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Setback for plurilateral approach as investment deal blocked again

The 128 participants will continue efforts to persuade India, South Africa and Türkiye that their deal can become an official WTO plurilateral agreement

By Peter Ungphakorn
POSTED MARCH 22, 2024 | UPDATED MARCH 23, 2024

India and South Africa, now joined by Türkiye, continued to block consensus on adding the 128-participant Investment Facilitation Agreement to the World Trade Organization’s rulebook when WTO members met as the General Council today (March 22, 2024).

The on-going resistance is a setback for the large number of countries that had hoped deals among only some of the WTO’s 164 members — known as “plurilateral” — could be a way to allow rule-making to develop among the willing without affecting others who are not ready.

Lack of consensus prevents “plurilateral” agreements from being part of the organisation’s official package of rules. That means WTO committees cannot be set up to oversee implementation and the agreements are not subject to legal proceedings under WTO dispute settlement.

Only three of the 36 non-participants have opposed adding this plurilateral agreement to the WTO’s rules. The US is a non-participant that has previously argued in favour.

In General Council India alone opposes investment deal as a WTO agreement

Overwhelming support for 117-member deal to be a formal WTO agreement, even among non-participants

THIS UPDATES AND REPLACES
“118 members want investment facilitation deal to be formal WTO agreement”
(from December 13, 2023)

SEE ALSO
Comment: on India’s claim that a plurilateral WTO deal is ‘illegal’
WTO investment facilitation text completed but still faces uphill battle
Technical note: types of plurilateral deals and adding them to WTO rules
Explainer: The 18 WTO plurilaterals and ‘joint-statement initiatives’
Technical note: Participation in WTO plurilateral talks
●
General Council minutes from this meeting and in general (published a few months after the meeting)
All articles tagged “investment facilitation”

By Peter Ungphakorn
POSTED DECEMBER 18, 2023 | UPDATED MAY 10, 2024

India says it will block adding to the official WTO rule-book a new investment facilitation agreement among over 70% of the World Trade Organization members, even though it was the only country to speak against the request in the organisation’s General Council on December 15, 2023.

India’s opposition has implications beyond this particular deal, which is backed by 117 developed and developing countries such as China, the EU, Bolivia, Chad and Laos.

It makes investment facilitation a test case for all rule-making negotiations among subsets of the membership.

The other subjects that could potentially line up to follow investment facilitation into the WTO rule-book include e-commerce and digital trade, plastics pollution, and fossil fuel subsidies, all involving only part of the membership.

WTO members are struggling to conclude several negotiations because of insoluble differences preventing them from reaching consensus agreement.

This means existing agreements are lagging behind the latest developments in global trade — for example in digital trade or sustainability.

Many governments now consider the best way to modernise WTO rules is to try to reach agreement among “the willing” first. The rest of the membership can join later when they are ready.

But to insert an agreement among only the willing into the rule-book still needs consensus support from the whole membership, including non-participants.

If India (previously also supported by South Africa and Namibia) continues to oppose anything short of a fully multilateral agreement, this would prevent the deal from becoming a proper WTO agreement.

Now replaced: 118 members want investment facilitation deal to be formal WTO agreement

One way or another it needs a consensus decision by WTO members, in the face of some strong opposition

This article has been updated and replaced by
In General Council India alone opposes investment deal as a WTO agreement
(December 18, 2023)

Image credits:
Main image | Michelle Henderson, Unspalsh licence

WTO investment facilitation text completed but still faces uphill battle

One way or another it needs a consensus decision by WTO members, in the face of some strong opposition. (Now includes the final version of the proposed agreement)

UPDATE (October 16 and December 13–18, 2023)
In General Council India alone opposes investment deal as a WTO agreement

SEE ALSO
Comment: on India’s claim that a plurilateral WTO deal is ‘illegal’
Technical note: types of plurilateral deals and adding them to WTO rules
Explainer: The 18 WTO plurilaterals and ‘joint-statement initiatives’
Technical note: Participation in WTO plurilateral talks
●
All articles tagged “investment facilitation”

NOTE: An error has been removed from this. The possibility of voting under WTO Agreement Article 10 (on amendments), does not apply to amending Annex 4 of the agreement. Only Article 10.9 (requiring consensus without the option of voting) and Article 10.10 (other requirements) apply

By Peter Ungphakorn
POSTED JULY 7, 2023 | UPDATED JANUARY 26, 2024
(Developments after July 2023 are in italics. Now includes the final version of the proposed agreement)

Negotiators from over two thirds of the World Trade Organization’s members say they have reached agreement on a final text on “investment facilitation for development”, but they still have to persuade the rest of the membership either to join them or to stand aside so the deal can be added to WTO rule book.

