Signing of Bilateral Investment Agreement between Japan and the Republic of Iraq

1) Protection of investment and improvement of the investment environment

The Agreement stipulates rules concerning the protection of investment and the improvement of the investment environment. It is expected to increase the legal stability of the investment environment in Iraq and to facilitate Japanese companies' investment there.

2) Enhancement of bilateral relationship

As Iraq is endowed with abundant resources and a large market of over 30 million people, it is expected for Japanese companies to expand their business in various areas, such as energy, infrastructure, trading, investment and other industrial areas. The Ministry of Economy, Trade and Industry (METI) is now aiming at the enhancement of Japan-Iraq economic ties through the promotion of business activities, including the first Japan-Iraq Joint Economic Committee held in Tokyo on May 29, 2012. It is expected that the Agreement will facilitate Japan-Iraq investment activities and bilateral personnel exchanges involving such activities.

See the following METI news release about the Japan-Iraq Joint Economic Committee:
http://www.meti.go.jp/english/press/2012/0529_03.html

The Agreement includes the following provisions to increase the legal stability of the investment environment in Iraq.

1) National treatment and most-favored-nation treatment in the post-establishment phase of investment

2) Prohibition of the performance requirement in principle

Prohibition of export requirements, local-content requirements, and technology transfer requirements

3) Obligations to observe any contracts concluded by the signatory state with investors (commonly called the "umbrella clause")

4) Investment protection provisions, including compensation for exploitation, protection from strife, and free transfer.

5) Settlement of investment disputes between investors and the signatory state

The Agreement shall enter into force on the thirtieth day after the date of exchanging diplomatic notes between the governments informing each other of the completion of national legal procedures, which should be approved by the Diet in Japan's case, necessary for the entry into force of the Agreement.

Reference 1: Past negotiations

Japan and Iraq confirmed each intention of commencing negotiations for the Investment Agreement in January 2011. METI and the Ministry of Foreign Affairs (MOF) representing Japan and the National Investment Committee representing Iraq held three negotiation sessions before reaching a substantial agreement in November 2011.

First negotiation:

 September 2011, Tokyo

Second negotiation:

October 2011, Baghdad

Third negotiation:

November 2011 (phone conference)

Reference 2: The text of the Agreement will be posted on the websites of METI and the Ministry of Foreign Affairs.

METI website:

Economic Partnership Agreement (EPA)/Free Trade Agreement (FTA)- "International Investment Agreement(IIA)" (in Japanese)
http://www.meti.go.jp/policy/trade_policy/epa/investment.html

June 7, 2012

• <Country overview> Middle East and Africa Division, Trade Policy Bureau
• <Agreement overview> Economic Partnership Division, Trade Policy Bureau