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Joint Press Release with the Ministry of Foreign AffairsSigning of the Japan- Kazakhstan Investment Agreement

On October 23, 2014, H.E. Mr. Masayoshi Kamohara, Ambassador Extraordinary and Plenipotentiary of Japan to the Republic of Kazakhstan, and H.E. Mr. Asset Issekeshev, Minister of Investment and Development, Kazakhstan, signed the Agreement between Japan and the Republic of Kazakhstan for the Promotion and Protection of Investment (Japan-Kazakhstan Investment Agreement) in Astana, Kazakhstan.

1. Purpose and effects of the Agreement

1) Investment protection and developing an investment environment

The Agreement stipulates rules for investment protection and development of an investment environment. Improving the legal stability of the investment environment in Kazakhstan is expected to facilitate investment activities by Japanese enterprises in the country.

2) Strengthening the Japan-Kazakhstan relationship

Kazakhstan has abundant energy resources, such as petroleum and natural gas, as well as mineral resources, such as uranium and chrome, and has recently been maintaining economic growth of about 5% per year. Japanese enterprises have been expanding their businesses and joining the projects in Kazakhstan with Japan and Kazakhstan maintaining a good relationship.

2. Key points of the Agreement

The Agreement includes the following provisions in order to improve the legal stability of the investment environment:

1) National treatment (only concerning the post-investment process)

The Agreement stipulates an obligation under which a contracting country should treat an investor of the other contracting country and such investor's investments no less favorably than the contracting country's own investors and their investments.

2) Most-favored-nation treatment (including the pre-investment process for obtaining permission in addition to the post-investment process)

The Agreement stipulates an obligation under which a contracting country should treat an investor of the other contracting country and such investor's investments no less favorably than investors of a third country and their investments.

(This provision is not applied to treatments under certain international agreements.)

3) Extensive prohibition of the performance requirements

This provision prohibits the contracting country from requiring the other contracting country’s enterprises, where such enterprises have made investments, to provide the former with certain performance, including export restriction requirements, local-content requirements, requirements for hiring local executive officers and people, and requirements for establishing headquarters in the former country, excluding the measures imposed by the former during the process where such enterprises are making their investments.

4) An obligation to observe any commitments made by the contracting countries with investors (known as “Umbrella Clause”)

When an investment contract, such as those related to resource development and infrastructure projects, is cancelled without reasonable cause, investors may lodge a complaint due to violation of the Agreement against the counter parties with an international arbitration procedure.

5) Investment protection provisions, including compensation in expropriation, protection from strife, and free transfers

6) Settlement of investment disputes between the contracting countries and investors

When an investor suffers damage from the contracting country that the investor has invested in due to such country’s breaching of its obligation under the Agreement, the investor may submit a dispute with the country to an international arbitration procedure for settlement.

References

1: Background of the negotiations

June 2008: Agreed with President Nursultan Nazarbayev of Kazakhstan to start negotiations during his visit to Japan;
February 2013: Substantially concluded the Agreement, following the five rounds of working-level negotiations so far

2: The text of the Agreement is scheduled to be publicized on the METI and MOFA websites:

METI website for Economic Partnership Agreement (EPA)/Free Trade Agreement (FTA) /Investment Agreements:
/policy/trade_policy/epa/english.html

Release date

October 23, 2014

Division in Charge

  • Information on the country and regions
    Russia, Central Asia and Caucasus Office, Trade Policy Bureau
  • Information on the details of the Agreement
    Economic Partnership Division, Trade Policy Bureau
Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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