14 June 10 - UNCTAD-OECD Report on G20 Investment Measures

UNCTAD-OECD ReportA joint UNCTAD and Organisation for Economic Cooperation and Development (OECD) report on G20 investment measures calls on G20 countries to extend their commitment to resist protectionism.

The joint UNCTAD-OECD report is being issued for the forthcoming G20 Summit in Toronto, Canada, to be held on 26-27 June.

It will be submitted together with the WTO's report on trade-related developments though a joint letter and summary by the heads of the three organizations, Pascal Lamy, Supachai Panitchpakdi and Angel Gurría.

Today's joint report comes at a time when the global economic picture has improved, although the emerging recovery is still subject to significant downside risks. While global FDI inflows fell dramatically in 2009 (i.e. by some 40% compared to 2008), UNCTAD expects them to pick up this year, albeit modestly.

The UNCTAD-OECD Report on G20 Investment Measures finds that between November 2009 and May 2010, most investment policy moves pointed toward greater openness and transparency for foreign investors, but some emergency measures designed to manage the effects of the crisis continue to threaten the flow of international investment.

The new report confirms the findings of earlier joint reports on G20 trade and investment policies, issued in March 2010 and September 2009. Those findings are also in line with the April 2010 and December 2009 editions of UNCTAD's recently launched Investment Policy Monitor, which provides the most recent country-specific data on global investment policies.

The joint report looks at the relevant investment policy developments between November 2009 and mid-May 2010, including:

  • Eight G20 countries - Australia, Brazil, Canada, China, India, Indonesia, Saudi Arabia and South Africa - took investment-specific measures. China, for example, allowed the establishment of sales service departments by foreign-funded insurance companies, and India liberalized the establishment of foreign branch and liaison offices.

  • Only one country, Australia, took investment measures related to national security, in this case involving foreign investment approval procedures in a large weapon testing range.

  • 13 G20 countries took emergency measures with potential impacts on international capital movements.

  • 14 G20 countries concluded international investment agreements (IIAs).

Emergency measures constituted the largest share of investment-related measures. Some were directed at the financial sector and the real economy as a whole. Others took a sector-specific approach, targeting the automotive, agriculture and shipbuilding sectors, or were aimed at the promotion of green products. While most of the earlier emergency schemes were maintained, some schemes were closed to new entrants, some were extended, and several new schemes were adopted.

The 20 IIAs concluded during the reporting period included 12 bilateral investment treaties (BITs) and eight other agreements with investment provisions. With these agreements, G20 countries further enhance the large network of IIAs to which they are parties, with a view to ensuring open and predictable policy frameworks governing international investment.

The report commends G20 countries and leaders for resisting protectionist pressures and contributing to a return to growth and development. The OECD and UNCTAD also recommend that G20 leaders extend their commitment to resisting protectionism and promoting global investment. However, the report urges that careful attention be paid to managing the investment impacts of the emergency measures taken in response to the crisis, and to the processes of winding down emergency schemes and ensuring progress on fundamental reform in the financial sector.

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