Home / News & Speeches / Speech of ICC Secretary General John Danilovich at the fifth edition of the Annual Investment 2015 Sustainable Development through FDI Induced Innovation and Technology Transfer

Speech of ICC Secretary General John Danilovich at the fifth edition of the Annual Investment 2015 “Sustainable Development through FDI Induced Innovation and Technology Transfer”

What are your member companies looking for when investing in emerging economies? What policies need to be in place for them to be willing to transfer technology?

  • There are of course many factors that influence business investment decisions…
  • But a core theme we hear from our members time and time again is “stability”.
  • In this context, I want to focus on one specific issue which has proved highly controversial in recent months…
  • Specifically, the role of bilateral investment treaties…
  • Or “B-I-Ts”…
  • And the role these treaties play in promoting FDI flows and technology transfer.
  • The debate on investment protection…
  • And, more specifically, investor-state arbitration…
  • Continues to receive unprecedented attention in many countries around the world.
  • Arguably this is a good thing.
  • For too long, B-I-Ts have been viewed as too technical…
  • To warrant any form of mainstream attention.
  • But-that said-to have any utility…
  • The public debate on investment protection needs balance…
  • And, more fundamentally, a clear sense of reality.
  • We have seen scarcely little of either in recent months.
  • I was particularly struck by one columnist in the international press…
  • Who wrote recently that that investor-state rules are:
  • “used by big business to strike down laws…
  • that impinge on their profits…
  • such as tougher financial rules…
  • and stronger standards on water pollution and public health”.
  • This comment is symptomatic of what has been a highly myopic debate on B-I-Ts…
  • What’s been missing…
  • And what ICC-as the World Business Organization-is actively seeking to redress…
  • Is debate about the role of foreign investment…
  • In promoting growth and jobs.
  • And, moreover, the measures governments might usefully take to promote FDI…
  • That’s one of the reasons I was so delighted to be able to join this event this week.
  • The reality is that when we speak to our members…
  • B-I-Ts are widely cited as playing a key role…
  • In helping countries attract FDI.
  • This is particularly true for developing countries…
  • For whom inward investment is a vital driver of GDP growth and jobs.
  • It’s also hard to understand why these investment agreements…
  • Have come in for such criticism in recent months.
  • You heard me speak earlier about the view that these agreements…
  • Give companies carte blanche to sue governments to challenge policies they don’t like.
  • But the reality is quite different:
  • For instance, very few investment claims are brought each year…
  • Less than 300 claims were filed in 2013.
  • And of those that cases that have been brought to date…
  • A large proportion have been settled in favour of host states.
  • What’s more, investors cannot use investment agreements to bring a claim against a state…
  • Just because their profits might be affected by a new government policy.
  • These agreements only kick-in in rare but serious situations where companies’ assets are expropriated…
  • But we also need to ensure that policy makers understand that…
  • These agreements have played a key role since the 1960s…
  • In supporting FDI flows…
  • And promiting good governance.
  • My concern that is that the current distorted debate…
  • In Europe and the U.S. in particular…
  • Risks encouraging some governments to terminate their existing B-I-Ts…
  • And also discouraging them from entering into new ones.
  • That would be a seriously retrograde step for the international investment climate…
  • And I hope you will support our efforts to promote a more balanced debate on this agenda in the months ahead.

How do your member companies look at IP (intellectual property) issues when investing in emerging economies and how do they safeguard their IP?

  • It’s certainly a vital factor when considering investments and establishing new business relationships.
  • A large number of our members say they see an extensive risk of IP infringement in emerging markets when engaging suppliers and agents/business partners.
  • Our members, of course, take steps to protect their IP assets
  • Indeed, some have in place very sophisticated systems…
  • But they are also reliant on the measures taken by governments and other businesses in their supply chains.
  • In this context, I’d like to highlight two key themes.
  • The first is the need to build a better understanding amongst policy makers…
  • ofthe role IP protection plays in facilitating investment and technology transfer .
  • We’ve seen a lot of anti-IP rhetoric in recent UN talks on climate change and sustainable development…
  • Most notably in the form of proposals to invoke compulsory license for key technologies.
  • In this context, we need to be much clearer on how robust IP protections…
  • Promote FDI flows and the diffusion of critical technologies.
  • It’s vital that governments view IP as a tool for…
  • Collaboration…
  • Innovation…
  • And knowledge sharing.
  • In my view the message is clear…
  • Forcing companies to license their technologies can only get you so far…
  • Because successful technology transfer…
  • Ultimately requires the sharing of tacit knowledge…
  • And the development of collaborative long term relationships.
  • Robust IP frameworks are a vital foundation for doing just that.
  • The second point…
  • Is that we need to take a broad conception of intellectual property in discussions like these…
  • There’s often a risk of associating IP solely with…
  • Patents, trademarks and copyright…
  • But the reality is that trade secrets are often the “crown jewels” of a firm’s intellectual capital…
  • Developed over many years of experience and trial and error.
  • ICC estimates that trade secrets encompass around 70 per cent of the value of companies’ intellectual assets.
  • What’s worrying is that our members tell us that they are increasingly vulnerable…
  • To the theft of their confidential business information.
  • This is in large part due to growing cyber security risks…
  • The WIPO “TRIPS” agreement provides for protection of trade secrets.
  • This is important an important building block…
  • But, right now national approaches to protecting trade secrets vary greatly…
  • Which causes real problems for companies operating in an environment where information and data flows are global.
  • We welcome efforts to harmonize protections for trade secrets in Europe…
  • But much more needs to be done on an international level to harmonize and strengthen those protections
  • And to make them fit for purpose for the digital age.
  • This is an issue we are working on as an absolute priority…
  • If you are interested in learning more about what we are doing then please get in touch.