Chair’s Summary Report

APEC Investment Experts Group (IEG) Meeting

Sapporo, Japan

30 May 2010

1.Introduction

The second IEG meeting for 2010 was held on 30 May 2010 in Sapporo, Japan. The meeting was chaired by the IEG Convenor, Noriyuki Mita, and attended by approximately 50representatives from 20economies (Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; Philippines; Russia; Singapore; Chinese Taipei; Thailand; United States and Viet Nam), including one representative from ABAC, one invited guest from UNCTAD and representatives from Colombia, IEG’s official guest for 2009-2011. The APEC Secretariat’s Program Director of IEG and the officer of the Policy Support Unit also attended.

2. Opening Remarks by APEC IEG Convenor

IEG Convenor, Mr Mita, welcomed the delegates and the IEG guest, Colombia and, sought cooperation for an effective meeting. Members were also encouraged to participate in the CTI/TPD.

3.Business Arrangements

IEG Convenor set out the business arrangements for the meeting.

4.Adoption of Agenda (2010/SOM2/IEG/001)

The meeting adopted the Draft agenda.

5.Reports on Activities and Developments since the last IEG Meeting held in Hiroshima, Japan on 3 March 2010.

(a) IEG Convenor’s Report (2010/SOM2/IEG/002)

IEG Convenor provided the meeting with the brief development of IEG and investment related activities since IEG1 including the SOM1 process which discussed REI, Growth Strategy, Human Security, Ecotech and APEC reform. He reminded the meeting of the outcomes of the SOM1, CTI1 and IEG1 and IEG’s task related to core issues of this year’s priorities, especially, REI and APEC Growth Strategy. As for REI, evaluation of the Bogor Goalswas one of the issues. At the same time, fora/committees discussed a pathway to an FTAAP. Follow-up discussions would be held in many ways and finally reported to AMM. IEG Convenor encouraged the members that IEG couldcontribute tothose issues, through discussion of APEC 2010: A road map for Investment proposed by Japan and the APEC Growth Strategy consisting of balanced growth, inclusive growth, sustainable growth, and knowledge-based growth. As explained by CTI Chair at IEG1, SOM asked CTI to work on investment as one of the key areas of REI. Japan proposed a concept of a roadmap at CTI and at IEG. Most economies were supportive of basic concepts of the roadmapitself and three elements, i.e., Advanced Principles, Facilitation and Promotion. Now the issue would be how to establish concrete ideas of three pillars or total picture as a roadmap. Also at CTI, they discussed IFAP. As 2010 being the final year of IFAP, CTI had to discuss the KPI/measurement. IEG Convenor reminded the meeting that IEG was instructed to report back its implementation of 15 priority areas which IEG identified. IEG1 discussed current situation of implementation, and IEG2 also had to discusshow to develop the final report to the Ministers. IEG Convenor then informed the meeting of the outcome of the Extraordinary SOM held in April in Tokyo. Senior Officials discussed the basic direction of the Bogor Goalsevaluation and the organization of the report, for which a basic understanding would be reached at the MRT. As for the Growth Strategy, organization and the state of progress toward an action plan to implement the strategy were discussed. SOM agreed to proceed with the work toward producing a short Action Plan. The Senior Officials deepened understanding of these issues and agreed on the necessity of further discussion. He also touched upon the outcome of related meetings (2010/SOM2/IEG/002).

The meeting endorsed the Chair’s Summary Report of IEG1 2010 which had been approved intersessionally prior to the meeting (2010/SOM2/IEG/003).

(b) APEC Secretariat Report

APEC Secretariat presented a brief report on APEC-wide developments. The meeting was updated with the progress of the new project submission and approval process which was being trialed for the current session as well as new project monitoring and completion process (2010/SOM2/IEG/004, 004att1, 004att2, 004att3) and, reminded members of intersessional work to follow and sought cooperation of the members, especially QAF members (Mexico and New Zealand). The submission deadline of IEG’s Concept Notes to CTI was 30 May and to the Secretariat on 9 June. IEG Convenor reminded members to cooperate in completing the IEG’s approval and ranking process of three Concept Notes submitted this time before the end of the meeting and also suggested the meeting to get acquainted with the new approach and process if they were thinking new proposals.

6.IEG Projects

(a)Reports on Ongoing Projects:

Capacity Building for Dispute Prevention and Preparedness (CTI 42/2009T)

United Statesreported on the progress of the preparation for the workshop to be held on July 26-30 in Washington, D.C. 40 participants were confirmed including some self-funded participants from several developing economies. The entire workshop programme would be finalized and sent around in the next two weeks, including guidance and reference on the advance reading and preparation as suggested by Indonesia. UNCTAD representative added that the program would be made to be interactive and practical which would require participants to have a lot of homework before the workshop, and expected a maximum engagement of participants. Japan congratulated the preparation and mentioned that it was ready to send an expert as a speaker. He hoped that the workshop would add to the predictability and stability in investment in the APEC region. Indonesia suggested that participants be advised advance reading on topics. IEG Convenor thanked US and UNCTAD, mentioning that this capacity building workshop would bring a new aspect in IIAs, focusing on keeping obligation and avoiding disputes and, would provide very practical and useful opportunity for officials in charge.

