Info Service on WTO and Trade Issues (May17/09)
12 May 2017
Third World Network
US, India-South Africa nix move for Investment Facilitation
Published in SUNS #8458 dated 9 May 2017
Geneva, 8 May (D. Ravi Kanth) -- A sustained push by Germany to revive
the failed Multilateral Agreement on Investment (MAI) under the banner
of an Investment Facilitation agreement foundered on Friday (5 May)
at the G20 technical experts' meeting in Berlin.
The German attempt failed, after the United States, and India and
South Africa blocked the draft agreement on different grounds, participants
The US also opposed attempts to strengthen trade monitoring and trade
measures for resisting protectionism, and trade assistance at the
The US made it categorically clear that it is not in a position to
consider the three issues at this juncture, said several participants
who took part in the deliberations.
Germany along with Japan, Canada, Australia, China, and Brazil among
others have worked hard to prepare the deliverables on these three
issues at the level of technical experts so as to finalize them for
the G20 sherpas meeting later this month.
The sherpas meeting was to be followed by the meeting of G20 leaders
on 9 July.
After two days of discussions that began on 4 May, Germany held a
meeting with the US, India, and South Africa to see whether the three
are ready for a much watered-down text on investment facilitation.
The US stuck to its hardline stance that it is not in a position to
agree to any outcome, while India and South Africa said that even
a non-binding outcome on investment facilitation as proposed by the
German Presidency will undermine policy space for developing countries
to pursue their developmental policies.
The two developing countries made it clear that they can only agree
to some broad messages on investment facilitation but not a deliverable
based on a non-binding outcome, according to participants who took
part in the meeting.
Against this backdrop, Germany was forced to cancel the meeting a
day before the scheduled-end on 6 May.
Significantly, the setback suffered at the G20 Trade and Investment
Working Group (TIWG) on investment facilitation on Friday has nearly
put paid to the discussion of several proposals on the same subject
at the World Trade Organization General Council meeting on Wednesday
(10 May), according to participants who asked not to be identified.
Proposals such as the need for an informal dialogue on investment
facilitation for development by a group of countries, possible elements
of investment facilitation by China, a WTO instrument on investment
facilitation by Argentina and Brazil, MIKTA investment proposal by
Mexico, Indonesia, Korea, Turkey, and Australia, and a Multilateral
Investment Facilitation agreement by Russia, are all listed for consideration
at the General Council meeting on 10 May.
Despite fierce opposition from the US which asked Germany to drop
the consideration of investment facilitation at the G20 experts' meeting
last month, Germany along with several developed and a few developing
countries went ahead, as though it is business as usual, to negotiate
the draft agreement that was circulated prior to the meeting.
The German draft package, for example, has called for reaffirming
"the Principles for Global Investment Policy Making endorsed
in the Hangzhou communique and encourage policymakers to use them
as reference and guidance."
"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," it has argued, suggesting
that, at a time when Foreign Direct Investment flows are volatile
and not sufficient enough to induce economic growth, there is an urgent
need for facilitating investment.
Therefore, it has suggested language that G20 leaders 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."
Further, "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,"
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
(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
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."
While technical experts from Japan, Canada, China, Russia, Brazil,
and Australia among others started discussing each element in the
German draft, the US simply refused to engage in the discussions.
On 11 April, the US had sent a communication to Germany and other
members of the G20 that it "does not believe that G20 TIWG negotiation
of detailed policy prescriptions in this area is necessary or helpful
at this time, nor that 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." (See SUNS #8444 dated 18 April
Japan sought robust provisions in the IF (investment facilitation)
while China, Russia, and Brazil insisted that it should guide G20
countries to negotiate the facilitating issues based on the G20 Hangzhou
India and South Africa raised several objections to IF, insisting
that while there is no need for any outcome at this juncture, their
demands - right to regulate, policy space, respecting developmental
needs of developing countries, and without prejudice to discussing
it in other international fora - must be incorporated.
As the talks proceeded for two days, it became clear that all the
three issues faced formidable obstacles for arriving at meaningful
Faced with a grim impasse, Germany convened a meeting with the US,
India, and South Africa on Friday afternoon to know whether the three
countries are prepared to consider a watered-down text.
The US said that it is not in a position to join consensus on any
of the three issues while India and South Africa maintained that they
are not in a position to incorporate the document as a recommendation
of the TIWG but are willing to consider only as some key messages
or as a broad signal for investment, according to people who took
part in the meeting.
On trade monitoring and measures, and trade assistance - which included
issues such as steps to prevent protectionism, the WTO's continued
role to monitor trade measures and the need to keep markets open,
the US said it is not in a position to join consensus.
It now remains to be seen how the proponents - Argentina, Brazil,
China, Russia, and the MIKTA (Mexico, Indonesia, Korea, Turkey and
Australia) will pursue their proposals on investment facilitation
at the GC meeting on Wednesday.
But the writing on the wall is unmistakably clear that IF will not
be able to make progress at the WTO given the fierce opposition from
the US on one side, and India and South Africa on the other, due to
differing positions, said a trade envoy, who asked not to be quoted.