• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

G. Srinivasan

Mr Karl P. Sauvant

NEW DELHI, May 20

DEVELOPING countries are now gripped by substantial amount of uncertainty as to what a multilateral investment agreement would do, to what extent it would help to increase investment flows and to what extent it would help to protect them in terms of bilateral and regional investment agreements.

``The single biggest issue which makes countries hesitant about is that there is a fear that the multilateral investment agreement would not only add to existing obligation in terms of implementing it but also in particular could restrict policy autonomy in investment areas in a manner which would perhaps prevent the pursuit of development-oriented programmes,'' the visiting senior official of the UN Conference on Trade and Development (Unctad), Mr Karl P. Sauvant, told Business Line here in an interview.

Taking a break from the ongoing three-day international seminar on investment, jointly organised by the Department of Commerce and Unctad here, Mr Sauvant, Director-Division on Investment, Technology and Enterprise Development, said this is the single question engaging the attention of developing countries that have reservations over a multilateral investment pact. He said when Malaysia wanted foreign investment, it wanted it to reduce unemployment and subsequently it sought foreign investment in technology-intensive and export-oriented industries. Thus, countries want foreign investment to pursue various objectives and the areas and on what manner this should be done is to be decided by the individual country concerned, he said.

Mr Sauvant said countries were driven by various economic factors to attract investments and their regulatory system allows investment to come in with substantial amount of effort on the part of individual developing countries to liberalise autonomously. This is supplemented by agreement at bilateral levels with more than 2000 bilateral investment agreement and also regional investment agreements when free trade agreements are increasingly becoming free investment agreements as well. This clearly shows that countries have recognised the importance of investments and the need for attracting the same in tune with their developmental objectives, he said. On the proposal for a multilateral investment agreement, he said countries have to basically look at key issues that are relevant to a multilateral framework in order to see whether they would like to proceed from negotiations into actively sitting in the WTO and devising a multilateral framework. He said key issues as right of establishment are very crucial in terms of leaving policy flexibility with the developing and developed countries in order to protect sectors of importance to them.

He said it would be difficult to say how countries would eventually come out of this issue.

Certain observations of the Working Group in WTO convinced him that a number of countries want a multilateral framework while a number of other countries are against it, he said. The position would be clear in the next couple of months in the run-up to Cancun Ministerial, he said.

Mr Sauvant said the role of Unctad is very much focused on the provision of technical assistance and to give training seminar with WTO to familiarise decision-makers in the developing countries to some of the key issues. He said the whole process of examining the issue has not been concluded in the Working Group and how countries would come at the end is also not a foregone conclusion.

As such, seminar of this type being organised by Unctad and the Government of India would be helpful in terms of preparing developing countries to exchange ideas and clarify understanding some of the key points related to discussion on investment in WTO Working Group.

He said that 20 per cent of investment flows out of world FDI flows into developing countries. How the benefits of FDI could be increased by establishing positive linkages of the affiliates of foreign and domestic firms by targeting and focusing export-oriented FDI is addressed by Unctad, he said. Unctad also undertakes a whole range of technical assistance to projects to strengthen investment promotion agencies and to review the extant regulatory framework in developing countries to see whether it is the state-of-the-art in light of the objectives the country has, he said.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Rain, rain come along!

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line