FOB – Free on Board (Named Place) Incoterms® 2020

FOB – Free on Board (Named Place) Incoterms® 2020

Article 4 in our series of Incoterms® 2020 – In each article we will identify the responsibilities of the seller in the transaction at different points in the shipping journey.

What are Incoterms used for?

Incoterms® are primarily used for determining how the sale of equipment for delivery across international boundaries will be handled and who will pay for what in the transaction. They will not address the consequences of a breach of contract or exemptions of liability. Incoterms® relate to the terms between the exporter and importer.

Incoterms® cover the following broad points:

  • Delivery – Incoterms® 2020 specify when seller delivers to buyer:
  • Risk – Incoterms® 2020 specify when risk transfers from seller to buyer. Risk passes from seller to buyer when seller has fulfilled his obligation to deliver the goods
  • Costs – Responsibility of costs passes from seller to buyer at a point up to which the seller is obliged to pay transport (and insurance) costs

Our third Incoterm® is

  • FOB – Free on Board (Named Place)

FOB should only be used for sea and inland waterway transport.

Under the Incoterms® 2020 rules, FOB means the seller has fulfilled its obligation when the goods are loaded on the vessel nominated by the buyer at the named port of shipment. With FOB, the seller is responsible for loading the goods on the vessel, while the buyer is responsible for everything else necessary to get the goods to the final destination.

The risk or liability for the goods transfers from the seller to the buyer when the goods are on board the vessel, and the buyer bears costs from that point forward.

Because the seller is responsible for the goods until they are loaded on the vessel, they need to ensure the goods arrive at the vessel. Since most goods are now delivered to container yards rather than right to a vessel, and if FOB is the agreed upon term, both buyer and seller must agree upon exactly what “loaded on board” means in the sales contract, because it can vary for different types of vessels and commodities.

Quick overview

Seller delivers when goods placed on board the vessel nominated by the buyer at named port of shipment:

  • Cleared for export by seller
  • Only to be used for sea transport
  • If commercial practice or at buyer’s request, seller may (but is not required to) arrange transport at buyer’s cost and risk

Incoterms® 2020 FOB rules are used only and exclusively in maritime transport or inland waterway transport. Use of FOB is not recommended for container transport.

Missed the first three articles? Catch up on them here:

  1. What Are the Incoterms® Rules?
  2. EXW–Ex Works (Named Place) Incoterms® Rule
  3. FCA–Free Carrier (Named Place) Incoterms® Rule

Release of Biosecurity Bite Videos

Release of Biosecurity Bite Videos

If you, or someone you know, want to learn more about how the Department of Agriculture, Water and the Environment manages plant biosecurity, check out our new Biosecurity Bite video series!

 

Sink your teeth into the world of plant biosecurity with our Biosecurity Bite videos. This series of seven videos will take you behind the scenes of Australia’s biosecurity system.

This series includes seven bite-sized videos on how we manage plant pest and disease risks offshore, at the border and onshore in Australia.

The series covers the following topics:
  1. Biosecurity and Trade
  2. Market Access Requests
  3. Import risk analysis
  4. At the border
  5. Exotic plant pests
  6. Export processes
  7. Now, it’s your turn (how you can help).

Entrepreneurs’ Programme – we can help transform your business, getting you from where you are to where you want to be.

Entrepreneurs’ Programme – we can help transform your business, getting you from where you are to where you want to be.

The Entrepreneurs’ Programme offers a suite of services designed to help you achieve your business vision, facilitated through expert advice and financial incentives.

Through this program we want to support your business:

  • to grow and understand your potential and how to reach it
  • to work with researchers to be innovative and build productive and collaborative relationships
  • to commercialise successfully into global markets with new-to-market opportunities
  • to rebuild from economic instability and strengthen your capabilities and resilience into the future

To take advantage of this support, you must address all the eligibility criteria.

For further information or clarification, you can contact 13 28 46 or go to https://www.business.gov.au/Grants-and-Programs/Entrepreneurs-Programme

NSW eligible businesses can email ausindustry.nswbd@industry.gov.au.

Australia Awards Women Trading Globally participant recognised as Vogue Warrior for COVID-19 response

Australia Awards Women Trading Globally participant recognised as Vogue Warrior for COVID-19 response

Rubina Nafees Fatima of SAFA, an organisation in Hyderabad, India formed with the vision to socioeconomically empower women from marginalised communities, provides livelihoods for women through manufacturing eco-friendly lifestyle products.

