EU and Myanmar/Burma to negotiate an investment protection agreement
Myanmar Brussels, 20 March 2014
After the EU reinstated trade preferences to Myanmar/Burma in July 2013, EU Trade Commissioner Karel De Gucht today launched negotiations for an investment protection agreement between the European Union and Myanmar/Burma with Dr. Kan Zaw, Union Minister of National Planning and Economic Development of the Republic of the Union of Myanmar, in Nay Pyi Taw. The EU Member States gave their green light on the negotiation mandate earlier this week in Brussels, on 18 March 2014. The investment agreement will improve the protection and fair treatment of investors from both sides and will thus contribute to attracting investments to Myanmar/Burma and the EU.
This investment agreement could become an important accelerator for the reform process in Myanmar/Burma, said EU Trade Commissioner De Gucht. Experience has shown that improving legal certainty and predictability for investments is key in providing business opportunities and much-needed development for this growing economy. I hope we can conclude negotiations swiftly to open the door to an increased flow of mutually beneficial investments. The European Union fully supports Myanmar's reform process and is ready to support further efforts in this direction.
Currently, there is no bilateral investment treaty in place between Myanmar and any EU Member States. An EU-Myanmar/Burma Investment Protection Agreement would offer EU investors key guarantees in their relationship with Myanmar such as:
- Protection against discrimination;
- Protection against expropriation without compensation;
- Protection against unfair and inequitable treatment;
- Protection for the possibility to transfer capital.
These provisions provide guarantees to companies that their investments will be treated fairly and on an equal footing to other investors. Creating legal certainty and predictability for companies will help to attract and maintain foreign direct investment (FDI) to underpin Myanmar/Burma's development.
The agreement could have a positive impact on the reform process in Myanmar/Burma in the longer term, as it would be in line with some on-going legislative changes, such as the merger of the foreign and the domestic investment laws.
At the same time, the investment agreement will not interfere with the right of the state to regulate to pursue public policy objectives and to work for the development of the country and its people, as a balance between the right to regulate and to pursue legitimate public policy objectives and the need to protect investors will be ensured.
The agreement will also offer an opportunity for the EU and Myanmar/Burma to continue to pursue their strong commitment to sustainable development and to promote responsible corporate conduct, in line with internationally recognised principles and guidelines.
EU-Myanmar trade and investment relations
Responding to Myanmar's political and economic reform process begun in 2011 and after the June 2012 decision by the Conference of the International Labour Organisation (ILO) to suspend its restrictive resolution on Myanmar/Burma, the European Union reinstated the Generalised Scheme of Preferences (GSP) tariff preferences on 19 July 2013, with retroactive application as of 13 June 2012. The EU had temporarily withdrawn these preferences since 1997 due to violations of the principles of the ILO convention on forced labour.
As a result, in 2013 bilateral trade in goods with Myanmar/Burma amounted to €569 million, a 41% increase compared to 2012 (€403 million).
Myanmar/Burma exports to the EU increased by 35% in 2013 to amount to €223 million (compared to €165 million in 2012). While previously limited to garments (66,9%), fisheries products (8%), rice (4,4%) and beans (4.3%), exports of Myanmar in 2013 saw the share of garments decrease to 58,2%, but the re-entry in the export base of precious stones (11,7%) and wood products (7,8%).
EU exports to the country increased by 45% in 2013 reaching €346 million (compared to €239 million in 2012). Key EU exports were powered aircrafts, pharmaceuticals, electrical machinery and equipment.
EU investment in Myanmar/Burma has so far been limited as a result of previous EU sanctions. According to Myanmar/Burma's official figures, cumulated existing investments of the EU amounted to some USD 3.1 billion in 2013 (9% of FDI in Myanmar/Burma).
For further information
Joint communiqué on the launch of EU-Myanmar investment relations
EU trade relations with Myanmar/Burma
EU re-opens its market to Myanmar/Burma, 18 July 2013 - Press Release (IP/13/695):
EU Trade Commissioner De Gucht travels to South East Asia to boost trade ties with Vietnam, Cambodia and Myanmar, 14 March 2014 - Press Release (IP/14/271)
