The road to Kazakhstan Sofia Baliño is Media and Communications Officer in the Economic Law and Policy program at the International Institute for Sustainable Development (IISD) The 70 World Trade Organization (WTO) members currently working on identifying ‘elements’ for a multilateral framework for investment facilitation are expected to present the fruits of their labour at the global trade club’s Twelfth Ministerial Conference (MC12) in Nur-Sultan, Kazakhstan in June 2020. Should their discussions prove successful, the next step would be text-based negotiations after MC12 draws to a close. The push to develop such a framework comes at a time when the global trade body is facing heightened pressure from multiple angles: some of these pressures are building within the system itself, while others are the result of external forces that are repeatedly testing the WTO’s resilience against intense, short-term shocks, as well as its long-term health and ability to support the achievement of sustainable development objectives. The current ‘structured discussions’ on investment facilitation began after the WTO’s last Ministerial Conference in Buenos Aires, Argentina, in December 2017, an event that was known largely for the failure of multilateral negotiations on disciplining harmful fisheries subsidies and in setting up a new work program on agriculture-related trade talks. This disappointment was paired with a landmark development that was largely, though not entirely, unprecedented in the organization’s recent history: the announcement of various ‘joint initiatives’ among large groups of WTO members to lay the groundwork for new negotiations or work in select subject areas1. One of these four initiatives is the development of an investment facilitation framework; the other three involve preparing for formal negotiations on new rules on electronic commerce; working toward a better understanding of the intersection between women, trade, and economic empowerment; and establishing an informal work program on issues that affect micro, small, and medium-sized enterprises’ (MSMEs) ability to participate in world trade. “The fact that this is happening shows that people see this organization as a place where they can advance issues that are of importance to them and to their economies,” said WTO Director-General Roberto Azevêdo at the close of the Buenos Aires Ministerial, while urging participants in these initiatives to make these discussions inclusive2. Since then, the WTO chief has referred to the investment facilitation efforts as a potential avenue for exhibiting the organization’s “continued importance, relevance, and credibility,” while reminding participants at their March 2019 investment facilitation meetings to keep the process open and inclusive, even of WTO members who are not part of the initiative3. “While we work to respond urgently to the broader systemic issues that we face in the trading system, we also have to deliver in areas of immediate, practical economic importance to members. For many members, facilitating investment is clearly one such area,” he continued. Proponents say that investment facilitation could also be valuable in addressing the well-documented shortfall in the investments needed to fulfil the targets included in Agenda 2030 for Sustainable Development and the related Sustainable Development Goals (SDGs), which the United Nations Conference on Trade and Development (UNCTAD) estimates to be at USD 2.5 trillion annually for developing economies4. While this problem is urgent, making sure this same framework or other investment facilitation efforts elsewhere do not complicate the achievement of sustainable development objectives in other ways is also essential. Several major developing countries have argued that creating a multilateral framework for investment facilitation that would be housed at the WTO not only goes beyond the scope of the organization’s mandate and capabilities, but also takes much-needed attention away from existing negotiating issues that have a clearer link to trade and are vital for the development prospects of several countries5. The fact that these discussions are advancing among a relatively small group, despite the opposition of some other WTO members, also raises the question of how this framework can truly be ‘multilateral’ as its proponents suggest, and the systemic implications of then presenting the outcome of these structured discussions to the full membership in Kazakhstan for their buy-in. As with other trade negotiations at the WTO, the closed-door nature of the discussions also means that stakeholders typically present at UN meetings face severe limitations on weighing in on these discussions and advocating for a wider range of perspectives. “The WTO was a rules-based institution. Any and every subject was not within the domain of the WTO as had been laid down in the Agreement Establishing the WTO. If members had to start seeing it as a discussion for each and every subject, it would destroy the rules-based institution,” India said at the May 2017 General Council, where it blocked the addition of an agenda item on investment facilitation on these and related grounds, and stressed the language agreed at the 2015 Nairobi WTO Ministerial about not negotiating on issues where there is not a consensus6. More recently, a group of ministers from developing economies meeting in New Delhi in early May 2019 issued a statement stressing that any new issues being considered under the ‘joint initiatives’ from Buenos Aires must ensure they are supportive of the multilateral