1523;AriAlalo,TowardsaCommonLawofInternationalInvestment:HowNAFTAChapter11PanelsShouldSolveTheirLegitimacyCrisis,17(1)GeorgetownIntlEnvironmentalLRev(2004)51–96;CharlesHBrowerII,Structure,Legitimacy,andNAFTA'sInvestmentChapter,36(1)VanderbiltJTransnatlL(2003)37–94;CharlesNBrower,CharlesHBrowerII&JeremyKSharpe,TheComingCrisisintheGlobalAdjudicationSystem,19(4)ArbitrationIntl(2003)415–440.
2Brower&Schill,ibid473.
3BrunoSimma,ForeignInvestmentArbitration:APlaceforHumanRights,60(3)IntlCompLQ(2011)573–596;KylaTienhaara,WhatYouDon'tKnowCanHurtYou:Investor-StateDisputesandtheProtectionoftheEnvironmentinDevelopingCountries,6(4)GlobalEnvironmentalPolitics(2006)73–100.
4Brower&Schill,supranote1,473.
5Ibid.
6See,forexample,HugoPerezcano,RisksofSelectiveApproachtoInvestor-StateArbitration,CIGIInvestorStateArbitrationSeries,PaperNo3(April2016).
140AhmadGhouri123Theseconcernshavepromptedcriticstocharacteriseinvestor-Statearbitrationastheworld'sworstjudicialsystem,andavarietyofactionsbygovernmentsincludingsuspendingnegotiationsofnewinvestmenttreaties,attemptstorenegotiateorwithdrawfromtheexistinginvestmenttreaties,andwithdrawalfromtheInternationalConventionfortheSettlementofInvestmentDisputes(ICSID)Convention.
7Apartfromnationalsovereigntyandpublicpolicyconcerns,theideaofpre-conceivedconsenttointernationalarbitrationinbilateralinvestmenttreaties(BITs),whichlargelyconstitutetheprimarysubstantiveandproceduralframeworkofinternationalinvestmentlaw,isirritatingforStatesbecauseitmayproliferatedisputesandtarnishtheirimageasaprospectivedestinationforforeigninvestment.
AlthoughstudieshavedeterminedthatconcludingBITshasapositiveeffectonforeigndirectinvestment(FDI)inowsandthattheeffectislargerwhendevelopingcountriesconcludetheseagreementswitheconomicallymoreimpor-tantcountries,8thereisnohard-empiricalevidenceiftheexistingpracticeofBITspromoteFDI.
9Morefundamentally,conictingarbitrationawardsdonotbringaboutdomesticandinternationalpolicyreformtopreventfurtherdisputes.
AlthoughoverwhelmingpresenceofBITswithstarklysimilarprovisionshasmanifestedconclusionsthattheytranspireasaninternationallegalandpolicyframework,10theyareessentiallybilateralinstrumentshavinglittlerulemakingsignicancefornon-partyStates.
11Insteadofencouragingthedevelopmentofmulti-stakeholderco-operationleadingtoauniversalpolicyframeworkfortreatmentofforeigninvestments,BITsarearguablyone-sidedagreementsimposinginternationalminimumstandardsoftreatmentforforeigninvestorsondevelopingcountriestowhichtheywouldnothaveagreedinamultilateraltreaty.
12Atdomesticlevel,mostexistingBITsare7MartinKhor,TheWorld'sWorstJudicialSystem,SouthBulletin74(5July2013).
TheInternationalConventionfortheSettlementofInvestmentDisputes(ICSIDConvention)isa''multilateralinvestmenttreaty''enteredintoforceon14October1966.
8See,forexample,JeswaldSalacuse&NicholasSullivanandTimButhe&HelenMilner,in,KarlPSauvant&LisaESachs(ed)TheEffectofTreatiesonForeignDirectInvestment–BilateralInvestmentTreaties,DoubleTaxationTreaties,andInvestmentFlows(OUP,Oxford,2009)chaps.
5and6.
9See,forexample,EricNeumayer&LauraSpess,DoBilateralInvestmentTreatiesIncreaseForeignDirectInvestmenttoDevelopingCountries,33(10)WorldDevelopment(2005)1567–1585.
10StephanSchill,TheMultilateralizationofInternationalInvestmentLaw(CUP,Cambridge,2009).
11See,forexample,AniruddhaRajput,TheMythofaMultilateralFrameworkinInternationalInvestmentLaw,56(3–4)IndianJIntlL(2016)427–461.
12ThisisbelievedtobeoneofthereasonswhytheOECDMAInegotiationsfailed.
See,forexample,DanielEgan,TheLimitsofInternationalization:ANeo-GramscianAnalysisoftheMultilateralAgreementonInvestment,27(3)CriticalSociology(2001)74–97.
ServedonasilverplatterAreviewoftheUNCTAD141123essentiallypassiveinstrumentshavingnodirectapplicationinaState'snationalinvestmentpolicyspace.
FormostBITpartyStates,BITsremaindormantuntilaforeigninvestorinitiatesaBITbasedclaim.
ThisiswhenaBITiseventuallyoperationalised.
TheOrganisationforEconomicCo-operationandDevelopment(OECD)lednegotiationsonamultilateralagreementoninvestment(MAI)collapsedin1998,whichhascreatedavacuuminmultilateralinvestmentpolicymaking.
AtthisimportantjunctionwhenpolicymakersfrombothcapitalimportingandexportingStatesarecontem-platingvariousoptionstorestructureinternationalinvestmentregime,thereisapressingneedtondinternationallywell-coordinatedpolicyalternativestomaximisethebenetsofFDIinalevelplayingeldbetweenhomeandhostStates,topromotemutualco-operationratherthancompetitionleadingtoaracetothebottom,andmostimportantly,topromoteinvestmentinsustainabledevelopment.
TheUnitedNationsConferenceonTradeandDevelopment(UNCTAD)hasrecentlypublishedarevisedversionofitsGlobalActionMenuforInvestmentFacilitation(the''ActionMenu'').
13AfterthecollapseofOECDMAInegotiations,theUNCTADActionMenuistherstattemptbyaninternationalorganisationtopotentiallyredirectinternationalinvestmentpolicytoamoreco-ordinatedandconstructivepathascomparedtoexistingproliferatedregimecomposedofseveralthousandBITs.
AscomparedtoBITs,theActionMenuisnotmeanttobeatreatyoratreatydraft,andsinceinvestmentfacilitationessentiallyfallswithinaState'seminentdomain,itisprimarilymeanttopromotetheadoptionofinternationalbestpracticesfornationalinvestmentpolicymaking.
Byrecommendingoptionsfornationalinvestmentpolicy,theActionMenu'sprovisionsaremeanttopromotetheeaseofbusinessandpreventtheaccrualofinvestor-Statedisputes.
14Theseoptionsarenotmeanttobestandaloneprovisions;theyaremutuallyinclusivesuggestingacomprehensivepolicyframeworkdirectedtowardsthecommongoalofinvestmentfacilitation.
TheActionMenu'simportancecannotbeoverstated.
First,itislikelytoyieldaharmonisationeffect.
TheActionMenu'sultimateobjectivesofinvestmentfacilitationareframedwithinthepreviewofwellcelebratedprinciplesoftransparency,predictability,efciencyand13TheUNCTADGlobalActionMenuforInvestmentFacilitation,UNCTAD/DIAE(September2016)(hereinafterthe''ActionMenu'').
14Ibid,3.
142AhmadGhouri123accountability.
15ThemoredetailedpolicyoptionsgivenintheActionMenureectinternationalbestpracticesandtheiradoptionbyStateswouldproduceStatepracticeleadingtothedevelopmentofinterna-tionallyrecognisablestandards.
Second,theActionMenucreatesanicheforitsapplicationbynuancedlydistinguishinginvestmentfacilitationfrominvestmentpromotionandprotection.
Thisdistinctionisarguablynotional,however,forthepurposesofinternationalinvestmentpolicymaking;itservesanimportantpurposeindistin-guishingtheActionMenu'sobjectivesfromcontentiousissuesofminimumstandardsofprotectionandinvestor-Statedisputesettlement(ISDS).
