This paper seeks to investigate FDI rule in ASEM, a logical extension of ASEM-IPAP, based on the arguments stemming from the factors hindering FDI flows between the two regions and the impacts of the recent Asian financial turmoil. The barriers to Asia-EU inter-regional FDI are often related to regulatory regimes in Asian countries. However, Asia's future prospects as a destination for profitable FDI remain solid despite the recent financial and economic crisis. Furthermore, it is the EU based multinational firms that express highly favorable attitudes for the Asian countries most affected by the financial crisis.

The ASEM-IPAP has to take into account this new reality and the expectations from both sides. In light of that, the evolution of ASEM-IPAP was viewed through the prism of existing international FDI rules. There will be four directions for the medium- to long-term evolution of ASEM-IPAP: promote the development of a legal environment which is conductive to investment without any legal mandatory rules like EU-MERCOSUR Interregional Framework Cooperation; shape a non-binding regional investment initiative such as the one in place in APEC; frame a binding regional investment agreement similar to NAFTA; and accede to the MAI once the treaty is concluded. Each needs to be assessed carefully to respond to expectations of ASEM members, which may be quite divergent at the moment. But as the process moves on, there is certainly positive, common agreements which could be further developed and enhanced and ultimately result in positive benefits for all ASEM members.

Abstract

Ⅰ. Introduction

Ⅱ. ASEM Investment Promotion Action Plan

Ⅲ. Asia-EU Inter-regional FDI Trends

Ⅳ. Obstacles to Asia-EU Inter-regional Investment

Ⅴ. Impact of Asian Financial Crisis on EU FDI in Asian

Ⅵ. ASEM-IPAP: The Way Ahead

Ⅶ. Concluding Remarks

References

Appendix Tables