[ Nippon Keidanren ] [ Policy ] [ Index ]
Toward for the Creation of International Investment Rules
and Improvement of the Japanese Investment Environment


The following model agreement lists provisions which Japanese business wishes to see contained in a WTO investment framework, and is not intended to be exhaustive. It was created with reference to the GATS and other agreements.



Recognizing the great importance of investment promotion for the growth and development of the world economy, and particularly the developing countries;

Acknowledging the economic circumstances of the developing countries, and particularly the least-developed countries;

Desiring to expand investment while securing transparency and progressive liberalization;

Hereby agree as follows:


Investment shall comprise those assets directly or indirectly owned or controlled by investors (natural persons, juridical persons or other legal entities), and shall include direct investment, rights conferred under contract, and intellectual property rights. It shall exclude short-term financial transactions for speculative purpose, as well as the movement of loan capital.

Direct investment shall comprise that investment undertaken by foreign investors for the purpose of permanent profit. In cases where the ratio of stocks and other holdings by foreign investors, comprising stock capital, reinvested profit, capital related to borrowing between companies, or other capital, is ten percent or more, the Definition shall be based on the International Monetary Fund definition.


In principle, all areas of investment shall be included within the scope of the agreement, with the exception of those service industry areas covered under the GATS. Member countries may stipulate exemptions in line with the provisions of GATT Article XXI (Security Exceptions).

Developing countries may exempt areas notified to the WTO only where requests are made on the basis of national development policy and where there is adequate reason.

This agreement shall not affect the rights and obligations of member countries as stipulated under existing WTO agreements, the GATS included.


  1. Each Member shall announce promptly all relevant domestic measures which pertain to or affect investment, including laws, regulations, administrative procedures and judicial decisions, and shall make these publicly available.

  2. Each Member shall ensure that investment-related administrative approval and licensing procedures do not become an unnecessary barrier by working to secure transparency. This shall include providing notification of decisions based on objective and transparent standards within a reasonable time frame in response to requests in accordance with domestic law.

  3. Each Member shall establish litigation procedures independent of legislative and administrative institutions to engage in non-discriminatory, transparent, timely and effective investigations so as to enable complaints to be laid in regard to domestic investment-related measures in response to an investor request.

  4. Each Member shall notify the WTO promptly, and at least annually, of the introduction of or changes to domestic measures related to investment, such as laws, regulations and administrative procedures.

  5. Each Member shall, wherever possible, establish an enquiry point to supply information on domestic measures in relation to investment in response to requests for specific information from other Member countries or investors.

  6. Each Member shall, wherever possible, publish a notice on domestic measures such as laws and regulations related to investment prior to the formulation of said measures, and, where a written opinion is submitted by an investor from another Member state, engage in discussions in response to said request, and consider both the submitted opinion and the results of discussions.


Each Member shall provide fair and equitable treatment and full and continued protection and security for the investments of investors from other Member states.


Members shall not expropriate investment unless this expropriation meets all the following criteria:

  1. Expropriation is for the purpose of public interest.
  2. Expropriation is based on the principle of non-discrimination.
  3. Expropriation is undertaken in accordance with due process of law and the principles of international law.
  4. Prompt payment is made in an internationally convertible currency of compensation equivalent to the fair market value of the investment immediately prior to expropriation.
Developing countries may be exempted where requests are made on the basis of national development policy and there is adequate reason.


Each Member shall guarantee that investors will be able to effect all remittance, including investment profits, freely, without delay, and in an internationally convertible currency. Member states shall also guarantee that investors will be able to freely convert their funds to any currency.


Member states shall accord to any Member treatment no less favorable than it accords to any other Member in regard to investments in terms of both investment approvals and licenses and post-investment business activities, including establishment, acquisition, expansion, operation, management, maintenance, use, possession, settlement, sale or other disposal of investment assets.

However, where Member states, and particularly developing countries, seek to maintain measures inconsistent with MFN treatment and notify the WTO accordingly, such exemptions shall be granted in principle for a period not exceeding ten years.

Most-favored-nation treatment shall also apply to the right to appeal and tax matters.


Each Member shall accord to any Member treatment no less favorable than it accords to any other Member in regard to investment in terms of investment approvals and licenses and post-establishment business activities only in those areas where it has made commitments. However, wherever possible, national treatment shall be granted unconditionally for post-establishment business activities.

Member states shall endeavor to progressively reduce or eliminate liberalization restrictions in order to elevate the level of liberalization. To this end, they shall engage in ongoing liberalization negotiations.

National treatment shall also apply to the right to appeal and tax matters.


In terms of market access related to investment entry, each Member shall accord to the investment of any other Member treatment no less favorable than that provided for under the terms, limitations and conditions, only in those cases where it has committed to do so. Members shall not maintain or adopt measures such as limitations on the number of investors, limitations on total investment value, limitations on mode of business, or limitations on the participation of foreign capital in terms of maximum percentage limit where specified in its Schedule.


Member states may adopt general exception measures in line with the provisions of GATT Article XX (General Exceptions).


Developing Member countries may exempt areas notified to the WTO only where requests are made on the basis of national development policy and where there is adequate reason. Member states shall endeavor to progressively reduce or eliminate such measures.

Where developing countries notify to the WTO measures which are inconsistent with this Agreement and which are currently in practice, these measures may be retained until the end of the transitional period. Transitional periods shall be extended longer for least-developed countries than for developing countries.


Where Member states recognize that other Members are not fulfilling specific commitments based on this Agreement, the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) may be applied to dispute settlement among WTO Member states.


Member states shall progressively extend bilateral and regional investment treaties which have already been concluded to all Member countries equally on the basis of most-favored-nation treatment.

However, existing treaties or treaties concluded in the future shall be recognized as exceptions on the condition that: (1) they meet the requirements stipulated in GATT Article XXIV and GATS Article V; (2) substantially all areas of investment are included; and (3) no trade and investment barriers are raised in regard to other Member countries.

Home Page in English