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051293A1: 2/8 02118
NOTE FOR FILE
HKB 091/3
E
LG JEL 1993
OECD/CIME: PROPOSED STUDY OF CHINA/FDI
Introduction
pa DELD.
1. The following note arises from a luncheon hosted on 3 December by Clavel (Swiss Delegation), but organised at the request of the DAFFE, to discuss informally a number of items due for discussion at the December CIME and associated meetings. Also present were colleagues from the Delegations of France (Chavranski), Germany (Grau), Japan (Niimi), the Netherlands (Lammersen) and the US (Reddy); the Secretariat was represented by Witherell, Geiger and Ley!
2. I am recording the main points raised on other topics separately (not to all).
Detail
3. Niimi admitted that the proposal to carry out a study of FDI in China came from his Government. But it was consistent with the outcome of the 1993 Ministerial. The problem was resources. Ley said that he hoped some of the FF1.2m for work on non-DNME economies controlled by DSG Taniguchi would be made available to pay at least in part for the work. Chavranski and Grau said that they would have no problem in principle, but.... I agreed; we should want to look closely at detailed proposals to ensure that the study was going to come up with something new and different, taking full account of work going on both within OECD (eg the Development Centre's recent report on China) and beyond; the study carried out by the Trade Directorate earlier in the year (which had included FDI) had failed to meet any of these criteria and we should look to do better this time (a point which Niimi acknowledged despite that work being Japanese financed and carried out by a Japanese consultant!).
Geiger agreed. He thought the study would adopt the standard CIME approach to reviews of non-OECD countries and envisaged a team of consultants (including at least one who was based in China) doing the work under the close supervision of the Secretariat; a mission to Peking would be necessary. I said that it was not good enough simply to study what was going on in Peking given the wide disparities of practice in the regions; it was also worth remembering that some of the leading experts on FDI in China were based in Hong Kong. Ley acknowledged the need to look further than simply Peking and
anticipated close liaison with experts in member countries throughout to pool ideas.
4.
Reddy said that the US would want to look very carefully at the political implications of this work before agreeing. Even then, they would want to see very tight control of the consultants. They were also worried about resources; in particular, this work should not be at the expense of the Wider Investment Instrument (WII). I said that we would certainly not want to see the study get in the way of what would be a heavy and urgent post-Uruguay Round demand for work related to the next GATT Round (which would almost certainly include the WII whatever form that might ultimately take see separate note of today's date) next year whatever happened on 15 December. There were no dissenters.
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