ReSolution Issue 22, September 2019 | Page 38

The Singapore Mediation Convention: A Panacea for Trade in the Trans-Pacific Region or Just One Piece of the Puzzle?
by catherine green
Part Three: Facilitation of Trade and Invesment
This is the third instalment of a six part series on the Singapore Mediation Convention in which I have considered the overarching question of whether the Singapore Convention is a panacea for trade in the Trans-Pacific Region or just one piece of the puzzle?

Part One of the series provides an introduction and Part Two of the series considers the ‘Trans-Pacific’ experience and why the question of accession to the Singapore Convention needs to be considered taking into account the specific characteristics of the constituent member states within that region.

Part Three turns now to considerations of the facilitation of trade and investment in the Trans-Pacific.
Many Trans-Pacific states gained their independence in the second half of last century. In the period following decolonisation, those states received official development assistance (ODA) from international sources (including their previous colonisers). This ODA has reduced over time leaving the recipients of that financial support looking for alternative inflows of capital to make up for the loss of foreign aid. 1
In my view, the improved integration of Trans-Pacific states into the global trading system ought to facilitate greater trade and investment throughout the region and, in particular, increase much desired foreign direct investment (FDI) in those states.
The question is, would accession to either the New York Convention or the Singapore Convention have any tangible (and beneficial) impact on this integration, in turn increasing the incidence of FDI throughout the region?
To evaluate this proposition, I first consider the role of FDI specifically within the Trans-Pacific context. Second, I seek to evaluate how accession to the New York Convention and/or the Singapore Convention might aid or encourage foreign investors to look to the Trans- Pacific for greater investment and economic development opportunities.
A. Foreign direct investment
FDI occurs when a corporate entity in one jurisdiction (the investor) establishes a commercial operation in another (the host country). This investment in the host country could take place by (a) the investor setting up a wholly owned affiliate in the host country; (b) acquiring a local business; or (c) entering into a joint venture in the host country.2
FDI has played an extensive role in the development of many Trans-Pacific states. Historically, this was largely a by-product of colonisation,3 although the presence of natural resources in some island nations has also been a significant driver encouraging FDI for a reasonably extensive period of time, including in particular in Fiji, the Solomon Islands and Papua New Guinea.4
As noted above, small states, many of which are located within the Trans-Pacific region, typically have limited resources available at a local level making FDI a particularly significant economic and developmental boon.