Plurilateral deal on investment facilitation faces opposition

More than six years ago, the 11th Ministerial Conference of the World Trade Organization (WTO) ended without any progress on critical issues but three plurilateral initiatives.
Six years later, one of the initiatives is now almost at the final stage of being incorporated in the WTO as a plurilateral agreement as 123 members have decided to move ahead with it despite opposition from some developing countries like India and South Africa.
On the day before the formal inauguration of the MC13 of the WTO in Abu Dhabi, United Arab Emirates (UAE), on Monday, the ministers and senior officials representing these 123 countries issued a Joint Ministerial Declaration, marking the finalisation of the Investment Facilitation for Development (IFD) Agreement.
They also issued a submission requesting the MC13 to incorporate the IFD Agreement as a plurilateral agreement into Annex-4 of the Marrakesh Agreement establishing the WTO. Being a plurilateral agreement, which is binding only for the members accepting it, others may also join anytime the deal.
India and South Africa are against any such deal arguing that investment facilitation is a non-trade matter and the multilateral trade body should not be involved in it.
They also argued that the agreement may force developing nations to compromise the autonomy to take domestic investment-related decisions without the obligations imposed by international commitments.
Though South Korea and Chile are the formal co-ordinators of the IFD deal, it is widely backed by China. The deal, however, requires endorsement of all the 164 member countries of the WTO to be incorporated as a formal plurilateral agreement.
Some international civil society groups also opposed the deal terming it an 'illegitimate' and 'anti-development'.
"Not only is there no mandate for these negotiations, there is a negative mandate. Countries who are trying to push this through at the MC13 are breaching fundamental WTO rules," says Deborah James, facilitator of the Our World is Not for Sale network, in a press statement.
She alleged that powerful countries, mainly China, put pressure on many small and weak countries to join the plurilateral initiative.
When asked whether Bangladesh is thinking about joining the IFD or any other plurilateral deal in near future, Tapan Kanti Ghosh, senior secretary of the commerce ministry, told journalists that there is no such possibility now as the country in principle upheld the spirit of multilateralism.
"We are observing the developments but there is no plan to join any plurilateral agreement right now," he said. "We are also not in a position to support the said deal. As the LDC group in WTO has a common position in this regard, we should not deviate from this stance."
Nevertheless, participants of the IFD deal include around 90 developing economies as well as 26 Least-Developed Countries (LDCs) including Djibouti, the coordinator of the LDC group in WTO, according to the joint declaration.
Devabrata Chakraborty, Minister (Commercial) at Permanent Mission of Bangladesh in Geneva, said that Bangladesh is not against any specific plurilateral agreement.
"We are always in favour of maintaining WTO's rules and procedures under the multilateral spirit," he told the journalist on Tuesday. "Countries who join any such agreement do so according to their own decisions and interests."
Chakraborty, also a member of Bangladesh official delegation to the MC13, further added that the big developing countries who are opposing the IFD have already identified various flaws in the proposed agreement.
WTO Director-General Ngozi Okonjo-Iweala expressed optimism that the IFD agreement 'will contribute to making the global economy more resilient and inclusive'.
Her supportive position to the deal also comes under criticism by many. They argued that being the head of the organisation, the DG needed to be impartial.
Dr Thani bin Ahmed Al Zeyoudi, UAE's Minister of State for Foreign Trade and MC13 Chair, said that the finalisation of the IFD agreement is the result of more than six years of work, dedication and vision of more than 120 members.
Under a plurilateral agreement, participating countries may form new rules and secure mutual liberalisation of tariffs and those sometimes go beyond the multilateral arrangement under the WTO.
Since the inception of the WTO, only a few plurilateral agreements have been incorporated. The first four such deals were: trade in civil aircraft, government procurement, dairy products and bovine meat. The bovine meat and dairy agreements were terminated in 1997.
The Agreement on Government Procurement (GPA) was first concluded in 1979 under the General Agreement on Tariffs and Trade (GATT). It was revised and expanded later and entered into force in 2014 and has no expiration date. At present, the agreement has 22 parties comprising 49 WTO members.
The Agreement on Trade in Civil Aircraft now has 33 signatories. Bangladesh is one of the observers of the agreement.
Moreover, there are three more plurilateral agreements in force now. These are: pharmaceuticals, information technology and expansion of information technology and services domestic regulation.
All these are negotiated as MFN agreements, meaning these are open for other members of the WTO to join anytime.
Moreover, at least half a dozen plurilateral initiatives are now underway in various stages of discussions among some of the WTO members.
Currently 90 members of WTO are negating the Joint Statement Initiative on Electronic Commerce which was launched during the MC11 in Buenos Aires six years back. Another such initiative on Micro Small and Medium Enterprises (MSMEs) also launched at the same time as informal working and now 98 members of WTO are parties in it. Similarly, Trade and Gender is also an informal working group with 127 members.
Other initiatives include: Multi-Party Interim Appeal Arbitration Arrangement (MPIA), Dialogue on Plastics Pollution (DPP), Trade and Environmental Sustainability Structured Discussions (TESSD), Fossil Fuel Subsidy Reform (FFSR), and Environmental Goods Agreement (EGA).
Meanwhile, the WTO on Tuesday enshrined new rules facilitating trade in services between more than 70 member states, the European Union's trade commissioner said, despite initial objections from India and South Africa.
The set of rules will streamline authorisation requirements and ease procedural hurdles faced by businesses, according to a AFP report based on a press release.
It will help reduce the costs of global services trade by more than $119 billion every year, it added.
Its integration into the WTO implies all 164 members have approved as per the body's rules which require full consensus.
"Reaching this outcome...and integrating it into the WTO has not been an easy pass," EU trade commissioner Valdis Dombrovskis said during the WTO's 13th ministerial conference in Abu Dhabi.
"We faced opposition from two WTO members" but a "spirit of compromise" eventually cleared hurdles, he said without naming any country.
Global services exports are valued at more than $6.5 trillion, representing 23 per cent of total world trade, according to the EU.
The latest WTO agreement applies to 71 member states who signed the initiative but businesses from other member states can also benefit.
China, the United States and the EU are among the 71 signatories. India and South America have not signed.
Costa Rica, which led the negotiations on the initiative, called it "a significant milestone" for member states and the WTO.
This "is the first WTO result in the field of services in more than 25 years. A real success story for this organization," said Costa Rica's foreign trade minister Manuel Tovar.

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[The writer is in Abu Dhabi at the invitation of the Secretariat of the World Trade Organization (WTO) and Friedrich-Ebert-Stiftung (FES), Geneva.