trading system. “Multilateral avenues, based on consensus, remain the most effective means to achieve inclusive development-oriented outcomes. Members may need to explore different options to address the challenges of contemporary trade realities in a balanced manner,” they said7. Understanding investment facilitation The group involved in these investment facilitation talks is currently meeting on a near-monthly basis, with their next meeting planned for July8. They have moved from naming possible issues to include in this framework to a discussion that is more ‘concrete’ and incorporates examples and lessons learned from WTO members’ own experiences. This stage is based on a checklist of issues that were raised during their meetings in 2018, though the full checklist is not publicly available. These issues fall within the categories of making investment measures more transparent and predictable, streamlining and speeding up administrative procedures and requirements, developing ways to improve international cooperation and sharing of information and best practices, and seeing that development-related issues are incorporated into such a framework. The sessions themselves are open to any interested WTO members, but are not open to other stakeholders. Within the area of investment measures’ transparency and predictability, possible ‘issues’ that participants raised last year included the notification of these measures to the WTO, along with making those measures publicly available9,10. For administrative procedures and requirements, participants are examining issues such as whether to set time limits for administrative procedures or how to use information and communication technologies in making these procedures advance more quickly and cleanly11. On development, these discussions include the complex and important issue of special and differential treatment, which refers to provisions that allow developing countries additional latitude in implementing some of the WTO’s rules, such as exemptions or additional time. While the structured discussions are barely over a year old, the subject of whether and how to address investment at the WTO is a debate whose origin dates back decades. In the organization’s early years, the relationship between trade and investment was one of the four ‘Singapore issues’ that working groups were tasked with considering after the organization’s first ministerial conference in 199612. These working groups were meant to assess whether and how to include trade facilitation, investment, competition, and transparency in government procurement13. After the Cancún ministerial collapse in 2003, the Singapore issues were formally dropped in 2004, with the exception of trade facilitation, which was integrated into the Doha Round negotiating agenda. It is worth noting that there are some existing WTO Agreements that do address certain aspects of investment, such as the Agreement on Trade-Related Investment Measures (TRIMs) and the General Agreement on Trade in Services (GATS). During the intervening years, investment-related discussions, aside from in the context of GATS and TRIMs, were largely absent from the WTO, though the international investment law and policy regime outside the global trade club has evolved substantially. The number of bilateral investment treaties or treaties with investment provisions that countries have negotiated now numbers at over 3,300, though not all of these remain in force, according to UNCTAD14. Within the regime of IIAs, Brazil has made the notable shift in abandoning the negotiation of bilateral investment treaties in favour of cooperation and facilitation agreements (CFIAs) with interested partners15. G20 members in 2016 adopted Guiding Principles on Investment Policymaking, a notable first for the coalition, though the item was omitted from leaders’ communiqués in 2017 and 201816. UNCTAD, along with the Organisation for Economic Co-operation and Development (OECD), has also played an active role in developing guidance for country governments and regional bodies that they can use in their investment policymaking efforts, including on investment facilitation in relation to sustainability objectives17. The new investment facilitation discussions among the WTO member group was the result of a push by two different configurations of countries. One of them is a group known as the Friends of Investment Facilitation of Development (FIFD), which includes a growing coalition of developing economies that have advocated for an ‘informal dialogue’ on the issue and have held multiple workshops and regional outreach events18. The other group supporting this effort, known as the MIKTA, included Mexico, Indonesia, South Korea, Turkey, and Australia19. Officials from these WTO members, along with some trade experts, suggest that investment facilitation is the natural sequel to the WTO’s Trade Facilitation Agreement (TFA), which is the only global trade deal that the organization has managed to negotiate, adopt, and bring into force since the World Trade Organization was first founded in January 199520. The TFA and investment do have a common history at the WTO, in terms of both being ‘Singapore issues’. From there, however, their tracks diverge. Trade facilitation addresses topics which generally fall within the remit of ministries and border agencies that work on areas such as trade, customs, transport, and foreign affairs. The objective behind trade facilitation is reducing trade costs: making sure that trucks are not stalled for days when crossing national borders, for