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IPP South Korea

Colombia is Proactive in the Signing of Investment Protection Agreement with Asian Countries

La Nota Digital and RCN Radio, June 24 and July 7, 2010

Colombia and South Korea signed a Reciprocal Investment Promotion and Protection (IPP) Agreement. The Agreement must now be submitted to legislative approval to be ratified by both countries.

Currently, South Korea is the second biggest investor in Colombia from Asia. The IPP between South Korea and Colombia will allow Colombia to deepen and strengthen its ties to Asia, seeing how it will facilitate the arrival of capital from Asia and contribute to Colombia’s entry into a market that everyday increases in importance in the global economy.

It is worth mentioning that along with the IPP with South Korea, the two countries are currently negotiating a free trade agreement, for which the third round of negotiations has finished.

Similarly, negotiations have finished between Colombia and Kuwait for a bilateral Reciprocal Investment Promotion and Protection (IPP) Agreement.

The technical teams of both countries met for three days in the headquarters of the Ministry of Finance of Kuwait, where the second round of negotiation for the IPP were held, a process which began in March 2010 in Bogotá.

While the agreement is important for attracting investment from Kuwait, it is also key to bringing Colombia and countries of the Persian Gulf closer together, a region that today has invested large sums around the world.

During the Colombia-Kuwait IPP, the two countries established a transparent, legal framework through which to promote investment through the creation of a stable and predictable environment. This implies creating protection for investment without creating obstacles for investment from either party.

The agreement is expected to be signed in the next few months, after which it will be sent to the respective internal processes for ratification.

The central objective in these agreements is to guarantee international protection standards for investment in a reciprocal manner, which means that the benefits the Colombia offers to other countries are the same that Colombian investors receive in those countries.

One of those standards is national or domestic treatment, which means that a foreign investor, in this case from Kuwait, receives the same treatment given to a Colombian investor, and vice versa.

The Most Favored Nation treatment is also applied, and the expropriation without just compensation is not allowed. Furthermore, conflict resolution mechanisms exist between the investor and the state, which permits the parties to turn to international arbitrage.

This IPP is part of a network of international investment agreements that Colombia has been negotiating in the last few years. To date, 6 agreements have been signed with Spain, Peru, Switzerland, China, India and the United Kingdom.

At the same time, the chapters dedicated to investment in the FTAs signed with Mexico, the United States, Chile, Canada, the Northern Triangle, the European Union and the countries of the European Association of Free Trade are also important.