Dodwell in SOM3 Medan - Post 11

July 06, 2013

After the “mid-life crisis” of the Investment Experts Group in Surabaya in April, ABAC was tasked to facilitate a workshop in Medan with the broad theme “Whither the IEG”.

Since we had no formal ABAC meeting between Surabaya and Medan, it was in technical terms impossible for ABAC to comply – even though investment related issues have emerged to be as important today as they have ever been for us, and for APEC in general.

So instead of organizing a formal ABAC workshop, we agreed instead to facilitate a discussion. Anchoring this was Dr Allan Bollard, head of the APEC Secretariat, who combined his institutional interest in ensuring all APEC Working groups have a clear, well articulated sense of mission, with his years of experience as a banking regulator, to address the IEG’s key question. As if the point needed reaffirming, Dr Bollard, was crystal clear: “The IEG is at the very core of what APEC is trying to achieve.”

From ABAC we then organized presentations on different aspects of investment policy and facilitation to assert from our point of view the pivotal importance of the IEG – one on the Investment Facilitation Action Plan (IFAP) which has been pursued by ABAC for several years; one on a US-driven checklist on barriers to foreign investment, and one on this year’s Marshall School study of chokepoints for foreign investment. For good measure, we also included a presentation from the APEC Indonesian Chair’s office on the pivotal importance of investment facilitation in this year’s multi-year plan on Infrastructure Investment and development. (This discussion raised important calls for next year’s APEC Chair – China – to begin thinking now about its 2014 investment-related agenda.)

One concern for ABAC was to distinguish where possible which investment-related issues should be pursued along APEC’s “finance track” with senior Finance Officials (driven this year by work on establishment of the Asia Pacific Financial Forum (APFF)) and which through the IEG and the trade-related Senior Officias track. Discussion was valuable here, but of course an answer was elusive: the line between the two tracks was inevitably blurred and pragmatism would always be necessary. In short, we need to use both tracks, flexibly.

On some issues there was virtual consensus: the IEG should focus on capacity-building with the aim of ensuring transparent, rules-based processes for managing foreign investment flows. Since the IEG sits as the centre of a web of connected activity among APEC working groups, IEG members should be thinking always of collaboration with other groups: with the Market Access Group, the Group on Services and the Standards and Conformance Sterring Committee on standards, for example; with the Economic Committee on broad investment issues and on competition; with the Finance Track on infrastructure investment and financial literacy; and with the Steering Committee on ECOTECH on effective capacity building. As Dr Bollard noted, the IEG needs to “reach out”.

Some counter-intuitive issues arose in the workshop: was resistance to foreign investment liberalization due to “bad press” economy by economy, due to local lobbies beating the drum for their separate interests? Should there be a coherent approach to drafting foreign investment clauses in free trade agreements? And what role does the IEG play in articulating optimal responses to the short term upheavals arising from the 2008 global financial markets crash, and the long term challenges of rebuilding the best 21st century architecture for facilitating foreign investment?
And there were some interesting areas of difference: for example, the IEG Chair’s insistence that the group should focus exclusively on foreign investment POLICY, and not get drawn into foreign investment PROMOTION was roundly contradicted by economies as diverse as Chile, the Philippines and the United States, who insisted that investment promotion was an integral component of investment policy, and should not be separated. There was also an animated debate on whether the thorny issue of divergent Government procurement policies should be grasped by the IEG. On balance, economies were reluctant to bring the issue under the IEG’s wing – but does this mean procurement will remain one of APEC’s “orphan” issues?

There was also concern over the level of seniority of attendees at IEG meetings: no matter how well focused the IEG agenda, if attendees did not have the clout to deliver initiatives back into their own governments, then the IEG would never punch up to its weight.

At the end of the morning, the verdict was clear: the work of the IEG has never been more important. Its primary obligations should be to drive capacity-building, in particular through the Investment Facilitation Action Plan (IFAP), and to provide guidance on investment-related issues to the many other APEC working groups it links to. I believe ABAC too will be under considerable pressure to channel more investment-related initiatives in the IEG’s direction.

It is premature to say that the IEG’s mid-life crisis is now behind it, but the workshop certainly provided a feast of thoughts on how to revitalize its agenda. If investment-related issues have never been more important how could anyone logically cauterize it now?

⇒  More blog posts from the SOM3 Medan meetings series.

⇒  Dodwell's other meetings blogs.


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