BackIndia in a bind as Russia, China plan investment facilitation talks
New Delhi piqued as negotiations will be almost on lines of its proposal on trade facilitation for services
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Geneva: India faces a piquant situation as three major Brics countries—Russia, China and Brazil—want to launch discussions on issues concerning “investment facilitation" at the World Trade Organization (WTO), almost on the lines of New Delhi’s proposal on trade facilitation for services (TFS), according to people familiar with the development.
Until now, India and South Africa adopted strong positions against discussing trade and investment at the WTO. The two countries opposed the G-20 initiative for launching discussions on investment facilitation at an official meeting in Berlin last month, according to participants present at the meeting.
Close on the heels of India’s proposal on trade facilitation for services—which received a mixed response last month, with the African Group of countries strongly opposing the Indian proposal—Russia, China, and Brazil are at various stages of introducing their proposals for discussing investment facilitation disciplines.
On Friday, Russia formally introduced its proposal for immediate discussions on “multilateral disciplines on investment facilitation" at the WTO. “Discussions on coherent multilateral investment facilitation rules in the WTO are necessary for further improvement of investment climate in WTO members and to increase their efficiency for both investors and recipient economies," Russia argued.
In a three-page document reviewed by Mint, Russia almost structured its proposal on the lines of India’s TFS paper, maintaining that the proposed discussions on investment facilitation disciplines “are not intended to cover such issues as market access and treatment of investments, as well as expropriation and investor-state dispute settlement." The scope of future investment-related arrangements, according to Russia, must remain “comprehensive covering a priori all types of goods (GATT), traded services (GATS) or IPRs (trade-related intellectual property rights)".
More importantly, the rules for future investment-related arrangements “should be aimed at the creation of a transparent, stable and predictable regulatory and administrative framework for investors, without questioning the rights of the members to regulate and without interfering with their policies of protection of investments, including issues of nationalization, expropriation and compensation for losses," Russia argued.
Russia also called for strong “transparency" provisions that provide for “transparency for relevant regulations concerning investments, as well as elements that ensure that such regulations provide a stable and predictable environment for investments".
In a similar vein, Russia demanded discussion on “reasonable" permits for investments, fees and charges, time frames for administrative actions, dispute prevention and resolution provisions, single-window clearance mechanisms for investments, electronic procedures and online services, and penalties “for a breach of regulation concerning investment".
Further, Russia wants WTO members to discuss their investor policies before implementing them as well as for “self-assessment mechanisms". It also includes a controversial provision—as a “basis for future market access and treatment disciplines: the rules should include elements for their future development and expansion of regulating market access and treatment for investments".
China and Brazil have informally shared their proposals with select countries and the Chinese proposal also emphasizes transparency, advance commitments and efficiency on investment procedures, according to negotiators familiar with the proposals.
India finds itself in a quandary now because any opposition to investment facilitation from New Delhi will have its repercussions on its proposal on trade facilitation for services as well as the permanent solution for public stockholding programmes for food security in mercantile trade negotiations based on give-and-take, said an African trade envoy, who asked not to be identified.
Major industrialized members of the WTO such as the European Union, Japan, South Korea and Singapore introduced trade and investment at the WTO’s first ministerial conference in Singapore, in 1996, as part of what are called the four Singapore issues. The other three issues are government procurement, competition policy and trade facilitation.
The four issues failed to secure “explicit" consensus at the WTO’s fifth ministerial conference in Cancun, Mexico, in 2003, when then Indian trade minister Arun Jaitley led a coalition of developing countries to oppose them.
Subsequently, industrialized countries managed to salvage one of the issues called “trade facilitation" in July 2004, promising the developing countries that they will address their developmental issues in agriculture and other improvements in special and differential treatment flexibilities.
But, in 2013, the major industrialized countries led by the US along with their developing country allies, pocketed the trade facilitation agreement while turning their back on all other issues of interest to developing countries. “There is no guarantee that they would even provide the permanent solution for public stockholding programs for food security now," said the African trade envoy.
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