Geneva: India on Thursday succeeded in ensuring a controversial proposal on investment facilitation cannot be discussed formally at the World Trade Organization (WTO), making it certain that the dialogue, if any, can happen only at an informal level.
India claimed that discussion on investment facilitation as demanded by China, Russia, Brazil, Argentina, Australia and others was not part of “multilateral trade relations,” people familiar with the development said.
China, which led the proponents, pressed for a formal discussion on investment facilitation because of its mutually reinforcing and beneficial role. As a major global investor leading the ‘One Belt, One Road’ initiative, China pressured several African countries to support its position on investment facilitation, said an African trade envoy, who asked not to be identified.
On 10 May, India had blocked the General Council from adopting the agenda which had tagged investment facilitation under “trade and investment”. The proposals were inserted by China, Russia, Brazil, Argentina, and MIKTA countries (Mexico, Indonesia, Korea, Turkey, and Australia).
At the council, the highest decision-making body of the WTO between the ministerial conferences, India insisted it will not allow the item on grounds that trade and investment were dropped from the Doha Development Agenda (DDA) trade negotiations in July, 2004. India said new issues such as investment facilitation cannot be negotiated under paragraph 34 of the Nairobi ministerial declaration of December, 2015.
In an attempt to break the impasse, the chair for the general council ambassador Xavier Carim of South Africa held consultations with India and the proponents of the proposal to find a compromise.
Consequently, the two sides agreed to a statement prepared by the GC chair in which Carim made it clear that the proponents can only have an “informal dialogue.”
As GC meeting resumed on Thursday, the chair read out a statement in which he incorporated all the concerns raised by India, including the point that under the 2004 July Framework Agreement and the paragraph 34 of the Nairobi Ministerial Declaration, investment facilitation is not part of the Doha work program.
The chair said the proponents can seek information through informal dialogues on investment facilitation. But such dialogues “do not constitute proposals for negotiations.” Further, as per India’s demand, the chair stated that “some members believe that investment facilitation does not lie within the scope of the WTO and hence the General council.” Carim said “the General Council is not required to take any decisions under this item of the agenda.”
India’s trade envoy Ambassador Anjali Prasad reiterated opposition to investment facilitation saying it is “outside the scope and ambit of the Marrakesh Agreement establishing the WTO.” She said the chair’s statement adequately reflected India’s position.
“India’s opposition to the discussion on investment facilitation in the WTO is based on serious, substantive, systemic concerns,” she said.
More important, investment facilitation does not concern ‘multilateral trade relations,” she argued, emphasizing that “investment covers a wide range of assets or enterprises that are the subject to a separate universe of bilateral obligations.”
India said “investment issues, including investment facilitation, are much more deep-rooted within the domestic regulatory mechanisms and complex in nature as compared to tariff issues which often can be controlled by taking border measures.”
“Therefore, regulation of investment involves measures which are specific to national circumstances, involving multiple stakeholders and complex processes [and] specific criteria for investment policy making would have to be consistent with national development objectives and a state’s constitutional authority and obligations,” India argued.
Consequently, “a multilateral trade organisation like the WTO does not have the authority or competence to discuss investment related issues, including investment facilitation,” India maintained. Prasad debunked the argument that investment facilitation will attract foreign direct investment. Although trade and investment have a complementary role in a nation’s development, they do not “justify the relevance of the WTO to discuss or make rules in this respect.”
Several industrialized countries including the European Union, Korea and Canada severely criticized India for opposing formal discussions on investment facilitation. The EU, for example, said there is no mandate nor an agreement “to discuss or negotiate on investment in WTO.” The EU said it is worrying that WTO’s “ deliberative function has been challenged,” pointing that there should not be “a systemic menace.”
China, which led the proponents on investment facilitation, said it wants the discussion on investment as the investment facilitation has a mutually reinforcing role.
The US sought to know what specific problem investment facilitation will solve and how rule making framework can provide a solution. According a person who attended the meeting, the US welcomed the informal dialogue, adding the common position adopted by the proponents seemed dubious.
India’s tough stance was supported by South Africa and Uganda on behalf of the least developed countries, Ecuador, Bolivia, Cuba, and Venezuela among others. South Africa cautioned that new issues like investment facilitation will undermine the prospects for the Buenos Aires meeting in the second week of December.