Trade Hot Topics, The Commonwealth (Issue 150, 2018).
The 11th Ministerial Conference of the World Trade Organization (WTO) (MC11), held from 10-13 December 2017 in Buenos Aires, Argentina, witnessed the emergence of different groups of WTO members agreeing to initiate discussions on four specific issues: investment facilitation, domestic regulation, e-commerce, and MSMEs. The focus of this paper is on the issue of investment facilitation.
The Joint Ministerial Statement on Investment Facilitation for Development at MC11 was issued by 70 WTO members, including 28 members of the European Union. This group currently includes only 9 members of the Commonwealth- Australia, Canada, Cyprus, Malaysia, Malta, New Zealand, Pakistan, Singapore and United Kingdom. The Joint Ministerial Statement does not define the term "investment facilitation". Its thrust is on "...the need for closer international cooperation at the global level to create a more transparent, efficient, and predictable environment for facilitating cross-border investment." It calls for "beginning structured discussions with the aim of developing a multilateral framework on investment facilitation," and sets out the elements of a framework for facilitating foreign direct investments, which it states would:
- Improve the transparency and predictability of investment measures;
- Streamline and speed up administrative procedures and requirements; and
- Enhance international cooperation, information sharing, the exchange of best practices, and relations with relevant stakeholders, including dispute prevention.
The Joint Ministerial Statement emphasizes that the discussions shall not address market access, investment protection, and Investor-State Dispute Settlement.
In its Briefing Note for MC11, the WTO Secretariat noted that the key concerns regarding the discussions on Investment Facilitation at the WTO are that it is not part of the current negotiating mandate. It also noted concerns of some Members that a binding legal framework under the WTO could hinder the ability of members to regulate investment coming into their home markets.
The next ministerial conference (MC12) is scheduled to be held in June 2020, the momentum for which is likely to start building up over the next few months. An important consideration for countries that are so far not a part of the informal group discussions, is whether there is merit to continue to stay away from the discussions and simply observe as events unfold. Such a position carries with it the potential risk of losing the opportunity to raise questions and inform the outcome. Countries need to consider whether a more prudent approach may be to contribute to the discussions and seek clarifications, which can enrich the understanding of the subject.
At the outset, it is emphasized that policies and laws to attract and retain investors and investments are clearly in each country's own interest. The UNCTAD has highlighted that facilitating investment is crucial for achieving the Sustainable Development Goals (SDGs), and estimates that developing countries face an annual SDG-investment gap of $2.5 trillion. Some key questions that arise are as follows: Do multilateralization of rules on investment facilitation have a role to play to address this investment gap? Or are there other approaches that can effectively address this issue? Is this an issue that the WTO can address, and if yes, can it do it alone? Or should UNCTAD further consolidate on the substantive work it has already done to address this? Can there be a hybrid WTO-UNCTAD approach and innovative mechanisms to address this?
This issue of Trade Hot Topics seeks to present a brief primer on the key issues relating to investment and investment facilitation that WTO Members need to consider, whether or not they are a part of the informal group discussions on investment facilitation. This paper does not claim to have all the answers. It simply seeks to lays out some of the main issues that countries need to think about.
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