The Growth of Foreign Investments

Foreign direct investment (FDI) is one of the most politically sensitive 'trade' issues, as it involves foreigners exercising control over national assets and resources through investment. When a company closes a factory in the U.S. and moves it to China to take advantage of cheap labor, it is investing in China. The expansion of this FDI in the global economy has reached an unprecedented level. In 2001 more than 65,000 transnational corporations had expanded FDI through the creation of more than 850,000 foreign affiliates. That companies invest in foreign production is good, as long as they do it in ways that respect local laws and benefit local development. Not unexpectedly, MNCs have been actively lobbying governments to ensure that agreements are included under both the FTAA and WTO to strengthen the rights of investors at the expense of the rights of citizens.

Investment agreements currently proposed under the WTO and FTAA will greatly restrict the ability of governments to implement national policies for development and poverty reduction - the same policies that were used by the industrialized countries to develop. Furthermore, such agreements conflict with the 1962 UN Resolution on Permanent Sovereignty over National Resources, whose mandate is to regulate foreign investment by recognizing the state's permanent sovereignty over natural wealth and resources as a key component to the right of self-determination.

Investment Agreements: Following in the Footsteps of NAFTA

Investment agreements under the FTAA have been drafted to model the North American Free Trade Agreement (NAFTA). WTO negotiators from rich countries, including the U.S. and the European Union, are pursuing investment protections under the WTO according to a similar model. Much like NAFTA, an agreement of this type will be designed to maximize the rights of foreign investors while minimizing the authority and rights of governments to pursue policies crucial to their national interest.

The rich countries are pushing to include a package of "New Issues" that are not currently in the WTO, that include investment, government procurement, competition policy, and trade facilitation. If successful, these New Issues will spell the end of the role of government in setting any policies to regulate foreign capital within the national boundaries. If this becomes a reality, the scope of protected capital will be expanded to include portfolio investments, short-term capital flows, and real estate.

Дата добавления: 2015-11-14