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Info Service on WTO and Trade Issues (Dec25/16) Geneva, 12 Dec (D. Ravi Kanth) — Ahead of the World Trade Organization’s General Council (GC) meeting on 16-17 December, India has pushed back against the incorporation of the proposed Investment Facilitation for Development Agreement (IFDA) into Annex 4 of the WTO Agreement dealing with plurilateral agreements, citing “legal and systemic concerns.” In a proposal (WT/GC/W/982) circulated on 9 December, India chose to set the record straight by revisiting “the Doha Round and the Ministerial Mandate” since the WTO’s first ministerial conference in Singapore in 1996, showing that a slew of ministerial decisions rejected the issue of trade and investment on several grounds. At a time when the WTO’s rules-based system appears to be crumbling in the face of the unilateral reciprocal tariffs imposed by the Trump administration, a large group of countries – with the alleged support of the WTO’s leadership – seems to be preparing the ground for a major violation of the Marrakesh Agreement, one replete with systemic implications, said people familiar with the development. The IFDA issue appears twice on the General Council agenda (WTO/AIR/GC/67): first under the review of WTO activities as a draft decision by the proponents of IFDA (paragraph 10), and second, in India’s proposal highlighting concerns over the incorporation of IFDA into Annex 4 of the WTO Agreement (paragraph 19). BRUTE MAJORITY VS WTO RULES In what appears to be a battle between a “brute majority” of members, who seem determined to violate the WTO rules to ensure the incorporation of IFDA into Annex 4 of the WTO Agreement, on one side, and India, which appears willing to preserve the WTO rules, on the other, it remains to be seen who will prevail ahead of the WTO’s 14th ministerial conference (MC14), scheduled to be held in Yaounde, Cameroon on 26-29 March 2026, said people familiar with the development. It is common knowledge that attempts to bring an investment agreement into the WTO rule-book have consistently failed since the WTO’s fifth ministerial conference in Cancun, Mexico in September 2003. Subsequently, the European Union and several supporters of an investment agreement – under what were referred to as the four “Singapore issues” (trade and investment, government procurement, competition policy, and trade facilitation) – attempted to bring it into the Geneva “July package” of 2004. However, three of the four “Singapore issues” – trade and investment, competition policy, and government procurement – were dropped from the Doha agenda. In its submission, India argued that “In 2004, the General Council (GC) expressly dropped trade and investment from the Doha Work Programme.” India cited the relevant paragraph of this decision taken in 2004 as follows: “Relationship between Trade and Investment: The Council agrees that these issues, mentioned in the Doha Ministerial Declaration in paragraphs 20-22, … respectively, will not form part of the Work Programme set out in that Declaration and therefore no work towards negotiations on any of these issues will take place within the WTO during the Doha Round.” India argued that the above decision of the General Council in July 2004 “reflected a conscious decision by the Membership to abandon any work towards negotiations on any of these issues during the Doha Round, which overlap with the elements that are now contained in the IFD Text.” More importantly, India emphasized that “no subsequent Ministerial Conference or General Council decision has revised the above-stated negative mandate.” It said that “discussion on any aspect concerning trade and investment continues to remain out of bounds within the WTO framework.” LEGAL FRAMEWORK Highlighting the legal framework underlying the current push by the IFDA proponents, India argued that “incorporating new agreements into Annex 4 of the Marrakesh Agreement is not merely an issue concerning the right of States to enter into international agreements.” “The issue,” India said, “concerns the functioning of the WTO, how decisions on negotiations on new issues and adoption of rules on such new issues are taken, how and through what bodies decisions are implemented under WTO rules, and how that affects the future of the WTO and its core foundational principles.” Further, “the principle of “multilateralism” is central to the WTO’s design and is reflected in the Preamble to the Marrakesh Agreement which encapsulates the “resolve” of the Members to develop an “integrated, more viable and durable multilateral trading system”.” According to India, “when interpreting this Preambular recital, the Appellate Body in Brazil – Desiccated Coconut had noted that the “authors of the new WTO regime intended to put an end to the fragmentation that had characterized the previous system”, reflecting on the move away from the Tokyo Round style codes.” The Marrakesh Agreement has clearly laid out the rules for new multilateral as well as plurilateral agreements. For example, India said that “Article II.1 envisaged the WTO to provide the “common institutional framework for the conduct of trade relations among its Members” for matters related to the agreements and associated legal instruments included in its Annexes.” “Article III.2,” India said, “spelt out the key role of the WTO to be “the forum for negotiations among its Members concerning their multilateral trade relations” in matters dealt with under the covered agreements. Further, in respect of future negotiations, the WTO is also to provide “a forum for further negotiations among its Members concerning their multilateral trade relations, and a framework for the implementation of the results of such negotiations, as may be decided by the Ministerial Conference”.” According to India, “the IFD(A) does not fall within the first sentence of Article III.2, as it does not concern a matter dealt with under the agreements in the Annexes to Marrakesh Agreement. As provided in the second sentence, negotiations on matters outside the existing annexed Agreements, require a decision by the Ministerial Conference to initiate the negotiations and establish the framework for their implementation.” “Even