The final Vi videoconference of the spring season, held June 13, introduced 40 government representatives, students and academics gathered at core university member, the Pontificia Universidad Católica del Perú (PUCP), to the recently published UNCTAD Investment Policy Framework for Sustainable Development (IPFSD).
The IPFSD was designed as a handbook to assist policymakers in formulating national investment policies and in negotiating investment agreements pursuing a broader development policy agenda, while building or maintaining a generally favourable investment climate.
"UNCTAD'S IPFSD is going to become an indispensable point of reference in the area of investment policies," said Director of International Economic Negotiations at the Ministry of Foreign Affairs, Elmer Schialer, stressing the importance of not only making countries more attractive for investment, but also linking foreign direct investment (FDI) to their economic development and making investment socially and environmentally more sustainable.
Schialer, a former Deputy Permanent Representative in Geneva, was part of a panel of experts composed of Alan Fairlie, Dean of the Faculty of Social Sciences and Vi member coordinator; Javier Illescas, Director of Proinversión (Ministry of Economy and Finance); and José Carlos Orihuela, Associate Professor at PUCP's Department of Economics.
"UNCTAD'S IPFSD arrives at a crucial moment, when countries are dealing with a proliferation of bilateral and regional investment agreements, imposing numerous challenges which need to be faced at both the national and international level," added Carlos Rossi, Counsellor at the Permanent Mission of Peru in Geneva and 2012 Chairman of the WTO's Working Group on Trade and Transfer of Technology, who joined UNCTAD experts, Natalia Guerra and Ariel Ivanier, of the Division on Investment and Enterprise, and Vi Chief, Vlasta Macku, for the video presentation of the policy framework.
In the South American region, FDI kept rising in the past few years, Ivanier said, and, despite continued efforts to regulate and/or restrict FDI, the overall policy trend (at the country level) is toward continuous liberalization and promotion of investment."
And, although at the international level the annual number of new bilateral investment treaties is declining, regional investment policymaking is intensifying, he added.
"During the 90s, a consistent increase in bilateral investment treaties took place, in a particular historical context centred on liberalization measures," Guerra explained. "In the past few years, the changes in the global political and economic context resulted in a more frequent use of these treaties' protection clauses and a steady increase of investor-State disputes brought before international arbitration centres. Unfortunately, in many cases the monetary awards to foreign investors (mostly claiming damages due to changes in national policies and regulations) have outweighed any positive development-impact the foreign investment could have had in the host country."
To address these and other related challenges, UNCTAD's IPFSD includes core principles for investment policymaking, guidelines for national investment policies, and options for the design and use of international investment agreements compatible with the sustainable development objectives of individual countries.
These new generation investment policies place inclusive growth and sustainable development at the heart of efforts to attract and benefit from investment," Ivanier said.
Orihuela, citing an example of a situation when environmental regulation was considered as a potential deterrent to FDI investment, welcomed the idea of bringing sustainable development to the forefront, and saw the potential of the topic as a new area for academic research. Young researchers could look into how liberalization has produced positive effects, and how much green growth there has been thanks to FDI, for instance.
In Peru, the 11 principles of the IPFSD are embedded in the country's legal framework," Illescas commented. The problem is in their implementation -- division of roles and responsibilities, institutional capacity, interaction between people. We are at initial stages in this respect," he acknowledged.
"This is unfortunately the case for the majority of developing countries," added Guerra. "UNCTAD is working to devise tools like the IPFSD based capacity-building programme, precisely to help countries fill these gaps."