Of innovation, targets and compliance - a new template in FTAs?

More on the recently concluded EFTA-India FTA.

As reported in the press, this is perhaps for the first time in the negotiating history of FTAs that investment promotion targets and job creation have been included in a legal free trade agreement in the EFTA-India FTA.

As this press note stated, 

• EFTA has committed to promote investments with the aim to increase the stock of foreign direct investments by USD 100 billion in India in the next 15 years, and to facilitate the generation of 1 million direct employment in India, through such investments. The investments do not cover foreign portfolio investment.
• For the first ever time in the history of FTAs, a legal commitment is being made about promoting target-oriented investment and creation of jobs.

Chapter 7 of the FTA speaks about Investment Promotion and Co-operation. The relevant provision related to foreign direct investment commitments is listed here:

Article 7.1.3 states:

The Parties share the objectives that: 

(a) the EFTA States shall aim to increase foreign direct investment from investors of the EFTA States into India by 50 billion (US dollars) within 10 years from the entry into force of this Agreement and an additional 50 billion (US dollars) in the succeeding 5 years 6 7 ; and

(b) the EFTA States shall aim to facilitate the generation of 1 million jobs8 within 15 years in India from the entry into force of this Agreement, resulting from inflows of foreign direct investment from investors of the EFTA States into India.

Non-compliance is not subject to dispute settlement but India can take remedial measures under Article 7.8 to rebalance the concessions given to the EFTA States in the Schedule of Commitments under the Chapter on Trade in Goods.

Some quick thoughts:

Though the chapter is not subject to dispute settlement  ( a lengthy legal process of a panel hearing and appellate review), there are remedial measures for "non-compliance". Thus, it is not hard law in terms of legal enforcement through dispute settlement but soft law with a bite! Further the obligation of foreign direct investment is only on EFTA and not vice vera. FDI targets and job employment figures for the first time as "commitments" in an FTA.

FTA templates are not static they say. This is surely on good example.