SEE ALSO
In General Council India alone opposes investment deal as a WTO agreement
Technical note: types of plurilateral deals and adding them to WTO rules
What the agreement includes
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General Council minutes from this meeting and in general (published a few months after the meeting)
All articles tagged “investment facilitation”
All articles tagged “Plurilaterals”
By Peter Ungphakorn
POSTED JANUARY 12, 2024 | UPDATED MAY 10, 2024
India has circulated a strongly-worded statement prepared for the World Trade Organization’s General Council on December 15, 2023 on why it opposes bringing the new plurilateral agreement on Investment Facilitation for Development (IFD) into the package of WTO rules.
It describes the whole process as “illegal”, without any mandate and against the multilateral WTO framework. Worse, India says, the investment facilitation talks defy a “negative mandate” because of previous consensus decisions against the move.
Why is this important? Two words: WTO reform.
But is that legalistic rejection valid? Some lawyers suggest the argument is political even though it is dressed up as legal.
And “BS” is how one described the claim that negotiations can only be launched in the WTO by a consensus mandate.
CONTINUE READING or JUMP TO:
Beyond investment facilitation | What India does not say: nothing on content | What India does say: it’s illegal | What does ‘illegal’ mean? | ‘Negative mandate’ | Consensus to launch | Consensus to add the conclusions to the system | Non-multilateral
Historical footnotes: government procurement and consensus, Annex 4 and investment
Some comments received
Beyond investment facilitation
Why is this important? Two words: WTO reform.
It’s about much more than streamlining investment policies. It affects the drive to reform WTO negotiations so that rule-making in the organisation can catch up with the 21st Century.
Change is needed because most negotiations are blocked. Consensus is the rule for WTO decision-making but it’s proving almost impossible to achieve. At a time when many members want to move on to digital trade, sustainability, pollution, and industrial subsidies, new rules are passed only in dribs and drabs.
This can be solved in two ways.
One is for members to be more compromising, to be more prepared to give and take, to actively search out the trade-offs that allow consensus agreement.
Too often the onus on members is forgotten. No amount of creative thinking at the WTO is going solve the problem of lack of interest in most governments back at home. Not tinkering with the WTO’s decision-making, or changing its structure by setting up an executive board, or anything else.
In the past decade, negotiated, consensus, multilateral rule-making has only happened four times:
- the 2013–14 Trade Facilitation Agreement
- the 2013–14 agreement not to challenge the legality of food stocks procured with large subsidies
- scrapping export subsidies in agriculture (2015)
- an incomplete agreement on fisheries subsidies (2022)
Everything else of consequence has either been deadlocked or a non-starter because there is no consensus.
Without WTO-wide consensus, some members are turning to talks among only those countries that are willing to push ahead, and to reach agreement on new rules that would only apply to them.
In the WTO, these are called plurilateral. Investment facilitation is one. Plurilateral activities are always open to the rest of the membership to join in when they are ready.
The controversy over India’s statement is not about the content of the deal. It’s about the principle — whether plurilateral talks are appropriate at all (with implications for reforming WTO negotiations) and whether members are flouting previous decisions by negotiating anything to do with investment.
I’m not a lawyer. I do speak regularly to some, including on this subject, but this is still a non-lawyer’s attempt to look at the arguments raised by India’s statement.
What India does not say: nothing on content
First, what the statement does not say. It does not say whether the content of the new deal is good or bad. It does not complain that India or its investors will be disadvantaged (actually, they’ll be free riders). It sidesteps the content completely.
But it does object to the topic: “investment”.
THE SEVEN SECTIONS
in the proposed Investment Facilitation for Development Agreement:
1. Scope and General Principles
2. Transparency of Investment Measures
3. Streamlining and Speeding up Administrative Procedures
4. Focal Points, Domestic Regulatory Coherence and Cross-Border Cooperation
5. Special and Differential Treatment for Developing and Least-Developed Country Participants
6. Sustainable Investment
7. Institutional Arrangements and Final Provisions
The 119 participants (Angola and Cameroon joining in January 2024) in the Investment Facilitation for Development deal — developed, developing and least-developed — have crafted their proposed agreement carefully so as not to affect the rights and obligations of non-participants.