The agreement would make investment conditions easier, more predictable and more transparent, with a focus on sustainability and development. (In November 2023 a final revision was circulated, replacing the version of July 2023, which still left some options open. See this 41-page explanation.)

“Despite the lack of high-level fanfare, this agreement represents important progress,” former WTO Deputy Director-General Alan Wolff wrote after the deal was announced on July 6, 2023.

He said it was “remarkable for several reasons” such as having no constraints on governments’ investment policies, being pro-development and focusing on process with positive encouragement.

“Participants firmly believe that the proposed […] agreement will contribute to creating a more transparent, efficient, and predictable environment to facilitate not only more investment, but also more sustainable investment, as well as to anchor and support […] participants’ domestic, bilateral, and regional reform efforts,” said the talks’ coordinators, ambassadors Sofía Boza (Chile) and Jung Sung Park (Rep. Korea), when they announced the deal had been struck on July 6, 2023.

The text “is the result of three years of intense text-based negotiations amongst over 110 participating WTO members at all levels of development, held in a transparent and inclusive manner since their launch in September 2020,” they said.

The whole exercise has taken five and a half years from the original joint statement issued by 42 WTO members at the Buenos Aires Ministerial conference in December 2017.

The aim is to “improve the investment and business climate, and make it easier for investors in all sectors of the economy to invest, conduct their day-to-day business and expand their operations”, the WTO says.

Provisions addressing ‘Responsible Business Conduct’ and ‘Measures Against Corruption’ … [break] new ground within the WTO
— Ngozi Okonjo-Iweala, WTO Director-General

The deal would include helping developing and least-developed countries participate more in global investment flows, in some cases with aid.

“The initiative does not cover market access, investment protection and investor-state dispute settlement,” the WTO clarifies.

WTO Director-General Ngozi Okonjo Iweala said: “The text also contains provisions addressing ‘Responsible Business Conduct’ and ‘Measures Against Corruption’ — again breaking new ground within the WTO.”

Clapping in the successful conclusion of the plurilateral negotiations of the Investment Facilitation Agreement by 112 @wto members! And preparing for the next phase of multilateralization! A fantastic achievement by members. Thanks to coordinators Ambs Boza of Chile and Park of… pic.twitter.com/537PcDBORg
— Ngozi Okonjo-Iweala (@NOIweala) July 6, 2023

Participants said they would spend the rest of the 2023 and until the next Ministerial Conference in February 2024 on a major campaign to bring the rest of the membership onside, the talks’ coordinators said (see below).

The task could prove trickier than the past three years of negotiations on the text itself. The biggest and apparently unavoidable challenge will be to allow the agreement and its provisions to pass a consensus decision, meaning none of the WTO’s 164 members block it.

Ukraine invasion—what Russia and Belarus face in the WTO system: so far

The feasible actions are unilateral. Anything requiring formal decisions in the WTO such as suspending membership is likely to fail

This blog post contains a list of actions that countries have taken against Russia and Belarus. It will now only be updated occasionally. The point was to examine how they work, where WTO decisions might be needed and the implications, and how they relate to WTO provisions such as non-discrimination (MFN) or the security exceptions. That should be clearer now.

See these sources for closer monitoring:

Global Trade Alert

A considerably longer list of sanctions announced against Russia is available at Global Trade Alert. Many are outside the WTO system. Some may be within the system, such as export restrictions on dual-use products and restrictions on shipping services (but not air traffic rights). Russia’s retaliation is here.

Global Trade Alert was originally set up by Simon Evenett and his team at St Gallen University, Switzerland. It is now run by an independent foundation.

PIIE

Chad Bown of the Peterson Institute for International Economics (PIIE) has created a timeline that tracks all the actions taken by various countries on all sides: Russia’s war on Ukraine: A sanctions timeline.

A number of other sources are available. This one (details paywalled) is Europe-centred.

By Peter Ungphakorn
POSTED MARCH 4, 2022 | UPDATED MAY 10, 2022 (SEE ALSO ENTRY DATES)

This is a summary of actions taken or proposed so far against Russia within the WTO system. Some are also against Belarus, which is not a WTO member.

