*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
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 "The Rise of Self-judging Essential Security Interest Clauses in IIAs",
Can host countries have legitimate expectations?", "The Next Step in
Governance: The Need for Global Micro-regulatory Frameworks", "How
International Investment Agreements can Protect Free Media", "China, the
G20 and the International Investment Regime", "The Evolving International
Investment Law and Policy Regime: Ways Forward", "China's Outward FDI and
International Investment Law", and  "Policy Options for Promoting FDI in
the LDCs" *are* available at and

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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 190  January 2, 2017
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Daniel Allman ([log in to unmask])
*China moves the G20 on international investment*
Karl P. Sauvant* * <#m_4796700276778695808__edn1>*

During China’s Presidency of the Group of Twenty (G20), culminating in the
G20 Hangzhou Summit in September 2016, important decisions were taken that
could shape the future of international investment law and policy. China
was the driver, given its fear of FDI protectionism and of discriminatory
treatment toward its outward investors.

First, the Summit endorsed[1] <#m_4796700276778695808__edn2> nine “Guiding
Principles for Global Investment Policymaking,”  agreed in July 2016 by the
G20 Trade Ministers,[2] <#m_4796700276778695808__edn3> and prepared by
their Trade and Investment Working Group to provide overall guidance to
investment policy making: avoidance of FDI protectionism; openness,
non-discrimination, transparency, and predictability; investment
protection, including dispute settlement; transparency in investment
rule-making, involving all stakeholders; coherence in rule-making,
consistent with sustainable development; the right to regulate; investment
promotion and facilitation; responsible business conduct; and international

Reaching agreement was a challenge, with G20 members having to compromise
in a short period in the face of disparate views on key issues. The
Principles, therefore, were formulated in general language, and certain
issues such as specific protections could not be agreed. Other notions
could not be clarified, such as that investment promotion and facilitation
should include maximizing benefits for host countries; that investment,
best to contribute to sustainable development, should exhibit certain
sustainability characteristics; and that “responsible business conduct”
should include obligations, in such areas as those addressed, for instance,
in the OECD Guidelines for Multinational Enterprises. More generally, the
G20 Principles remain focused on the obligations of host countries, with
only modest references to investor obligations and no mention at all of
home country obligations.

China, with help from Canada as Working Group co-Chair, brought about a
compromise, aided by its links to other members of the BRICS group and
supported by the Secretariats of UNCTAD, the OECD, the WTO, and the World
Bank. Agreement was possible because the Principles are general in nature,
are non-binding and keep the focus on host country obligations. Overall,
they are a desirable step toward outlining a comprehensive international
investment framework and preparing the ground for an eventual plurilateral
or multilateral investment regime.

Going forward, it is important for governments to build on the Principles.
For example, a review (e.g., a gap analysis) could be undertaken of the
extent to which international investment agreements already reflect the
Principles and the ways in which new agreements take them into account.
Another possibility would be for international organizations to monitor
future treaty practice in light of the Principles and periodically to
report on the results of such monitoring, or to invite countries to report
on implementation of the Principles in their own policies. Finally, the
Principles could be elaborated through the addition of annotations. The key
is for governments actually to work with the Principles. As a first step,
then, the Principles need to be widely disseminated.

Second, China’s Presidency has laid the groundwork for something concrete,
relatively non-controversial and in the interest of all countries, namely,
the facilitation of higher FDI flows to developing countries, and
especially the least developed among them. The Trade Ministers
“encourage[d] UNCTAD, the World Bank, the OECD and the WTO to advance this
work within their respective mandates and work programmes.”[3]
<#m_4796700276778695808__edn4> Various international organizations have
initiated such work.

Encouraging, too, is India’s proposal for an “Agreement on Trade
Facilitation in Services” at the WTO,[4] <#m_4796700276778695808__edn5>
explicitly covering Mode 3 (i.e., commercial presence) of the General
Agreement on Trade in Services. FDI (akin to “commercial presence”) in
services accounts for roughly two-thirds of total FDI. Such an Agreement
could become a stepping-stone for a broader international support program
for sustainable investment facilitation.[5] <#m_4796700276778695808__edn6>
In the near/medium term, one way to make progress would be to prepare G20
“Guiding Principles for Global Investment Facilitation,” drawing on the
precedent of the “Guiding Principles for Global Investment Policymaking.”

Finally, the G20 decided to maintain its Trade and Investment Working
Group. This Group could remain a valuable additional platform for
intergovernmental discussion regarding governance of international
investment in a non-rule-making setting, and can serve as an incubator for
related ideas.

Germany, holding the G20 Presidency in 2017 and co-chairing the Working
Group, can move the G20’s investment policy work forward. However, given
the controversies surrounding some investment issues, and given Germany’s
federal elections set to take place in the fall of 2017, that country’s
focus is likely to be on investment facilitation. Argentina, holding the
G20 Presidency after Germany and having an interest in FDI facilitation,
could build on whatever work has been done to achieve additional concrete

Considering the difficulty of the investment issue and the shortness of
time, the agreements reached by the G20 represent important
accomplishments. The challenge, now, is to build on them.