When a participating government introduces streamlined and more transparent rules and regulations on investment, as prescribed in the deal, it would do so for all other WTO members, participants and non-participants alike.
That’s why non-participating countries like India and the US would be free riders.
The only discrimination is in the right to bring a legal case in WTO dispute settlement. If a participant (say, the EU) is suspected of violating a provision in the agreement, other participants (say, Chile or Laos) would be able to challenge it legally. Non-participants such as India or the US would not.
There are no market access commitments either, or to put it technically, signatories do not have “schedules” (or lists) of commitments. So the question of whether those commitments discriminate against non-participants does not arise.
India’s complaint is not about being put at a disadvantage by the deal.
PARTICIPANTS
Investment facilitation for development
March 22, 2024
Afghanistan; Albania; Angola; Antigua and Barbuda; Argentina; Armenia; Australia; Austria; Bahrain; Barbados; Belgium; Belize; Benin; Bolivia; Brazil; Bulgaria; Burkina Faso; Burundi; Cabo Verde; Cambodia; Cameroon; Canada; Central African Republic; Chad; Chile; China; Colombia; Congo; Costa Rica; Côte d’Ivoire; Croatia; Cyprus; Czech Republic; Denmark; Democratic Republic Congo; Djibouti; Dominica; Dominican Republic; Ecuador; El Salvador; Estonia; European Union; Finland; France; Gabon; Gambia; Georgia; Germany; Greece; Grenada; Guatemala; Guinea; Guinea-Bissau; Honduras; Hong Kong; Hungary; Iceland; Indonesia; Ireland; Italy; Japan; Kazakhstan; Rep. Korea; Kuwait; Kyrgyz Republic; Laos; Latvia; Liberia; Lithuania; Luxembourg; Macao; Malawi; Malaysia; Maldives; Mali; Malta; Mauritania; Mauritius; Mexico; Moldova; Mongolia; Montenegro; Morocco; Mozambique; Myanmar; Netherlands; New Zealand; Nicaragua; Niger; Nigeria; North Macedonia; Norway; Oman; Panama; Papua New Guinea; Paraguay; Peru; Philippines; Poland; Portugal; Qatar; Romania; Russia; Saudi Arabia; Seychelles; Sierra Leone; Singapore; Slovak Republic; Slovenia; Solomon Islands; Spain; Suriname; Sweden; Switzerland; Taiwan; Tajikistan; Thailand; Togo; Tonga; Uganda; United Arab Emirates; United Kingdom; Uruguay; Vanuatu; Venezuela; Yemen; Zambia; Zimbabwe (128)
(As listed in the revised draft 2024 Ministerial Declaration and the WTO web page on investment facilitation (accessed March 22, 2024). Burkina Faso, Côte d’Ivoire, Dem. Rep. Congo, Venezuela and Tonga joined most recently. Colombia and Taiwan were restored to the list. Earlier, Ghana, Pakistan and Türkiye dropped out)
Sources are here
What India does say: it’s illegal
India’s whole argument is about broader principles.
India is in a small minority of WTO members. The 117 participants are 71% of the membership. They agree on these rules and want them added to the WTO rule-book at the February 26–29 Ministerial Conference in Abu Dhabi.
Even non-participants such as Pakistan, Panama and the US are said to have supported doing so.
India claims that:
- the participants have no mandate to negotiate this subject, and worse,
- they are flouting a “negative mandate” against negotiating it, and
- there was no consensus decision to launch the talks, plus
- the process of negotiating the deal violates the WTO’s multilateral nature
From that, India concludes that the whole deal, including the request to add it to the WTO rule-book, is “illegal”.
Some lawyers disagree on all counts.
Nothing is illegal in our process … people are voting with their feet
— Coordinator Jung Sung Park
Over 60 members (counting the EU as 28) also disagreed with India in the General Council on December 15, 2023, according to sources (the minutes won’t be published for a few months).
And in a public webinar on January 22, 2024 one of the group’s coordinators, Ambassador Jung Sung Park, said: “Nothing is illegal in our process.”
