BACK TO MAIN  |  ONLINE BOOKSTORE  |  HOW TO ORDER

TWN Info Service on WTO and Trade Issues (May17/18)
24 May 2017
Third World Network


Investment facilitation cannot now be discussed formally at WTO
Published in SUNS #8467 dated 22 May 2017


Geneva, 19 May (Kanaga Raja) - Following strong opposition from India along with several other developing countries to the inclusion of an agenda item on trade and investment facilitation (IF), a resumed General Council meeting on Thursday decided that this issue cannot now be formally discussed at the World Trade Organisation (WTO).

The proponents of this issue who had put forward several proposals for inclusion of the item in the agenda of the General Council meeting on 10 May, with a view to securing some deliverables on IF at MC11 in Buenos Aires this December, will now only be able to discuss it informally without seeking any possible outcomes either in the General Council itself or at MC11.

At the General Council meeting on 10 May, India had blocked the adoption of the agenda due to its opposition to item 5 of the draft agenda on trade and investment facilitation.

The draft agenda item 5, for the 10 May GC meeting, had stated the following: Trade and Investment Facilitation - Communication From Mexico, Indonesia, Korea, Turkey and Australia (MIKTA, Job/GC/121) - Joint Communication From the Friends of Investment Facilitation for Development (Job/GC/122 AND Job/GC/122/ADD.1) - Communications From the Russian Federation (Job/GC/120), China (Job/GC/123), Argentina and Brazil (Job/GC/124).

Following India's objection to the adoption of the draft agenda, the meeting was suspended, with the Chair of the General Council, Ambassador Xavier Carim of South Africa, holding consultations with the sponsors of the proposals on IF and India.

The impasse was finally broken on 17 May afternoon with both sides agreeing to a Chair's statement. This paved the way for the resumed General Council meeting on Thursday (see SUNS #8466 dated 19 May 2017).

According to trade officials, the resumed General Council meeting on Thursday began in informal mode where the Chair of the General Council reported that he and the Director-General had held intensive consultations on the issue and that they had reached an outcome - a statement by the GC Chair - that in their view the membership could support.

With no one opposing, the meeting reverted to formal mode, with the GC Chair reading out his statement.

He said that as he had indicated while suspending the Council on 10 May, he had held a series of consultations and "we may now be in a position to adopt our agenda" based on the following:

Ambassador Carim said the Agenda Item 5 is reformulated as "Communications on MIKTA Workshop and Informal Dialogue on Investment Facilitation" to allow for an exchange of views on the initiatives that some members have had or plan to have in informal dialogues on investment facilitation.

The GC Chair added: Members will recall the July 2004 General Council decision as contained in document WT/L/579 as well as paragraph 34 of the Nairobi Ministerial Declaration. All the statements made at the General Council on 10 May 2017 at the time of considering the proposed agenda are recorded in the minutes of this meeting.

It is noted that the proponents seek to share information on informal dialogues on investment facilitation and that the communications do not constitute proposals for negotiations, he said, adding that proponents believe that informal dialogues on investment facilitation are important.

It is also noted that some members believe that investment facilitation does not lie within the scope of the WTO and hence the General Council.

Finally, said the Chair, pursuant to Rules 2 and 4 of the Rules of Procedure for the General Council, "we note that the General Council is not required to take any decisions under this item on the agenda."

The Chair said that he is making this statement under his own responsibility and that he trusts that members are now in a position to adopt the agenda as amended.

The General Council then adopted the agenda with the proposed amendment.

Some 34 delegations then spoke under the amended agenda item 5.

According to trade officials, those that spoke in favour of holding discussions on investment facilitation included members of the MIKTA [Mexico, Indonesia (which did not speak), Korea, Turkey and Australia], Brazil, Argentina, China, Nigeria, Pakistan, Russia, the European Union, Qatar, Chinese Taipei, Paraguay, Singapore, Korea, New Zealand, Switzerland, Norway, Canada, Japan, Bahrain, Saudi Arabia, Israel, Colombia, and Hong Kong (China).

