Resolution by the Euronest Parliamentary Assembly on foreign direct investment in the EU Member States and Eastern Partner countries

(2018/C 343/02)

THE EURONEST PARLIAMENTARY ASSEMBLY,

— having regard to the Constituent Act of the Euronest Parliamentary Assembly of 3 May 2011 and the Joint Declaration of the Eastern Partnership Summit of 24 November 2017,

— having regard to the Association Agreements between the EU, of the one part, and Georgia, Moldova and Ukraine of the other part, in particular the Deep and Comprehensive Free Trade Areas (DCFTA),

— having regard to the Action Plan for 2016-2017 of the Conference of the Regional and Local Authorities for the Eastern Partnership,

— having regard to the World Investment Reports published by the United Nations Conference on Trade and Development,

— having regard to the Organisation for Economic Cooperation and Development investment policy, ‘Foreign Direct Investment (FDI) in figures’ of October 2017,

— having regard to the Joint Staff Working Document of the European Commission and the External European Action Service of 9 June 2017 entitled ‘Eastern Partnership — 20 Deliverables for 2020 — Focusing on key priorities and tangible results’,

— having regard to the EU-Armenia Comprehensive and Enhanced Partnership Agreement signed in November 2017 in Brussels,

— having regard to the Revised European Neighbourhood Policy (ENP) of 2015 and to the European Neighbourhood Instrument (ENI) for 2014-2020,

— having regard to the 2030 Agenda for Sustainable Development adopted at the United Nations Sustainable Development Summit on 25 September 2015,

— having regard to the Joint Statement of the Visegrad Group's Ministers of Foreign Affairs on the Eastern Partnership, following the results of their meeting in Warsaw on 12 April 2017, providing prospects for EU membership to the Eastern Partnership countries interested therein,

A. whereas cooperation in the framework of the Euronest Parliamentary Assembly is aimed at bringing about positive effects by serving as a platform to exchange views, find common positions on the global challenges of our times with respect to democracy, politics, economics, energy security and social affairs, and strengthen ties between the Eastern Partnership countries and with the EU;

B. whereas the bonds forged through the Eastern Partnership make both the EU and the partners stronger and better able to deal with internal and external challenges; whereas the Eastern Partnership is based on commitments to the principles of international law and to fundamental values, which include democracy, the rule of law and respect for human rights and fundamental freedoms, as well as to the market economy, sustainable development and good governance; whereas the Eastern Partnership is committed to the promotion of the inclusive engagement of all parts of society, and is committed to strengthening economic inclusion, in particular gender equality, as provided for by the EU Gender Action Plan;

C. whereas, during the 2017 Brussels Eastern Partnership Summit, all participants underlined the important role played by Association Agreements in accelerating political association and economic integration with the European Union, and confirmed the EU's support for their implementation;

D. whereas Association Agreements between the EU and the Eastern Partners and the comprehensive and enhanced partnership agreement signed with Armenia should be based on concrete progress made by EaP governments in implementing economic reform commitments;

E. whereas it is widely accepted that foreign direct investment (FDI) can be essential for long-term economic growth and can provide spill-over benefits through technology and skills transfer;

F. whereas remittances from expatriates account for a significant share of FDI in some of the Eastern Partners; whereas remittances can constitute a major share of GDP in those countries;

G. whereas, under the ENP, the EU is committed to supporting the economic development of its partner countries and to improving the aspirations, hopes and prospects of local populations, while maintaining a strong focus on good governance, democracy and the rule of law;

H. whereas the establishment of the DCFTA, which also abolishes barriers to FDI and capital movements, can provide a broad spectrum of potential benefits for the contracting parties, which will result from synergy between the DCFTA and the approximation process provided for by the Association Agreement;

I. whereas the cooperation between Armenia and EU, as well as the cooperation between Armenia and the Eurasian Economic Union (EEU) serve as a good example of non-confrontational policies in terms of collaboration with different economic unions;

J. whereas trade with the EU represents a substantial proportion of international trade flows and capital, and the economies of the Eastern Partnership countries are dependent thereon;

K. whereas foreign investors might take into consideration the developing legislation of the Eastern Partnership countries in areas such as environmental protection and labour, etc. with the purpose of lowering costs in order to obtain competitive price advantages by engaging in short-lived ‘nomadic’ investments, which create and leave behind deep employment issues; whereas this goes against the Sustainable Development Goals (SDGs) espoused both by the EU and its Member States, and by the Eastern Partners; highlights the fact that sustainable and decisive action against corruption is necessary in order for FDI to benefit society as a whole;

