TWN Info Service on Finance and Development (Apr17/01)
18 April 2017
Third World Network
US opposed to investment facilitation discussions at G20
Published in SUNS #8444 dated 18 April 2017
Geneva, 13 Apr (D. Ravi Kanth) - Attempts to finalize a non-binding outcome on
investment facilitation at the meeting of G20 officials of the Trade and
Investment Working Group (TIWG) in Berlin suffered a major setback after the
United States vehemently opposed any discussion on investment at this juncture,
trade envoys told SUNS.
The US decision on G20's efforts to finalize the so-called non-binding outcome
is expected to severely undermine the ongoing efforts of eight G20 countries -
Russia, Mexico, Indonesia, Turkey, Korea, Australia, China, and Brazil - to
start immediate discussion on investment facilitation at the World Trade
The eight countries supported by major industrialized and some developing
countries as well as the WTO Secretariat remain determined to launch
negotiations on investment facilitation at the WTO's eleventh ministerial
meeting in Buenos Aires later this year, several trade envoys told SUNS.
But, in an unexpected and sudden development, the US has put paid to the G20's
efforts by issuing a terse communication to Germany on Tuesday (11 April). The
US said categorically that Germany must avoid discussing investment or any
issue concerning investment at the TIWG meeting.
Germany, which is hosting the G20 leaders' meeting in Berlin in early July, is
currently preparing the draft deliverables in which investment facilitation is
a major issue along with digital trade.
Last month, the G20 sherpas discussed digital trade during which India and
South Africa opposed attempts by Canada and Australia to direct the WTO to
discuss rules concerning electronic-commerce.
Ahead of the TIWG meeting on investment facilitation beginning on 4 May,
Germany has issued a "draft investment facilitation package - G20
The draft package circulated by Germany on 29 March says: "we reaffirm the
Principles for Global Investment Policy Making endorsed in the Hangzhou
communique and encourage policymakers to use them as reference and
It maintains that "investment plays a central role in promoting inclusive
economic growth and sustainable development through the creation of jobs and
the dissemination of skills and technology.
"However, FDI flows are volatile and not as strong as necessary to induce
sufficient growth and achieve the United Nations Sustainable Development Goals
"Therefore, we underline our continued determination to facilitate
investment. We agree that investment policies should be transparent, efficient,
predictable and consistent - also with international obligations.
"To maximise the beneficial impact of investment, we are committed to
encouraging investment that is sustainable from an economic, social and
environmental perspective and to promoting good corporate governance as well as
responsible business conduct."
As part of the efforts "to complement the G20 Guiding Principles for
Global Investment Policy Making and facilitate their implementation we endorse
the attached non-binding G20 Investment Facilitation Package," Germany
The "non-binding G20 Investment Facilitation Package," according to
Germany, would include the following objectives:
(I) reaffirming and complementing the G20 Guiding Principles for Global
(II) fostering open and transparent business climates that are conducive to
(III) promoting inclusive economic growth, sustainable development and a level
playing field for all investors, including SMEs, G20 members propose the
following list of non-binding actions for the consideration of policymakers
seeking to facilitate investment during its whole life cycle.
To achieve these objectives, the draft has listed four actions for investment
facilitation. They include (a) Transparency, (b) Predictability and
Consistency, (c) Efficiency, and (d) Stakeholder Relations.
As part of transparency, the draft has suggested the need to promote
accessibility and transparency of policies, regulations and procedures relevant
to investors. Other elements of transparency include making "publicly available
clear and up-to-date information on the investment regime including timely and
relevant notice of changes in applicable standards, procedures, technical
regulations and conformance requirements."
It also calls for establishing enquiry or contact points for enquiries
concerning investment policies and applications to invest and publishing
outcomes of periodic reviews of the investment regime, where they are
As regards "Predictability and Consistency," the German draft
suggested elements as to how governments must "enhance predictability and
consistency in the application of investment policies and other policies that
have an impact on investment."
Other elements include systematizing and institutionalizing common application
of investment laws and regulations and bringing consistency of national
policies with international obligations. It has also suggested harmonization of
investment policies for providing "equal treatment in the application of
laws and regulations on investment, and avoid[ing] discriminatory use of
The draft has underscored the need for establishing clear and transparent
procedures for administrative decisions affecting investments and also ensuring
"access to effective, fair, open and transparent mechanisms for prevention
and settlement of disputes."
