The tangible and intangible assets associated with Foreign Direct Investment (FDI) – such as capital, employment, skills, technology, access to markets – can make an important contribution to growth and development. All countries, therefore seek to attract and benefit from it. But FDI also can entail various risks – such as the crowding out of local enterprises, environmental degradation and labour concerns, and abusive transfer-pricing — that need to be mitigated.
Investment laws, regulations and International investment agreements (IIAs) can facilitate and guide FDI, governing the relationship between investors and States, and, more broadly, with civil society and local communities. The more than 3,000 IIAs concluded in this context (most of which are bilateral investment treaties) are increasingly setting parameters for domestic policy making, especially as they are enforced through a powerful and controversial investor-State dispute-settlement (ISDS) system. Even beyond this mechanism, the international investment regime has come under criticism, and fresh ideas are needed for balanced reform.
In addition, there is significant momentum in mega-regional negotiations, yet their impact remains unclear. Efforts to establish comprehensive multilateral rules on investment have proved elusive in the past, although intergovernmental institutions such as UNCTAD, OECD, the World Bank, APEC, the World Economic Forum and the G20 display their efforts to help States, investors and other stakeholders to deal with the range of issues associated with FDI.
In light of these situations, the E15 Task force on Investment Policy has sought to analyse the 21st century landscape of FDI and multinational enterprise activities, as well as the structure of the investment law and policy regime, and formulate recommendations in several manners: identifying options to enhance its legitimacy while increasing the flow of sustainable FDI for sustainable development (especially to developing countries); identifying avenues to strengthen the institutionalisation and legitimacy of the investment regime’s dispute-settlement mechanism; providing recommendations on how to address key issues such as the growing interlinkages between trade and investment, and between the investment regime and other international law regimes (environment, labour, human rights, etc.); and examining the question of a multilateral/plurilateral framework on international investment, and the potential for global harmonisation of the regime starting from the Pacific rim. Other specific topics were also researched, such as interactions of the regime with State-owned enterprises, investment incentives or international taxation systems; and analysis of the possibility to establish an International Advisory Centre on Investment Disputes, or to create a framework for Sustainable FDI Facilitation.
For phase II of the E15 Initiative, the investment policy thematic stream will transition from an expert led process to a multi-stakeholder dialogue process engaging in a solution-oriented discussion on the systemic issues facing the international investment regime. The work will focus on fostering a global and regional common ground on investment policy that seeks to improve the efficiency and inclusiveness of the system by advancing coherence with the trade regime, and by including sustainability related concerns in the debate.
The forthcoming series of dialogues will be jointly implemented by the ICTSD and the World Economic Forum, with the support of the Government of the Netherlands; and will build upon proposals set forth by the E15 Task Force on Investment Policy recommendations, centering on its final policy options report and the additional recommendations provided in the 20 papers published by the Task Force.