TWN Info Service on WTO and Trade Issues (Nov19/06)
14 November 2019
Third World Network

Ministers declare intent to finalise outcome on IF at MC12
Published in SUNS #9014 dated 7 November 2019

Geneva, 6 Nov (D. Ravi Kanth) - Trade ministers from China and 63 other countries have decided to work towards a "concrete outcome" concerning the plurilateral Joint Statement Initiative on investment facilitation at the twelfth World Trade Organization (WTO) ministerial conference (MC12) in Nur Sultan, Kazakhstan, in June 2020.

At an informal trade ministerial summit on Tuesday (5 November) hosted by China in Shanghai, to coincide with its huge 2019 trade fair there, the trade ministers issued a joint statement declaring their intention to finalize an outcome from the ongoing plurilateral informal Joint Statement Initiative (JSI) on investment facilitation (IF) at the WTO.

The joint statement was signed by ministers from Afghanistan, Argentina, Australia, Barbados, Brazil, Burundi, Cabo Verde, Cambodia, Canada, Central African Republic, Chad, Chile, Colombia, Congo, Costa Rica, Djibouti, Dominica, Dominican Republic, Ecuador, European Union, Gabon, The Gambia, Ghana, Grenada, Guatemala, Guinea, Guinea-Bissau, Honduras, Hong Kong (China), Iceland, Japan, Kazakhstan, Korea, Kuwait, Kyrgyz Republic, Laos, Liberia, Macao (China), Mauritania, Mexico, Mongolia, Montenegro, Myanmar, New Zealand, Nigeria, North Macedonia, Norway, Pakistan, Paraguay, Russia, Saudi Arabia, Seychelles, Sierra Leone, Singapore, Suriname, Switzerland, Tajikistan, Turkey, Uruguay, Vanuatu, Yemen, Zambia, and Zimbabwe.

Although the mandate on investment facilitation is based on a plurilateral framework agreed outside the WTO's multilateral framework, the joint statement claimed that the "2017 Joint Ministerial Statement adopted in Buenos Aires" is aimed "at developing a multilateral framework on Investment Facilitation for Development."

The ministers said they recognize "the reinforcing relationship between trade and investment and their key role to leverage development in today's global economy, as well as the need for closer international cooperation at the global level to create a more transparent, efficient, and predictable environment for facilitating cross-border investment."

The participating trade ministers in Shanghai stated that "facilitating greater developing and least-developed Members' participation in global investment flows should constitute a core objective of the framework."

Further, "the discussions shall not address market access, investment protection, and Investor-State Dispute Settlement," the trade ministers said, welcoming "the high-level engagement among WTO Members in the ongoing Structured Discussions on Investment Facilitation for Development."

"These discussions will continue to be Member-driven, transparent, inclusive and open to all WTO Members," the ministers said.

Significantly, several developing countries such as India, South Africa, Indonesia, Malaysia, and Vietnam among others as well as the United States are among the notable absentees from the joint statement on investment facilitation issued at the Shanghai meeting.

In May 2017, discussions on investment facilitation were blocked at the WTO's General Council meeting.

Subsequently, discussions on investment facilitation were held at the WTO on the understanding that it is not part of the multilateral framework, noted a trade envoy, who asked not to be quoted.

China, however, has not issued any statement from Shanghai on the outcome, if any, on the multilateral deliverables for the 12th ministerial conference in Nur Sultan next year.

Also, the list of participants for the informal ministerial on WTO issues at Shanghai consists of almost one third of the participants who signed the pledge on investment facilitation.

The list of confirmed participants for the informal WTO meeting, seen by the SUNS, include Argentina, Australia (which will be represented by Canberra's trade minister Mr Simon Birmingham), Benin, Brazil, Cambodia, Canada, Chad, Chile, Colombia, Costa Rica, the EU, Hong Kong (China), India, Indonesia, Jamaica, Japan, Kazakhstan, Korea, Mexico, New Zealand, Nigeria, Norway, Pakistan, the Philippines, Russia, Saudi Arabia, Singapore, South Africa, Switzerland, Thailand, Turkey and Vietnam.

The US is not listed among the confirmed participants at the Shanghai meeting, despite Washington having already tabled controversial proposals on "differentiation/graduation" of several developing countries from availing special and differential treatment, and on punitive transparency and notification requirements.

While China's commerce minister Mr Zhong Shan chairs the half-day meeting, WTO director-general Roberto Azevedo will provide an overview of the state of play in the negotiations.

The meeting on WTO issues at Shanghai is aimed at "advancing the necessary reforms of the WTO", which is facing the worst systemic crisis, said trade envoys, who asked not to be quoted.

With the Appellate Body (AB) set to become dysfunctional from 11 December 2019 because of the intransigent positions adopted by the US in blocking the selection process for filling six vacancies at the AB, the WTO will lose a major limb for enforcing trade rules, said a trade envoy, who asked not to be quoted.

[With the AB dysfunctional, but the DSU rules on appeal in force, adoption of panel reports will remain blocked, if a party losing in panel rulings simply gives notice of appeal. SUNS]

As part of the WTO reforms, the US has already issued a memorandum on 26 July for bringing about differentiation/graduation among developing countries for availing special and differential treatment in the current and future trade negotiations.

China, India, and South Africa among others are the targets for the US-led differentiation initiative.

Washington has also called for enhanced transparency and notification requirements at the WTO, including financial penalties for countries failing to comply with timely notifications.

However, barring the two issues - "possible outcomes of the twelfth WTO ministerial conference" in June 2020 in Nur Sultan, Kazakhstan, and "advancing the necessary reforms of the WTO" - trade ministers are not expected to discuss other systemic issues that are confronting the WTO multilateral trading system, said a trade envoy, who asked not to be quoted.