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Business News/ Economy / India and South Africa object to WTO investment agreement in Abu Dhabi meet

India and South Africa object to WTO investment agreement in Abu Dhabi meet

The deal agreed by some 125 countries, or about three-quarters of the WTO's members, aims to simplify red tape, improve the investment environment and encourage foreign direct investment.

File image of the World Trade Organization (WTO) headquarters in Geneva (AFP / Fabrice Coffrini)Premium
File image of the World Trade Organization (WTO) headquarters in Geneva (AFP / Fabrice Coffrini)

India and South Africa have lodged a formal objection against an investment agreement during a World Trade Organization (WTO) meeting in Abu Dhabi, hindering its adoption, Reuters reported on February 29. This move, observers say, has the potential to impede hundreds of billions of dollars in investment.

The agreement, supported by approximately 125 countries, representing three-quarters of WTO members, aims to streamline bureaucratic processes, enhance the investment climate, and boost foreign direct investment.

However, WTO rules dictate that any of its 164 members can obstruct the adoption of a deal, a crucial step to ensure compliance among countries. "We underscore that given the lack of exclusive consensus, this is not a matter for the...(meeting) agenda," as per a document from the WTO.

Delegations from India and South Africa have not publicly commented on the development.

Reactions and Concerns

Alan Yanovich, a partner at Akin Gump Strauss, expressed concern, stating that this "deplorable" development would particularly affect the world's poorest countries. "The notion that two members can prevent a broad group of willing members from moving forward is absurd," he remarked.

A Western trade delegate labelled it "ironic that India and South Africa stand in the way of something with such manifest benefits for developing countries."

The initiative, known as the Investment Facilitation for Development (IFD) Agreement, led by Chile and South Korea with strong support from China, could potentially result in global welfare improvements ranging from $200-800 billion, according to a study.

Kerrie Symmonds, the facilitator for negotiations at the meeting and Minister of Foreign Affairs and Foreign Trade of Barbados, encouraged members to discuss the issue at the General Council in Geneva after the ministerial conference.

Status of WTO Talks

WTO talks, spanning four days to establish new global trade rules covering various topics, are set to conclude today, February 29. However, little progress has been reported, aside from the formal inclusion of two new members: East Timor and Comoros.

On February 27, the United States trade chief ruled out a deal on reforming the WTO dispute settlement system, which has been hindered for four years due to US objections.

A paragraph on climate change remains confined to a WTO annexe of the draft package, reflecting the challenge of addressing significant issues in trade, as emphasised by New Zealand's Trade Minister Todd McClay.

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Published: 29 Feb 2024, 11:35 AM IST
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