India, China, Cuba look for new rules for foreign investors

GENEVA: India, China and Cuba are calling for a new set of rules to make foreign investors more accountable to governments.
Enron and WorldCom are cited in their joint proposal to the World Trade Organization (WTO) as "cases of corrupt corporate practices and fraud" that show "the glaring absence of an enforceable global code of corporate conduct."
Pakistan, Kenya and Zimbabwe also signed the document. It calls for a WTO code of conduct that would allow governments to "regulate and monitor" foreign investors, binding them to the host''s economic goals as well as to "non-interference in internal affairs."
The US has proposed guarantees for stocks, bonds and bank deposits to make developing countries more attractive to foreign investors. The WTO''s 145 member governments will decide whether to continue negotiations on investment rules before their next ministerial meeting, scheduled for September next year in Cancun, Mexico.
Tightening regulation of foreign investment was a proposal from countries "desperate to attract money," said Joseph Francois, a research fellow at the Centre for Economic Policy Research in Rotterdam. "It sounds like the 1960s."
Rules governing investment aren''t "strictly a developing country issue" and the proposal may be designed to improve negotiating positions in wider WTO talks, Francois said.
The EU and US are seeking support from developing nations for WTO talks aimed at dismantling barriers in finance, farming and energy markets. The talks are due to wrap up by 2005.
China and the five other signatories say in their proposal that investment gives companies "the ability to bargain with the potential host countries from a position of strength" and can "circumvent financial restrictions imposed by governments."
The value of foreign direct investment - in joint ventures or companies owned or controlled by foreigners - halved last year to $735 billion worldwide, the biggest drop in more than three decades, as economic growth slowed and the value of mergers and acquisitions fell, the United Nations said in September.
Still, foreign direct investment into China grew 19.7 per cent to $46.4 billion in the first ten months of this year, as global automakers expanded production in the world''s fastest growing car market.
India attracted $4.4 billion in foreign direct investment.