The number of participants in the agreement (now 119) showed “people are voting with their feet,” he said. Park said he hoped dissenting countries would change their minds by the February Ministerial Conference.
What does ‘illegal’ mean?
India circulated its complete prepared statement six days afterwards, having been restricted in the meeting to a 3-minute speaking limit.
It was responding to a statement from the two coordinators (Chile and South Korea) representing the 117 participants in the plurilateral talks.
The coordinators said the group would ask the February 26–29 Ministerial Conference for a consensus decision to add the new deal to Annex 4 (on plurilateral agreements) of the WTO Agreement. That would make Investment Facilitation for Development one of the WTO agreements.
Legally, whatever the ministers have decided, ministers have the competence to undo later
— ex-Secretariat lawyer
Central to the debate are the questions of decision-making and what the WTO Ministerial Conference and General Council can decide.
Here, “there are two separate decision rules,” says one experienced trade lawyer, formerly with the Secretariat and with decades of GATT and WTO experience.
The general rule for decisions is to “follow GATT practice”, the lawyer says. (GATT is the General Agreement on Tariffs and Trade, the WTO’s predecessor as the multilateral trade organisation.)
For attaching plurilateral rules to the WTO rule-book, it’s “consensus”.
What about the powers of the Ministerial Conference and General Council? The most common answer is that members can decide whatever they want. And whether that contradicts previous decisions is entirely up to them.
“Legally, whatever the ministers have decided, ministers have the competence to undo later,” the lawyer says.
What India calls illegal, others might describe as members changing their minds. Or responding to changed circumstances. Or possibly bad faith. But not illegal.
The bottom line is there is no independent arbiter of whether a decision by the Ministerial Conference or General Council is valid or not — or whether it is legal or illegal. It cannot be established objectively, unlike, for example, with a court ruling. It’s up to the members to decide by consensus. (Voting is possible but never used — but see what happened in 1985, below.)
In other words, when India says this proposal is illegal it’s describing why it opposes the proposal and justifying why it won’t join a consensus on it. It’s an opinion.
Other members can argue the opposite, that the proposal is perfectly legal. That’s also an opinion.
Neither side’s arguments would be factually proved, because there is no court to judge — apart from the WTO membership itself, which is split.
India’s objection, and its accusation that the whole process is “illegal”, is based on four points: the negative mandate, consensus needed to launch a negotiation, consensus needed for the final agreement, and multilateralism.
‘Negative mandate’
Much of the argument refers to WTO members’ past decisions not to negotiate “the relationship between trade and investment” (items i to v in paragraph 5 of India’s statement). India calls these decisions a “negative mandate”.
The subject was one of four “Singapore issues” — originally proposed in Singapore at the first WTO Ministerial Conference.
The decisions cited are from 2001, 2004, and 2015 (paragraph 34). They are within the Doha Round negotiations, launched in 2001, now in limbo.
(Note that paragraph 34 of the 2015 declaration says “Any decision to launch negotiations multilaterally on such issues would need to be agreed by all Members”. I’ll leave it to lawyers to dissect whether those words cover plurilateral talks.)
Also cited is a meeting in 2017 where no decision was taken. India argues that this means the negative mandate was upheld.
India is saying more than that. It extends the negative mandate to any agreement involving investment in any way. In its statement it says “There has not been any Ministerial mandate for starting negotiations on investment-related matters.” (Paragraph 3)
It does not explain why a decision on a subject called “the relationship between trade and investment” covers everything related to investment, including investment facilitation. (Elsewhere in its statement it also argues that “Investment Facilitation for Development [is not about] multilateral trade relations” and “investment per se is not trade”, suggesting it is not a legitimate WTO subject.)
All of that can be debated — whether a “negative mandate” is a valid concept, whether it can be applied to this plurilateral subject, and whether the earlier decisions apply to everything described as investment.
Consensus to launch
India says a consensus decision is needed from the whole membership, to launch negotiations, particularly if they are plurilateral (only among some members) and are going to involve attaching new plurilateral rules to the WTO package of agreements. This would apply to investment facilitation.