Fordisputeresolution,theActionMenuhasconcentratedprimarilyonmechanismstopreventinvestor-Statedisputes.
Intheeventofanunavoidabledispute,theActionMenuhasproposedresolutionthroughdomesticalternativedisputeresolution(ADR)systemsinsteadofthesupra-nationalISDS.
Third,departingfromthecontroversialtrajectorieson(re-)makingofinternationalinvestmentlawthroughISDSdecisions,primarycontem-plationoftheActionMenuisdomesticpolicymakingforinvestmentfacilitation.
Thisreorientationeffectivelydivertsthefocusofinterna-tionalinvestmentpolicymakingfromcontroversialminimumstandardstostrengtheningofdomesticruleoflawandcapacitybuilding.
ThisisasignicantpolicyshiftwherehostStatesareincreasinglybecomingdissatisedwiththerightsgiventoforeigninvestorsintheexistingBITsandthepossibilityforinvestorstobringISDSclaims.
Fourth,theActionMenu'sfocusoninvestmentfacilitationlaysagreatfoundationforhomeStatestoengagepositivelyincapacitybuildingandtechnicalassistanceprogramstoenabletheadoptionofinvestmentfacilitationpoliciesinhostStates.
Thispromotesthespiritofco-operationratherthanimpositionofstandardsbythenorthtothesouth.
Finally,theActionMenu'sinvestmentpolicyoptionsaresupposedtopromoteinvestmentinsustainabledevelopmentinaccordancewiththeindica-torsthattheUnitedNations(UN)MemberStatesareexpectedtousetoframetheiragendasandpoliticalpolicies.
16TheprimaryideaofthisarticleistoreviewtheActionMenutoidentifyandanalyseitsstrengthsandweaknesses,consideringtheabovestatedproblemswiththecurrentinternationalinvestmentlawand15SeetheUNCTADPolicyHub'sInvestmentPolicyBlogat:http://investmentpolicyhub.
unctad.
org/Blog(accessed19March2018).
16TheActionMenu,supranote13,3.
ServedonasilverplatterAreviewoftheUNCTAD143123policyregime.
ThearticleengageswiththesignicantquestionsthattheActionMenuhasraisedandsuggestsmeanstoaddressthosequestions,namely:WhataretheobjectivesoftheActionMenuandhowdoestheActionMenustrivetoachievethemArethereanyothercomparableinitiativesthatmayenlightentheActionMenu'sapproachandpolicydirectionsTowhatextenttheexistingdomesticpoliciesrelatedtoinvestmentfacilitationreecttheActionMenu'sapproachesDoestheActionMenu'sinvestmentfacilitationpolicyframeworkrealisticallypromoteinvestmentinsustainabledevelopmentOthermattersthatthearticleanalysesincludetheActionMenu'sbreadthtoembraceallthreeprimarystakeholders(namely,foreigninvestorsandtheirhomeandhostStates)inasingledocument,itswhole-of-governmentapproachtowardstheimplementationofinvestmentfacilitationframework,andtheissueofprimacyofnationalinterestasanobstacletotheActionMenu'saims.
ThequestionwhethertheActionMenueffectivelyaddressestheproblemofracetothebottomandthepossibleissuesconcerningtheActionMenu'sproposedmulti-stakeholderconsultationbyhostStatesarealsodiscussed.
Thediscussiononinvestmentpolicyisfromalegalangle.
Thetoneisthought-provoking,withaviewthatthearticlewillopendialoguetoinvestigateandunderstandtheroleofinvestmentfacilitationpolicyinthemuch-neededoverhaulofinternationalinvestmentlawandpolicy.
Thearticleisstructuredasfollows:Section2summarizestheobjectivesoftheActionMenuandhighlightstheissuesthatarisefromitsdistinctionbetweeninvestmentfacilitationandinvestmentpromotion.
Part3placestheActionMenuinthecontextofothersimilarinvestmentfacilitationpolicyinitiativestakenbytheAsia-PacicEconomicCooperation(APEC),theOrganisationforEconomicCooperationandDevelopment(OECD),andtheWorldTradeOrganisation(WTO).
Thispartanalysesdifferencesandsimilaritiesintheapproachoftheseinternationalorganisationsintheimplementationofpolicyframeworkforinvestmentfacilitation.
Part4investigatestheexistingdomesticinvestmentpoliciesimplementedbyvariousStatesthatreectontheActionMenu'sapproach.
Part5presentsadetailedanalysisoftheselected''ActionLines''oftheActionMenu.
Part6examinesthecriticalroleassignedbytheActionMenutodomesticinvestmentpromotionagencies(IPAs)toimplementinvestmentfacilitationpolicies.
Part7concludesthearticlebyprovidingalistofproposalsthatshouldbeincludedintheActionMenu.
Theoverallconclusionsarethatalthough144AhmadGhouri123theActionMenuisastepintherightdirection,therearemanygapsthatneedtobelled.
2ObjectivesoftheActionMenuForeigninvestmentpolicyanalysistsviewpromotionandfacilitationpoliciesasacosteffectivemeanstocrediblysignalahostState'sintentionthatitisinterestedinattractingFDIandimprovingthebusinessenvironmentfortheprivatesector.
17AlthoughtherehasbeenacutecompetitionamongcapitalimportingStatestostrategizeinvestmentpromotion,noseriousinitiativeexistedtodevelopuniformnationalpoliciesoninvestmentfacilitation.
18TheUNCTAD'sActionMenuhaslledthisgapand,ifimplementedbyStates,willlikelytoincreasetheFDIows.
TheinitiativeisalsoverytimelybecausetheabovediscussedconcernsregardingtheexistingFDIregimehaveseriouslyobstructedthedevelopmentofinternationalinvestmentlawandpolicyrequiringnewthinkingforfutureofdomesticandinternationalFDIregulation.
ThekeyfeatureoftheActionMenuisitsfocusonimprovementsindomesticinvestmentfacilitationpolicy.
Inthisregard,theobjectivesofActionMenuarestarklydifferentfromothersignicantinitiativestoreforminternationalinvestmentlawandpolicy,suchasthecreationofamultilateralinvestmentcourt,19andtheemergingnewgenerationofBITsthatpromotemorecooperationatallstagesofforeigninvestmenttoachieveafairbalancebetweenforeigninvestors'andhostStates'rights.
20Boththeseinitiativesremainprimarilyconcernedwiththepromotionandprotectionofforeigninvestment,whereastheActionMenuisinessenceaframeworkforinvestmentfacilitation.
Thecreationofa17DirkWTeVelde,MeasuringState-BusinessRelationsinSub-SaharanAfrica,InstitutionsandPro-PoorGrowth(IPPG),DiscussionPaperSeriesNumberFour(2006).
Seealso,InvestmentPromotionandEnterpriseDevelopmentBulletinforAsiaandthePacic,No1,2003,EconomicandSocialCommissionforAsiaandthePacic(UnitedNationsPublication,SalesNoE.
03.
II.
F.
36).
18UNCTADWorldInvestmentReport2011–Non-EquityModesofInternationalProductionandDevelopment(SalesNo.
E.
11.
II.
D.
2)94.
19Since2015theEuropeanCommissionhasbeenworkingtoestablishaMultilateralInvestmentCourt.
See\http://trade.
ec.
europa.
eu/doclib/press/index.
cfmid=1608[(accessed19March2018).
20TherecentlyconcludedIndia-BrazilBITreportedlydoesnotcontainanyprovisiononinvestor-Statearbitration.
Instead,itisunderstoodtohaveprovidedforatiereddisputeresolutionmethodincludingtheuseofanombudsman,State-Statearbitrationandproceduresfordisputeprevention,includingtheestablishmentofajointcommitteetaskedwithoverseeingtheBIT'sfutureimplementation.
ThetextofIndia-BrazilBIThasnotbeenreleasedbutthesefeaturesappearinBrazil'sModelBIT.
ServedonasilverplatterAreviewoftheUNCTAD145123multilateralinvestmentcourtisnotreadilyimminentduetotheexistingdividebetweencapitalimportingandexportingStatesovertheminimumstandardsofinvestmentprotection.