In November 2019, Rubina participated in the Australia Awards Women Trading Globally program. Funded by the Department of Foreign Affairs and Trade, the program enabled 14 female entrepreneurs from South Asia and Afghanistan to undertake export readiness training sessions in Melbourne and Sydney. After participating in the program, Rubina has updated her new marketing plan and maintained a connection with Cricket Victoria who runs diversity programs.

During COVID-19, SAFA was the first in India to set up a response system for food (dry rations) through a crowd funding platform, distributing rations across 6 major cities in India to over 280,000 individuals. This gained Rubina recognition as a Vogue Warriorby Vogue India, and she will also be featured in Vogue UK in September.

Read on, as Rubina shares her story with us through the Q&A below.

Q&A with Rubina Nafees Fatima
CEO / Founder-president
SAFA SOCIETY

What led to you to establish your organisation, and what drove you to commence international expansion?

SAFA was formed with the vision to socioeconomically empower women from marginalised communities. The thought arose from the unique culture of the Muslim communities and the delicate fibre of the patriarchal setup. Women when economically empowered rise up to change the course of intergenerational poverty as they focus on the development of families through education and social awareness.

The work we have done so far in providing livelihoods for such women has resulted in them manufacturing eco-friendly lifestyle products for which we have been looking at global markets. Eco-friendly products like bags in jute, cotton etc. are promoted widely in most international markets and we felt based on our quality and preparedness we were ready for bigger markets.

What steps have you taken to prepare for export?

We have listed out the trade fairs and international exhibitions for related products, did some trade mapping of areas, and also participated in a global expo in January with good learnings as it was our first one to participate in. All of these developments have come to post my trip to Australia. The inputs given by the mentors on the pitch and strategy have formed/validated some ideas that I had parked aside as I found them too idealistic. Similar inputs were given by the team and I have already included them in my new marketing plan. What did you gain from participating in the Women Trading Globally program?

There were a lot of learnings on exporting globally and also to Australia. Market behaviour and optimising resources were also a key take away. The participants were a mixed group at different organisational stages and the peer learnings were from real-time experiences. Such learnings in a closed set up are extremely difficult to get at any place or situation.

The introduction to the Cricket Victoria and their programs for young girls from different ethnicities was pertinent to the needs to SAFA too and I have connected with them to discuss programs that they could sponsor in Hyderabad for which they have shown an interest too.

We have a premium brand Artizania and since the markets here are diverse and a huge chunk rests with price-conscious too we are launching a budget brand in menswear called “Pride” which will be a budget-friendly mens clothing line. We will start with shirts initially – for local markets only.

We have also worked on the strategy to white label our brand in order to sell more. This came after a lot of discussions within the management and post my learning from the ECA trip.

How have you been impacted by COVID-19 and how have you responded?

The lockdown resulted in the loss of livelihood, dignity and starvation for many in India. We have been the first in India to set up a response system for food (dry rations) through a crowdfunding platform and have distributed rations across 6 major cities in India to over 280,000 individuals. We have forged partnerships with 16 NGOs and 2 with the government during this period.

We have also started manufacturing cotton masks and have made and sold over 200,000 masks so far with over 140 women engaged and generating income for themselves when the primary wage earner in their families was unemployed. We continue to do the same as we are now picking up bulk orders of corporates.

We have also raised funds for volunteers engaged in the last rites of COVID-19 victims by providing them PPE kits for 2 months.

We were given national and international media coverage for all our efforts and continue to gain traction. I will be featured in Vogue UK in the month of September.

Webinar – Get cash flow confident with OFX & CPA Australia

Webinar - Get cash flow confident with OFX & CPA Australia

Does your business operate globally or have a global supply chain?

As we enter a new era of ‘business as unusual’ where volatile markets seem to be the new normal, it has never mattered more for business owners to have confidence managing their cash flow.

Knowing how to plan ahead and the tools at your disposal is key – and – it could mean the difference between a profit or a loss.

Join OFX as they team up with CPA Australia to bring you:
  • What’s driving AUD fluctuations and key currency corridors
  • Types of currency risk you may be exposed to
  • Simple currency tools you can use to manage FX risk
  • Overview of Government support packages available to Aussie businesses and tips for day-to-day cash flow management
  • How other businesses have successfully managed their FX exposure and use volatility to their advantage
TIP: We know you’re busy running your business, so if you can’t make the live webinar, simply register and we’ll send you a recording of the session.

