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Joint Opinion of the SEF and the ARATS on Advancing Negotiations on the Cross-Strait Investment Protection Agreement

  • Date:2011-10-12

Negotiations on the Cross-Strait Investment Protection Agreement have resulted in important and positive progresses after a year of active and in-depth talks on operational issues between the negotiation teams of the two sides. The two sides have reached many points of consensus and are in basic agreement on the content of the pact, which has been fully affirmed by the Straits Exchange Foundation (SEF) and the Association for Relations Across the Taiwan Straits (ARATS). Due to the breadth and the highly specialized nature of the Agreement, as well as differences between the administrative systems on the two sides, further communication and coordination are still needed both internally on each side and mutually between the two sides. The SEF and the ARATS have agreed to continue and accelerate the final stage negotiations so that an agreement can be signed at the next round of SEF-ARATS talks.

The two sides believe that the Cross-Strait Investment Protection Agreement is an important part of the follow-up talks to the Cross-Strait Economic Cooperation Framework Agreement (ECFA), and it has major significance in promoting the development of institutionalized cross-strait economic and trade relations. The two sides agreed to promptly complete negotiations according to the related provisions of the ECFA, in order to protect the rights and interests of investors on both sides, promote mutual investment, create a fair investment environment, and promote cross-strait economic prosperity.

The two sides agreed that the content of the Agreement should be drafted in reference to the basic framework of general investment protection agreements. It should, moreover, consider the special nature of cross-strait relations, respond to the deep concerns of investors on both sides, and strengthen the operability of the Agreement. The agreement content includes definitions, scope of application and exceptions, investment treatment, level of transparency, gradual reduction of investment restrictions, investment facilitation, expropriation, compensation, subrogation, transfer of capital, refusal to confer benefits with a third party, dispute resolution, liaison mechanisms, and other major issues as follows:

-Appropriately defining "investments" and "investors" to clarify the application scope of the Agreement.

-Stipulating investment treatment to give equal consideration to investments and investors, making appropriate arrangements to protect investors’ personal freedom and safety, and progressively formulating norms for reducing mutual investment restrictions, increasing the transparency of investment-related provisions, and promoting investment facilitation according to the provisions of the ECFA.

-The two sides agreed that expropriation (including indirect expropriation) should conform to basic principles of public good, and that compensation should be made based on fair market value; as for provisions on compensation, subrogation, transfer of capital, and refusal to confer benefits, they should be appropriately handled in reference to general conventions.

-The two sides have fully communicated on the framework of a dispute resolution mechanism. They have also held in-depth discussions on dispute resolution over investment protection between the two governments, resolution of disputes between investors and the authorities where the investment locates, and resolution of business contract disputes between investors on the two sides, so as to arrange a mechanism that can effectively resolve related disputes.

-The two sides will establish a contact platform and related coordination mechanisms to effectively implement the Agreement and strengthen related services for investors on the two sides.

The SEF and the ARATS affirmed the goodwill and sincerity of the negotiation teams on both sides in actively seeking consensus during the negotiation process. They also stated that they would continue to actively communicate and seek to complete the negotiations at an early date.

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