Investment - UK International Investment Policy

Investment Discussions in International Organisations

The UK is involved in international investment rules and policy discussions at a number of international fora;

World Trade Organisation (WTO ) and Investment

The background to the UK Government’s view with regard to negotiations on foreign direct investment (FDI) in the WTO was the concept of setting in place a simple, basic framework of rules based on transparency and non-discrimination in the treatment of foreign investors. The government felt that a WTO agreement on FDI could provide the stable and predictable climate that foreign investors seek and help countries, especially in the developing world, that do not currently attract much FDI.

It is worth recalling that the EU/UK position differs greatly from the OECD Multilateral Agreement on Investment (MAI) negotiations. For example by conducting negotiations in the WTO, developing countries would be involved. In addition, the MAI used a "top down" approach (every sector was included unless it was explicitly made an exception), but the EU proposed that a WTO negotiation take a "bottom up" approach (participants would make specific negotiated commitments regarding access to sectors for investment). Also unlike the MAI, the WTO would have only state-to-state dispute settlement procedures.

WTO Working Group on Trade and Investment (WGTI)

Established after the WTO Ministerial in Singapore in 1996 the WGTI had a remit to carry out analytical work on the relationship between trade and investment, including areas such as FDI flow, technology transfer, investment incentives and multilateral rules.

The aim was that negotiations on a multilateral investment agreement would be launched at the fifth ministerial conference at Cancun in 2003. However WTO members were unable to agree, by explicit consensus at that meeting, on this course of action. At the July 2004 meeting of the WTO General Council, a decision was taken (dated 1 August) that ‘no work towards negotiations on (trade and investment) will take place within the WTO during the Doha Round’.

The Government supported the idea of negotiations in principle (subject to the proviso that it would not sign up to something that it did not believe to be in the interests of developing countries), but has of course accepted this decision.  The Joint BERR/DfID Trade Policy Unit continues to be responsible for developing UK policy on trade and investment in conjunction with other interested BERR Directorates and other Government Departments.

WTO Committee on Trade Related Investment Measures (TRIMs)

The TRIMs Committee is responsible for overseeing implementation of the WTO TRIMs Agreement, for example by discussing notifications of TRIMs that do not conform with the Agreement. The TRIMs Agreement commits WTO members not to impose discriminatory investment measures that distort trade, for example by imposing local content and performance requirements on foreign investors. The Agreement contains transitional arrangements allowing Members to maintain notified TRIMs for a limited time following the entry into force of the WTO (two years in the case of developed country Members, five years for developing country Members, and seven years for least-developed country Members). The WTO investment site also covers TRIMs.

OECD Investment Committee (formerly known as the Committee on International Investment and Multinational Enterprises (CIME).

The Investment Committee has the task of further developing and strengthening co-operation among Member countries in the field of international investment and multinational enterprises. It is also responsible for OECD Guidelines for Multinational Enterprises. Although the European Commission participates in the meeting, the UK has direct input and there is no agreed EU position.

OECD Working Party on the Guidelines for Multinational Enterprises

This Working Party overseas the implementation of the Guidelines and associated issues such as outreach to non-OECD countries. The UK is an active participant in this Working Party. Further information is available on BERR's web pages on  OECD Guidelines (see related links section on right of page)

UNCTAD Trade and Development Board: Commission on Investment, Technology and Related Financial Issues

This UNCTAD Commission examines global trends in foreign direct investment (FDI) flows; the inter-relationships between FDI, trade, technology and development; and the development implications of a possible multilateral framework on investment. It also assists developing countries to promote inward investment and improve their investment climate. There is an agreed EU position, however individual EU member states are still able to make individual contributions.

Energy Charter Treaty

The Energy Charter Treaty obliges Contracting Parties to endeavour to accord non-discriminatory treatment to Investors of other Contracting Parties as regards the Making of Investments. This obligation is relevant for the 38 Contracting Parties who have ratified the Treaty and for the five Signatories applying the Treaty provisionally. An investment committee regularly meets to discuss investment regimes in developing countries and other investment issues relevant to the treaty. The EU does coordinate on certain issues in the meeting but member states are also free to make their own contributions.

Investment Promotion and Protection Agreements (IPPAs)

IPPAs are international bilateral agreements between governments, which can protect and encourage British investment overseas. They are more commonly known internationally as Bilateral Investment Treaties (BITs). The UK has concluded 106 IPPAs with other countries, of which 94 are in force.

IPPAs are designed to encourage investor confidence by setting high standards of investor protection applicable in international law. Key elements include provisions for equal and non-discriminatory treatment of investors and their investments, compensation for expropriation, transfer of capital and returns and access to independent settlement of disputes.

The Trade Policy Unit now leads on  the negotiation of new IPPAs and IPPA policy in general. For further information please contact Ben Price. Copies of IPPA's are available on the FCO's website