1. Underlines the strategic importance of the ENP, as a policy creating multi-layered relations; highlights the fact that the fundamental challenge of the ENP lies in delivering tangible and concrete improvements to the citizens of the partner countries; considers that the ENP should become a stronger and more efficient policy, inter alia through the reinforcement of its positive elements, including a greater focus on developing effective investment policies based on EU best practice;

2. Believes in the continued value of the ENP's initially stated objectives of creating an area of prosperity, stability, security and good neighbourliness, based on the common values and principles of the European Union, by providing assistance and incentives for deep structural economic reforms in the neighbouring countries, carried out under their own responsibility and agreed with them, which will allow for reinforced engagement with the EU; stresses, therefore, the need to attract more FDI in order to ensure economic development;

3. Emphasises that FDI attraction, transparency, good governance, mutual accountability and inclusiveness should be key aspects of the new approach so as to ensure that the benefits of the ENP reach all levels of society in the countries concerned, rather than being concentrated within particular groups;

4. Recalls the shared interest of the European Union in helping the Eastern Partnership countries to pursue long-term stable and sound economic growth and to establish modern economic governance, which can be achieved by linking the economies of the Eastern Partnership countries with the EU's single market via DCFTAs with full respect for greater differentiation reflecting the diversity among Eastern Partnership countries; underlines the fact that FDI is essential to ensuring a boost in competitiveness and should lead to productivity enhancement, job creation and long-term sustainable growth;

5. Stresses that deeper market integration between the EU and the Eastern Partnership countries could contribute to stimulating economic growth in both the EU and the EaP, and to eliminating regional economic imbalances and social inequalities between and within these countries and regions, and therefore enhance the welfare of their respective populations, a significant outcome particularly at a time of slow economic recovery and rising social and economic inequality as well as geopolitical instability;

6. Stresses that FDI can be instrumental in achieving the economic paradigm shift towards productive and sustainable investments and exports; stresses also that FDI can contribute to the required competitiveness boost by developing skills and infrastructure, as well as opening new markets for goods and services from Eastern Partnership countries and facilitating their participation in pan-European value chains;

7. Recognises that, in their transition towards a market economy, the Eastern Partnership countries have opened up to FDI, but have so far attracted a rather limited amount; considers that further efforts are needed to provide a stable business environment and for these countries to reach their full potential in the area of the rule of law;

8. Notes that FDI could help the Eastern Partners to diversify their energy supply and improve energy infrastructure, and thus to achieve supply independence and greater efficiency;

9. Notes that the Eastern Partnership countries have undertaken major efforts towards the improvement of their general investment environment; notes also that recent and ongoing reforms have focused on two main pillars, namely alignment with EU rules and regulations, and the introduction of international best practice in support of private sector development;

10. Recognises that EU financial and technical assistance financed through instruments such as the ENI and MFA have contributed to creating a better business climate in Eastern Partners and to attracting greater amounts of FDI;

11. Emphasises that good laws do not automatically translate into a conducive investment climate, and that the quality of public administration and its capacity to implement these laws have an important role to play; considers, in this respect, that additional efforts are required in the Eastern Partnership countries; believes that the implementation of reforms in public administration and the judiciary, as well as the fight against corruption, are essential to achieving excellence; considers that civil services must be professionalised and better remunerated and that public service reform will require better use of IT facilities, training and rationalisation of resources; believes that a strong focus must also be placed on improving governance;

12. Notes that the Eastern Partnership countries can attract more and higher-value FDI with appropriate policies; affirms that more FDI would help to achieve the countries' national development goals and the Sustainable Development Goals by contributing to job creation, technology transfer, export promotion, sustainable growth and poverty alleviation; notes that higher-value FDI would lead to improvements in infrastructure development, sectoral diversification and the improvement of education systems;

13. Highlights the fact that transparent FDI could be instrumental in reducing the share and role of the informal economy in Eastern Partners, thus helping to combat tax evasion, organised crime and corruption;

14. Argues that the creation of jobs through FDI could be advantageous in terms of reducing youth unemployment; believes also that FDI in sectors requiring skilled labour would help decrease the number of young unemployed or low-paid graduates when coupled with active labour market policies and an emphasis on relevant skills in education and training;

15. Stresses that promoting women entrepreneurship could be an effective tool in stimulating economic growth, decreasing unemployment, promoting inclusivity and gender equality, and reducing social imbalances;