Investing Across Borders: an important diagnostic tool to assist in IFAP implementation - Stage 1(CTI 43/2009T) (2010/SOM2/IEG/005)

Australiareported on the progress of the project. Phase 1 of the project would be data collection and analysis drawing on the expertise of the World Bank, (WB) which already started desk analysis and contacting some APEC members and its contacts therein. Phase 2 of the project would be the development of the first annual specific purpose APEC report using WB data tailored to APEC’s needs. The study should be finalized in mid 2010 and a report be produced at the end of 2010.

Development of APEC Guide to Investment Regimes E-Portal and electronic publication(CTI 01/2009)

Australiabriefed on the progress of finalizing survey questionnaires which had been circulated to all members. Comments from economies on the questionnaires were received and incorporated in the current version. APEC Secretariat added detailed technical explanation on the progress of an e-portal designing, simple feature and how to use the e-portal. Members were asked to nominate and inform to the Secretariat by 16 June two focal points each as e-guide members who would be responsible to get acquainted with the e-portal and make actual input. They would receive additional login IDs and passwords later to access to an e-portal through ACS/IEG. Submission deadline of responses to survey questionnaires was tentatively set on 20 August. The Secretariat would keep IEG members and focal points informed of the schedules and further progress. The Project Overseer and APEC Secretariat explained that the e-portal would be designed in a manner that input work need to be done by members and members were responsible for the content of input. APEC Secretariat added that the publication would be on an annual basis in the beginning, but it would be possible to publish as many publications as possible, subject to members’ decision in the future. IEG Convenor suggested members use hyperlink to avoid lengthy explanation to be posted on the Investment Guide, which could also avoid frequent revisions. Responding to the concern on questionnaires, IEG Convenor explained that the basic concept of an e-portal is not to discuss interpretation of the investment regimes but to compile information of the facts of each economy, and there would be no intention to ask for new interpretation of each investment regime. Facts or interpretation would be up to members. He welcomed the comments from member economies and encouraged them to agree on the questionnaires intersessionally, preferably by early July and, publication in September.

Filling the Infrastructure gaps in APEC developing economies (CTI 11/2009A)

Viet Namreported on the progress of the project and welcomed members to share views and experiences on public private partnership on infrastructure development. It was planned that a set of questionnaires to collect information on the topic would be prepared by the consultant and three additional consultants (Australian, Latin America and Asia) would be employed in consultation with the APEC Secretariat. Due to difficulties in preparation to identify qualified consultants, however, implementation of the project was behind the schedule. Viet Nam proposed that reprogramming (extension) request be submitted. The meeting supported the proposed extension. IEG Convenor asked Viet Nam to further develop ideas and at the same time to accelerate the reprogramming procedures with new timeframe. (2010/SOM2/IEG/007)

Capacity Building for Sharing Success Factors of Improvement of Investment Environment – Phase 3 (CTI 03/2010T)

The project has been approved by the BMC Session 1. Japan reported on the progress of the project which would hold a seminar in Sendai in September including several candidates for speakers and topics. The programme would be developed and circulated to members later. Nomination of participants was expected in August. IEG Convenor added that this project would also promote discussion of “promotion”on the road map. (2010/SOM2/IEG/008)

(b)New Project Proposals for 2010-2011

Three concept notes have been presented and discussed (2010/SOM2/IEG/009, 010rev2, 012 and 013). The meeting endorsed the concept notes and, agreed to rank and prioritize them by the end of the meeting using a new template [post meeting note: prioritization was made in the following order] and, submit all to CTI.

-Core Elements Project – Moving beyond phase III – A Handbook for Negotiators (MEX, CHL, TILF-US$105,000)

- Core Elements Project – Moving beyond phase III – Intensive Training Course (PER, TILF-US$100,000)

-Investing Across Borders: An important diagnostic tool to assist in IFAP implementation – Stage 2 (AUS, JPN, TILF-US$127,825)

Core Elements: UNCTAD representative was invited to explain two Core Elements project proposals which comprised a part of a 2-year comprehensive project built on the previous Core Elements activities. For submission to CTI, three concept notes originally submitted would be combined into two considering close link of two components (activity 2 & 3).

A representative of the Philippines informed the meeting of its intention to submit a Concept Note at IEG3 for activities in March 2011. Indonesia expressed its interest in sponsoring one of the activities and host in collaboration with UNCTAD in 2011.

IAB Stage 2: Australia explained that the IAB was a 3-year project. 1st report would be ready in 2010. Stage 2 would look at 2010-2011 data. At the end of each stage, WB would produce APEC specific reports. As part of this specific APEC project, 5 economies would be included. Report would look at foreign investment.