without prejudice to whether the IFD, an investment facilitation initiative according to the proponents, can fall within “multilateral trade relations”, any new negotiation, as may be permissible under the Marrakesh Agreement, requires explicit mandate from the Ministers.” The Doha single undertaking, like the previous Uruguay Round negotiations, allowed for “cross-sectoral trade- offs among Members.” For India, “expanding Annex 4 through outcomes of Joint Statement Initiatives (JSIs) would erode the possibility to achieve meaningful inclusive multilateral outcomes that addresses the interests and concerns of the entire membership.” CONSENSUS PRINCIPLE At a time when the facilitator overseeing the discussions on WTO reform is seemingly arguing for amending the principle of “decision making by consensus”, India reminded that the consensus principle “is another foundational principle of the WTO.” It said that Article IX.1 on Decision Making states that “The WTO shall continue the practice of decision-making by consensus …” India said that “the commitment to this approach underscores the importance of collective agreement and cooperation in the functioning of the WTO, ensuring that all Member voices are heard and respected in the decision-making process.” It said that this is hardly surprising given that “the WTO’s built-in objective of having an “integrated” and non- fragmented trading system, necessitates any deviation to take place only with the consensus of the Membership.” India emphasized that “the core foundational principles of the WTO highlighted above gain special prominence, and are in fact threatened, in light of the ongoing JSIs at the WTO, including the IFD.” According to India, another major legal requirement is that “adopting the IFD disciplines as an Annex 4 agreement requires fulfilment of the conditions of Article X.9 of the Marrakesh Agreement, which provides that: “The [WTO] Ministerial Conference, upon the request of the Members parties to a trade agreement, may decide exclusively by consensus to add that agreement to Annex 4″.” “Thus, a decision to add such an agreement to Annex 4 is to be done exclusively by consensus,” India argued. It said “this is one of the safeguards built into the Marrakesh Agreement to ensure that plurilateral agreements remain an exception and do not become a norm, and to ensure that the WTO Members continue “to develop an integrated, more viable and durable multilateral trading system” as agreed in the preamble to the Marrakesh Agreement.” It said that so far there has been “no precedent for adopting Annex 4 agreements through the Article X.9 route; the existing Annex 4 agreements were carried forward from the Uruguay Round negotiations.” IFDA A “TRADE AGREEMENT”? India said the Marrakesh Agreement conveys that the WTO’s key objective is to provide a forum for governing multilateral “trade relations” among its Members and that the subject matter of disciplines within the WTO must be limited to “trade”. Article X:9 also confines only to a “trade agreement”. “It is critical that this basic underpinning of the WTO is not undermined as new subjects are sought to be included in the WTO,” India stressed. “When WTO Members discussed investment in the context of the Working Group established during the 1996 Ministerial Conference in Singapore, the focus was on the “relationship between trade and investment”, which clearly shows the separation that WTO Members apply between the two concepts,” India argued. India drove home the message that “IFD is not a “trade” agreement” and “it does not meet the conditions of Article X.9, and the foundational principle of the WTO governing multilateral “trade relations”.” India pointed out that “the Vienna Convention on the Law of Treaties (VCLT), at Article 2(g), defines “party” to an agreement to mean “a State which has consented to be bound by the treaty and for which the treaty is in force”.” It said that “Article X:9 of the Marrakesh Agreement read in conjunction with VCLT Article 2(g) implies that a request to add a plurilateral agreement to Annex 4 of the Marrakesh Agreement can be made only after the participating members have fulfilled their domestic procedures to sign and ratify the agreement and for which the plurilateral agreement has entered into force.” The preparations for MC14 appear to be equated to brushing aside previous ministerially mandated agreements, while imposing a “top-down” reform agenda that only exacerbates the legal tensions and fragmentation, said people familiar with the development. Under the sub-heading of “marginalization of mandated issues, and diversion of limited WTO resources”, in its submission India conveyed that “the IFD represents a deviation from time honoured WTO negotiating practice.” “It suggests that select WTO Members can cherry-pick areas of their interest with the long-standing demands of especially the developing Members including LDCs being relegated to the sidelines.” In conclusion, India said that “JSIs [Joint Statement Initiatives] create an inherently discriminatory multi-tiered multi-speed trading system and reinforce asymmetrical bargaining power.” India stressed that “JSIs such as the IFD have led to a diversion of the negotiating capital of the participating Members to areas without a multilateral mandate, which is not a priority for the entire Membership.” It said that “JSIs continue to use the WTO’s resources and institutional setup without any mandate from the Membership.” “The nature and extent of involvement of the WTO Secretariat in respect of JSIs that are not yet part of the WTO framework poses significant systemic and budgetary concerns,” India argued. In short, it said “diversion of critical resources of the WTO for activities and issues that concern only a subset of members and that have not been mandated, raises questions of consistency with the priorities of the entire membership.” India underscored that it is important that “the WTO’s institutional energy and resources are efficiently allocated to support discussions and work that is multilaterally mandated, concerns the entire Membership and remains consistent with WTO’s core foundational underpinnings.” +
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