Speakers:

Michael Judge | Head of Australia and New Zealand, OFX
Michael joined OFX in 2009 and oversees consumer and corporate segments for the ANZ market. Born and raised on Sydney’s northern beaches, Michael has a Bachelor of Commerce and Diploma in Financial Services from Macquarie University. He has over 10 years of experience in global financial markets and provides regular insights and commentary to the business community and media including: Business Insider, AFR, Macquarie Media, BBC, Sky News and other outlets.
Elinor Kasapidis | Tax Policy Adviser, CPA Australia
Elinor is the Tax Policy Adviser for CPA Australia. Elinor is responsible for the development of policy, research and advocacy on issues related to tax policy, legislation and administration in Australia and internationally. She leads the CPA Australia Taxation Centre of Excellence and represents CPA Australia on a variety of tax-related forums and groups. Elinor spent 17 years at the ATO prior to joining CPA Australia in 2019.

Australia and Singapore sign digital trade agreement

Australia and Singapore sign digital trade agreement

Australia and Singapore have today signed a landmark Digital Economy Agreement (DEA) to further enhance digital trade opportunities for businesses and consumers in both our nations.

Federal Trade Minister Simon Birmingham, who signed the Agreement with Singapore’s Minister for Trade and Industry Chan Chun Sing in a virtual signing ceremony, said it would help to expand the scope of our economic engagement with our largest two-way trading partner in South-East Asia.

“Technology and digitisation continue to transform the way Australian businesses trade and interact with customers in key export markets including Singapore,” Minister Birmingham said.
“As we begin the economic recovery from COVID-19, this Agreement will reduce barriers and boost opportunities for Australian businesses to reach more customers and further tap into the Singaporean market.
“Singapore’s economy is dynamic, innovative and sophisticated and this will help to make it easier for Australian businesses to connect with the rising number of Singaporean businesses and consumers now engaged in cross-border digital trade.
“The Agreement will deliver practical improvements to lower costs and make it easier for exporters to do business, including in areas of personal data protection, e-invoicing, paperless customs procedures, and electronic certification for agricultural exports.
“These are some of the most ambitious digital trade rules Australia has ever negotiated, and this Agreement will serve as benchmark for other digital trade rule negotiations within our region.
“The Agreement builds on Australia and Singapore’s leading roles in negotiating new international rules on e-commerce in the World Trade Organization to better facilitate the growing volumes of digital trade across the globe.”
The DEA upgrades the Singapore-Australia Free Trade Agreement (SAFTA) through a new Digital Economy chapter. It will now undergo Australian treaty-making processes, including tabling in Parliament and consideration by the Joint Standing Committee on Treaties, prior to entry into force.
The full text of the DEA and a summary of its key features are available at: Australia-Singapore Digital Economy Agreement.

Australia’s export sector continues to boom despite ongoing challenges

Australia’s export sector continues to boom despite ongoing challenges

Australia recorded its largest financial year trade surplus in 2019-20, off the back of booming goods exports, according to new data released today from the Australian Bureau of Statistics.

The data shows that despite severe global economic shocks from COVID-19, Australia posted a record financial year trade surplus of $77.4 billion in 2019-20 with Australian goods exports growing by $9.29 billion or 2.5 per cent. Australia also recorded its 30th consecutive monthly trade surplus in June 2020, worth $8.2 billion, the second highest monthly trade surplus.

Federal Trade Minister Simon Birmingham said the COVID-19 pandemic was testing all Australian producers and businesses, but today’s data highlighted the incredible strength and resilience of our export sector.

“Despite the ongoing domestic and international challenges, Australian exporters across a range of sectors like resources, agriculture and advanced manufacturingcontinue to withstand global economic shocks and remain highly sought after in our key markets,” Minister Birmingham said.

“It is a credit to our hard-working exporters that even in these incredibly challenging economic times, their high-quality, safe and reliable product remains in demand around the world.

“Notwithstanding factors such as rising export costs and disruptions to supply-chains, our exporters continue to show incredible resilience and ability to navigate through these significant global economic headwinds.

“The continuing strength of our exporting sectors reinforces the importance for Australia of keeping trading channels open and accessible, expanding market access through even more trade agreements and continuing to support a global, rules based trading system.

“We also recognise the current COVID-19 crisis continues to place immense pressure on parts of our services sector, including tourism and education businesses, many of whom felt the earliest and deepest aspects of the economic downturn.