Those that opposed holding discussions on investment facilitation argued this is not in line with the mandates, and that the priority should be on the conclusion of the Doha negotiations and not on bringing in the so-called new issues on the agenda.

These included Cameroon, Ecuador, Uganda, India, South Africa, Bolivia, Cuba, and Venezuela.

According to trade officials, Australia, on behalf of the MIKTA group, said that the issue of investment was already being dealt with piecemeal in the WTO. It was in the GATS (Mode 3), in the TRIMs Agreement, the TRIPS Agreement as well as the WTO Agreement on Government Procurement. All these deal with investment measures.

Investment is an important part of the work of the WTO. Developing countries account for an increasing share of inward and outbound investment. Investment is important to achieving the UN Sustainable Development Goals.

It recognised that it won't be easy given the longstanding sensitivities on this issue at the WTO. But the group is willing to discuss it and investment facilitation is a good start in this area as it avoids known sensitivities.

China, on behalf of the Friends of Investment Facilitation for Development, said that the informal dialogue that is being proposed will proceed without specified outcomes. It will look at measures that members could take to facilitate investment and examine possible ideas on improved transparency, predictability, and streamlining of regulations. It will not tackle market access, investor-state dispute settlement, and investment protection.

From China's perspective, investment facilitation is increasingly relevant to WTO members and it is a timely and meaningful topic for discussion in the WTO. It is being formulated in a way that will avoid the more controversial subjects. It looked forward to discussing this in the future.

On behalf of itself, China said that it is apparent that we were in difficult times with regards to the suspension of the General Council meeting. It called for reconciliation and understanding.

Russia said that currently the WTO only addresses certain aspects of investment facilitation especially in services. Talks could look into this imbalance.

Brazil pointed out that in its proposal with Argentina, both were very careful in how they framed the discussions so that it would be suitable to developing countries, and that it would exclude sensitive issues - investment protection and investor-state dispute settlement.

The EU said that it had serious concerns over the events of recent days. While the WTO's negotiating function hasn't worked for some time, even up to today the deliberative function had not been challenged until the recent events.

While we don't always agree on particular topics, we always had a readiness and openness to discuss particular topics which has been a cornerstone of our work, it said, and hoped that the events of the past week would not develop into a systemic menace. The last thing the WTO needs is paralysis in its decision-making structures. We are wasting quite a lot of time on matters of procedure and formalities in the run-up to Buenos Aires, it said.

Pakistan said it viewed trade and investment as two sides of the same coin. One cannot thrive without the other. Investment is extremely important to the developing and least-developed countries. It noted that South-South FDI has been growing quite a bit in recent years. It has jumped from 3% at the beginning of this century to 14% by 2009.

It also noted that the Friends of Investment Facilitation for Development are organising a seminar on 10 July on behalf of the group.

Japan welcomed the resumption of the General Council meeting. It believes that members should not be prevented from raising any issue which they want to discuss in the General Council.

It was of the view that trade and investment are inseparable in today's world of global value chains, and that facilitating investment contributes to inclusive trade and economic growth. Therefore, having discussions on investment at the WTO is relevant, it maintained.

According to trade officials, India noted that it had expressed its strong reservations to the inclusion of item 5 on the agenda at the 10 May General Council meeting.

It reiterated its strong opposition to discussions in any formal structures in the WTO on investment facilitation, as the subject is outside the scope and ambit of the Marrakech Agreement establishing the WTO.

India viewed the Chair's statement as adequately reflecting the positions on the issue. India opposes discussions on investment facilitation in the WTO based on serious, substantive and systemic concerns.

India pointed out that the discussions do not fall within the ambit and scope of the WTO, hence, it doesn't fall within the ambit and scope of the General Council and other bodies. Investment doesn't concern multilateral trade relations, it said.

We all understand that discussions in this organisation do not occur without context, which is the establishment of enforceable WTO rules. Therefore, any discussion will have serious repercussions and implications, it cautioned.

