Ref. Ares(2016)5299715 - 14/09/2016
Ref. Ares(2017)4070668 - 17/08/2017
EUROPEAN COMMISSION
Directorate-General for Trade
Directorate B - Services and Investment, Intellectual Property and Public Procurement
Investment
Brussels, 14.09.2016
Trade B2/WI/am 5778862
MEETING FLASH REPORT
Subject:
Meeting with ESF on Performance Requirements - 14 July 2016
Participants European Services Forum (ESF):
-Pascal Kerneis (PE), Managing Director, European Services Forum
-
Art. 4.1(b)
, Wind Europe
-
Art. 4.1(b)
, BDI
-
Art. 4.1(b)
, DIGITAL EUROPE
COM Participants:
Art. 4.1(b)
B.2 DG TRADE),
Art. 4.1(b)
(DG
TRADE),
Art. 4.1(b)
(DG GROW)
The meeting took place following an ESF letter (Ares(2016)2227873 - 12/05/2016, see
attachment) addressed to DG Demarty.
COM Art. 4.1(b) underlined the growing concern with respect to the amount of Performance
Requirements including local content requirements across the world. Increasingly
developing countries have started applying Performance Requirements (PR) on foreign
investors and service suppliers although these measures are not an instrument conducive
to attract investment but rather the contrary – PRs today do form a real impediment for
FDI. By this, PRs are not the path to make foreign investment work for development.
COM informed about the EU investment approach and how PR but also other
impediments described in ESF's note (like forced joint ventures, Senior Management and
Board of Directors provisions) are dealt with in comparison with other international
partners and how EU addresses this problem in international for a as well as in EU Trade
negotiations.
ESF (PK) asked why PRs could be challenged under ISDS in US investment agreements
and not in EU agreements. COM replied that the EU proposed investment court system
Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111
(ICS) would not be applicable to PR because EU investment agreements cover
investment protection provisions (like unfair compensation in case of expropriation,
denial of capital transfer, fair and equitable treatment) and core disciplines like national
treatment. ESF raised Senior Management and Board of Directors provisions abused by
certain countries to effectively hinder the operation of an investment. The practice of
"material impairment" used by an increasing number of countries was discussed and ESF
indicated to provide examples for such impediments encountered outside the EU. As
further impediments to foreign investment ESF mentioned foreign equity caps, local
employment requirements and digital protectionism. Public Procurement in some non –
EU countries was also identified by ESF as haven for unfair local content and other
performance requirements. Art. 4.1(b)informed about recent ESF contacts as regards the WTO
compatibility of such local content requirements and asked what could be done under
WTO disciplines. COM
Art. 4.1(b)
provided information on the applicable WTO
system in this respect, especially as regards TRIMS, GATS and GATT. PT raised issues
with respect to wind energy in BRICs countries. PK reported about abusive requirements
to force foreign business to carry out research and development in China and Turkey. PK
also raised as impediment for foreign business certain requirements for license fees and
imposed contract durations which Japan has taken up in its investment agreements as part
of the Performance Requirements Article. DG TRADE and GROW commented to this
respect taking note of the concern expressed by ESF.
ESF suggested at the end of meeting to provide COM with more examples on the
detrimental effect of Performance Requirements to EU business.
Art. 4.1(b)
Cc.: J-L Demarty, R. Schlegelmilch, Art. 4.1(b). Art. 4.1(b) . Art. 4.1(b)
, all B2 unit
(DG TRADE), Art. 4.1(b)
(DG GROW)
2