Part of its argument gets close to implying any plurilateral or multilateral (WTO-wide) talks need a WTO-wide consensus before they can start, although the statement does not say so specifically.
India does not cite any rules stating that a consensus decision is needed to launch negotiations, only general rules on decision-making (WTO Agreement Article 9) and on amending the main WTO Agreement (Article 10).
Some lawyers say there are none, not even for multilateral negotiations. The former Secretariat lawyer says:
“WTO Agreement Article 9.1 says that ‘The WTO shall continue the practice of decision-making by consensus followed under [GATT]’. The GATT did not have a practice that negotiations can only be launched by consensus. If that had been GATT practice, there would have been no Uruguay Round.”
The General Agreement on Tariffs and Trade (GATT) was the WTO’s predecessor as the multilateral trade institution.
In 1985 a debate raged over launching new negotiations — they became the 1986–94 Uruguay Round, which created the WTO. A GATT Secretariat paper issued during the debate says:
“The General Agreement does not lay down any special procedures for the launching of negotiations nor any rules for their organization. […] [GATT members] and other governments have taken decisions to launch trade negotiations at ad hoc meetings outside the framework of a GATT body and subsequently invite the [membership] to incorporate the results of such negotiations into the institutional and legal framework of the GATT.”
The former Secretariat lawyer adds that in 1985, a sufficiently large number of countries persuaded a minority to drop their threat to block consensus on launching the Uruguay Round (see below).
The lawyer concludes:
“The rest of the Indian arguments about launching trade negotiations, and new subjects in trade negotiations, are based on decisions by the ministers, not on the WTO Agreement itself.”
India’s main argument in this case seems to be that since previous decisions rejected negotiations on the Singapore issue of trade and investment (the “negative mandate”), a consensus would be needed to overturn that and start negotiations.
This seems partly to be related to a phrase India had insisted on being added to the 2001 declaration that kicked off the Doha Round talks. It said launching negotiations on the Singapore issues would require “specific consensus”.
India seems to take this to mean that the need for a consensus to launch any negotiation involving investment is particularly strong, even though this Singapore issue was called “the relationship between trade and investment”.
… We agree that negotiations will take place […] on the basis of a decision to be taken, by explicit consensus …
— Doha Declaration, 2001, paragraph 20
So the questions here are:
- Is consensus really needed to launch negotiations on any subject, particularly if it aims to create plurilateral rules inserted into the package of WTO agreements?
- Is consensus needed to launch negotiations specifically on the Singapore investment issue?
- Does that include “investment facilitation”?
Some lawyers say “no” to all three questions.
In practice multilateral negotiations are usually launched by WTO-wide consensus. The same can’t be said about plurilateral talks. Since the WTO was created, some plurilateral negotiations have been launched with consensus decisions by ministers, some without.
The consensus decisions came from the 1986–94 Uruguay Round negotiations that created the WTO, some of them announced by ministers at the end. They include plurilaterals on: duty-free trade in pharmaceuticals (with several others concluded within the Uruguay Round) and improved market access in several service sectors.
Plurilateral talks that have started without WTO-wide consensus decisions include
- duty free trade in information technology products — launched in 1996 by a plurilateral ministerial declaration
- duty free trade in environmental goods — launched plurilaterally in 2014 (now stalled)
- domestic regulation in services — launched plurilaterally in 2017 by a joint statement and therefore a “joint-statement initiative”
For all of those subjects, consensus was also not needed to bring their conclusions under WTO rules. It was all done by participants unilaterally (but in unison) amending their specific commitments on goods or services — their “schedules”. None of the rules became specific WTO agreements.
(How the Government Procurement Agreement became plurilateral and whether that involved consensus decision-making is unclear. It seems to have turned plurilateral when multilateral consensus failed. See below.)
Consensus to add the conclusions to the system
The need for consensus to add the Investment Facilitation Agreement to the WTO rule-book is undisputed. That’s clear in Article 10.9 of the WTO Agreement. Technically it means inserting the agreement into Annex 4 of the WTO Agreement.