16. Emphasises the importance of SMEs for the economies of Eastern Partners; argues that investments in SMEs offer the best opportunity for generating sustainable growth, combating unemployment and boosting trade between the Eastern Partnership countries and the EU; urges the EU and its Member States, and the Eastern Partners to work together towards attracting more FDI to SMEs in the latter;

17. Realises that Eastern Partnership countries will also be in a better position to reconsider their tax base, which in turn will provide funding to improve living standards and, with time, reduce their dependence on international assistance and remittances; believes that this would eventually allow Eastern Partnership countries to turn to more progressive taxation in order to bridge inequalities and social divides in their societies;

18. Recognises that, while one of the objectives of the Eastern Partnership countries is to receive more FDI relying on skilled labour, the Partners must undertake additional efforts to enhance certain professional skills among their own populations; points out that, although FDI can help in this process in various ways, it cannot act as a substitute for the role of national education systems in providing the necessary skills for a strong economy, responsibility for which lies with governments;

19. Calls for a large injection of investment in the Eastern Partnership countries' infrastructure, labour skills and economic development, which goes beyond enhancing the capacity of the local public or private sectors;

20. Urges the authorities of the Eastern Partners to develop a set of incentives for job creation in order to attract FDI, with the purpose of significantly increasing the weight of the private sector in job generation;

21. Urges that short-, medium- and long-term priorities and strategic objectives be defined, bearing in mind that the ENP should aim to create a differentiated approach to promote investment attraction; stresses that, in defining its approach, the EU should look at its interests and priorities and those of the individual countries concerned, together with their level of development, taking due account of the interests and aspirations of their societies, political ambitions and the geopolitical environment;

22. Urges the EU to focus its relations with the Eastern Partners, where necessary, on shared interests and specific benefits, in particular on economic development and FDI attraction; urges the EU also to assist Eastern Partnership countries to speed up work on the reform of their industrial policy, which could determine a transition to a knowledge-based competitive economy;

23. Calls on the authorities of the Eastern Partnership countries associated with the EU, and those which have signed comprehensive and enhanced partnership agreements with the EU, to speed up the approximation of their legislations with EU legislation relating to improvement of the investment climate, as stipulated in their respective agreements;

24. Calls on the European Commission to increase its support and assistance with capacity building to the Eastern Partners that are engaged in implementing measures which have an impact on the investment climate;

25. Calls on the Commission and the authorities of the EU Member States to assist Eastern Partners in developing national plans for attracting FDI;

26. Calls for the monitoring of the quality of investments as well as the evaluation and identification of long-term investment selection measures; calls also for any problematic outcomes of the monitoring of investments to be duly dealt with;

27. Calls on the national parliaments of the Eastern Partnership countries to speed up the process of harmonising national economic laws with the acquis communautaire and supports the steps taken by the national parliaments to enact DCFTA-related reforms by adopting relevant recommendations; encourages the setting-up of multilateral working groups to enable them to assist one another in the regulatory approximation process across the whole spectrum of the EU acquis related to trade and investment;

28. Calls on the EU Member States and the Eastern Partners to step up cooperation to combat climate change, especially in the framework of COP21; encourages cooperation on resource-efficient and low-emission technologies, particularly their transfer and innovation in this field, in order to increase the adaptive capacity of the countries' economies in the process of attracting FDI; emphasises the importance of research and innovation in general for enhancing competitiveness, productivity, sustainability and job creation; notes the EU's target of investing 3 % of its GDP in research and development by 2020;

29. Emphasises the importance to the Eastern Partners of strengthening the role of diplomacy in promoting policies and programmes, the sharing of lessons learned and best practice related to the attraction of FDIs;

30. Emphasises the importance of communication policies, the need to demonstrate the benefit of reforms to the citizens of the Eastern Partnership countries, and the need, therefore, to further strengthen strategic communications efforts;

31. Supports the implementation of best practice promoted by the EU, Eastern European Partners and international and regional organisations, including financial institutions, banks and donors in individual countries, to promote FDI;

32. Encourages the EU Member States to develop stronger bilateral and multilateral links with the Eastern Partnership countries and to be actively involved in transitional assistance, technical support, capacity building and experience sharing with a view to promoting FDIs, as well raising awareness of the opportunities afforded by the DCFTA;

33. Recognises that many of the challenges faced by the Eastern Partners are shared ones; encourages, therefore, stronger cooperation and forward-looking political dialogue between the Eastern Partnership countries to address common challenges and encourage investment;

34. Urges that steps be taken to prevent money laundering and to ensure transparency and social responsibility regarding foreign investments;