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Trade and Investment in the Multilateral Trading System

The relationship between trade and investment was among the “Singapore issues” dropped from WTO negotiations after the 2003 Cancun Ministerial Conference. However, with ministers' recent decision to explore new negotiating issues at the WTO and the growing presence of investment in trade agreements worldwide, some anticipate a possible comeback of investment at the WTO. At this meeting, East African negotiators discussed the state and ground realities of investment in their countries.

Country Update Notes developed by national partners in the region, seek to obtain the views of various stakeholders on their take for Trade and Investment being negotiated in the WTO. CUTS International, Geneva has also developed a technical note on "Trade & Investment in the WTO" for information and discussion among the delegates.

The forum was designed to remind delegates of the issues related to trade and investment in a historical context. From the rejection of trade and investment as a key issue during the Singapore Ministerial Conference in 1996 and the ensuing establishment of the Working Group on Trade and Investment (WGTI), the suggestion to add these issues to WTO discussions has been controversial. In interviews with EAC members, it was clear private enterprises and researchers supported the inclusion of trade and investment issues in discussions. However, government officials focused on liberalization on the regional level than global multilateral level. There was some worry from multiple EAC countries that they would have to surrender economic autonomy in multilateral agreements. Regionalized trade was the preferred method for economic growth among these states. The delegates at the forum were just as hesitant to commit to negotiating a multilateral agreement with trade and investment provisions. All delegates felt that as soon as a developing country makes a commitment to these issues, they are expected to create quid pro quo agreements with developed nations that might limit autonomy. Preservation of domestic laws were considered the top priority for developing countries. While many believe a multilateral framework promotes FDI, this is not always the case as domestic investors are not always involved. Delegates stated their goal was legal and economic autonomy.

Instead it was suggested that issues directly relating to domestic or regional development are examined because trade and investment framework is not considered a development issue to EAC states. Any multilateral framework would have to include beneficial provisions that are not already included in TRIMs or TRIPs or there is no incentive for developing countries to adopt it. Furthermore, it is significantly easier to pull out of bilateral agreements than multilateral trade agreements through the WTO. The EAC countries are cautious domestic industries will be cut out of investment and they will not be able to pull out of destructive agreements. Instead, growing as a region should be the priority right now and taking trade and investment to the WTO at this time would be too risky.

In general, the delegates did not consider the mention of trade and investment in negotiations beneficial to their development agenda. They preferred to focus on domestic firms and regional growth. For the next meeting, it was suggested that domestic growth be examined in reference to recent reports by the ACP and LDC. Delegates concluded that domestic and regional growth is the first step toward economic strength.

 

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