Incontrast,theActionMenudoesnotdealwithinternationalminimumstandardsofinvestmentprotectionandprimarilyfocusesonacoordinatedstrategyondomesticreformofinvestmentfacilitationpolicies.
RegardingBITs,StatesarelikelytocontinueredesigningtheirBITpracticetonegotiatebetterdealsthatworkforbothBITpartyStates.
AlthoughthenewgenerationofBITs,suchastheBITbetweenBrazilandIndia,21includeaspectsofinvestmentfacilitation,theyprincipallyremainmutuallynegotiateddealsbetweenthepartyStates.
BecauseBITsarebilateraldeals,itislikelythattheBITpracticewillremainfragmented.
Ontheotherhand,theActionMenu'sproposalsareaimedatsettingbroaderpolicygoalsforinvestmentfacilitationbenecialforallStatesthatarewillingtoenhancetheirdomesticregulatorycapacitytogetmostoutofforeigninvestmentsandpreventinvestor-Statesdisputes.
TheActionMenu'sproposalssetstandardsforinvestmentfacilitationpoliciesgivingStatesachoicetoincludethemintheirfutureBITsifagreeabletobothBITparties.
TheActionMenu'sprimaryobjectiveistosuggestdomesticpolicyreformforinvestmentfacilitationasanindependentpolicyareadistinguishingitfrominvestmentpromotionorprotection.
InvestmentpromotionhastypicallybeenviewedtoincludeactivitiesthroughwhichgovernmentsaimtoattractFDIinows.
22IntheexistingliteratureondomesticpolicyonFDI,investmentfacilitationisusuallyconsideredasapartoftheinvestmentpromotionandprotectionpolicy.
Forexample,theUnitedNations'InvestmentPromotionandEnterpriseDevelopmentBulletinforAsiaandthePacic(2003)conatesinvestmentpromotionandfacilitationasfollows:23Investmentandbusinessfacilitationmeasuresincludepromotionefforts,provisionofincentivestoforeigninvestors,reductionofunnecessarycostsofdoingbusinessinahostcountry(e.
g.
,reducingoreliminatingcorruptionandimprovingadministrativeefciency)andprovisionofamenitiesthatcontributetothequalityoflifeofforeigninvestorsandexpatriates.
Investmentfacilitationservicesareanotherincreasinglyimportantcomponentofpromotionactivities21Ibid.
22Fordetaileddiscussiononinvestmentpromotion,see,LouisTWells&AlvinGWint,MarketingaCountry:PromotionasaToolforAttractingForeignInvestment,ForeignInvestmentAdvisoryService(FIAS)OccasionalPaper,vol.
13(RevisedEdition2000)1–204.
23supranote17,107.
TheOECDPolicyFrameworkforInvestmentUser'sToolkit,infranote102,hasalsodescribedinvestmentfacilitationaspartofinvestmentpromotionactivities.
146AhmadGhouri123inbothdevelopedanddevelopingcountries.
Suchservicesconsistofcounselling,acceleratingthevariousstageoftheapprovalprocessandprovidingassistanceinobtainingallthepermitsneeded.
Similarly,theInternationalFinanceCorporation'sGlobalInvestmentPromotionBestPractices(2012)usetheterminvestmentpromotionandfacilitationinterchangeablydisregardinganydifferencesbetweenthetwo.
24Themainareasofinvestmentpromotionhavetraditionallycomprisedofstrategyandorganisation,leadgeneration,facilitationandinvestmentservices.
25However,theActionMenucreatesanedistinctionbetweenfacilitationandpromotioninthefollowingterms:26One[promotion]isaboutpromotingalocationasaninvestmentdestination(andisthereforeoftencountry-specicandcompetitiveinnature),whiletheother[facilitation]isaboutmakingiteasierforinvestorstoestablishorexpandtheirinvestments,aswellastoconducttheirday-to-daybusinessinhostcountries.
TheActionMenu'sdistinctionsuggeststhatinvestmentpromotionessentiallyaimstopromoteacertainlocationasaninvestmentdestination,whichistraditionallyachievedbyincentivessuchastaxrebatesorcreationofspecialeconomiczones.
Investmentfacilitation,ontheotherhand,isconcernedwitheasinginvestmenttransactionsthroughdomesticregulationonestablishment,retentionandexpansionofinvestments.
Therefore,whileinvestmentpromotionpoliciesdrawtheattentionofforeigninvestorsinordertoinvitethemintoahostState,investmentfacilitationaimstosupporttheinvestorsthathaveshownstronginteresttoinvestorhavealreadyinvestedinahostState.
Thepracticalsignicanceofthedistinctionbetweenfacilitationandpromotionisquiteremarkable.
Promotion,initstraditionalsense,encompassescompetitionbetweenStatestoattractmoreFDIandpotentiallyleadstoaracetothebottom,whereasthefocusoffacilitationisondomesticreformandcapacitybuilding.
ItgoeswithoutsayingthattheoutcomeofinvestmentfacilitationpolicieswillalsoyieldinvestmentpromotionassomeforeigninvestorsmayparticularlychoosetoinvestmainlybecausetheirrelianceisgreateronaState'sinvestmentfacilitationpractices.
However,attractionofFDIisnottheprimarypurposeofinvestmentfacilitationpolicyintherstplacebutcouldonlybeanatural24InternationalFinanceCorporation,GlobalInvestmentPromotionBestPractices(WorldBank,Washington,2012).
25HenryLoewendahl,AFrameworkforFDIPromotion,10(1)TransnatlCorporations(2001)1–42,3.
26TheActionMenu,supranote13,3.
ServedonasilverplatterAreviewoftheUNCTAD147123outcomeofbothpromotionandfacilitationpolicies.
Inotherwords,investmentpromotionandfacilitationpoliciescomplementeachother,andbothremainimportantfactorstoattractandretainFDI.
However,inordertopropagatethattheActionMenuistrulymeanttoprovidepolicyguidelinesthataregloballyacceptableandarecapableofmendingtheexistingNorth-Southdivideaimingtoachievethesharedobjectiveofinvestmentfacilitationforsustainabledevelopment,itisimportanttosetitsaimsapartfromsomeofthepredominantBITpracticesthatportraytheprevalentNorth-Southdivide.
WhiletheActionMenu'sdistinctionbetweenpromotionandfacilitationisusefulforsettingupthepolicyagendafordomesticreform,asomewhatsimilardistinctionexistsinexistingBITpractice.
27Thereisalongstandingdistinctionbetweenpre-entryandpost-entryBITmodels,wherethersttypeoftreatiescreateadmissionandestablishmentrightsforforeigninvestorsandthesecondtypeoftreatiescreateonlypost-establishmentrights.
28Thepre-entrymodeltypicallyaccordsadmissionandestablishmentrightstoforeigninvestorsinaccordancewithnationaltreatmentstandards(sametreatmentasgrantedtonationalsofhostState)andmost-favoured-nation(MFN)treatmentstandards(sametreatmentasgrantedtoinvestorsfromotherStates)toforeigninvestors.
29Whereas,thepost-entrymodelmakestheentryofforeigninvestmentsubjecttodomesticlawsandprocedures,30whichareobviouslywithinthehostState'spowertochangeputtingforeigninvestorsatagreaterrisk.
31However,post-entrymodelallowshostStatesspacetoreformulatetheirdomesticlawsandputrestrictionsonadmissionandestablishmentofforeigninvestmentinaccordancewiththeirnationalpublicpoliciesandinterests.
Pre-entrymodelinvestmenttreatieshavebeenviewedasameanstofurthertheagendaofdevelopedcapitalexportingStatesbecausetheyrestricthostStates'righttoregulate,whichisanessentialfeatureofStatesovereignty.
32Inthisregard,itiseasytomisconstruetheActionMenu'sdistinctionbetweeninvestmentpromotionandinvestmentfacilitation.
TheAction27RudolfDolzer,PrinciplesofInternationalInvestmentLaw,2ndedn(OUP,Oxford,2012)87–97.
