Eight bilateral investment treaties (BITs) were signed here today by representatives of eight countries, in a ceremony held during the tenth session of the United Nations Conference on Trade and Development (UNCTAD X). Earlier in the Conference, several countries had also announced progress in negotiations on bilateral treaties to avoid double taxation.
Thailand, host country for the Conference, signed seven of the BITs, with Argentina, Croatia, Egypt, Israel, Slovenia, Sweden and Zimbabwe. Croatia and Zimbabwe also signed an investment treaty.
The signing ceremony was presided over by Mr. Surin Pitsuwan, Minister of Foreign Affairs of Thailand, and Mr. Carlos Fortin, Deputy Secretary-General of UNCTAD.
Countries are increasingly concluding BITs as a means of promoting and protecting foreign direct investments (FDI) and fostering economic cooperation among themselves. By signing such treaties, the signatories are sending a strong signal to the business community worldwide and to their own investors of their commitment to provide a predictable and stable legal framework for investors, to encourage investment and thereby to further boost FDI flows. By the end of 1998, the total number of BITs had reached 1,726, involving 174 countries -- 170 more treaties than at the end of 1997. Of these, 434 were concluded between developing countries.
A number of the treaties signed today were the result of rounds of negotiations organized by UNCTAD in Geneva at the request of the Governments concerned. UNCTAD’s role was to facilitate the negotiations through the provision of expert advice, when requested, conference facilities and travel funds; UNCTAD did not participate in the negotiations themselves. This activity forms part of UNCTAD’s work programme on international investment agreements.
One advantage of bringing together negotiators in a single location to negotiate BITs is to keep the momentum going for negotiations and to provide negotiators with an opportunity to exchange experiences among themselves. Negotiators are also able to achieve in one week an outcome that would otherwise have required numerous contacts and as much as three or four years. "As we arrived well prepared, we managed in one week to finalize four agreements, some of which had been outstanding for over two years", said the representative of Croatia.
To improve the investment climate further, double taxation treaties (DTTs) often complement BITs. The agreements arrived at during UNCTAD X involved Senegal and Egypt, which initialled a memorandum of understanding; and Senegal and Indonesia, which decided to finalize their negotiations in June 2000.
The number of DTTs concluded in the world as a whole reached 1,871 by the end of 1998, involving 178 countries and territories, many of them in the developing world. The increased participation of developing countries has not been limited to concluding agreements with developed countries, however; indeed, since the 1980s, developing countries have been concluding such treaties with other developing nations. For example, in 1998 alone, these countries had signed 17 DTTs among themselves. Such treaties can support mutually beneficial economic links between the signatory countries by reassuring investors that a mechanism exists to settle tax grievances, should any arise.