Coordinators Chile and South Korea say in their statement:
“… the participating Members will engage with all WTO Members with a view to garnering consensus to add the [Investment Facilitation] Agreement to Annex 4 of the Marrakesh Agreement Establishing the WTO … .”
They hope this can be done at the Ministerial Conference.
However, India accuses the proponents of trying
“to force their interests into the rule-based WTO multilateral system in violation of WTO rules and the basic foundation of the [WTO Agreement], which specifically requires decision-making through consensus.”
They can’t both be right. Engaging is not force.
But India goes further. Since consensus is needed both to launch the plurilateral talks and to attach the results to the rule-book, its statement says, “slicing this consensus rule only to seek to incorporate an agreement into Annex 4 is illegal.”
That argument about “slicing” also seems to be behind India’s accusation that participants are trying to “force their interests” into the system without consensus.
Is it “illegal”? First, India does not cite any legal grounds for claiming that the two cannot be separated. Lawyers who argue that plurilateral talks can be launched without consensus are saying the opposite, that the two really are separate.
Second, to repeat: there is no objective way to establish whether WTO rules are being violated and whether the process is illegal. Only the membership can do that, and members are split.
The scale of the split can be seen from India’s full sentence on participants “forcing” their interests into the system. It attacks all 117 participants in the talks:
“Therefore, it is a matter of serious concern to us if the proponents of [the Investment Facilitation for Development Agreement], a JSI [joint-statement initiative or plurilateral] outcome, try to force their interests into the rule-based WTO multilateral system in violation of WTO rules and the basic foundation of the Marrakesh Agreement, which specifically requires decision-making through consensus.” (India’s statement paragraph 6)
Non-multilateral
India seems to be objecting to any plurilateral negotiation or agreement. At the start of its statement it complains not only that the issue is “non-mandated” but that it’s also “non-multilateral”.
If India is implying that plurilateral deals have no place in the WTO then it’s wrong. The WTO Agreement specifically includes plurilateral rules in its Annex 4.
In the past, and certainly in the pre-1995 GATT years, India did not block plurilateral agreements such as the Tokyo Round “codes” and the various zero-tariff deals in the Uruguay Round.
The Government Procurement Agreement is a plurilateral agreement under Annex 4. It discriminates, because favourable treatment is only shared among participants. It has been updated and expanded through negotiation, much of it in the WTO years, post-1994. (See also below)
Various other plurilateral deals have been struck in that period, but they have avoided using Annex 4 because of the problem with consensus. The investment facilitation agreement is the first new set of rules to be proposed for Annex 4. It’s a test case.
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In the meeting, about 30 delegations representing almost 60 members supported annexing the Investment Facilitation Agreement as a WTO plurilateral set of rules.
After India spoke, the US, which is not a participant, responded to support annexing the deal. The US delegate said:
“I will be brief. I was not planning on intervening on this, but I must. As you all know the United States is not a participant of this initiative, but we welcome the initiative and we have said that before. I will say that, listening here, particularly to many members […] who are participating in this, who we really hear from, it is really heartening, and it goes to why we are here. While, again, we are not part of it, we welcome that it has been concluded, the intention of putting it in an Annex 4, as I have said this before, we have no objection to that, even though we are not participating. Since we do not have much time, obviously this is a conversation that needs to continue.
“We disagree with the paper that was put on the table some time ago by South Africa, India and Namibia, on their interpretation of the JSIs [joint-statement initiatives or plurilateral talks] and whether they are consistent or not with the WTO Agreement; we do believe that the WTO system does provide for and can sustain plurilateral initiatives. This is how we can make progress. I said here yesterday, we had a conversation about technology transfer, this is part of that conversation, having a healthy and transparent regulatory system, whether it is for investment of otherwise is part of what creates the enabling ecosystem for voluntary technology transfer. So again, we welcome that from that perspective and if you believe that we need to have conversations about that topic, then we do certainly think that investment facilitation and transparency, which is what this is about, belongs in the system. I just wanted to add those thoughts, I did not have anything prepared but wanted to be clear on that.” (Minutes, pages 133–134)
A Chinese delegate also responded:
“I think as members of this organization, in this room, we should think about how to work for the people. Actually, we do not lack mandates. We have a lot of mandates but what we do lack are deliverables. When the deliverable is already on the table, it can benefit members, especially the developing members and [least-developed countries]. We should do it. I will stop here.” (Minutes, page 134)
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There is one underlying question that India does not try to answer. How are WTO negotiations to progress — how are WTO rules to be modernised? (Or is everything fine as it is?)
