India hopes for US help to block China-led IFD proposal at WTO's 14th MC

The 14th WTO Ministerial Conference (MC14) is scheduled for 26 to 29 March in Yaoundé, Cameroon, a country in central Africa. (AFP)
The 14th WTO Ministerial Conference (MC14) is scheduled for 26 to 29 March in Yaoundé, Cameroon, a country in central Africa. (AFP)

Summary

India has opposed the IFD initiative, arguing that investment facilitation should not be negotiated at the WTO as it involves non-trade issues. 

New Delhi hopes the US will support blocking the China-led Investment Facilitation for Development (IFD) proposal at the World Trade Organization (WTO) 14th Ministerial Conference, scheduled to begin in March. With Donald Trump at the helm in the US, India sees a potential alignment in their shared scepticism toward China’s growing influence in global trade and investment forums, two people aware of the matter said.

The 14th WTO Ministerial Conference (MC14) is scheduled for 26 to 29 March in Yaoundé, Cameroon, a country in central Africa.

The IFD initiative, spearheaded by China and supported by over 120 WTO members, seeks to establish global rules to facilitate cross-border investments.

Also Read | Leaders emphasise support for WTO, rule-based international trading

However, India has consistently opposed the proposal, citing concerns over its impact on domestic policy space and fears that it could further entrench China's dominance in the global economy.

India opposes the IFD as it wants to maintain control over foreign investments in ways that suit its needs, especially in critical sectors for its long-term economic growth.

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India is hopeful that the Trump administration’s 'America First' policy, which takes an anti-China stance, could strengthen its efforts to prevent the proposal from securing a final agreement at the WTO, said the first person who spoke on the condition of anonymity.

India, South Africa and Indonesia have opposed the IFD initiative, arguing that investment facilitation should not be negotiated at the WTO as it involves non-trade issues that could restrict domestic policy space and disproportionately benefit developed countries. These nations advocate for addressing such matters through consensus-driven discussions rather than formal agreements.

"The WTO is a broader platform, and matters related to investment should not be discussed. This platform is intended for resolving trade-related issues," said the second person.

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“We plan to include it in the comprehensive agenda to be discussed with the US administration. Given the statements made by President Trump, we are hopeful that the US may not support the China-led investment proposal," this person said.

At the 13th WTO Ministerial Conference (MC13), members agreed to continue working on the IFD Agreement, essentially maintaining the ongoing negotiations to potentially integrate the IFD framework into the WTO legal structure, with a focus on assisting developing countries and least developed countries (LDCs) through the needs assessment process; however, no concrete decision on fully incorporating IFD was reached at MC13.

“The US, under its new President Donald Trump, has become a capricious nation," Utkarsh Sinha, managing director of Bexley Advisors, a boutique investment banking firm. "Traditionally, the US has portrayed (and, to a large extent, played) the role of a village elder in global geopolitics, which required it to adopt a semblance of long-term thinking. Under Trump, however, it has become more explicit in articulating and acting on its short-term interests. This suggests that China’s diplomatic forays have little chance of succeeding at the WTO level without US support," he added.

“From India’s perspective, we have a soft-MFN status with the USA. While this is not set in stone, we benefit from a positive attitude among US diplomats, and our overrepresentation in the US tech community is an advantage. This is a crucial time for India to stay alert and to reshape trade practices in its favour for the long term," said Sinha.

Trump's tariff threats could have disastrous effects

However, WTO chief Ngozi Okonjo-Iweala warned that trade wars triggered by US president Donald Trump's tariff threats could have disastrous effects on global growth. The WTO chief urged countries not to retaliate, highlighting the severe economic harm such conflicts could cause.

"If we have tit-for-tat retaliation, whether it’s 25% tariff (or) 60%, and we go to where we were in the 1930s, we're going to see double-digit global GDP losses. That's catastrophic. Everyone will pay," Okonjo-Iweala said on Thursday at the World Economic Forum annual meeting in Davos.

The WTO has 166 member countries. These members represent the majority of the world's nations and are responsible for setting and enforcing international trade rules.

According to an updated projection by WTO economists on 10 October, global goods trade is expected to grow by 2.7% in 2024, slightly higher than the earlier forecast of 2.6%. The volume of global merchandise trade is anticipated to rise by 3.0% in 2025, though the forecast remains vulnerable to risks from geopolitical tensions and economic policy uncertainties. Meanwhile, leading indicators suggest a brighter outlook for services trade than goods.

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