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FTAA – NEGOTIATING GROUP ON INVESTMENT REPORT OF THE NEGOTIATING GROUP ON INVESTMENT (NGIN) TO THE TRADE NEGOTIATIONS COMMITTEE (TNC)
In keeping with the mandate of the Ministers Responsible for Trade given at their meeting held in Toronto in November 1999 to prepare a draft text of the chapter on investment; the guidelines outlined at the San José Ministerial in March 1998; and the work programme agreed to at the meeting of the TNC held in Buenos Aires in June of 1998 to “develop a framework incorporating comprehensive rights and obligations on investment, taking into consideration the substantive areas already identified by the FTAA Working Group on Investment,” and to “develop a methodology to consider potential reservations and exceptions to the obligations;” the Negotiating Group on Investment (NGIN) prepared a draft chapter on investment for the FTAA Agreement.
Following is a report of the Group’s activities, during the second phase of the negotiations, prepared pursuant to the guidelines of the TNC as outlined in Document FTAA.TNC/11/Cor.1.:
PART I: DESCRIPTION AND ASSESSMENT
a) Description of the Negotiating Group Activities
Since the Toronto Ministerial Meeting, the NGIN has met on five occasions (February 15, 2000, May 22-24, 2000, August 14-15, 2000, October 9-10, 2000, and November 27-29, 2000) with a wide participation of FTAA countries, whether directly or through sub-regional delegations.
In keeping with the mandate of Ministers, the NGIN advanced its work on the development of “a framework incorporating comprehensive rights and obligations on investment, taking into consideration the substantive areas already identified by the FTAA Working Group on Investment” (FTAA.TNC/01). The Group discussed the twelve (12) substantive issues identified by the Working Group on Investment as issues that might, in principle, be included in the FTAA Chapter on Investment.
The NGIN agreed on the following work methodology: i) Preparation of the draft chapter based on initial submissions on the twelve (12) substantive issues by delegations and discussions at the NGIN meetings. Submission by delegations prior to each meeting of their initial proposals to the Chair by a specific date.
ii) Preparation by the Chair of a consolidated text of these initial proposals, which was circulated to delegations prior to each meeting.
iii) Discussion by delegations of a consolidated text in plenary and bilateral sessions, review of initial proposals, and reduction in the number of brackets in the document by merging positions, where possible.
iv) Agreement by the Group, acting on the advice of the Trade Negotiations Committee, to consider the issue of the treatment of the differences in levels of development and size of economies in a cross-cutting manner.
The work of the NGIN also included a presentation by the representative of the U.N. Economic Commission on Latin America and the Caribbean (ECLAC) on “Foreign Investment in Latin America and the Caribbean” and a presentation by the delegation of Mexico on the “Methodology for the Registration and Preparation of Statistical Information on Foreign Direct Investment in Mexico.” The Group also agreed that the studies prepared by the Tripartite Committee, entitled “Investment Agreements in the Western Hemisphere: A Compendium” and “Foreign Investment Regimes in the Americas: A Comparative Study” would be updated regularly.
b) Assessment on the Progress Accomplished
The NGIN made significant progress on the first element of its work programme to “develop a framework incorporating comprehensive rights and obligations on investment, taking into consideration the substantive areas already identified by the FTAA Working Group on Investment” (FTAA.TNC/01). The draft chapter contained in Part II of this Report shows initial proposals presented by some delegations.
In addition to the twelve substantive issues that were originally agreed in the context of the mandate of the Ministers to the NGIN, in the course of the negotiations various delegations submitted nine new issues 1 for consideration by the Group. No consensus was reached on whether these issues fall within the scope of the negotiation. The matter was considered subsequently at the TNC’s fifth and sixth meetings and given that no consensus was reached on the inclusion of proposals, the NGIN reiterated its request that the issues be again addressed at the seventh meeting of the TNC to be held in Lima, Peru in January 2001.
As negotiations progress the need for greater interaction among Negotiating Groups will intensify. The NGIN would wish to suggest therefore that there is a need for consideration of the following by Ministers:
i) The linkage between the Negotiating Group on Investment and many of the other Negotiating Groups which calls for an enhanced coordination between these Groups to facilitate the consideration of issues that may fall under their purview.
ii) The treatment of issues that are horizontal in nature but fall within the mandate of various Groups.
c) Report on Modalities and Procedures for the Negotiations The second element of the NGIN work programme is to “develop a methodology to consider potential reservations and exceptions to the obligations” (FTAA.TNC/01). The issues of reservations and exceptions were discussed by the NGIN and initial proposals are included in the draft text. The precise modalities and procedures for negotiations will be determined by the Group as soon as possible within the next negotiating phase. In this regard, the Group considers that enhanced coordination with the Negotiating Group on Services should be taken into consideration.
For the purposes of guiding future stages of the negotiation, the TNC may wish to provide direction with respect to a methodology for enhancing the work of the Group, and in so doing it may also give due consideration to timeframes and adequate frequency of meetings. The Group understands that the guidance of the TNC regarding the advisability of establishing a timeframe with respect to the development of the methodology for considering potential reservations and exceptions would be useful.
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