* <#m_4796700276778695808__ednref1> Karl P. Sauvant ([log in to unmask])
is Resident Senior Fellow, Columbia Center on Sustainable Investment, a
joint center of Columbia Law School and the Earth Institute, Columbia
University. The author is grateful to Jonathan Fried for his helpful
comments and to Julien Chaisse, Mark Feldman and Wenhua Shan for their
helpful peer reviews. *The views expressed by the author of this
Perspective do not necessarily reflect the opinions of Columbia University
or its partners and supporters. Columbia FDI Perspectives (ISSN 2158-3579)
is a peer-reviewed series. *
[1] <#m_4796700276778695808__ednref2> *See* “G20 Leaders’ Communiqué,”
available at
summit/2016/09/Leaders-CommuniqueHangzhouSummit-final_pdf/, para. 29.
[2] <#m_4796700276778695808__ednref3> “G20 Trade Ministers Meeting
Statement,” available at
[3] <#m_4796700276778695808__ednref4> *Ibid.*, para. 18.
[4] <#m_4796700276778695808__ednref5> *See* WTO Working Party on Domestic
Regulation, “Concept Note for an Initiative on Trade Facilitation in
Services,” Doc. S/WPDR/W/55, Sept. 27, 2016.
[5] <#m_4796700276778695808__ednref6> *See* Karl P. Sauvant, “We need an
international support programme for sustainable investment
facilitation,” *Columbia
FDI Perspectives*, No. 151, Jul. 6, 2015.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Karl P. Sauvant, ‘**China moves the G20 on
international investment**,’ **Columbia FDI Perspectives, No. 190, January
2, 2017. Reprinted with permission from the Columbia Center on Sustainable
Investment ( <>).” A copy
should kindly be sent to the Columbia Center on Sustainable Investment at
[log in to unmask] <[log in to unmask]>**. *

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Matthew Schroth, [log in to unmask]

   - No. 189, Robbie Schwieder, “Broadening the Global Compact agenda,”
   December 19, 2016.
   - No. 188, Karl P. Sauvant*, *Mevelyn Ong, Katherine Lama, and Thor
   Petersen, “The rise of self-judging essential security interest clauses in
   international investment agreements,” December 5, 2016.
   - No. 187, Jan Knoerich, “Why some advanced economy firms prefer to be
   taken over by Chinese acquirers,” November 21, 2016.

*All previous FDI Perspectives are available at
<>**. *

*Other relevant CCSI news and announcements*

   - CCSI is pleased to announce a call for papers for Part Two of the
   on International Investment Law and Policy
   by Oxford University Press (OUP). The *Yearbook* monitors current
   developments in international investment law and policy. Part One focuses
   on trends in foreign direct investment, international investment
   agreements, and investment disputes. Part Two looks at central issues in
   the contemporary discussions on international investment law and policy.
   The chapters in Part Two may be detailed analyses or short think-pieces.
   All papers must be original texts and are subject to double-blind peer
   review. Original contributions to be considered for publication in the
   *Yearbook* are accepted on a rolling basis until January 15, 2017;
   please send submissions to [log in to unmask] Please include an
   abstract; a table of contents is also recommended. Footnotes should conform
   to guidelines available here
   - *June - August 2017:* We are accepting applications for our three
   upcoming executive trainings: on Extractive Industries and Sustainable
   (June 5-16, 2017), Sustainable Investments in Agriculture
   (July 12-21, 2017), and Investment Arbitration for Government Officials
   (July 31-August 10, 2017). Each program is designed to equip participants
   with the necessary skills, analytical tools, and frameworks to address
   relevant challenges and opportunities, and to encourage a rich dialogue
   about best practices from around the globe. *More information about each
   training, including brochures and applications, is available at the links
   above.* Applications are accepted on a rolling basis. Participants will
   receive a Statement of Attendance from Columbia University.
   - The Brexit referendum has raised questions about the future terms of
   the United Kingdom’s engagement with the world economy. While a debate over
   the UK’s future approach to trade deals has already begun, a similar
   discussion has yet to develop on the treaties that govern foreign
   investment. As this briefing note
   Lorenzo Cotula of the International Institute for Environment and
   Development, and Lise Johnson of CCSI highlights, the stakes are high:
   ill-designed treaties could leave the UK excessively exposed to legal
   claims by foreign companies and could fail to address relevant economic,
   social and environmental challenges. While meaningful negotiations are
   unlikely to start until the new relationship between the UK and the EU has
   been clarified, now would be a good time for a policy review to define a
   new approach. The government, parliament and public have an important role
   to play in positioning the UK as a global innovator in investment treaty

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2017 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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