TWN Info Service on WTO and Trade Issues (May17/14)
However, there is a view that these could be brought up by proponents (with some help from the Secretariat) at the GC and/or the Ministerial Conference for decision at some point, and would force opponents (like India) to be alert and every time object and continue to deny consensus, according to trade observers.
While having "Facilitation" in their title, the Job items go far beyond, incorporating Rights and Obligations for Members in an area not within the WTO remit, and with the scope for their further development and expansion to regulating market access and treatment for investments.
A recent South Centre memo has summarised succinctly under various heads, the proposals in Job documents of several members. And in two interventions (full texts below), at the outset of the General Council (GC) meeting on 10 May, the Indian envoy, Ambassador Mrs. Anjali Prasad, has clearly set out why they could not be on the agenda.
Elements of the Investment Facilitation Proposals in Job documents of Russia, China and Brazil/Argentina are varied, and wide and far-reaching, going far beyond what "Facilitation" means in normal, common usage, and have been summarised thus, in the South Centre memo.
Objectives: Creation of a "transparent, stable and predictable regulatory and administrative framework for investors, without questioning the rights of the Members to regulate..." (Russia)
-- "provisions for transparency for relevant regulations" (Russia);
-- "make publicly available all investment-related laws and regulations, enquiry points";
-- "notification; applicable screening guidelines and clearly-defined criteria for investment assessment (China)"; "shall notify to the WTO all laws relating to investment policy issues of general application and regulatory issues of a cross-cutting nature (Brazil)"; "to the extent practicable... opportunity to comment (China; Brazil - "whenever possible").
Domestic Regulation (Russia)/Administrative Procedures Relating to Investment (China) (Overlaps with Transparency):
-- "Criteria - encourage the establishment of clear and consistent criteria and procedures for investment screening, appraisal and approval..." (China); "procedures and requirements for obtaining necessary permits are reasonable... all relevant information, including exhaustive lists of requirements, is publicly accessible" (Russia);
-- "Fees and Charges - reason for such fees; commensurate with costs of services rendered by such authority (Russia; China - "to the extent possible...");
-- "Processing of applications - a common set of principles for investment screening and licensing, "stable, predictable and efficient framework for investors" (Brazil); Timeframes for administrative actions are reasonable and predictable (Russia); "Streamline investment-related licensing and qualifications requirements and procedures..." (China); "Single window" (Russia): single electronic window (Brazil); "one-stop" approval institution where possible (China);
-- No Investor-State Dispute Settlement clause (ISDS): Dispute prevention and resolution within a Member's jurisdiction (Russia); National Focal Point or Ombudsperson to help prevent disputes between Members (Brazil);
-- Special and Differential Treatment: "Levels of development, development needs, technical assistance and capacity building" (Russia, China, Brazil); "Obligations in 3 categories of implementation schedules (as in Trade Facilitation Agreement," Brazil); "LDCs not required to implement" (Brazil); Priority consideration to needs of LDCs (China);
-- Other Elements: "Facilitate personnel relating to investment" (China); "Endeavour to accord investors easy access to basic public infrastructure" (China); "A Committee for Investment Facilitation" (Brazil); "Corporate social responsibility - voluntary by investors" (Brazil; China);
-- Clear link with Market Access: Brazil acknowledges that these rules would make it easier for investors "to establish, maintain and expand their investments in host countries" (Brazil);
-- Future Elements: The rules should include elements for their future development and expansion to regulating market access and treatment for investments (Russia).
Sources: Russia (JOB/GC/120); China (JOB/GC/123); and Brazil (with Argentina, JOB/GC/124).
At the GC Council meeting of 10 May, the Indian Ambassador to the WTO, Mrs. Anjali Prasad, made two interventions, to object to inclusion of the items on the GC agenda, how they were beyond the remit of the WTO, and could not be considered or WTO rules framed on them.