28AndrewNewcombe&LluísParadell,LawandPracticeofInvestmentTreaties:StandardsofTreatment(WoltersKluwerLaw&Business,Brussels,2009)134.
29Ibid,134–137.
30Ibid.
31AnnaJoubin-Bret,AdmissionandEstablishmentintheContextofInvestmentProtection,in,AugustReinisch(ed)StandardsofInvestmentProtection(OUP,Oxford,2008)12.
32HowardMann&CharlesBrower,NAFTA'sInvestmentChapter:DynamicLaboratory,FailedExperiments,andLessonsfortheFTAA(AmericanSocietyofInternationalLaw,WashingtonDC,2003).
However,nolegalobligationonpartofthehostStatearisesunlessaformalinvestmentcontracthasbeenconcludedoraninvestmenthasbeenactuallymade.
Fordiscussiononthispoint,see,supranote31,14.
148AhmadGhouri123Menu'sinvestmentfacilitationframeworkcanbeviewedasanothermeanstoachievetheobjectivesintendedfromthepre-entrymodelinvestmenttreaties.
Itcouldbeargued,forexample,thatthedistinctionisacovertattackonthehostStates'regulatoryspacethroughswayingthedomesticregulationofforeigninvestmentsdisguisedtoachievetheobjectivesofpre-entryinvestmenttreatymodel.
ThepossibilityofsuchnegativeviewsisfurthersupportedbytheActionMenu'sdirectreferencethatitstrivestobridgeexistinggapsininvestmentfacilitationintheinvestmenttreatypractice.
33Thereis,therefore,aseriousneedforUNCTADtoclarifythattheActionMenu'sfocusisonpost-entryfacilitationonly,anditisnotmeanttoinuencedomesticrulesandpoliciesonadmissionofforeigninvestment.
Theclaricationthatinvestmentfacilitationisconcernedwithpost-entryinvestmentpolicywouldalsobeusefultoendorsethattheActionMenu'sguidelineshavenothingtodowiththeexistingcontroversialinternationalminimumstandards,34whichhavehistoricallydivideddevelopedanddevelopingcountriesandplayedasignicantroleintriggeringlegitimacycrisisfortheprevalentFDIregime.
35Historically,developedcountrieshaveforcefullypromotedtheideaofinternationalminimumstandardsrequiringtreatmentofaliensinaccordancewithaminimumsetofstandardsthatStatesmustrespectwhendealingwithforeignnationalsandtheirpropertyregardlessoftheirdomesticlegislationandpractices.
Developingcountries,ontheotherhand,haveconstantlypropagatedfortheapplicationofnationaltreatmenttoaliensthatrequirestreatmentofforeignersequaltonationals.
36Theapplicationofinternationalminimumstandardstogoverninvestor-Staterelationsalsoleadstocontroversyovertheexpansiveinterpretationoffairandequitablestandard,whichisincludedinmostinternationalinvestmentagreements(IIAs),37byISDStribunals.
38As33TheActionMenu,supranote13,4.
34CRousseau,forexample,hasdenedinternationalminimumstandardas'anormofcustomaryinternationallawwhichgovernsthetreatmentofaliens,byprovidingforaminimumsetofprincipleswhichStates,regardlessoftheirdomesticlegislationandpractices,mustrespectwhendealingwithforeignnationalsandtheirproperty.
'CRousseau,DroitInternationalPublic(Sirey,Paris,1970)46.
(CitedbyOECDWorkingPapersonInternationalInvestment,FairandEquitableTreatmentStandardinInternationalInvestmentLaw(Number2004/3,September2004)8.
35See,forexample,AhmadGhouri,InteractionandConictofInvestmentTreaties,Chapter2–TheEvolutionofInvestmentTreaties(KluwerLawInternational,Brussels,2015).
36TheOECDWorkingPapersonInternationalInvestment,supranote34,8.
37Includingbilateralinvestmenttreaties(BITs)andinvestmentchaptersinfreetradeagreements(FTAs).
38Ibid.
Seealso,MartinsPaparinskis,TheInternationalMinimumStandardandFairandEquitableTreatment(OUP,Oxford,2013).
ServedonasilverplatterAreviewoftheUNCTAD149123comparedwithbinding,yetcontroversial,internationalminimumstandards,theActionMenu'sguidelinesareprimarilymeanttobeimplementedbyStatesunilaterallytoimprovetheirdomesticinvestmentclimate.
ThisdistinctionobviouslyhassignicantlegalimportanceasitclariesthatthepurposeoftheActionMenu'sinvestmentfacilitationguidelinesistopromotemutualcooperationratherthantoimposelegalobligations.
Accordingly,ifinvestmentfacilitationprovisionsareincludedinIIAs,theyshouldbeviewedasdistinctfrompromotionandprotectionprovisionsbecausefacilitationismeanttopromotemutualcooperationtoimprovedomesticinvestmentclimateratherthantocreatelegalobligationsbasedoninternationalminimumstandards.
Investmentfacilitation,intheActionMenu'ssense,ismeanttomakeforeigninvestors'operationseasier,anditcanalsobearguedthatfacilitatinginvestmentsismerelyameansbywhichinvestorprotectionsareoperationalisedinpractice.
However,ascontemplatedabove,theexistingframeworkofinvestmentprotectionisbuiltontheideaofinternationalminimumstandardenforcedthroughISDStribunals,39whichisprimarilyoperationalisedbyIIAs,i.
e.
,BITsandinvestmentchaptersinfreetradeagreements(FTAs).
40Whereasinvestmentfacilitationisnotfoundedoninternationalminimumstandards,theActionMenusegregatesinvestmentfacilitationfrominvestmentprotectionandtakesthefocusofinternationalinvestmentpolicymakingawayfromthecontentiousstandardsofprotection,effectivelydivertingtheinternationalinvestmentpolicyagendatoanuncontroversialandconstructivedirectionandcreatingnewpolicyspaceinthenameofinvestmentfacilitation.
However,asunderlinedabove,Statesarefreetooperationalisetheinvestmentfacilitationframeworkthroughtheirinternationalagree-mentssuchasBITsandFTAs.
TheseagreementscanbetailoredtospecicpreferencesofStatesparties.
InclusionofinvestmentfacilitationprovisionsinIIAswillnotonlybindtheStatescontractuallybutalsopromotethesenseofinvestmentfacilitationasapolicygoalindepen-dentof,oratleastparallelto,investmentprotection.
Infact,someStates,withBrazilleadingfromthefront,41havealreadybegunto39See,forexample,TheOECDWorkingPapersonInternationalInvestment,supranote34.
40KarlPSauvant,TheEvolvingInternationalInvestmentLawandPolicyRegime:WaysForward,E15TaskForceonInvestmentPolicy(1January2016)14–18.
41BrazilisreportedtohaveconcludedrstseriesofitsCooperationandInvestmentFacilitationAgreements(CIFAs)withMozambique,AngolaandMexicoin2015andnegotiatingfurtherCIFAswithAlgeria,Chile,Colombia,Morocco,Peru,SouthAfricaandTunisia.
See,FabioMorosini&MichelleRattonSanchezBadin,TheBrazilianAgreementonCooperationandFacilitationofInvestments(ACFI):ANewFormulaforInternationalInvestmentAgreements,InvestmentTreatyNetwork(4August2015).
150AhmadGhouri123reshapetheirBITstoincorporatetheinvestmentfacilitationgoals.
ThisnewgenerationofBITstiltedasCooperationandInvestmentFacilitationAgreements(CIFAs)furtherconrmstheincreasingrecog-nitionofdifferencebetweeninvestmentfacilitationandprotectionpolicies.
TheseCIFAsdistancetheirsubstantivefoundationfrominternationalminimumstandardsbyreafrmingthelegislativeauton-omyandpublicpolicyspaceofStatesparties.
42Similardiscussiononconceptualisationofinvestmentfacilitationasanindependentpolicyareaisgainingmomentuminrecentyears.
HeesandCavalcante,forexample,havesuggestedthatthemostappropriatewaytotacklingtheinvestmentfacilitationconceptisbymeansofanegativelistapproach,i.
e.
