The overreaching rationale for a comprehensive investment framework is that it would create a stable, predictable and transparent enabling framework, which would facilitate the growth of investment flows and their contribution to development. In fact, the globalization of business, the increased volumes and growing importance of l31, the extent to which FDI and trade are inextricably intertwined and the emergence of an integrated international production system require a similarly global poIicy framework. A global economy requires a global policy framework consistent for trade and investment issues.
What exists now, however, is a patchwork of bilateral, regional and multilateral agreements that contains overlaps, gaps and inconsistencies. And these pollens are bound to increase as the number of bilateral and regional agreements continues to proliferate.
Apart from regional groupings investment agreements, there are more than 1 100 bilateral investment agreements. Even a complete network of BITS covering all pairs of countries which would require some 20,000 treaties requiring a very long period of time to negotiate.
A comprehensive multilateral investment framework is seen by its proponents as the appropriate response to the need for a global policy framework:
The following section gives the views of the proponents of MIA.
Governments expect increased FDI flows to contribute to development, directly as well as indirectly (as they increase trade. They also expect that conflicts arising from FDI are more likely to be the subject to an effective dispute settlement process in the context of a rule based, not power-based, framework; smaller countries, in particular, benefit from a rule based system not only because they are more protected but also because they can participate in policy formulation and implementation.
Firms - large and small -expect that a multilateral investment framework should remove ' impediments to investment, establish high and coherent standards, provide protection for investment and put in place a mechanism for ;resolving disputes. A stable, predictable and transparent framework is particularly important for large-scale, long term infrastructure projects and for internationally integrated production networks.
Trade unions expect effective rules on FDI which would incorporate the principles of the ILO Tripartite Declaration, thus alleviating the danger of downward pressure on basic labour standards resulting from policy competition and contributing to a stable labour regime, which is essential for integrating TNCs in development strategies.
Other groups, in particular the consumer movement, expect a rule based system for international economic relations, which would also include effective consumer, competition and environment policies, and which would not marginalize some groups of countries but rather complement global liberalization.
Beyond that, it is expected that the existing multilateral economic institutions would benefit because they would be able to function more effectively if FDI were brought into the purview of the multilateral system governing international economic relations.
A comprehensive multilateral agreement, especially if it is linked to the international trade framework, would contribute more to increasing international investment flows. Not only would it entail a worldwide reciprocal lowering of barriers to the inflow and outflow of investment, but the consolidation of commitment of countries to an open investment regime would give greater credibility to such policies in the eyes of investors. It should thus enable countries to attract greater inflows of investment at a lower cost, and subscribing to it would become a "good housekeeping" seal of approval. The stronger the agreement, and the higher the standards, the more it would contribute to investment flows and hence development.
They are:
Investment measure that effect the entry and operations of foreign investors
The application, with respect to FDI, of certain positive standards of treatment,
Measures dealing with broader concerns, including setting appropriate standards of behaviour for investors and ensuring the proper functioning of the market.
The elimination (or reduction) of non-business risks through provisions on investment protection and settlement of disputes.
The MIA is expected to have Most Favored Nation Treatment and National Treatment to be accorded to foreign investor.
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