Investment facilitation is not directly related to multilateral trade negotiations, hence the WTO is not the proper forum. Members can hold discussions outside the formal structures of the WTO. This agenda item today is only to allow exchange of views on initiatives of some members that they have or are planning to have in respect of informal dialogues.

India said it has strong opposition to discussions in the negotiations on investment facilitation within formal structures of the WTO including the General Council.

Uganda, coordinator of the least developed countries (LDCs), regretted that this item was put on the agenda even with the suggested amendments that the Chair read out. This issue is misplaced and there is no mandate to discuss it here in the WTO. It cannot and should not promote a process that does not play by the rules simply for the reasons of expediency, said Uganda.

Members are free to meet when they choose to discuss whatever issues are of interest to them. However, bringing this issue to the same General Council that prohibited it is an exceptional act of bad faith and high handedness, Uganda underlined.

With this act, members (the proponents) want to repeal one by one all of the protective gear available to small and less powerful members. There is no such thing as mere discussion, if it torpedoes due process, said Uganda.

Uganda called upon all members to exercise maximum restraint so that the organisation doesn't transform into a club where only the strong survive.

South Africa said that it was taken aback and surprised that this item was placed on the agenda of the General Council meeting (on 10 May).

Given what we have heard repeatedly from opponents about bringing this matter to the WTO, most recently at a HOD meeting on 8 May, we won't enter into discussions on the issue other than to note that there is neither agreement nor mandate to discuss investment facilitation in the WTO, it said.

The 2004 General Council decision removes investment from the WTO mandate. Paragraph 34 of the Nairobi Ministerial Declaration (on non-Doha issues) states that any decision to launch negotiations multilaterally would need to be agreed by all members.

South Africa made clear that it is not able to agree to any proposals to initiate discussions on investment in any formal structure of the WTO. We can informally participate in workshops and seminars as long as it is in the non-negotiating context and outside of the WTO.

Cuba pointed out that the Doha mandate remains in force. Investment has no working mandate in this house since 2004.

Negotiations on the Doha issues should remain a priority for work until we are able to honour the commitments that we took on. We are completely committed to concluding the pending issues, it said. The reality is none of these new issues have achieved consensus. Cuba thanked India for its leadership.

Ecuador said that on investment facilitation it does not oppose looking at new issues on the understanding that it would not move to concrete negotiations, which would require consensus of the membership. Venezuela said that the issue of investment does not fall under the WTO.

According to trade officials, the United States said the papers that have been put forward show a clear interest in this topic of investment, similar to what was seen on e-commerce. It is continuing to study the papers. It highlighted the question of what specific problem is investment facilitation trying to solve, and how the rule-making framework of the WTO can provide a solution, if there is indeed a problem. There is need to address these basic definitional issues, and not much has been revealed today in this respect.

The US said that it will follow the informal discussions but it is dubious at arriving at a common position on inclusion of this issue on the WTO agenda in the near term. It is not even clear whether the proponents have a shared view on the precise scope of what this topic could cover.

One example is licencing procedures. Experience has shown that getting a multilateral agreement on something like this may be a daunting task, it said.

INFORMAL DIALOGUE ON MSMEs

The General Council also took up an agenda item on: Informal Dialogue on Micro, Small and Medium Enterprises (MSMEs): Statement by Argentina, Brazil, Brunei Darussalam, Chile, Colombia, Malaysia, Paraguay, The Philippines, Switzerland, Uruguay and Viet Nam.

Pakistan, the EU, Moldova and Chinese Taipei said that they want to be associated with the proposal.

According to trade officials, Argentina, on behalf of the proponents, said that policies to increase MSME participation seem necessary and the WTO has an important role to play in this respect.

The Friends of MSMEs are looking for ways forward based on concrete proposals submitted by members. Their aim is to achieve an outcome at Buenos Aires including building an appropriate platform for future discussions in the long-term.