,byclarifyingwhatisoutsidethescopeoffacilitation.
43Thedistinctioncan,accordingtoHeesandCavalcante,besimpliedbydeducingthatfacilitationdoesnotincludemarketaccess,investmentprotectionandISDS.
44Thiscouldactuallybeausefulwaytoclarifythetransformationbetweendistinctyetcloselyrelatedconceptsoffacilitation,protectionandpromotion.
Whiletheconceptofinvestmentfacilitationwillevolveandgainbroaderrecognitionovertime,suchnegativelistapproachcanhelpfullyisolatetheinvestmentfacilitationframeworkfromthedisputedareasofinternationalinvest-mentlaw,i.
e.
,ISDS,internationalminimumstandardsandmarketaccess.
3SimilarinitiativesbyotherinternationalorganisationsTheUNCTAD'sActionMenuisnottherstinitiativetorationaliseandharmoniseinvestmentfacilitationpolicies.
Twootherinternationalorganisationshavepreviouslyendeavouredtodevelopinvestmentfacilitationframework,anditisusefultocomparethoseeffortswiththeActionMenu.
In2008,theAsia-PacicEconomicCooperation(APEC)publishedanInvestmentFacilitationActionPlan(APEC'sIFAPor42SeethePreambletotheBrazil–MozambiqueandBrazil–AngolaIFCAs(signedin2015).
AnunofcialtranslationofthetextsoftheBrazil–MozambiqueandBrazil–AngolaCooperationandInvestmentFacilitationAgreement(IFCA)byMartinDietrichBrauchisavailableattheofcialwebsiteoftheInternationalInstituteforSustainableDevelopment(IISD)\http://www.
iisd.
org/[(accessed19March2018).
43FelipeHees&PedroMendonaCavalcante,FocusingonInvestmentFacilitation–IsItThatDifcult,ColumbiaFDIPerspectives(No202,19June2017).
44Ibid.
ServedonasilverplatterAreviewoftheUNCTAD151123IFAP).
45TheAPEC'sIFAPstatesthat'facilitatinginvestmentrequireswork:aconcertednationalandinternationalefforttocreateandsustainthemostconduciveclimateforinvestmentoninvestmentfacilitation.
'46TheIFAPdescribesthescopeofinvestmentfacilitationas'actionstakenbygovernmentsdesignedtoattractforeigninvestmentandmaximisetheeffectivenessandefciencyofitsadministrationthroughallstagesoftheinvestmentcycle,'and'effectiveinvestmentfacilitationcanmakeasignicantcontributiontothesortofbroaderinvestmentclimatereformeffortswidelypracticedbyAPECmembereconomies.
'47TherearesignicantdifferencesbetweentheapproachesofUNCTAD'sActionMenuandtheAPEC'sIFAP.
First,thereferencesto'allstagesofinvestmentcycle'and'broaderinvestmentreformefforts'indicatethattheAPEC'sIFAPdoesnotmaintainarmdistinctionbetweeninvestmentfacilitationandpromotion.
ThisisasignicantdifferencebecausetheIFAPislikelytobeviewedasanextensiontotheexistinginvestmentpromotionandprotectionpolicyframeworkoperatingwithinthetroubledwatersofcurrentlycrisisriddeninternationalinvestmentlaw.
AlthoughtheAPEC'sIFAPhasbroadlysimilarprinciplessetoutforinvestmentfacilitationascomparedwiththeUNCTAD'sActionMenu,theformerspecicallyaimstocomplementtheexistinginternationaleffortstostreamlineinvestmentfacilitationpolicies.
48Ontheotherhand,asdiscussedinPart2above,theUNCTAD'sActionMenuhaseffectivelydistanceditselffromtheexistingcontroversialaspectsofinternationalinvestmentlaw,suchastheISDSandinternationalminimumstandards.
Moreover,APEC'sIFAPisaregionalinitiativeaimedatinvestmentfacilitationintheAPECMemberStatesinaccordancewiththeAPEC'sownmandate.
TheIFAP'sambitionstoimplementitspolicyprinciplesgofarbeyondtheaimsofActionMenu.
Forexample,theIFAPrequiresprovisionofassistanceforcapacitybuildingandtechnicalcooperationtolesserdevelopedAPECMemberStatesforimplementationofitspolicyprinciples,whichisfurthersupportedbymeasurementandreportingmechanisms.
TheUNCTAD'sActionMenu,ontheotherhand,doesnotprovideastructuredprogrammeforcapacitybuildingandimplementationmonitoringsystemandlimitsitselftoencouraging45APECInvestmentFacilitationActionPlan(IFAP),2008/MRT/R/004(31May2008)1.
(hereinafterthe''APEC'sIFAP'').
46APEC'sIFAP,ibid,Introduction.
47APEC'sIFAP,ibid,Whatisinvestmentfacilitation48APEC'sIFAC,ibid,MultilateralInvestmentFacilitation.
152AhmadGhouri123cooperationbetweendevelopedanddevelopingcountriestocreatesuchlinkagesandprogrammes.
49TheActionMenu'spackageincludesactionsthatcountriescanchoosetoimplementunilaterally,andoptionsthatcouldguideinternationalcollaborationorthatcanbeincorporatedinIIAs.
50In2015,theOrganisationforEconomicCooperationandDevelopment(OECD)publishedthePolicyFrameworkforInvestment(OECD'sPFIorPFI).
51UnliketheAPEC'sAFIP,theOECD'sPFIhasmaintainedarmdistinctionbetweeninvestmentpromotionandfacilitation52:Promotingandfacilitatinginvestmentaretwoverydifferenttypesofactivities.
Oneisaboutpromotingacountryoraregionasaninvestmentdestination,whiletheotherisaboutmakingiteasyforinvestorstoestablishorexpandtheirexistinginvestments.
Effectiveinvestmentpromotionleveragesthestrongpointsofacountry'sinvestmentenvironment,highlightsprotableinvestmentopportunitiesandhelpstoidentifylocalpartners.
Intermsoffacilitation,effectiveone-stop-shopswithsingle-pointauthoritycanbeacriticalfactorininvestmentdecisions,especiallyiftheycutdowntheinvestor'stransactioncosts:complexadministrativeburdensrepresentsignicantbarrierstoinvestment.
Effectiveinvestmentfacilitationcanalsoreducecorruptionrisksbydecreasingthenumberofstepsinvolvedinthedecision-makingprocess.
Acoremandateofinvestmentfacilitationincludesllinganinformationgapcreatedbyincoherentorinaccuratepolicies.
Investmentfacilitationcanthusprovideinvestorswithmuchneededclarityvis-à-vispublicadministrationandpolicies.
TheOECD'sPFIprovidesamuchclearerdistinctionbetweeninvestmentpromotionandfacilitation.
ThePFI'sapproach,contentsandcoveragealsoprovideanopportunitytoanalyse,incomparisonwiththeActionMenu,astowhatshouldbethesubjectmatterofacountry'sinvestmentfacilitationpolicy.
ThePFIproposesguidanceintwelvepolicyeldsthatarecriticallyimportantforimprovingthequalityofacountry'senablingenvironmentforinvestment.
53Inadditiontocomponentsofdomesticinvestmentpolicyandinvestmentpromotionandfacilitation,thePFI'spolicyeldsincludetrade,competition,tax,corporategovernance,responsiblebusinessconduct,humanresourcedevelopment,investmentnance,publicgovernanceandsustainableinvestment.
ThecoverageofPFIis,therefore,muchbroaderthantheActionMenu,whichisstrictlylimitedtoinvestment49TheActionMenu,supranote13,ActionLines7to10.
50UNCTAD'sActionMenu,supranote13,4.
51PolicyFrameworkforInvestment(2015ed,OECDPublishing,2015).
52Ibid,39.
53Ibid,3.
ServedonasilverplatterAreviewoftheUNCTAD153123facilitation.
However,insteadofthePFI'sapproachtoprovidebroadergeneralguidelines,theActionMenuprovidespinpointActionLinesforinvestmentfacilitationpolicy.