example, or face onerous bureaucratic hurdles in the form of duplicate document requirements and administrative barriers21. At the time of this writing, the Trade Facilitation Agreement had been ratified by 142 of the WTO’s 164 members. Investment facilitation is another matter altogether: much of investment facilitation touches upon the regulatory environment in which investors operate, which has implications for the business climate22. Developing and implementing multilateral measures in this area would require the involvement of multiple ministries, well beyond those that deal with border issues affecting goods in transit, while implicating a host of economic sectors. How an investment facilitation framework would be designed without expanding into investment liberalization and protection would be complicated at best. The conclusion that investment facilitation disciplines merit further development because the TFA negotiations were a success would therefore be far-fetched, given the conceptual and practical differences between these two subjects in theory and in practice. The TFA also involved a multilateral negotiating process with an agreed mandate and scope, where all 164 members could advocate for their interests, as opposed to the current approach in the investment facilitation talks, where a multilateral framework is being discussed among less than half of the WTO membership. Eyes on Kazakhstan ministerial conference The investment facilitation discussions are preparing to enter their next phase after the summer. Other joint initiatives, namely e-commerce, are now entering a new chapter involving detailed, substantive talks. With just one year to go until the next WTO ministerial conference, these efforts are also taking place in a landscape that, in some ways, have very little to do with investment facilitation at all. WTO members and the institution overall are grappling with an additional challenge: that without a major win in June 2020 in Kazakhstan, either at the ‘plurilateral’ or multilateral levels, the interest and attention of member governments, the private sector, civil society, and academia will move even further away from the global trade club and into other forums and trade agreements, where not all voices will necessarily be included. WTO members in Kazakhstan and beyond, however, need to make sure that they are negotiating not just for the sake of achieving any agreed multilateral outcomes, but that these outcomes address priority issues with urgent development implications, while avoiding the missteps that have prevented these negotiations from reaching a successful, development-oriented conclusion in the past. There are already some worrisome signs in the regular negotiations among the full WTO membership. Multilateral talks on disciplining harmful fisheries subsides have been highly active since the Buenos Aires Ministerial Conference, yet trade officials caution that these efforts need to move beyond engagement into substantive progress, both on technical issues and in securing the political will to meet their current end-2019 target, or even by the June 2020 Kazakhstan Ministerial23. Negotiators working on agriculture are planning to move from working group discussions to more formal talks after July 2019, but what level of ambition they will aim for and what issues they may take is far from clear, with options including an outcome on transparency, a package of incremental advances in select areas, or a comprehensive set of reforms to agricultural trade rules in areas such as domestic support or public food stockholding. Again, while there has been intense activity in this area in Geneva, moving from activity to a consensus, development-oriented outcome supported by all 164 members is a notoriously tough ask, and has proven especially difficult in the agriculture negotiations. Concurrently, the WTO is being repeatedly tested against its ability to handle shocks, including economic ones that lie outside the realm of the institution, such as the US-China trade tensions that have involved months of tense negotiations and tariff escalations, or the impending exit of the United Kingdom from the European Union. It is also facing pressures from within, with its dispute settlement system on dangerous ground. The Appellate Body is widely expected to stop functioning at year’s end: December 10, 2019 is when two more judges’ terms expire, leaving just one Appellate Body member left. The United States, which has been blocking the start of selection processes to fill the vacant Appellate Body slots, has repeatedly made clear that it has no plans to remove its objections any time soon. US Ambassador to the WTO Dennis Shea said in early May that his country could not support any of the proposals for Appellate Body reform that some WTO members have lately put forward, nor has Shea indicated any obvious signs of what approaches could pass muster24. Under WTO rules, three Appellate Body members must sign off on any report, and there is a growing fear that WTO members will be able to appeal reports they disagree with to a body that is unable to take on its appeal. This situation would create an unprecedented state of legal uncertainty, making it impossible to have final, binding rulings on whether members’ disputed measures are consistent with global trade rules. As the days and months tick down toward the Kazakhstan Ministerial, another question is looming large over delegates: whether any negotiated outcomes, multilateral or otherwise, can be effectively enforced in the absence of a functioning Appellate