Won’t allow investors to challenge government: Nirmala Sitharaman

NEW DELHI: India will not allow investment to become part of any global agreement that allows investors to challenge governments to international arbitration, commerce and industry minister Nirmala Sitharaman said.

“We have said no to any investment agreement in which companies can challenge governments,” she said on Monday, following an informal meeting with ministers from Canada and European Union in Davos last week.

EU and Canada have signed a Comprehensive Economic and Trade Agreement, which incorporates a new approach on investment protection and investment dispute settlement, moving towards establishing a permanent multilateral investment court.

“They want to make this a global template for resolving investor-state disputes… We rejected it completely. We are opposed to multilateral approach to investment,” she said. This is “a clear signal of EU’s intent to include this new proposal on investment in its negotiations with all partners,” EU had said last year.

The proposal made at an informal breakfast meeting of trade ministers of select countries was also rejected by Argentina, Brazil and Japan. However, EU is keen to negotiate the Bilateral Investment Treaty ( BIT) with India before it begins talks on the Bilateral Trade and Investment Agreement (BTIA). “EU is keen to have investment agreement negotiated before a trade agreement,” the minister said.

Last year, India had asked all countries with which it has investment protection agreements, including the EU, to renegotiate those pacts on basis of the new model text of BIT.

The European Commission had raised concerns over negotiations for a fresh BIT since all existing investment protection agreements will be null and void from March 31 once the revised BIT kicks in.

The revised model BIT will be used for renegotiation of existing Bilateral Investment Promotion and Protection Agreements and negotiation of future BITs and investment chapters in various free trade pacts. The model excludes matters such as government procurement, taxation, subsidies, compulsory licences and national security to preserve the regulatory authority for the government.