Indoingso,theActionMenualsotouchesonsomeoftheotherareasaddressedbyPFI,however,remainingonlywithinthepurviewofinvestmentfacilitation.
Bybringingeveryaspectofdomesticpolicyrelevanttoinvestmentfacilitationwithinthepinpointprinciples,theActionMenuhasnotonlycreatedinvestmentfacilitationpolicyasaseparateeldofinquirybuthasalsoclarieditssubjectmatter,scopeandcoveragetakingtheinvestmentfacilitationagendafurtherthantheOECD'sPFI.
RecentlysomegroupsofStatesinitiateddiscussiononapossibleinvestmentfacilitationagreementattheWTO.
54AnothergroupofStates,ledprimarilybyIndia,haveobjectedtodiscusstheseproposalsattheWTOmaintainingthatinvestmentfacilitationrulesgobeyondtheWTO'scurrentmandate.
55AnIndianofcialhasmaintainedthatsinceinvestmentfacilitationiscompletelyabilateralissuelinkedtodomesticpolicies,itsinclusionintheWTOagendawouldrestrictthespaceforformulationofdomesticnorms.
56ItisquiteunderstandablethatStateshavereservationsonaninternationallymandatedmultilateralinvest-mentfacilitationframeworkatthistimebecauseitisfairlyanewconceptandnedistinctionsbetweeninvestmentfacilitation,promo-tionandprotectionarenotwidelyunderstood.
MorerecentlyinBuenosAiresinDecember2017,theWTOconductedanopen-ended'InformalDialogueonInvestmentFacilitationforDevelopment'whereministersadopteda'JointMinisterialStatementonInvestmentFacilitationforDevelopment.
'57On31January2018,Brazilsubmittedadraftfacilitationagreement,whichprovidesrubricsofwhatamultilateralinvestmentfacilitationframeworkattheWTOcouldlooklike.
58ThesedevelopmentsattheWTO,althoughtoorecenttobefullyevaluatedinthisarticle,illustratethesignicanceattainedbytheinvestmentfacilitationasaninternationalinvestmentpolicyframework54TheseveproposalshavebeensubmittedbyFriendsofInvestmentFacilitationforDevelopment(consistingofArgentina,Brazil,Chile,China,Colombia,HongKong,China,Kazakhstan,Mexico,NigeriaandPakistan);MIKTA(consistingofMexico,Indonesia,Korea,TurkeyandAustralia);China;Russia;andArgentinaandBrazil.
55SouthAfrica,UgandaandBoliviaarereportedtohavejoinedIndia.
56TheEconomicTimes(15May2017).
57Thestatementisavailableat\https://docs.
wto.
org/dol2fe/Pages/FE_Search/FE_S_S009-DP.
aspxlanguage=E&CatalogueIdList=240870,240871,240899,240900,240833,240[(accessed19March2018).
58TheCommunicationfromBrazilisavailableat\https://docs.
wto.
org/dol2fe/Pages/FE_Search/FE_S_S009-DP.
aspxlanguage=E&CatalogueIdList=241891&CurrentCatalogueIdIndex=0&FullT[(accessed19March2018).
154AhmadGhouri123thatisindependentofexistinginvestmentpromotionandprotectionregime.
TheeffortssuchasAPEC'sAFIP,OECD'sPFIandUNCTAD'sActionMenuhaveprovidedsomeclaritytotheemergingprinciplesofinvestmentfacilitationpolicy,graduallypushingtowardssomesortofglobalconsensusonthoseprinciplesandopeningtheirwaytomultilateralnegotiationsataglobalplatformsuchastheWTO.
ItremainstobeseeniftheWTOwouldbeableprovideaviableplatformforamultilateralagreementoninvestmentfacilitation.
4InuenceonexistinginvestmentfacilitationpoliciesTheActionMenuadoptstwobroadersystemlevelapproachestoinuencethedomesticinvestmentfacilitationpolicy,namely,thetriangularapproachandthewhole-of-governmentapproach.
First,itisacommonpracticetoexcludethepossibleroleofhomeStatesinthegovernanceofinvestmentsinhostStates.
Forexample,mostoftheexistingIIAsdonotassignanyactiveroletoaninvestor'shomeStateateitherpre-orpost-entrystagesofinvestment.
Intheexistinginternationalinvestmentregime,homeStatesarenotrespon-sibletoholdtheirinvestorsaccountableiftheycauseanyharmtolocalpopulationsorviolateanyestablishedinternationalnorms.
Fittinglyrealisingthatthereisapolicygaptobelled,theActionMenutakesupatriangularapproachwheretherespectiverolesareassignedtoallthreeforeigninvestmentmarketactors,i.
e.
,investorsandboththeirhomeandhostStates,whichalsoincludescertainactionsbyhomeStates.
WhereastheActionMenu'striangularapproachisundoubtedlylaudable,itisunclearastowhyitcurtailsitselfonlytoregularconsultationsbetweenforeigninvestors'homeandhostStates.
ItshouldhavegonefurtherbyrequiringhomeStatestocreatecleardomesticproceduresandsubstantiverulestoenforceliabilityagainsttheirinvestorsabroadforanywrongscommittedbytheminhostStates.
SuchrulesonforeigndirectliabilitywillopenavenuesforaccountabilityofmultinationalinvestorsintheirhomeStatesincaseswhenhostStatesareeitherunableorunwillingtopreventseriouspublicinterestandinternationallawviolationsbyforeigninvestors.
5959Forsomedetaileddiscussionontheneedforforeigndirectliabilityrules,see,forexample,MarisaMcVey,ApowerfulRetort:ForeignDirectLiabilityasanEssentialMechanismofRedressforVictimsofHumanRightsViolationsbyMultinationalExtractiveCorporations(PostgraduateHRC2015WorkingPaperNo1),HumanRightsCentre,QueensUniversityBelfast.
ServedonasilverplatterAreviewoftheUNCTAD155123Secondly,whileStatestypicallyaimtoensuresomeformofoverallinternaleconomicpolicycoordinationmechanismsamongvariouslevelsofgovernmentacrossdifferentsectors,mostdevelopingcountriesstruggletoimplementproceduresonconsultationandcoordinationamongvariouspolicymakinginstitutionsandregulatorybodiesresponsiblefordevelopingandimplementingdetailedinvestmentpolicies.
60Lackofcoordinationamonglayersofgovernmentorganshasbeenamajorcauseofconcernforsuccessfulformulationandimplementationofdomesticinvestmentpolicies,61whichunderminestheruleoflawgivingrisetoinvestor-Statedisputes.
Toaddresstheissueoflackofcoordinationatdifferentlevelsofgovernmentpolicymakingandimplementation,theActionMenusuggestsawhole-of-government(WG)approachtopromotingandfacilitatingforeigninvestment.
TheWGapproachensurespublicservicesagenciesworkingacrossportfolioboundariestoachieveasharedgoalandanintegratedgovernmentresponsetoparticularissues.
62TheWGapproachworksbetterthanthetraditionaldepart-mentalismandtunnelvisionapproachtopublicgovernanceandaspirestoachievehorizontalandverticalcoordinationamongpublicauthor-itiesbyeliminatingsituationswheredifferentpoliciesmayundermineeachother.
Overall,theWGapproachcreatessynergiesbybringingtogetherdifferentstakeholdersinaparticularpolicyarea,offeringseamlessratherthanfragmentedaccesstopublicservices,andensuringbetteruseofscarceresources.
63TheActionMenusuggeststheWGapproachatallthreestagesofdevelopment,64implementation65andreview,66ofinvestmentfacilita-tionpolicy.
ItproposestheWGapproachatbothcentralanddecentrallevelsofgovernance.
Atthecentrallevel,theActionMenuproposestheimplementationofWGapproachthroughinvestmentpromotionagencies(IPAs),singlewindoworspecialenquirypointforforeign60See,forexample,YannDuval,TradeandInvestmentLinkagesandPolicyCoordination:LessonsfromCaseStudiesinAsianDevelopingCountries,Session1.
2:TradePolicy,OECDGlobalForumonInternationalInvestment,GlobalForumVII(27–28March2008)4.