Body. If the investment facilitation and e-commerce joint initiatives both advance enough that their proponents can present outcomes for ministers’ consideration in Kazakhstan, this will also raise a host of additional questions: what will it mean for the multilateral trading system, for example, that elements for this multilateral framework on investment facilitation or a new set of draft rules on e-commerce have been developed among a WTO member group, rather than by all 164 WTO members. While the Nairobi Ministerial Declaration in 2015 made clear that negotiating on any non-Doha Round issues at the WTO would require the signoff of the full membership, the implications of that compromise language in practice could be far-reaching on multiple levels, such as on the levels of energy and interest devoted to existing negotiating issues that are of particular importance to developing and least developed countries (LDCs)25. Some developing countries have questioned whether they would get the same traction if they raised ‘new issues’ of their own without an agreed mandate to do so, leading to an even greater imbalance among the membership and on the organization’s overall agenda26. For example, at the May 2017 meeting of the General Council where China had asked to put an item on the agenda about investment facilitation, Uganda was one of various countries referring back to the Nairobi Ministerial Declaration, and the concern that in that meeting’s aftermath some members were now ignoring issues with existing mandates and instead bringing up new ones of particular interest to them. “Would anybody pay attention to the LDCs if they raised an issue without a mandate?” Uganda said, according to the meeting minutes27. Going forward, participants of this joint initiative must consider what the absence of some emerging economies, such as India and South Africa, from the talks means for the development dimension of any final outcomes, even if these economies have opted against participating in those discussions for the above-mentioned reasons28. Participants must also consider what the unveiling of this investment facilitation framework will mean for the tone of the multilateral discussions among the wider membership, which are already loaded with tension, and whether it will bring back the frustrations and conceptual disagreements that were on display in Nairobi over three years ago. Endnotes 1. WTO (2017), New initiatives on electronic commerce, investment facilitation and MSMEs, 2. WTO (2017), MC11 Closing Ceremony, 3. WTO (2019), DG Azevêdo urges open and inclusive discussions on investment facilitation, 4. UNCTAD (2014), World Investment Report, 5. WTO (2017), Minutes of the meeting held in the Centre William Rappard on 10 and 18 May 2018,,251667,249777,248597,246615,244853,243101,240275,238906,237843&CurrentCatalogueIdIndex=9&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True 6. Ibid. 7. Government of India, Ministry of Commerce and Industry (2019), Outcome of the WTO Ministerial meeting of developing countries working collectively to strengthening the WTO to promote development and inclusivity, 8. WTO (2019), Structured Discussions on Investment Facilitation for Development, 9. WTO (2018), WTO Public Forum: Trade 2030: Working Session 29, Investment Facilitation for Development, Session notes taken on site, supporting audio available online 10. WTO (2019), Structured Discussions on Investment Facilitation for Development, 11. Ibid. 12. WTO (2019), Trade and Investment, 13. WTO (2019), Investment, competition, procurement, simpler procedures, 14. UNCTAD (2019), International Investment Agreements Navigator, 15. International Institute for Sustainable Development, Bernasconi-Osterwalder, N and Dietrich Brauch, M (2015), Brazil’s Innovative Approach to International Investment Law, 16. Berger, A and Evenett, S (2018), The Trump-Induced G20 Stress Test on Trade: Did the German Presidency Pass? 17. UNCTAD (2015), Investment Policy Framework for Sustainable Development, 18. WTO (2017), Workshop on Investment Facilitation for Development, 19. Investment Treaty News, Ghiotto, L (2018), A Critical Review of the Debate on Investment Facilitation, 20. Columbia FDI Perspectives, Hamdani, K (2018), Investment facilitation at the WTO is not investment redux’ 21. WTO (2013), Briefing note: Trade facilitation — Cutting “red tape” at the border, 22. OECD Investment Insights, Novik, A and de Crombrugghe, A (2018), Towards an International Framework for Investment Facilitation,’ 23. WTO (2019), DG Azevêdo: rules-based trading system is “irreplaceable” but must be ready to evolve, 24. US Mission to International Organizations in Geneva (2019), Ambassador Shea’s Statement at the WTO General Council Meeting (agenda items 4, 6, 7), 25. WTO (2015), Nairobi Ministerial Declaration, 26. WTO (2017), Minutes of the meeting held in the Centre William Rappard on 10 and 18 May 2018,,251667,249777,248597,246615,244853,243101,240275,238906,237843&CurrentCatalogueIdIndex=9&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True 27. WTO (2017), Minutes of the meeting held in the Centre William Rappard on 10 and 18 May 2018,,251667,249777,248597,246615,244853,243101,240275,238906,237843&CurrentCatalogueIdIndex=9&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True 28. WTO (2017), India - Statement by HE Mr Suresh Prabhakar Prabhu, Union Minister for Commerce and Industry,
Participants must also consider what the unveiling of this investment facilitation framework will mean for the tone of the multilateral discussions among the wider membership