This study provides a historical recollection of trade and investment in the multilateral trading system. It also highlights approaches taken under regional trade arrangements so as to reflect on recent trends on the issue. The study includes contemporary views with regard to investment facilitation, which highlights WTO Members’ proposals and differing views in this regard.
Trade and Investment in the multilateral trading system was first considered in the Havana Charter of 1948 that proposed establishment of an International Trade Organization (ITO) to regulate trade relations amongst Members; however it was adopted, it did not come into force. Subsequently the General Agreement on Trade and Tariffs (GATT) was maintained to regulate trade relations and as a forum for trade negotiations amongst members, its mandate did not extend to trade and investment. As a result, Bilateral Investment Treaties (BITs) were resorted to by most countries, as the means of regulating and protecting foreign investments.
In the multilateral trading system, soon after the establishment of the World Trade Organization (WTO), at the first Ministerial Conference of 1996, Trade and Investment was amongst the issues proposed for the next negotiation round. Although it was not adopted, Members decided to establish a working group on trade and investment (WGTI) whose mandate was to examine the relationship between trade and investment issues, as well as carry out exploratory work in that regard. In its deliberations, the WGTI considered a number of issues such as:
Technology transfer; Transparency; Non-Discrimination; and Dispute Settlement among others. A possible multilateral framework on investment was also deliberated upon. Ultimately, in 2004 WTO Members decided that trade and investment issues would not be considered before the conclusion of the Doha Development Agenda (DDA) negotiations, and the WGTI went into limbo.
In the meantime, given the continued impasse in the DDA negotiations, Trade and Investment is increasingly being covered within Regional Trade Agreements (RTAs) and in the so-called mega regionals such as the recently concluded Trans-Pacific Partnership Agreement (TPP) and the Transatlantic Trade and Investment Partnership negotiations between the United States and the European Union. The common emphasis in these arrangements is the provision for transparency and non-discrimination with regard to investment. In the TTIP and TPP, investment is broadly defined. The latter agreement also takes consideration of developing country members’ concerns, making provision for their situation with regard to investment regulatory obligations.
The 10th Ministerial Conference Declaration at the WTO noted that although strong commitment remains to advance negotiations on the remaining Doha issues, some Members wish to identify and discuss other issues for negotiations, while others do not. Amongst the issues that have been proposed in this context is investment facilitation.
The proposed Investment Facilitation takes a different approach to trade and investment, from what was deliberated under the WGTI and earlier similar initiatives to multilateralism of trade and investment. Proponents of investment facilitation argue that the overarching objective is to facilitate investment as means of enhancing trade, investment and development through the WTO, which would ultimately be leveraged towards achievement of the United Nations Sustainable Development Goals (SDGs). This approach specifically proposes avoidance of known sensitivities such as investment protection, and investment dispute settlement arrangements. The rationale is to enhance transparency on investment policies and regulatory systems so as to ensure predictability as well as promoting efficiency by streamlining administrative procedures amongst the WTO membership. Such a move, it is argued, would minimise investment barriers, while promoting international cooperation, capacity building and technical assistance to the Membership, thereby contributing to their development efforts.
There are however members with differing views on the above approach. They argue that most countries are cognisant of the role of investment and its potential towards development efforts, and have already adopted policies, legislation and institutions towards attracting and promoting investment, including providing an enabling environment for its enhancement. They are therefore of the view that there is no need for multilateral obligations to undertake what is already being done, moreover such a move would unnecessarily impact on their policy space.
Clearly, a lot more deliberations and considerations will have to be undertaken before reaching a common position on the appropriate approach to trade and investment in the multilateral trading system. Such deliberations should also be inspired by the work of other organisations so as to harness investment for sustainable development, notably UNCTAD, which is the United Nations’ focal point for all issues related to investment and development.