61See,forexample,PolicyFrameworkforInvestment:AReviewofGoodPractices(OECD,2006),PublicGovernance,Chapter10,238.
62TomChristensen&PerLgreid,TheWhole-of-GovernmentApproachtoPublicSectorReform,67(6)PublicAdministrationR(November–December2007)1059–1066.
63Ibid.
64See,forexample,theUNCTADActionMenu,supranote13,ActionLine4.
65See,forexample,theUNCTADActionMenu,supranote13,ActionLine7.
66See,forexample,theUNCTADActionMenu,supranote13,ActionLines3and5.
156AhmadGhouri123investors,andonlineone-stopapprovalauthorities.
67Atthedecentrallevel,theActionMenu'sWGapproachissupposedtobeimplementedthroughdevelopmentofclearrulesforinstitutionalcooperationandcoordination,andbyassigningclearrolesandaccountabilityproceduresbetweennationalandlocalgovernmentsorwheremorethanoneagencyscreensorauthorizesinvestmentproposals.
68Toemploythebroadersystemleveltriangularandwholeofgovernmentapproaches,theActionMenuoutlinesthefollowingsevenkeyareasofnationalpolicythatcomplimentasuccessfulinvestmentfacilitationframework69:1.
Improvementsintransparencyandinformationavailabletoinvestors;2.
Efciencyinadministrativeproceduresforinvestors;3.
Predictabilityofthepolicyenvironmentforinvestorsthroughconsultationprocedures;4.
Accountabilityandeffectivenessofgovernmentofcials;5.
Mitigationofinvestmentdisputes;6.
Cross-bordercoordinationandcollaborationinitiativessuchaslinksbetweenoutwardandinwardinvestmentpromotionagencies;and7.
Technicalcooperationandothersupportmechanismsforinvestment.
ThesekeyareasundoubtedlyconstitutethemostimportantpillarsofanysuccessfulFDIfacilitationframework.
Asfarastheexistingpracticegoes,someStateshavealreadytakenstepsconsistentwiththeActionMenu'srsttwokeyareasofreform,namely,transparencyandinformationavailabletoinvestors,andefciencyinadministrativeprocedures.
Myanmar,forexample,passedanewinvestmentlawembracingthespecicaimtopavethewayforspeedierinvestmentapprovals.
70SomeStateshavealsodevelopedtheirbusinesslicensingproceduresincorporatinginvestmentfacilitationframeworkconsistentwiththeActionMenu'sproposals.
Angola,forexample,passedanewregulationtodiminishthebureaucracy67See,forexample,theUNCTADActionMenu,supranote13,ActionLines1,5and8to10.
68See,forexample,theUNCTADActionMenu,supranote13,ActionLine3.
69PolicyFrameworkforInvestment(OECDPublishing,2015),3.
70UNCTADWorldInvestmentReport2016–InvestorNationality:PolicyChallenges(UNCTAD/WIR/2016),106.
ServedonasilverplatterAreviewoftheUNCTAD157123surroundingtheproceduresfortheadmissionofinvestments.
71Likewise,Indonesiahaslaunchedathree-hourlicensingprocessforinvestmentsover100billionIndonesianRupiahand/orthatemployatleast1,000workers.
72Ukrainehasalsomadestridestoeaselicensingproceduresincertaininvestmentactivitiesbyadoptingalawonlicensingofcommercialactivities.
73In2016,Kazakhstanintroducedaone-stopshop,enablinginvestorstoapplyformorethan360typesofpermitsandlicenseswithouthavingtovisitvariousministriesorgovernmentagencies,74andTurkeyannouncedthelaunchofawebsiteenabled''one-stopshop''forforeigninvestors.
75Theseexamplesofchangesinnationalinvestmentfacilitationpoliciesobviouslydonotcoverthewide-rangingpolicydirectionsandoptionsgivenbytheActionMenu.
However,Statesarelikelytofaceincreasingdemandforimplementationofotherkeyareasofinvestmentfacilitationpolicy.
Forexample,theOverseasInvestorsChamberofCommerce&Industry(OICCI)inPakistanhasrecentlyaskedthePakistanigovern-menttocreateastructuredforumtodiscussforeigninvestors'issueswithcentralandprovincialgovernments.
76TheOICCIhasalsodemandedforproactiveresolutionofgrowingnumberofinterprovin-cialcoordinationissues,andtheformulationandimplementationofconsistent,transparentandpredictablepolicyforforeigninvestment.
77Forcross-bordercoordinationandcollaboration,theUNCTADhasfacilitatedthecreationofWorldAssociationofInvestmentPromotionAgencies(WAIPA)toprovidetheopportunityforIPAstonetworkandexchangebestpractices.
78OntheIIAslevel,BrazilhasdevelopedapolicyputtinginvestmentfacilitationatthecoreofitnewgenerationofBITs.
7971Ibid.
72Seeforthedetails\http://www3.
bkpm.
go.
id/[(accessed18March2018).
73WorldInvestmentReport2016,supranote70.
74Seeforthedetails\http://invest.
gov.
kz/pages/one-stop-shop-for-investors#[(accessed18March2018).
75Seeforthedetails\http://www.
invest.
gov.
tr/en-US/Pages/Home.
aspx[(accessed18March2018).
76See\https://oicci.
org/index.
php/news/interactive-session-of-the-oicci-managing-committee-with-the-prime-minister-of-pakistan-mr-shahid-khaqan-abbasi/[accessed18March2018).
Seealso,supranotes20,41and42.
77Ibid.
78See\http://www.
waipa.
org/[(accessed18March2018).
79See,supranote41.
158AhmadGhouri1235DisputefreeFDIforsustainabledevelopmentTheActionMenuproposes10ActionLineswithaseriesofoptionsforinvestmentpolicymakersandgovernmentagenciesfornationalandinternationalpolicymeasures.
80ThepackageineachActionLineincludesactionsthatcountriescanchoosetoimplementunilaterally,andoptionsthatcanguideinternationalcollaborationandpossiblybeincorporatedinfutureinvestmenttreaties.
81The10specicActionLinestocreateorimprovetheinvestmentfacilitationclimateareasfollows:1.
Promotingaccessibilityandtransparencyintheformulationofinvestmentpoliciesandregulationsandproceduresrelevanttoinvestors;2.
Enhancingpredictabilityandconsistencyintheapplicationofinvestmentpolicies;3.
Improvingtheefciencyofinvestmentadministrativeprocedures;4.
Buildingconstructivestakeholdersrelationshipsininvestmentpolicypractice;5.
Designatingaleadagency,focalpointorinvestmentfacilitator;6.
Establishingmonitoringandreviewmechanismsforinvestmentfacilitation;7.
Enhancinginternationalcooperationoninvestmentfacilitation;8.
Strengtheninginvestmentfacilitationeffortsindeveloping-countrypartnersthroughsupportandtechnicalassistance;9.
Enhancinginvestmentpolicyandproactiveinvestmentattrac-tionindeveloping-countrypartners;and10.
Complementinginvestmentfacilitationbyenhancinginterna-tionalcooperationforinvestmentpromotionfordevelopment,includingthroughprovisionsinIIAs.
TheseActionLinesclearlyprovideawidespectrumofimportantpolicygoalstofacilitateinvestmentsinaneffectiveway.
Theoverallobjectivesofthe10ActionLinesareprimarilytoimprovetransparencyandavailabilityofinformationtoinvestorsthroughefcientadminis-trativeprocedurestoensurepredictabilityofthepolicyenvironment.
80TheActionMenu,supranote13,4.
81Ibid.
ServedonasilverplatterAreviewoftheUNCTAD159123Lackoftransparencyinhostgovernmentactionsandinconsistentformationandimplementationofinvestmentpoliciesshattersinvestorcondenceandproducesinvestor-Statedisputes.
TheActionLine1preventsthepossibilityofdisputesduetolackofinformationbyrequiringhostStatestoensureconsistentowofinformationoninvestmentregimethroughIPAsandtimelynoticeofchangesinprocedures,applicablestandards,technicalregulationsandconformancerequirements.