“That is why our Government has taken significant steps to support businesses and jobs across the tourism sector through cash payments of up to $100,000 and the extension of the JobKeeper payment until the end of March next year.

“We’ve also taken action to keep supply chains open for our agricultural and fisheries exporters through initiatives such as our $350 million International Freight Assistance Mechanism, which has so far supported over $1 billion in exports and helped to protect regional jobs.

“Our Government’s strong track record of delivering high-quality free trade agreements with our key-trading partners has helped cushion the blow for our exporters. That is why we continue to pursue agreements with our key trading partners including with European Union and United Kingdom, to open up new markets for Australian farmers and businesses.”

Policy Brief: Managing Global Supply Chain Risks Post COVID-19

Policy Brief: Managing Global Supply Chain Risks Post COVID-19

Key issues

  • Australian traders experienced a blow as a result of authorities’ efforts to control the spread of Covid-19

– They experienced disruption in their supply chain, such as:

    • Suppliers shutting down operations, at least temporarily
    • Deliveries constrained due to transport and border restrictions
    • Buyers withholding purchases.
  • With the Australian and global economy powering along as late as December 2019, many would have dismissed the risks associated with a global pandemic (or escalating trade war)- Such risks might have been regarded as a ‘known unknown’ (i.e. was aware of it, but not the size of its impact), or an ‘unknown known’ (i.e. was aware of it, but disregarded it)
    • Many businesses were therefore unprepared for Covid-19
    • Interestingly, many were also able to adjust relatively quickly.
  • But the current reality has now altered perspectives, with many firms now reassessing their risks and intending to revisit their supply chain strategies- A recent survey by Procurious (a global online network of procurement and supply chain professionals with over 40,000 members) found that 73% of respondents intend to make large-scale changes to their supply chains
    • 34% intends to shift from foreign to local suppliers
    • 21% plans to increase inventory levels.
  • A firm’s response to potential reconfiguration of their supply chain will depend on the nature of the firm (including its size), its supply chain strategy, and where it is at in the supply chain evolution- An optimal position will be a balance between cost effectiveness and security, and a balance between control and cooperation among partners
    • These could be achieved without sacrificing agility and responsiveness
    • It will require transparency of information (including on performance measures) between parties in the supply chain, and real partnership and integration for better coordinated response.
  • It is important to acknowledge that for certain enterprises pursuing a significant change in supply chains may be near impossible- They highlight the lack of competition among suppliers, including in terms of reliability of quantity and quality, as well as value for money
    – A further complicating factor may be that their supplier also happens to be in the same market/country as their customers
    • That geographic proximity is a crucial part of their strategy.

So what, if any, changes could be made?

At the firm level, there are a number of measures worth investigating, but will require innovative thinking and flexibility. These include:
  • Blending supply chain strategies to find a compromise between cost efficiency and resilience (such as allowing for increased inventory). This may be influenced by a recalculation of risk weightings and redefining of product life cycle.
  • Building better systems for information flow, disruption alert warnings and coordinated response to disruptions.
  • Exploring alternative inputs or ingredients if there is no alternative to current supplier(s). This is a longer-term solution, and may potentially require increased R&D investment.
  • Revisiting the value of investments in vertical integration, which can strengthen supply chains, including investing in infrastructure such as warehousing in third countries.

How can government assist?

While supply chain decisions are made by private enterprises, government can assist by creating the conditions that facilitate change by firms

On the domestic front, government initiatives might include:

  • Investing in facilities that reduce transport and storage costs
  • Extending funding assistance to SME traders (specifically for supply chain related activities)
  • Increasing assistance for relevant R&D, including in production and logistics technologies

At the international level, government could:

  • Ensure relevant aspects of current and future trade agreements (including on standards and conformance, rules of origin, investment and services) support the transformation of supply chains
  • Increase international development assistance or ‘aid for trade’ to partner countries to undertake reforms, including as part of implementation of trade agreements
  • With its counterparts in key partner countries, convene strategic dialogue between private sector organisations and relevant government agencies, as a contributing step towards collaboration and partnership.

