TWN Info Service on WTO and Trade Issues (May17/10)
12 May 2017
Third World Network

India blocks GC over agenda item on Investment Facilitation
Published in SUNS #8460 11 May 2017

Geneva, 10 May (D. Ravi Kanth) - India on Wednesday blocked the proceedings of the World Trade Organization General Council on grounds that the agenda includes proposals to discuss the controversial issue of investment facilitation that is not part of the WTO's mandate, trade envoys told SUNS.

At the General Council meeting, India's trade envoy Ambassador Anjali Prasad raised the flag as soon as the draft agenda came up for approval.

She asked the General Council Chair, Ambassador Xavier Carim of South Africa, to strike off item five (of draft agenda) for discussing five proposals on investment facilitation as they cannot be agreed under provision six of the GC rules of procedure.

India also cited several legal precedents as well as the Marrakesh agreement that established the WTO, saying that there is no place for discussing investment facilitation which is not part of the WTO's mandate.

India raised the following legal grounds for its decision not to join the consensus for approving the agenda.

They include the Marrakesh agreement and the other multilateral trade agreements which cover issues such as (a) facilitating implementation of existing agreements, (b) providing the forum for negotiations concerning multilateral trade relations in Article 3(1) under which WTO shall facilitate administration and operation, (c) investment facilitation fails to come under the purview of implementation, administration and operation and furthering the objectives of any multilateral agreement, (d) GC shall carry out the functions as set out in the WTO agreement.

By agreeing to the investment facilitation it will unmistakably convey that it operates outside the mandate of the WTO, and so on.

Further, the Agreement on Trade-Related Investment Measures and Mode 3 cover issues concerning investment in goods and services.

Significantly, paragraph 34 of the Nairobi Ministerial Declaration does not allow for new issues such as investment facilitation, India argued.

The sponsors have tabled proposals on investment facilitation under different titles such as the need for an informal dialogue on investment facilitation for development by a group of countries that include China, Brazil, Argentina, Pakistan, possible elements of investment facilitation by China, a WTO instrument on investment facilitation by Argentina and Brazil, a MIKTA investment proposal by Mexico, Indonesia, Korea, Turkey, and Australia, and a Multilateral Investment Facilitation agreement by Russia.

After India blocked the proceedings, the sponsors severely attacked India for its stand to stop the proceedings.

Russia, Pakistan, Chile, Norway, New Zealand, Norway and Pakistan among others asked for the inclusion of the item on investment facilitation.

The sponsors said that it has never happened in the past 15 years that one member could block the proceedings because it could not agree to the issue.

They said India's decision has caused a grave "systemic" crisis for advancing work for the WTO's eleventh ministerial meeting in Buenos Aires later this year.

Uganda, Bolivia, and Ecuador among others strongly supported India's stand, saying that investment facilitation has no place for discussion at the WTO.

The GC chair Ambassador Xavier Carim suspended the meeting and informed members that he would hold informal consultations to resolve the crisis.

Last Friday (5 May), India along with South Africa, and the United States blocked a draft deliverable on investment facilitation at the G20 technical experts' meeting in Berlin.

Germany along with Japan, Canada, Australia, China, and Brazil among others 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 and followed by the G20 leaders' meeting on 9 July.

The US said 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 five proposals on investment facilitation with varying emphasis revolve around arguments that "investment policies should be transparent, efficient, predictable and consistent - also with international obligations."

They seek to foster open and transparent business climates that are conducive to investment and 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.

The proposals also seek to cover issues such as (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."

[Chakravarthi Raghavan, Editor Emeritus, adds: At the first Ministerial Conference of the WTO in Singapore (1996), four new issues were marked for study as part of the work programme: investment, competition policy, government procurement, and trade facilitation.

[In 2001, at the Doha Ministerial Conference, the declaration and work programme identified these four as issues for study and to be taken up for negotiations on the basis of explicit consensus. The Declaration and Work Programme were adopted only on the basis of such a clarification provided by the Chair of that Ministerial Conference before adoption.

[In terms of this mandate, it is only at the stage of negotiations on investment, to be taken up by explicit consensus, that issues to be covered and rules/disciplines to be framed could be considered. In 2003, at Cancun, when efforts to launch negotiations were blocked by India, Malaysia and other developing countries in the Green Room, the European Union, with Pascal Lamy as Trade Commissioner, gave up one by one each of the issues, pleading only for retention of Trade Facilitation as a concession to the EU. However, even then the meeting collapsed.

[When efforts were made to relaunch negotiations on the Doha Work Programme, at a General Council meeting in Geneva in 2004, a compromise was achieved involving India and Brazil on one side, and the EU on the other (with their ministers - India's Kamal Nath, Brazil's Celso Amorim and EU's Pascal Lamy participating), by including Trade Facilitation as an agenda item. It was then understood also, that while the other three Singapore issues were not being formally taken off the agenda, they would not be brought up until the conclusion of the Single Undertaking of the Doha Work Programme, as modified by the 2004 GC decision.

[With the Doha Work Programme yet to be concluded as a Single Undertaking with agreement on all issues on its agenda, in terms of the Doha Declaration/DWP, and the GC decision of 2004, investment, whether as an issue for framing a comprehensive agreement, or for any rules and disciplines relating to investment, cannot figure on the WTO agenda.]