Likewise,inconsistencyamongstvariousgovernmentdepartmentsandlayersofgovernmentintheinterpretationandapplicationofinvestmentregulationsoftentriggersinvestor-Statedisputes.
TheActionLine2precludesthispossibilitybyrequiringconsistentapplicationofinvestmentregulationsacrossrelevantinstitutions,avoidingdiscriminatoryuseofbureaucraticdiscretionintheapplicationoflawsandregulationsoninvestment,andestablishingclearcriteriaandproceduresforadministrativedecisionswithrespecttoinvestmentscreening,appraisalandapprovalmechanisms.
TheActionLine2furthersuggeststocreatingamicabledisputesettlementmechanisms,includingmediation,tofacilitateinvestmentdisputepreventionandresolution.
Suchmechanismsatnationallevelwillstrengthendomesticinstitutions,enhancecapacityofnationalpolicymakersandexpertstohandleinvestor-Statedispute,andreducerelianceoncostlyandcontroversialinternationalarbitration.
Similarly,theActionLine4emphasisesonmaintainingmechanismsforregularconsultationandeffectivedialoguebetweeninvestmentpolicymakersandstakeholderstoidentifyandaddressissuesencounteredbyinvestors.
Itfurtherrequiresestablishingmechanismsprovidinginvestorswithanopportu-nitytocommentonproposednewlaws,regulationsandpoliciesorchangestoexistingonespriortotheirimplementation.
Suchregularconsultationswithinvestorsandthepossibilitytoraisetheirconcernsbeforenewlawsandenactedwillundoubtedlycontributetopreventdisputes.
SeveralotherproposalsintheActionMenuareaimedatearlydetection,preventionandamicableresolutionofinvestor-Satedisputes.
Actionssuchasimprovementofthestandardsofcorporategovernanceandresponsiblebusinessconduct(ActionLine4),establishmentofIPAstoaddressinvestorcomplaintsandtimelyactiontoprevent,manageandresolvedisputes(ActionLine5),home-hostStateconsultationwithstakeholdersthroughouttheinvestmentlifecyclewithaviewto160AhmadGhouri123addressingspecicproblemsraisedbyinvestorsandpreventionoftheescalationofinvestmentdisputes(ActionLine8)arealldirectlyaimedatinvestor-Statedisputeprevention.
OtherActions,suchasenhance-mentoftheefciencyofadministrativeprocedures(ActionLine6),enhancementofinternationalcooperationonanti-corruptionpracticesintheinvestmentprocess(ActionLine7),home-hostStatescooperationtoconductfeasibilitystudiesforpotentialinvestmentprojectsincludingenvironmentalandsocialimpactassessments,willalsomassivelycontributetodisputepreventionbecauseinvestor-Statedisputesmostlyariseduetoadministrativeinefciencies,allegedcorruptionbygovernmentofcialsandhostStates'publicpolicyconcernsregardingaforeigninvestment.
Undoubtedly,theActionLinesareallvaluableproposalsforinvestmentfacilitationandinvestor-Statedisputeprevention.
However,thereareseveralareasthatneedfurtherclarication,tighteninganddevelopment.
TheActionLine1emphasisesonaccessibilityandtransparencyofinvestmentpolicyrequiring,amongotherthings,cleardenitionsofcriteriaforassessinginvestmentproposals.
Thisappearstobeamissionimpossible.
Althoughclearrulescanbemadeforsomesectors,variousinvestmentproposalswillneverbethesameineverypossibleaspectrequiringacase-by-caseassessment.
Foreigninvestmentswillalsoneedtopassthroughtheuidcriteriaof''nationalinterest,''whichincludefactorssuchas''nationalsecurity''andsometimesalso''nationaleconomicsecurity''82NationalinterestapprehensionsarepresentevenincountrieshavingthemosttransparentFDIpolicies.
Australia,forexample,describesitselfasahighlytransparentcountryprovidingadetailedoutlineofforeigninvestmentpolicy.
83However,protectionistremnantsofnationalinterestcontinuetoshadowAustralia'strans-parencyobjectivesdespitehavingadetailedandapparentlytransparentforeigninvestmentpolicy.
84TherstthreeActionLinesemphasiseshorteningofscreeningtimestoensureproceduralandadministrativeefciencyatvariousstagesof82See,forexample,VivienneBath,ForeignInvestment,theNationalInterestandNationalSecurity–ForeignDirectInvestmentinAustraliaandChina,34(5)SydneyLRev(2012)5–34.
83ThedetailedandregularlyupdateddocumentonAustralia'sforeigninvestmentpolicycanbefoundhere\https://rb.
gov.
au/resources/policy-documents/[(accessed18March2018).
84See,forexample,AndrewLumsden,The''NationalInterestTest''andAustralianForeignInvestmentLaws,TheCentreforLaw,MarketsandRegulation–UniversityofNewSouthWales,Australia(2016)\https://clmr.
unsw.
edu.
au/article/market-conduct-regulation/state-capital/the-%E2%80%9Cnational-interest-test%E2%80%9D-and-australian-foreign-investment-laws[.
ServedonasilverplatterAreviewoftheUNCTAD161123investments.
However,shorteningthescreeningandprocessingtimesmayproduceunexpectedcomplicationsduringthelifeofinvestments.
AlthoughtheActionLine3doesstatespeedingupin''appropriatesituations,''85itneitherclarieswhatsituationsmightjustifydelaysinapprovalnorprovidesguidelinestomitigatepossibleharmfuloutcomesoffast-tracking.
Speedingupprocessingtimeswillsurelyincreasethesatisfactionofforeigninvestors;however,emphasisoninvestmentfacilitationshouldnotaimtocompletelyeliminateadministrativediscretion.
ItwilllikelybeunacceptabletomostStates.
TheActionLine4proposesbuildingofconstructivestakeholderrelationshipsininvestmentpolicymakingpracticebyseekingcom-mentsonproposedlegislationfromthebusinesscommunity.
AlthoughthisproposalisappropriatewherehostStatesstrivetoprovideaninvestment-friendlyatmosphereforinvestors,developingcountries,particularlyleastdevelopedcountries,arelikelytoremaincautiousofruthlesslobbyingbypowerfulforeignstakeholdersfearingthattheirdomesticlegislativeprocessmightbehijacked.
Developingcountriescaneasilylosegroundtoforeignstakeholderswho,assomestudieshavesuggested,canspinmedia,engineerconclusions,sponsorthink-tankcampaignsandevenbuycredibility.
86Likewise,thereisanestablishednexusbetweenstrandsofFDIandachievementofsustainabledevelopmentgoals(SDGs).
87However,theActionMenudoesnotappeartohaveprovidedaneffectivestimuluspolicypackagetoachieveSDGsthroughFDI.
ThepreambleoftheActionMenustatesthatanyfacilitationinitiativecannotbeconsideredinisolationfromthebroaderinvestmentfordevelopmentagenda88:Effectiveinvestmentfacilitationeffortsshouldsupportthemobilizationandchannellingofinvestmenttowardssustainabledevelopment,includingthebuild-upofproductivecapacitiesandcriticalinfrastructure.
Itshouldbeanintegralpartoftheoverallinvestmentpolicyframework,aimedatmaximizingthebenetsofinvestmentandminimizingnegativesideeffects.
85TheActionMenu,supranote13,ActionLine3,sub-line1.
86See,forexample,TamasinCave&AndyRowell,TheTruthaboutLobbying:10WaysBigBusinessControlsGovernment,TheGuardian(12March2014).
87TheUN2030AgendaforSustainableDevelopmentrepeatedlyemphasisesontheneedformoreFDItoachievesustainabledevelopmentgoals(SDGs).
TheUN2030Agendaisavailableat:\https://sustainabledevelopment.
un.
org/post2015/transformingourworld[(accessed15May2018).
SeealsothepresentationonInvestmentFacilitationbyJamesZhanasUNCTAD'sPerspective,availableat\http://investmentpolicyhub.
unctad.
org/Upload/Documents/JamesZhan_PresentationOnInvestmentFacilitation.