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Development Account Projects

Strengthening capacities in the ESCWA region to negotiate bilateral investment treaties

Background:

Several challenges remain in the key areas of the Monterrey Consensus most relevant for the ESCWA member countries, namely attracting FDI, promoting domestic financial resources, and sustainable debt management to finance development projects. In 2002, ESCWA, as part of assisting member countries in promoting FDI inflows, implemented a joint project with the United Nations Conference on Trade and Development (UNCTAD) to provide technical assistance to member countries in the area of compilation and reporting of FDI. As a result, eight member countries have established databases for FDI statistics based on internationally accepted methodologies. The establishment of FDI databases has enabled those countries to compile accurate foreign direct investment data and statistics for the policymaking based on common methodologies among ESCWA member countries to collect, compile, analyse and disseminate data on FDI. Furthermore, the established databases in member countries provide inputs to the UNCTAD World Investment Report on an annual basis.

In addition, ESCWA assisted member countries in formulating adequate FDI policies by preparing country studies on FDI policies in eight member countries. The studies analysed FDI policies adopted in those countries and provided a set of policy recommendations to the policymakers to assist them in formulating investmentfriendly strategies and policies. As a result, several new policies and procedures have been undertaken by ESCWA member countries in recent years to attract FDI.

In the next step of technical assistance in the area of FDI, ESCWA is to assist member countries in strengthening their negotiation skills on bilateral investment agreements by organizing national training workshops to upgrade the skills of government officials from member countries in negotiating bilateral investment agreements. Those agreements have become one of the most important policy tools for the promotion and protection of FDI. Almost all countries have signed such agreements as part of their efforts to increase FDI inflows for development and to protect their investors abroad. These agreements provide legal protection and favourable treatment to investors and investments of the contracting parties by covering substantive issues such as expropriation, free transfer of funds, dispute settlement, standards of treatment and admission and establishment. The benefits of these agreements depend on the skills of the negotiating parties and their experience in formulating such agreements.

However, many countries, including ESCWA member countries, lack adequate technical skills and expertise to efficiently negotiate these agreements, which in turn reduces their economic reward. The project will assist ESCWA member countries to enhance their negotiating skills and techniques and provide a venue for the exchange of experience and expertise in the area of bilateral investment agreements designed to promote interregional and intraregional investment flows as well as integrating the Monterrey Consensus into their economic strategies and policies.

Objective:

To strengthen the capacity of Governments in designing and negotiating bilateral investment treaties in ESCWA member countries and improve the negotiation skills of decision makers responsible for the finalization of bilateral investment treaties.

Expected accomplishments:

  • Improved the capacity of concerned government officials, particularly in the ministries of foreign affairs, justice, economy, investment and planning in designing and negotiating bilateral investment agreements
  • Development of skills on how to apply those negotiated bilateral investment agreements for settlement of investment dispute

Implementation status:

 

The project has created awareness among ESCWA member countries to develop their own Bilateral Investment Treaties (BITs) template/model and to form a coherent team of multi-displinary experts to carry out the drafting of different clauses in Bilateral Investment Treaties (BITs) as well as to carry out negotiation procedures.

As a result of conducting two workshops in Sudan, the Sudanese government established a permanent team of government officials to negotiate future BITs. Moreover, after the training provided to Omani government officials, new members joined the Omani team for negotiating BITs.