Download Using RCEP To Spur Investment?

Using RCEP To Spur Investment?
Deborah Elms
([email protected])
First East Asia Investment Forum
Kuala Lumpur, Malaysia
August 24, 2015
Asian Trade Centre
RCEP Impact on Investment Uncertain




Nine rounds of RCEP negotiations completed
Initial offers on investment just exchanged
Unclear how ambitious members willing to be
RCEP builds on two existing models:
• ASEAN+1 agreements (ASEAN with 6 AFPs: Japan,
South Korea, China, India, and
Australia/New Zealand)
Not all agreements cover investment (esp with Japan)
• ASEAN Economic Community (AEC) for
ASEAN integration
Investment coverage varies but often quite weak
Asian Trade Centre
Investment FTA Chapters Often Include
 Creating favorable investment conditions:
• National treatment for foreign investors
 Greater certainty
• Free transfer of capital and profits related to
investments
• Transparency of investment rules, regulations
and policies
 No performance requirements
• No unfair conditions to establish, operate and
manage investments (such as requirements for
export minimums for goods and services)
Asian Trade Centre
Investment Chapter Goals Continued:
 Stronger protection of investments
• No expropriation of investments (except for
public purpose)
• Obligation to compensate if investments
are expropriated
• Investor-State Dispute Mechanism to allow
aggrieved investors to seek redress
 Overall objective: stronger, more secure
and predictable environment for investors
 Business receives improved market access
and stronger protection than current regime
Asian Trade Centre
Odd Hybrid Model of Negotiations
 Generally, are two models of negotiating
on investment liberalization
• Positive list—everything listed is open for partners
• Negative list—listed sectors are NOT open
 Possible to create lists that are equally open
 Negative list automatically opens new sectors
 ASEAN uses positive list, but some members
have used negative approach (TPP and U.S.)
 RCEP using some sort of odd hybrid of two
Asian Trade Centre
Can Be Harder to Switch
 Generally, first time officials use negative list,
response is to list every sector as closed
 Negotiations=painstaking paring down list
• Services, for example, cover 12 sectors and
more than 160 subsectors
 But many officials have extensive experience
• Particular attention to 7 RCEP members also in TPP
 Rhetoric usually encouraging of inward
investment, but in practice can be hard
Asian Trade Centre
RCEP and TPP: Overlapping Membership
RCEP
Cambodia
China
India
Indonesia
Laos
Myanmar
Philippines
South Korea
Thailand
Asian Trade Centre
TPP
Australia
Brunei
Japan
Malaysia
New Zealand
Singapore
Vietnam
Canada
Chile
Mexico
Peru
United States
7
Biggest Issue Likely to be AFPs
 In most of RCEP, biggest hurdle to closure
is connections between ASEAN Foreign
Partners (AFPs)
 Can be frosty relationships between AFPs
 Little history of working together and few
existing agreements between them
 Investment could get caught up in larger
disagreements about extent of liberalization,
reach and depth of final deal
Asian Trade Centre