China expressed its confusion about the project’s relation to APEC or to IFAP. China also questioned the methodology which was similar to that of the Stage 1 and suggested that IEG needed to review a progress report of IAB Stage 1 and discuss assessment thereof. It pointed out that, from the FIAS website, the project’s report would be of WB and not tailored for APEC. Australia explained that the project would extend coverage of 5 economies to cover all 21 APEC members and prepare a specific APEC report. IEG Convenor explained the meeting discussed it last year when the Stage 1 project was approved. The concept was to use already developed indicators by WB, not to discuss on ‘tailor-making the indicators’ but only extended the coverage of survey. Instead this project was to develop ‘tailor-made’ report. China asked more information on the methodology of IAB since if methodology had serious limitation/shortfall similar to those it believes exist with respect to EoDB, it would make it difficult for China to contribute. Australia would provide information to China intersessionally. IEG Convenor mentioned that Australia already explained the methodology last year and it was approved. Also, he asked Australia to review those documents and explain to members again on what kind of indicators they were using and also how they would assess researches. This would be the project to use already existing indicators and develop a customized report. As for the content of the report, Australia will circulate a draft for review and comments to accommodate the concerns. US commented that China’s point was valid one, noting that there were some limitations as in every methodology and could not be perfect, but that the research was nonetheless highly valuable. IEG Convenor encouraged members to contact with colleagues who made contacts with WB, which would also be a useful way to understand the project.

(c)Projects led by other fora related to the IEG activities

-In-Depth Seminar on Enforcing Contracts (Phase I of the EoDB Action Plan (EC 01/2010A)

Korea submitted the progress report including a tentative draft of the Seminar. The Seminar would be held on 20-21 June in Seoul. (2010/SOM2/IEG/019)

-EC Project “Ease of Doing Business Capacity Building Workshop for Dealing with Permits - Reforming the Regulatory System for Construction Permits” (EC 02/2010A)

Singapore informed the meeting that the date of the workshop was being processed around October 2010, and will be confirmed later.

–SME Working Group Project “Best Practice Guide: Improving business regulationin APEC member economies, based on knowledge shared fromthe Ease of Doing Business/Private Sector Development Workshops series.” (SMEWG 01/2010T)

New Zealand updated the meeting on the project. The best practice guide would be produced based on the outputs from the activities of EoDB workshop as part of the APEC’s Private Sector Development Strategy. The final product would be ready in 2011.

The meeting was encouraged to follow activities of other fora which were relevant to IEG.

7. IFAP Progress and discussion

IEG Convenor informed the meeting that IEG needed to report to CTI2 on the progress of implementation of IFAP 15 priority areas. The report was the revision of the document submitted last year. Australia as chair of Small Group for IFAP Implementation and IEG Convenor made several modifications on existing capacity building activities and made some small corrections on the report. The meeting agreed to submit the document as a report to CTI. (2010/SOM2/IEG/014)

8. Discussion on Road Map for Investment 2010

The meeting discussed a revised road map, which incorporated member’s comments, prepared by Japan including the concept paper of APEC wide consultation mechanism. Japan explained that after further comments and elaboration of the roadmap, Japan would like to articulate the direction of the APEC activities in this area of investment by SOM3. Taking into account all the comments, possibly at SOM3 in Sendai, Japan would be ready to make further elaboration of actual draft of a road map. Intersessionally, Japan would provide a revised version. Japan explained that this was a kind of conceptualization of the actions made to date in APEC investment area and, in that sense, a draft road map covered philosophical or conceptualizing aspects of activities. Japan viewed that all the elements would go in line with members’ understanding of APEC investment. As for a draft APEC-wide consultation mechanism, Japan explained that it believed from its experience that such a mechanism would be the most efficient way to reduce investor-states disputes in advance through communication and, therefore liked to propose this mechanism as concrete action of a road map. IEG Convenor commented that the CTI/TPD would be held on 31 May to develop certain areas of regional economic integration, such as APEC investment actions, convergence/divergence among policies and improvement of business environment.He encouraged members to participate in the TPD which would be a good chance to understand a road map and the consultation mechanism.

Several economies sought clarifications on the three pillars of the road map and activities there under. ABAC showed strong support to establish an APEC-wide consultation and complaint mechanisms for investment within a proposed road map. Japan would take into consideration all the suggestions, ideas on possible projects and comments provided during the meeting and elaborate the draft further for interesessional circulation among members. The meeting was of the view that Japan’s revised proposal was generally welcomed and there was consensus on the concept of three pillars. The concept of an APEC wide consultation mechanism was understood by most members. However there was still some confusion on the details, especially on a concrete design of such a mechanism and issues to be taken up at such consultation. The meeting pointed out certain supporting elements for establishment of a mechanism, such as introducing good practices for issues faced by most APEC members and investors. The information would help host economies and investors. IEG Convenor reiterated that the APEC objective was to improve business environment and, APEC could develop its own agenda through direct discussion with business.