Investment | Brussels, 10 April 2012
EU and US adopt blueprint for open and stable investment climates
EU Trade Commissioner Karel De Gucht and Deputy Assistant to the President of the United States Michael Froman agreed on an ambitious set of investment principles and openly invite other countries to follow suit. In the framework of the Transatlantic Economic Council (TEC), the EU and the US have developed a blueprint for creating and maintaining stable, predictable and transparent investment regimes. The principles cover the elements which the EU and the US believe are necessary to attract long-term sustainable investment.
"Open investment markets generate growth and jobs – and these investment principles will support such an open investment climate," said EU Trade Commissioner Karel De Gucht. "It's another example of where the EU and the US are working together to keep trade and investment flowing worldwide. It shows that EU-US cooperation in the Transatlantic Economic Council delivers."
The Statement on Shared Principles for International Investment urges governments to maintain open, transparent and non-discriminatory investment climates. Simultaneously it confirms that governments can commit to a high level of investment protection and still maintain the right to regulate in order to pursue legitimate public policy objectives. In the view of the EU, such objectives include the environment, health, safety, labour or cultural diversity. The Statement also stresses that governments should not lower their standards, for example in relation to human rights or the environment, in order to attract foreign direct investment.
The EU and US have implemented these principles in their own respective investment regimes and call on other countries to consider them with a view to strengthening international investment markets.
In the last 15 years, there has been a dramatic increase of capital movements, including notably of foreign direct investment (FDI). Both a cause and an effect of globalisation, FDI flows reached a record high of almost €1,500 billion in 2008.
After a severe decline in 2008 and 2009, FDI flows are now slowly recovering. Global FDI inflows rose 5% to €930 billion in 2010, according to the United Nations Conference on Trade and Development (UNCTAD) and are considered to be rising slowly towards the pre-crisis levels.
The EU tops the tables as largest source and destination for FDI in the global economy. According to the 2011 UNCTAD's World Investment Report:
- EU investors invested €305 billion outside the EU in 2010;
- EU investors control about €6.7 billion in FDI stock assets overseas, equivalent to about 60% of EU's GDP;
- Foreign investors invested a total of €229 billion in the EU in 2010 and control about € 5.25 trillion of assets.
The transatlantic commercial relationship is by far the largest in the world, with the United States and the European Union surpassing €3.22 trillion in annual trade, investment and sales by foreign affiliates of companies in one another’s markets, representing over 50% of global GDP and 30% of global trade. US companies have over €750 billion invested in the EU. In Ireland alone, the stock of US FDI totalled €124 billion at the end of 2009 — more than the US total for China, India, Russia and Brazil combined. EU investment in the US supported 3.6 million jobs in 2008. EU investment in California alone supported 287,000 jobs, while its investment in New York supported 255,000 jobs.
Transatlantic investment flows generate deep economic integration with significant intra-firm trade. For instance, half of all US foreign affiliates are in Europe and 60% of the assets held by US foreign affiliates are in Europe. The equivalent figure for EU affiliates in the US is 75%. Estimates suggest that intra-firm trade represents more than a third of the total transatlantic trade.
As evidenced also by the figures below the European Union and the United States are the largest sources of, and hosts to, foreign direct investment:
- EU investment flows to the US in 2010: €20.9 billion
- US investment flows to the EU in 2010: €44.9 billion
- Investment stocks inward in 2010: €1.2 trillion
- Investment stocks outward in 2010: : €1.2 trillion
For more information:
- Statement of the European Union and the United States on Shared Principles for International Investment
- Déclaration de l’Union européenne et des États-Unis
sur les principes communs en matière d’investissements internationaux
- Declaración de la Unión Europea y los Estados Unidos sobre
principios comunes para la inversión internacional
- Memo: Investment and the EU economy
- EU investment policy