“Indeed, in
today's economy, trade and investment are not merely increasingly complementary, but also
increasingly inseparable as two sides of the coin of the process of globalization.”Speaking to an
audience of government officials, businessmen and academics, Mr. Ruggiero emphasized how
foreign direct investment facilitates an international division of labour to take
advantage of international trade opportunities by increasing the mobility of factors of
production. “It represents the most effective mechanism for the diffusion of
productive know-how and capital around the world and the general creation of wealth. It
can release much of the untapped production potential of today's developing and transition
economies, while at the same time opening up new markets for high value-added products and
services of the industrial countries that generate high income jobs.”
Mr. Ruggiero
pointed out a number of important aspects of investment policy which were already the
subject of WTO rules governing the treatment of foreign companies operating within a
country's territory - such as the rules covering trade in services, or the protection of
intellectual property rights, and the agreement dealing with trade-related investment
measures which includes a commitment by the WTO member governments to consider within the
next four years the need for complementary provisions on investment policy.
Turning to
developments outside the WTO framework, Mr Ruggiero said that the need for international
agreements for the promotion and protection of investment had been widely manifested in
the great increase in interest in bilateral investment treaties - some 60 per cent of the
more than 900 existing bilateral investment treaties had been negotiated during the course
of this decade, including a growing number and proportion among developing countries. He
also pointed to a proliferation of regional and other initiatives to address the
establishment of international rules relating to foreign investment such as the European
Union whose rules in this area extend to the whole of Western Europe; NAFTA which
integrates issues of trade and investment into a single trade agreement; the ASEAN
leaders' initiative to study the establishment of an ASEAN free investment area; the work
of APEC on investment; and the OECD negotiations aimed at concluding a multilateral
agreement on investment by mid-1997.
Mr Ruggiero
cautioned that this proliferation of initiatives raised a number of concerns such as that
some countries were not involved in any of these efforts and that some key initiatives
were not open to many countries, especially developing countries, thereby risking outcomes
that might be mutually conflicting and discriminatory particularly where strong and
coherent multilateral rules did not apply. He also expressed concern at the interaction of
these initiatives with the existing multilateral rules and work programme of the WTO.
Bearing in
mind the proliferation of such treaties and initiatives, Mr Ruggiero stressed that there
could be no doubt of the widespread recognition of the need for international cooperation.
He highlighted some of the characteristics which might justify multilateral work on
investment:
- The
involvement of a sufficiently representative cross-section of the international community;
- While not
necessarily replacing bilateral investment treaties, obviating the need for the
negotiation of the tens of thousands of BITs that would be necessary to provide equivalent
international rules;
- Ensuring
that regional and any other more limited arrangements fit into a framework that provides
adequate safeguards against discrimination to third countries;
- Promoting
access to foreign direct investment, and reducing the cost of securing it to recipient
countries, through providing greater security and common rules, for example against
beggar-my-neighbour investment policies;
- Not
undermining but increasing the ability of states to determine their own futures. In
general, foreign direct investment, by increasing wealth and transferring know-how, will
do this, but it is necessary to be sensitive to the concerns of Member countries,
especially those who perceive themselves as weaker ones on this score;
- Ensuring an
adequate balance that reflects the mutual dependence of the home and host countries in any
foreign investment;
- Ensuring
that the issue is not perceived as one of North/South relations, but as one of common
interest;
-
Consolidating commitments to, and facilitating public support for, the free flow of
investment and of goods and services. In this regard we should not delude ourselves that
public support for outward investment is automatic.
“There
is an increasingly symbiotic and integrated relationship between trade and
investment,” said Mr Ruggiero. “A key question before the multilateral trading
system is whether the time is ripe to initiate a consideration as to whether this broader
approach to trade policy should be extended to all areas of international trade.”
The full text
of Mr Ruggiero's statement is available on request. |