Background

Supply chain is a global network and the cumulative efforts of bringing a product (or service) to market. The entities in the supply chain include suppliers, producers or manufacturers, transporters, distributors, storage or warehouse providers, and customers. What is involved is the forward and reverse flow of goods and services, of cash and of information.
Supply chain strategies include:
  • stable supply chain strategy, when a firm is just focussed on reliability, without need for real-time performance
  • efficient reactive strategy, an operation in which production meets customer demand on an immediate basis (e.g. just-in-time)
A firm’s supply chain management can be at different stages of development:
  • The spectrum can go from a supply chain that has no shared goals, weak relationships and lack of coordinated flows of information
  • At the other end of the spectrum is a supply chain management where all businesses and supply chain elements are integrated, there is complete sharing and efficient flow of information, and holistic planning and coordinated approach.
Made famous by Donald Rumsfeld in 2002, the ‘knowns’ and ‘unknown’ risks were derived from the Johari Window psychological concept by Joseph Luft and Henry Ingham in 1955. The four risk categories are:
(i) Known known – risks we know and aware of their scale of impact;
(ii) Known unknowns – risks that we know, but not their scale of impact;
(iii) Unknown unknowns – risks the business do not know about and not their level of impact;
(iv)  Unknown knowns – these are rare risks that organisation is aware of but ignores.

Businesses must consider all risks and have systems to monitor and manage them. Supply chain risks are complex, and the field of supply chain risk management has been increasing in importance due to previous economic and financial crises.

This is an ECA Edge Policy Brief. To read all of our Poicy Briefs, head to our main page here

Policy Brief: The Importance of Investment Treaty Protection in a Post COVID-19 World

Policy Brief: The Importance of Investment Treaty Protection in a Post COVID-19 World

Key issues

  • As green shoots emerge of a cautious return to normal (or what will become the new normal) post Covid-19, it is likely that governments will begin to embark upon a process of self-reflection.
    • Firstly, in an effort to quantify the damage caused by the pandemic and devise an appropriate response
    • Secondly, to identify the weaknesses in their response and find solutions to offer resilience in the face of future events.
  • Governments managing battered economies and facing political pressure over the handling of the pandemic may be tempted to restrict, or take greater control of, what they now perceive to be critical industries or supplies within their jurisdiction to avoid or mitigate some of the critical supply issues faced at the height of the pandemic.
  • In some countries we have started to see severe restrictions being imposed on foreign investment in the wake of a weakening economy, and commentary devoted to the over-reliance on imports due to the depletion of the domestic manufacturing industry.
    • For other nations, more fundamental issues of food and energy security have risen to the fore in the wake of the pandemic.
  • Such measures will, no doubt, be well intentioned. However, this does not make them immune to action from disappointed foreign investors in countries subject to investment treaties, and may give rise to unexpected or unwelcome consequences if the investment protections promised by those treaties are not delivered.
  • Where foreign investors have already made their investment in a country which their home country has a treaty with, they will be entitled to expect that any actions taken by the host nation, as it emerges from the pandemic, will not devalue their investment.
    • This can occur directly, such as by expropriation or nationalisation, or indirectly, such as by the subsidisation of local competitors or the imposition of additional regulations or fees.
  • While nationalisation or direct expropriation of an investment are quite straightforward examples where investment protections will trigger a right to compensation, indirect expropriation or breach of the fair and equitable treatment protection are generally less clear-cut.
    • Further, not every government action that leads to a devaluation of an investment will contravene the protections in the treaty. Generally, there has to be some discriminatory element.
  • Host nations should be careful in the implementation of policies and legislation as part of their recovery, that they do not discriminate against foreign investors and reduce the value of their investments.
  • Foreign investors should be aware of the various protections provided to them under investment treaties and consider how they might be able to press these rights if their investments are put in jeopardy by measures enacted by governments in the countries in which they have invested.
  • Those nations with a robust treaty programme, and a proven track record of protecting foreign investors, are likely to fare better at attracting foreign direct investment than those leaning towards a more nationalistic approach, which may well emerge when this global pandemic is finally over.