It noted that the obstacles to MSMEs include insufficient information on access to market opportunities, the high cost of accessing information to comply with regulatory measures, high transportation and shipping costs and other related logistics, and limited access to digital connectivity.

According to trade officials, those who spoke in favour of having an informal dialogue on MSMEs included Chile, Paraguay, Pakistan, Switzerland, the EU, Colombia, Russia, Japan, Moldova, Canada, Korea, Nigeria, Thailand, Chinese Taipei, Hong Kong (China), Singapore, the Philippines for ASEAN, Australia, New Zealand, Nicaragua, Norway, Colombia, China and Uruguay.

Those that were not in favour of having the informal dialogue included South Africa, India, Bolivia, Cuba and Venezuela.

South Africa said that like the issue of investment facilitation, it has a similar attitude towards this informal dialogue on MSMEs. There is no agreement to bring this issue into the formal agenda of the WTO.

It noted that informal discussions have been ongoing outside of the formal structures and they should continue in this manner. It is not convinced that the problems faced by MSMEs can be addressed in the WTO through the rules function. It does not agree that MSMEs are an issue for decision or guidance for ministers in Buenos Aires.

According to trade officials, India said that the idea of achieving an outcome in Buenos Aires raises serious concerns. It asked what are the specific results that the proponents are seeking to achieve.

It seems like most of the proponents have put forward the idea of implementing the trade facilitation agreement as one way to address this, removing barriers of a general nature. But these are of a general nature and not specific to the MSMEs.

WTO provisions are neutral in terms of types and size of business entities, so how exactly would you deal with goods that arrive at the border and come from a MSME? Would you have separate procedures for that?

This would add another layer of scrutiny, it said. It also pointed out that the definition of a MSME varies widely especially between developed and developing country members. There is need for a basic understanding of this concept. It also voiced concerns that e-commerce is being slipped in through the MSME agenda.

While the MSME proponents can continue informal engagement, for this issue to be reviewed by the General Council, it should fall in the General Council's mandate by consensus of the membership. It is clear that no consensus on this issue exists, India said.

OTHER ACTIONS

On the agenda item of MC11, Argentina informed the meeting that it wants to change the dates of MC11 from 11-14 December to 10-13 December.

It proposed this for logistical reasons, noting that 11 December falls on Monday and that it would be better to start the meeting on 10 December which falls on Sunday. Moving some 170 or so delegations for the opening ceremony would be much easier to do on a Sunday (in order to avoid traffic jams), it said.

The GC Chair asked delegates to consult with capitals and that they have until 24 May to do so, and if there are no objections by then, these new dates will be adopted.

The General Council also formally elected Ms Susana Malcorra, the Foreign Minister of Argentina, as the Chair for MC11.

Meanwhile, under agenda item 1 on report by the Chair of the Trade Negotiations Committee, the GC Chair noted that members had an informal HOD meeting (last week) and the DG and Chairs of the negotiating groups had provided detailed reports at this meeting which will be included in the minutes of this General Council meeting.

According to trade officials, Cameroon asked why we don't do TNC meetings anymore, and is this practice going to continue?. (The last TNC meeting took place mid-July 2015).

Director-General Roberto Azevedo replied that the report by him at the informal HOD meeting as the Chair of the TNC is actually the TNC report. The report of the TNC is done at the informal HOD meeting and as noted by the GC Chair is included in the minutes of the General Council meeting.

Cameroon asked does that mean that the TNC meetings are suspended? The DG said that the TNC meets every time that a negotiating group meets, under the TNC.

According to trade officials, Uganda noted that since Nairobi (in December 2015), there have been no formal TNC meetings. Now we are doing them in informal HOD, and there is no historical footprint to the meeting.

The DG said that the discussions in the HODs are reflected in the report by the TNC Chair.

Cameroon asked if the TNC format could be revived, to which the DG replied that we can do a HOD meeting first and a TNC meeting after that.

 


BACK TO MAIN  |  ONLINE BOOKSTORE  |  HOW TO ORDER