NEW DELHI: The 13th ministerial conference (MC 13) of the World Trade Organisation (WTO) in Abu Shabi next week could dent the crucial single-undertaking rule or consensus-based decision making at the multilateral body, sources here warned. New Delhi would oppose the China-led Investment Facilitation for Development (IFD), even as a plurilateral pact, they asserted, but expressed the apprehension that it could still be adopted by the world body.
Government sources here say that the IFD, which is backed by at least 120 countries, buy opposed by India, US, Brazil and South Africa, could undermine the autonomous domestic policy space on foreign direct investments.
According to the sources, Idia is opposing bringing investment facilitation to the WTO because it is a non-trade matter which the global trade body should not be involved in. Other reasons for staying away from the agreement is to protect the autonomy to take domestic investment-related decisions without the obligations imposed by international commitments, they added.
While investment facilitation is the idea with maximum backing at the start of MC 13, other issues engaging India’s attention is finding a permanent solution to the public stockholding operations and government procurement of agricultural produce.
India will also be pushing for an end to moratorium on taxation of cross-border electronic transmissions, greater room to provide subsidies to its fisheries sector. Officials have clearly stated that India will start negotiations on other issues of agriculture like subsidies and export control only after it gets a permanent solution to public stockholding issues.
As per law the inclusion of IFD in the WTO would require a consensus at the ministerial conference. Out of the 164 members of the WTO, the IFD has a backing of 120 members, and more may join the bandwagon. The discussions on IFD began in April 2017 and the countries involved finalised the text of the agreement in November 2023.
WTO allows members to bring a proposal through annexure-4 of the WTO for plurilateral agreements, implying the proposal would be binding on only the signatory members, and not on others. However, India is opposed to use of this route to bring in IFD, as the multilateral nature of the WTO would then be at stake. Any such pact should be outside the formal structure of the WTO, India feels.
However, during a ministerial event on IFD scheduled for February 25, IFD participants will likely issue a Joint Ministerial Declaration, appending the final IFD Agreement and making it available to the public.
“The very fact that we have reached such a stage on investment facilitation implies that it is without following the rule of law,” Abhijit Das, trade expert and former head of Centre of WTO Studies at Indian Institute of Foreign Trade said. “It will leave a legal question of how (IFD) can be integrated into the WTO system because WTO requires such agreements to be integrated exclusively by consensus. All these joint statements and plurilateral initiatives are marked by being started without a consensus,” Das added.
According to expert on WTO matters and former professor at Jawaharlal Nehru University Biswajit Dhar, “There could be some forward movement in areas which we are not comfortable. There is a larger problem of how decision making in this multilateral system is taking place. Groups of countries have got together and started negotiating on issues keeping others outside the loop. It doesn’t look too good for India.”
There would be some pressure on countries like Brazil and South Africa that are opposing this agreement mainly on systemic grounds, but how long they are able to sustain their opposition remains to be seen, he added.
The focus of the IFD Initiative is not on changing Members’ investment policies in substance, but on making such investment policies more transparent and investment related administrative procedures more streamlined and efficient.
According to China and others who back IFD, it would create clear and consistent global benchmarks for investment facilitation, reducing regulatory uncertainty and making it easier for investors to invest. It would, according to them, anchor domestic reforms in shared international commitments, thereby sending a signal to investors that a host economy is committed to reforming its investment climate. Also, it would allow developing and least-developed country (LDC) members to receive the technical assistance and capacity-building support they need to implement and benefit from the future agreement. Countries with sovereign wealth funds looking for investment avenues are part of the pact.
Source: The Financial Express
