Local Content Policies Design and Implementation Issues

Conference on Local Content Policies in the Oil, Gas and Mining Sectors

Vienna, October 1, 2013

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Local Content Mechanisms

Framework Voluntary scheme –

Company dependent Non-binding

framework – Chile Legislation – Timor-

Leste Contracts – Worldwide Bids – Brazil

Definition What does local

content include? Legal loopholes –

what is a “local company”?

Local vs. National Content

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Trade and Investment Treaties

WTO: Aim to lower tariffs and non-tariff barriers Limiting performance requirements related to trade in

goods (TRIMs Agreement in 1995) Limiting performance requirements related to trade in

services (GATS Agreement in 1995) Limiting performance requirement related to

government procurement (GPA Agreement in 1996) Bilateral and Multilateral Trade and Investment

Treaties International investment agreements with Japan, USA,

Canada and others forbid performance requirements beyond TRIMs

NAFTA: Example of Mobil vs. Canada case

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Implementation

Taking Stock• Demand

from Investment

• Identifying gaps

• Identifying potential

Targets/Timelines

• Quantifying impact

• Setting the right targets

• Developing indicators

• Updating targets

Monitoring

• Tender process• Audit capacity• Reporting requirements•Transparency

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Holistic ApproachSupporting Local

Companies• Implementation

Committees• Procurement

Communication Plan

• Information Sharing Platform

• Financing• Capacity Building• Facilitating Joint

Ventures• Cluster

Development

• Monitoring• Disseminati

on

• Capacity Building

• Project alignment

• PPP Potential

• Best practices

• One stop shop

• Industrial Policy• SME Policy• Education

Strategy

Govt. Investor

Civil Societ

yDonor

s

Cooperation

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Questions

Are market forces sufficient to increase local content?

Should future trade and investment treaties further restrict domestic local content policy discretion?

What is the principle stumbling block in practice for the successful implementation of a binding local content policy?