Background

What are the protections provided to investors under investment treaties?
Most investment treaties provide a foreign investor with a suite of standard protections against undue influence being exerted over their investments. While the exact extent of the protections available will depend on the investment treaty sought to be relied upon, there are a number of commonly reoccurring protections which appear in a significant number of investment treaties globally, namely:
  • national treatment provisions;
  • fair and equitable treatment provisions;
  • most-favoured-nation treatment provisions;
  • expropriation and nationalisation provisions; and
  • transfer provisions.
At the core of most investment treaties is the premise that foreign investors will be treated no less favourably, in like circumstances, to a domestic investor. This is often referred to as national treatment.
The inclusion of fair and equitable treatment provisions in investment treaties is seen as another central tenet of the operation of investment treaties, with such provisions generally providing that a host nation will not act in a discriminatory or unreasonable manner towards foreign investors/investments.
Expropriation and nationalisation provisions prevent a host nation from taking measures to expropriate or nationalise an investment, without providing prompt compensation. It is not uncommon to see these provisions qualified with language to the effect that expropriation shall not take place “unless the measures are in the public interest, non-discriminatory, in accordance with the law of the host nation”. This kind of carve out is of obvious interest given many of the measures taken by countries to combat the COVID-19 virus could arguably fall within it i.e. being measures taken in the public interest.
Transfer provisions, are another common feature of investment treaties which provide a foreign investor with the right to transfer all funds – often broadly defined – freely and without undue delay out of the host nation. The unencumbered transfer of funds from one country to another is of course critical to the operation of any globally operating business.
The operation of each of these protections (and any others) may also be extended if an investment treaty has a most-favoured-nation provision (MFN). The effect of MFN provisions is to extend to the beneficiary not only the protections in its own home country’s investment treaty with a host nation, but also the protections that are enjoyed by foreign investors from a different country with the same host nation. In other words, the host nation promises to the beneficiary of a MFN clause that it will have the highest standard of investment protection that is on offer though its treaty program.
Taken together the protection provisions above provide investors with a wide safety blanket and certain expectations regarding the treatment of their foreign investments. The protection provisions more crucially provide a legally binding framework upon which a foreign investor might rely as recourse against an infringing host nation, as many provide for binding arbitration against the host nation.
Measures which might infringe investor protection provisions in a post COVID-19 world
Under most investment treaties, host nations will commonly be afforded a number of defences to measures that, on their face, would appear to infringe upon the protections it has promised to foreign investors. Like the specific investor protections, the extent to which defences are available to a host nation will be dependent upon each specific investment treaty. However, measures taken by host nations which would otherwise infringe the rights of foreign investors are commonly defensible if:
  • necessary to protect human, animal or plant life or health;
  • necessary for the maintenance of public order;
  • necessary to ensure compliance with laws and regulations, insofar as those laws and regulations are not inconsistent with the investment treaty in question;
  • imposed for the protection of national treasurers of artistic, historic or archaeological value;
  • necessary to protect intellectual or industrial property rights or to prevent unfair, deceptive, or misleading practices;
  • it relates to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; or
  • a defence arises under customary International Law – custom provides a defence in circumstances where measures are taken because of a force majeure event, distress and necessity (among others) – as codified in the International Law Commission’s Articles on State Responsibility.
In the context of the COVID-19 pandemic, host nations that are challenged by foreign investors over measures implemented in response would likely rely upon the defence that measures taken were “necessary to protect human…life or health” or the “public order” defence. While the success of any defence will ultimately turn on the unique facts of the dispute in question, the protection of life or health defence is likely to be compelling where the measures were taken for the purpose of seeking to stem the rate of transmission of the virus, such as closing certain workplaces and industries, or to bolster a country’s ability to treat its citizens, such as the procurement of additional critical care capacity.
The public order defence may also apply in such circumstances. In any event, many of these urgent measures were applied across the board, and were non-discriminatory in their application. As such, they may not be considered to be an infringement of the investment protections in any event.
Less clear, as most nations are yet to emerge from the grip of the pandemic, is the prospect of a host nation relying upon the protection of life or health or public order defence for measures taken as part of its social and economic recovery i.e. post the COVID-19 pandemic. Arguably, once the immediate threat of the pandemic is over, and the focus shifts to fixing economies and communities, these defences are unlikely to have the same efficacy.
Potential traps and opportunities
Regulations promoting domestic manufacturing of critical medical equipment or personal protective equipment (at the expense of existing foreign owned manufacturers or importers), may well give rise to an entitlement to compensation under an investment treaty after the immediate threat of the pandemic has passed, but may be defensible if enacted during the course of the pandemic. More tangentially, restrictions on trade or discriminatory economic stimulus measures which advantage domestic investors over incumbent foreign investors, may also expose unwary governments to claims for compensation under investment treaties.
While investors may ultimately have recourse to investor state dispute settlement such as through the International Centre for Settlement of Investment Disputes, part of the World Bank based in Washington DC, awareness of their rights and engagement with the host nation and investor state trade bodies at an early stage may go a long way to avoiding protracted disputes.

This is an ECA Edge Policy Brief. To read all of our Poicy Briefs, head to our main page here