1. PACER Plus: Investment Sixth Non-State Actors (NSA) Dialogue Workshop on PACER Plus Nadi, Fiji 10-11 July 2016

2.  Text of the Chapter agreed at the 11 th ISM in Apia  Australia, New Zealand, and 8 PICs have so far submitted their initial offer of a schedule of commitments on Investment: Status of the negotiations Cook Islands Nauru Niue Palau Samoa Tonga Tuvalu Vanuatu

3. Main Objectives of the Chapter on Investment To encourage a stable and predictable environment to facilitate direct investment flows among Parties, with due respect to national policy objectives and to the right of each Party to regulate. Attract FDI in sectors of development priority to promote competition, expand productive capacity, boost growth, create employment, and take advantage of trade opportunities

4. Content of the Chapter (1) Obligations in relation to Investment Protection: Expropriation Minimum standard of treatment Transfers Compensation for losses These are obligations usually found in all international investment agreements (IIAs), whether bilateral investment treaties or FTAs. This will bring FICs up to international standards with respect to basic norms of protection of investments. But, unlike other IIAs and in deference to the FICs’ size and level of development, the Agreement has no Investor-State Dispute Settlement System allowing private operators to take governments to international arbitration and seek monetary compensation

5. Content of the Chapter (2) Conditional Obligations: Most-Favoured-Nation (MFN) Treatment (subject to national list of exemptions, like for services and GATS) National treatment (subject to national schedule of commitment) Senior management and boards of directors (subject to national list of exemptions, like for MFN)

6. Content of the Chapter (3) Performance requirements (PRs) Unlike in most other IIAs, this obligation is quite limited in PACER Plus The only prohibited PRs are those of the WTO TRIM agreement Further, this only applies fully to FICs that are WTO Members. For non Members, the obligations is of “best efforts” Non Members will have the possibility to maintain any TRIM- inconsistent measure that they maintain by notifying such measure within 2 years of entry into force of the Agreement.

7. Content of the Chapter (4) Investment and Environment, Health and Other Regulatory Objectives (Article 19) Parties recognise that it is inappropriate to encourage investment by foreign investors by not enforcing their own environmental, health, labour, safety or other regulatory standards. Promotion and Facilitation of Investment (Article 20) Obligation for Australia and New Zealand to assist the FICs in promoting and facilitating foreign investment into their countries.

8. Flexibility in national schedules Unlike the large majority of IIAs, PACER Plus uses a positive list approach for the scheduling of commitments on national treatment Part of the general compromise to finalize the chapter (definition of investment vs scheduling approach) Countries can select the sectors and subsectors where they want to undertake commitments in view of their development priorities Limitations can be listed for committed sectors To maintain existing restrictions; or Exclude certain policy areas (e.g., measures relating to land ownership)

9. Flexibility in national schedules (examples) Preserve FDI screening laws or reserved areas Limit commitments on Fisheries only to ‘Aquaculture’ Exclude ‘small scale agriculture for local markets’ from commitments on Agriculture. Maintain existing limits on foreign capital participation “ Maximum foreign equity of 49%”

10. Discussion Points Ability to regulate the entry of foreign service suppliers into their territory The FICs will not give up their regulatory powers under PACER Plus. Regional trade agreements such as PACER Plus usually contain obligations on trade in services and investment, including with respect to “pre-establishment”. Investment-related obligations do not give foreign investors unfettered rights to enter FIC markets. All investors have to comply with governments’ non- discriminatory measures, including as it relates to the admission of investments. As in any other trade agreement, PACER Plus Parties would have the possibility to apply measures that discriminate against foreign investors by listing them in their national schedule. This may include measures relating to, for example, the screening and review of foreign investments, or discriminatory measures that require foreign corporations to train local personnel, e.g. see the draft Schedule of a FIC

11. Discussion Points Settlement of Disputes, Right to Regulate, Exceptions Unlike various regional trade agreements, PACER Plus does not include a conventional investor-state dispute settlement mechanism. As such, it will not give foreign companies the right to take FIC governments to binding international arbitration tribunals and seek monetary compensation for alleged violations of the Investment Chapter. The Investment Chapter will not prevent a government to implement certain regulatory measures simply because they will somehow affect the profits that could be derived by a foreign company. Nor would the Chapter prevent governments from introducing new regulations that might be “more burdensome than necessary”. Article 5 of the General Provisions and Exceptions Chapter recognises the right of Parties to adopt or enforce measures (a) necessary to protect public morals or to maintain public order; (b) necessary to protect human, animal or plant life or health (including environmental measures); (d) relating to the conservation of living or non-living exhaustible natural resources.

12. Thank you Reminder: World Bank seminar on how to make best use of Trade Agreements to attract and promote FDI