Fully mandated multilateral WTO negotiations are largely deadlocked. So are efforts to introduce new topics. India is not offering any way out. It rejects plurilateral efforts without offering a constructive solution to the impasse, a realistic way to build consensus that goes beyond “just accept what I want”.
India is by no means the only country refusing to shift its red lines in multilateral talks. The US is pretty stubborn in blocking the revival of appeals in dispute settlement, without even being clear — at least publicly — about whether it wants appeals scrapped or reformed. On this subject, the US is also in a small minority.*
But at least some members are exploring alternative solutions to the problem of WTO negotiations, such as to do it plurilaterally. India is blocking that too.
SEE ALSO
● “Why always India?”
in “Six talking points from the year’s final General Council meeting”
● Deborah Elms: “The challenge of getting to yes at the WTO”
Hinrich Foundation (2024)
● Nicolas Lamp “The Club Approach to Multilateral Trade Lawmaking”
SSRN Electronic Journal (2014/2016)
● Inu Manak and Manjari Chatterjee Miller “Responsible Consensus at the WTO Can Save the Global Trading System” Council for Foreign Relations (2024)
* Incidentally, US Trade Representative Katherine Tai’s visit to India, January 12–14, 2024, included a meeting with her counterpart Commerce and Industry Minister Piyush Goyal. See this joint statement and this read-out
Footnotes
HISTORY: THE GOVERNMENT PROCUREMENT AGREEMENT
Whether there was ever a multilateral decision to turn the government procurement negotiations into a plurilateral agreement in the Tokyo Round is unclear. The subject is not mentioned in the 1973 ministerial declaration in Tokyo, where the round began, or the meeting’s summary record. Nor is it mentioned in the 1986 ministerial declaration launching the Uruguay Round (although the broad aim to “improve, clarify, or expand” the Tokyo Round agreements might be seen as a multilateral mandate).
It first appears under one of the Tokyo Round subjects: non-tariff measures. A multilateral sub-group on government procurement was created by the Tokyo Round negotiating group on non-tariff measures in May and July 1976. This led to the 1979 agreement which created a new Government Procurement Committee (Article 7). Whether the agreement was formally adopted is unclear although it was submitted by the sub-group’s chair to the Trade Negotiations Committee.
How and when this became plurilateral is also unclear but the text allowed for the possibility that some GATT members (“contracting parties”) would not be parties to the Government Procurement Agreement. That’s how it ended up.
Since the Government Procurement Agreement already existed, it was attached to Annex 4 of the WTO Agreement as part of the multilaterally-agreed Uruguay Round package.
HISTORY: CONSENSUS, ANNEX 4 AND INVESTMENT
An episode in GATT-WTO history that is now mostly forgotten is how the consensus rule almost prevented the Uruguay Round negotiations from taking place. The threat of a vote by a sufficiently large number of countries persuaded the consensus-blockers to yield. There were more battles to come, but the round was launched in 1986, creating the WTO in 1995.
This is one of several morsels of history that have a bearing on the investment facilitation debate. They are recalled by a former Secretariat lawyer with decades of GATT-WTO experience, whose account has been edited slightly:
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The WTO’s official history of the Uruguay Round by John Croome notes the following:
In 1985 many wanted a new round of multilateral negotiations, but India and others blocked consensus in the GATT Council on a launch, particularly on trade in services.
In July 1985, the US declared that since the Council was incapable of taking a decision, it would request a Special Session of the Contracting Parties, GATT’s highest decision-making body. The rules of procedure said calling a Special Session required support from at least half of the members.
The US appealed to all GATT member governments to secure their votes. By the end of August 1985 a majority of them did support holding the Special Session.