For improving the "efficiency and effectiveness of administrative
procedures" in action three, the German draft has called for improving the
efficiency and effectiveness of administrative procedures such as streamlining
the process and shorten the processing time for application, registration,
licensing, and other investment-related administrative procedures, including,
where appropriate, through the promotion of time-bound approval processes or no
objections processes within defined time limits.
It has suggested the need to keep "costs to the investor relating to
administrative procedures to a minimum" and also to simplify the process
for connecting to essential services infrastructure.
Finally, it suggested the so-called stakeholder relations such as building
"constructive stakeholder relationships and engage the private sector in
assessing de jure and de facto barriers to investment."
The draft has also asked for establishing and maintaining "mechanisms for
regular consultation and effective dialogue with investment stakeholders
throughout the life-cycle of investments, including approval, impact
assessment, operation and expansion stages, to identify and address issues
encountered by investors and affected stakeholders."
Germany has maintained that "this investment facilitation package can
serve as a reference for investment policymaking, in accordance with respective
More important, "it should also be considered in the context of the G20
development agenda and is without prejudice to government's right to regulate
for legitimate public policy purposes. It can serve as an inspiration for
future - even more far-reaching - work on investment facilitation on a multi-,
pluri- and bilateral level," Germany argued.
The broad coverage of objectives in the German draft went beyond the failed
Multilateral Agreement on Investment in several aspects, said a trade envoy
after reviewing the objectives.
Perhaps, in response to these wide-ranging and across-the-board objectives, the
US issued its stern communication to Germany, the trade envoy said.
The US told Germany: "Regarding investment, the United States does not
support moving forward with the draft deliverable or any alternative package on
Further, said the US, it "does not believe that G20 TIWG [Trade and
Investment Working Group] negotiation of detailed policy prescriptions in this
area is necessary or helpful at this time, nor that the TIWG should seek to
prioritize policy actions in certain areas of investment over others, including
with respect to which issues should be on the agenda of separate bilateral,
plurilateral, and multilateral negotiations."
The G20 guidelines, which remain non-binding on its members, have often been
used as a launching board for negotiations at the WTO.
Prior to the German draft, the WTO Secretariat had made a
"contribution" on investment facilitation at the G20's TIWG meeting
The WTO's contribution was later used by eight countries and include
"improving regulatory transparency," "streamlining and speeding
up administrative procedures," and "encouraging international
information sharing and cooperation."
The WTO Secretariat had urged the G20 to identify "core investment
facilitation principles" based on the G20 Leaders' Communique from the
Hangzhou summit last year on Guiding Principles for Global Investment
"Encourage a dialogue on trade and investment policy coherence among WTO
Members - with a particular focus on how the multilateral trading system can
contribute to facilitating investment flows," the WTO Secretariat
The Hangzhou Leaders' communique includes the non-binding principles for
(i) Recognizing the critical role of investment as an engine of economic growth
in the global economy, Governments should avoid protectionism in relation to
(ii) Investment policies should establish open, non-discriminatory, transparent
and predictable conditions for investment.
(iii) Investment policies should provide legal certainty and strong protection
to investors and investments, tangible and intangible, including access to
effective mechanisms for the prevention and settlement of disputes, as well as
to enforcement procedures.
(iv) Dispute settlement procedures should be fair, open and transparent, with
appropriate safeguards to prevent abuse.
(v) Regulation relating to investment should be developed in a transparent
manner with the opportunity for all stakeholders to participate, and embedded
in an institutional framework based on the rule of law.
(vi) Investment policies and other policies that impact on investment should be
coherent at both the national and international levels and aimed at fostering
investment, consistent with the objectives of sustainable development and
(vii) Governments reaffirm the right to regulate investment for legitimate
public policy purposes.
(viii) Policies for investment promotion should, to maximize economic benefit,
be effective and efficient, aimed at attracting and retaining investment.
(ix) Investment policies should promote and facilitate the observance by
investors of international best practices and applicable instruments of
responsible business conduct and corporate governance.
(x) The international community should continue to cooperate and engage in
dialogue with a view to maintaining an open and conducive policy environment
for investment, and to address shared investment policy challenges.
Against this backdrop, Russia and a group of five G20 countries - Mexico,
Indonesia, Korea, Turkey and Australia (MIKTA) - circulated proposals for
discussing investment facilitation at the WTO without further delay.
China and Brazil also shared their separate proposals on investment
facilitation with select countries. All four proposals include the elements
outlined by the WTO Secretariat.
Now, with the US having stated its position against discussing investment
facilitation at the TIWG meeting in Berlin, it remains to be seen how
Washington will respond to the Russian and MIKTA proposals when they come up
for discussion at the WTO's General Council next month.