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On November 15, 2020, the Regional Comprehensive Economic Partnership (RCEP)
agreement was signed. It is one of the world’s largest trade and investment
pacts, compromising almost 30% of global GDP and one-third of the world’s
population. The RCEP counts 15 signatories composed of the Association
of Southeast Asian Nations (Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Philippines, Singapore, Thailand, Vietnam) and ASEAN’s free trade
agreement partners (Australia, China, Japan, New Zealand, the Republic
of Korea). India stepped out of the negotiations in November 2019.
RCEP’s provisions on trade and investment facilitation should give a significant
boost to FDI in the region.[1]
Facilitating quantitatively and qualitatively more sustainable investment
will be especially crucial in the post-Covid-19 era. RCEP’s Investment
Chapter seeks to facilitate investment originating from both inside and
outside the region by promoting transparency and streamlining administrative
procedures for investors within the RCEP region. Hence, RCEP further consolidates
the increasing trend of including specific provisions on investment facilitation
in international investment agreements.[2]
RCEP’s provision on investment facilitation follows ASEAN treaty practice,
as its wording is no different from the ASEAN-China
FTA (ACFTA) and the ASEAN
Comprehensive Investment Agreement
(ACIA). Under the RCEP “each Party shall endeavor to facilitate investments
among the Parties” through the implementation of four measures:
“(a) Creating the necessary environment for all forms of investment; (b)
Simplifying its procedures for investment applications and approvals; (c)
Promoting the dissemination of investment information, including investment
rules, laws, regulations, policies, and procedures; (d) Establishing or
maintaining contact points, one-stop investment centers, focal points,
or other entities in the respective Party to provide assistance and advisory
services to investors, including the facilitation of operating licenses
and permits.”[3]
Like ACFTA, but different from ACIA, the RCEP provision is “subject to
[the] domestic laws and regulations” of the parties. Hence, the provision
is programmatic in nature and does not further dictate how RCEP parties
are to facilitate investment. Such a “built-in work program” is a typical
approach of ASEAN treaty practice. While the provision may appear liberal,
many ASEAN states have rather restrictive legal frameworks, often requiring
foreign investors to obtain written permission to enter.
The remainder of the provision on investment facilitation suggests alternative
means of facilitating dispute resolution (e.g., through grievance mechanisms)
and preventing disputes. While the listed measures are not binding on the
parties, the RCEP favors a more collaborative approach to resolve and/or
prevent disputes between investors and states.[4]
Flexibility for domestic implementation is welcome. The RCEP region comprises
a highly diverse group of economies, and each of them has different requirements
and imperatives on how to manage investment and how investment facilitation
should unfold concretely. For instance, some RCEP economies rely heavily
on agriculture, whilst others focus on investment in services and high-tech
manufacturing. The region’s least developed countries (Myanmar, Lao’s
People Republic, Cambodia), in particular, face quite different economic
challenges than their more advanced economies. The common objective of
all investment facilitation efforts should be to fill the investment gap
for achieving the Sustainable Development Goals (SDGs).
To gain the benefits of quality investment, the question of what kind of
investment is targeted remains crucial. While RCEP’s investment facilitation
provision suggests that “all forms of investment”[5]
should benefit from investment facilitation, sector-specific facilitation
is fundamental and should allow targeting of SDG-related investment. A
concrete example is the 2016
Law on Investment Promotion of the Lao People’s Democratic Republic,
which establishes a specific administrative mechanism to create favorable
conditions to attract investment that uses innovation in the production
of agricultural products to save natural resources and energy. Whilst investment
facilitation is mostly associated with streamlining processes, improving
efficiency and reducing timelines, it should likewise be about improving
the quality of engagement and outcomes. Put differently, facilitating sustainable
FDI is not about securing quick environmental and other approvals, but
about enhancing the likelihood of long-term success for all stakeholders.
The RCEP can be an opportunity to set a collaborative framework for investment
facilitation, allowing for exchanges among the contracting parties on best
practices, building on their experiences. The framework could be organized
by the RCEP Joint Committee or with the support of the ASEAN Secretariat.
In particular, the exchange of practices on sustainable FDI can be a valuable
source for generating policy ideas. Cooperative processes might also include
capacity building, information sharing and sector-specific guidance. An
example is policy benchmarking for investment promotion agencies, thus
avoiding one-fits-all rules at the regional level. In other words, approaches
to address administrative procedures at national and local levels should
be preferred over implementing top-down regional or multilateral commitments.
*
The Columbia FDI Perspectives
are a forum for public debate. The views expressed by the author(s) do
not reflect the opinions of CCSI or Columbia University or our partners
and supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a
peer-reviewed series.
**
Stefanie Schacherer ([log in to unmask])
is a Swiss National Science Foundation post-doctoral research fellow at
the World Trade Institute, University of Bern. The author wishes to thank
Julien Chaisse, Makane Moïse Mbengue and M. Sornarajah for their helpful
peer reviews.
[1]
Julien Chaisse, “The
Regional Comprehensive Economic Partnership’s investment chapter: One
step forward, two steps back?,”
Columbia FDI Perspectives, No. 271, Feb. 10, 2020.
[2]
See, e.g., the
recent negotiations between the EU and Angola.
[3]
RCEP,
Article 10.17.1.
[4]
RCEP,
Article 10.17.2-4. The provision
is not subject to the treaty’s dispute-settlement mechanism (Article 10.17.5).
[5]
It is unclear how this notion relates to the definition of “covered investment”
under RCEP, Article 10.1. Considering that Article. 10.17.2 refers to “covered
investment”, it seems that the parties deliberately chose “all forms
of investment” as to mean a wider category of investment. |
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material in this Perspective may be reprinted if accompanied by the following
acknowledgment: “Stefanie Schacherer, ‘Facilitating investment through
IIAs: The case of the Regional Comprehensive Economic Partnership Agreement,’
Columbia FDI Perspectives No. 295, January 11, 2021”. Reprinted with permission
from the Columbia Center on Sustainable Investment (www.ccsi.columbia.edu).”
A copy should kindly be sent to the Columbia Center on Sustainable Investment
at [log in to unmask]. |
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For
further information, including information regarding submission to the
Perspectives, please contact: Columbia Center on Sustainable Investment,
Riccardo Loschi, [log in to unmask].
- No. 294, Federico Ortino, ‘Taming the chaos
in investment treaty protections,’ Columbia FDI Perspectives, December
28, 2020
- No. 293, Crina Baltag, ‘From investment
promotion and protection to investment regulation,’ Columbia FDI Perspectives,
December 14, 2020
- No. 292, Khalil Hamdani, ‘The development
dimension of an investment facilitation framework,’ November 30, 2020
All
previous FDI Perspectives are available at http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/.
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Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
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