The US request was procedural but its main purpose was to test whether a majority supported launching a new round, meaning the launch would pass a vote under GATT Art.25. That vote was never held. Opponents yielded.
“From that point onwards, it was virtually certain that the new round of negotiations would take place,” Croome writes
(See also the minutes of the Special Session
day 1, day 2 (morning and afternoon), and day 3)
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Croome also mentions a GATT Secretariat note on “The Launching and Organization of Trade Negotiations in the GATT” which says the GATT has no special rules for launching negotiations. It is legally a matter for an Art.25 majority vote.
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The decision rule on attaching new Annex 4 agreements is “exclusively by consensus”. (WTO Agreement Art.10.9). The history is that this was a Brazilian item. In 1991–93, there were OECD talks on a steel agreement to include zeroing tariffs, eliminating subsidies and banning anti-dumping and countervailing duty on steel.
By late 1993 the idea was to attach it to Annex 4 when it was ready. Brazil got “exclusively by consensus” to let outsiders veto attaching the steel deal to Annex 4.
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India’s objections to dealing with investment are no surprise. Some delegations blocked a GATT dispute settlement panel ruling on the Canadian Foreign Investment Review Act in 1982 until it was clarified that the panel would not deal with investment as such, only GATT (see the panel report paras 1.4 and 5.1).
In the Uruguay Round services talks, India and Brazil insisted the General Agreement on Trade in Services could not be an investment agreement.
Some comments received
A former colleague in the WTO Secretariat, Mark Koulen, asked on LinkedIn why I hadn’t discussed India’s references to Articles 3.1 and 3.2 of the WTO Agreement. They deal with the functions of the WTO. India cited them to justify its argument for multilateralism and against plurilateralism.
My reply is in two parts, here and here. Briefly, I think the point about multilateralism is discussed without citing those two provisions specifically. Doing so would make the article even longer and even less readable. My replies explain why I question whether those two provisions can rule out plurilateralism, particularly since it is included in the WTO’s functions in other provisions of the WTO Agreement, and Article 10.9 specifically allows new plurilateral agreements to be annexed.
This is his interesting response (Roman numbers translated for consistency):
“I think that there is tension between Art. 10.9 and 3.2 in that while Art.10.9 provides that new plurilateral agreements can be added to Annex 4, Art.3.2, second sentence only refers to the role of the WTO as a forum for further negotiations among its members concerning their multilateral trade relations and does not mention plurilateral negotiations.
“As Nicolas Lamp has shown some time ago in a brilliant analysis, the creation of the WTO based on the single undertaking concept severely reduced the scope for pursuing a club approach to future rule making because ‘the WTO was supposed to be the club to end all clubs’.”
Lamp’s article is “The Club Approach to Multilateral Trade Lawmaking” (2016). He concludes that his research
“shows that the founding of the WTO, while itself an example of the successful employment of the club dynamic, has made the use of the club approach in the multilateral trading system much more difficult, if not impracticable. In a way, the WTO was the club to end all clubs. As a result, it has become much more difficult for a subset of members to assume more ambitious obligations in the framework of the multilateral trading system. At the very least, the new lawmaking framework is markedly less hospitable to the club dynamics that flourished under the GATT.”
Thanks:
This piece could not have been written without the generous help of experts who asked not to be named. I hope I have done justice to the knowledge they shared
Updates:
May 10, 2024 — following the public release of the meeting’s minutes, adding links, the quotes from the US and China, with some minor editing
January 22, 2024 — adding the quote from the South Korean ambassador; adding the link to the paper by Inu Manak and Manjari Chatterjee Miller
January 16–17, 2024 — adding the section on “some comments received” at the end; adding a link to Art.10.9 on the section on “Consensus to add the conclusions to to the system”; adding links to Nicolas Lamp’s article on clubs
January 13, 2024 — minor additions to the information box on the Government Procurement Agreement
Image credits:
● Main image and cropped version: South Korean and Chilean ambassadors, coordinating the investment facilitation talks, on the podium in a meeting of participants October 13, 2023 | WTO.
● Singapore Ministerial Conference | WTO
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