In her first intervention, she said: "India would like to express its reservations on the inclusion of the proposed agenda item on "Trade and Investment Facilitation" (IF) at today's General Council meeting. While we thank the proponents for the various submissions and proposals, we believe that the so-called subject - Investment Facilitation - does not lie within the purview of the General Council, and the WTO itself. We could elaborate on the reasons for this position if so desired. Procedurally, as per Rule 6 of Procedure for Meetings of the General Council, the first order of business for each General Council meeting shall be the consideration and approval of the agenda proposed. If there is no consensus on the inclusion of any proposed item on the agenda, the item cannot be included in the agenda. Hence at this stage we object to the inclusion of item 5 in the agenda and express inability to join consensus on the adoption of the agenda as proposed. We could, however, support adoption of proposed agenda with the exclusion of item 5."
In her second intervention, explaining in detail India's objections, Mrs. Prasad said: "India believes that investment as a subject does not lie within the scope of discussions or negotiations at the WTO. We all acknowledge the strong legal structure and rule-based member-driven character of this Organization. An essential element of the strong legal structure of the WTO is that the functions and responsibilities of the WTO are informed by the Marrakesh Agreement establishing the WTO and the other Multilateral Trade Agreements.
"There are two broad functions of the WTO under the WTO Agreement - first, facilitating implementation of existing agreements and second, providing the forum for negotiations among Members concerning their "multilateral trade relations". Article III:1 of the WTO Agreement states that the WTO shall "facilitate the implementation, administration and operation and further the objectives, of this Agreement and of the Multilateral Trade Agreements". What is being referred to as Investment Facilitation does not fall within the ambit of implementation, administration and operation and furthering the objectives, of any of the Multilateral Trade Agreements. In this context, it is to be noted that General Council shall carry out functions assigned to it by the WTO Agreement. Thus, the General Council cannot function outside the ambit of the Agreement establishing the WTO.
"Further, Article III:2 of the WTO Agreement states that the WTO shall provide a forum for negotiations among its members concerning their multilateral trade relations. "Investment Facilitation" which supposedly deals with facilitating "investment" does not pertain to "multilateral trade relations". Investment per se is not trade. It may or may not result in cross border trade which is the subject of multilateral trade relations. "Investment" covers a wide range of assets or enterprises that are subject to a separate universe of bilateral obligations. We all are aware of the multitude of Bilateral Investment Treaties that cover aspects of facilitation, protection and dispute settlement in varying degrees. The so-called investment facilitation or protection cannot, therefore be characterized as addressing "multilateral trade relations" and the contours of the two are totally different. Therefore India does not believe that it has relevance in the context of multilateral trade relations. Because trade cannot occur without investment and therefore investment is part of multilateral trade relations is too farfetched an argument.
"As far as the existing Multilateral Trade Agreements are concerned, the Agreement on TRIMS and GATS already deal with trade related investment aspects in the areas of goods and services respectively. The TRIMS Agreement deals with "investment measures" that can cause trade restrictive and distorting investment measures. Any such discussion on such investment measures should take place in the TRIMS Committee. The GATS deals with supply of services through commercial presence in the territory of any other Member which is related to "trade in services" and not purely investment. However, neither the TRIMS Agreement nor the GATS provide the context for a general discussion on policies, rules and regulations surrounding investment.
"Further, the work towards negotiations on the relationship between trade and investment issues which was outlined in paras 20-22 of the Doha Ministerial Decision has been stalled under para 1g of the July Framework which clearly mandates that these issues will not form part of the Doha Work Programme and therefore no work towards negotiations on this issue will take place within the WTO during the Doha Round.
"More recently, para 34 of the Nairobi Ministerial Declaration notes that while some members wish to identify and discuss "other issues" for negotiations, others do not. This indicates clearly that there is no consensus on the identification and discussion of these so-called "other issues" for negotiations - the so-called Investment Facilitation is one such issue that is identified by a few as a "new issue" but India does not subscribe to this identification and need for discussion.
"India, therefore, objects, to the inclusion of investment issues, including so-called Investment Facilitation in the WTO and is not in a position to agree to the inclusion of the agenda item "Trade and Investment Facilitation" in the regular agenda of the General Council.
"Of course, Members who have an interest in this subject, are entitled to take up informal discussions on this or any other subject outside the formal structures of the WTO. We have seen the MITKA take this up in structures outside the formal bodies of the WTO.
"Mr. Chairman, to conclude, we are not in a position today to agree to the adoption of the agenda with item 5 included in it as India opposes inclusion of investment related issues at the threshold."
[* Mr Chakravarthi Raghavan is the Editor Emeritus of the SUNS.]