They are deliberately described as “within the WTO system” and not “in the WTO” — or worse “by the WTO” — to avoid confusion.

US politicians call for trade action against Russia in the WTO

Kicking Russia out of the World Trade Organization is probably impossible, but other actions are available

Painting (detail) by Chris Edmund © used with permission

See also:
List of measures announced or proposed
that come under the WTO system, periodically updated
Can a WTO member be expelled? No. But …

By Peter Ungphakorn
POSTED FEBRUARY 28, 2022 | UPDATED MARCH 4, 2022

Two senior US politicians announced on February 25, 2022 that they were introducing legislation to suspend World Trade Organization terms in US trade with Russia and to seek expelling Russia from the WTO.

Lloyd Doggett, chair of the House of Representatives Ways and Means subcommittee on health, and Earl Blumenauer, his counterpart on the subcommittee on trade, proposed the bill following Russia’s “unprovoked invasion of Ukraine”.

Since then, at least three similar bills have been proposed in the US Senate.

Meanwhile, Ukraine and Canada have actually implemented action against Russia within in the WTO system, and the EU has said it is considering its own action.

The Doggett and Blumenauer bill would make it easier for the US to impose trade sanctions against imports of Russian goods, in addition to the commercial, financial and personal sanctions the US and its allies have already initiated. That includes new EU sanctions in trade with Belarus (not a WTO member).

The bill would also “seek the suspension of the Russian Federation’s membership in the WTO”, a more difficult prospect.

Explainer: The 18 WTO plurilaterals and ‘joint-statement initiatives’

Brand new, decades old, or in between? Exclusive or applying to all members? Proper negotiations or just talk? Which is which, and what are the subjects?

By Peter Ungphakorn
POSTED JANUARY 3, 2022 | UPDATED APRIL 13, 2024

As World Trade Organization (WTO) members struggle to reach consensus on numerous issues, many see talks among “the willing” as the way to modernise the organisation and in many cases to update its trade rules. But the approach is controversial.

These talks and resulting decisions among only some WTO members are called “plurilateral” to distinguish them from “multilateral” activities and agreements among the WTO’s whole membership.

India and South Africa pour cold water on alternative approach to WTO talks

On the day she started her term as new WTO chief, Okonjo-Iweala faced a challenge to her vision

SEE ALSO
Explainer: The 18 WTO plurilaterals and ‘joint-statement initiatives’
Technical note: types of plurilateral deals and adding them to WTO rules
Participants in the present plurilaterals: Technical note

For a taste of the intense debate on this in the WTO General Council,
see this 13-page extract from the minutes (March 2021 meeting)

There are also signs that the “plurilateral” approach can
produce results. See “‘Plurilateral’ WTO services
deal struck after breakthrough text released”

By Peter Ungphakorn
POSTED FEBRUARY 22, 2021 | UPDATED JANUARY 3, 2024

It’s tempting to call it a bombshell. But the warning signs have been around for some time. Nevertheless a new paper from India and South Africa (joined two months later by Namibia) signals a tough ride for the new head of the World Trade Organization’s ambitions to drive negotiations forward.

The paper criticises negotiations involving only part of the WTO’s membership. They are called “plurilaterals” and are seen as a way of breaking deadlock when consensus is elusive.

Four years on, still basic mistakes on tariffs at the very top of UK politics

An exchange on tariffs in the Commons Liaison Committee shows a lack of basic understanding by Johnson, the chair of a key committee and a leading journalist

By Peter Ungphakorn
POSTED SEPTEMBER 18, 2020 | UPDATED SEPTEMBER 22, 2020

Here we go again. You’d have thought they would get it right by now. After all it’s over four years since the Brexit referendum thrust trade and World Trade Organization (WTO) rules into the British political consciousness.

And yet, there we were, on September 16, 2020, a few weeks before a UK-EU trade agreement was supposed to be concluded, listening to two leading politicians showing they still don’t get the most basic rule in international trade.

Iain Duncan Smith & co are wrong about GATT Art24, Brexit and getting out of jail

Tory Brexiteers’ claim that WTO rules let them pull a rabbit out of the hat is pure magical thinking

By Peter Ungphakorn
POSTED SEPTEMBER 5, 2019 | UPDATED SEPTEMBER 5, 2019
ORIGINALLY PUBLISHED ON THE TELEGRAPH WEBSITE, SEPTEMBER 2, 2019

Does the World Trade Organization (WTO) have a magic legal provision, one that Britain can use to get out of the “no-deal” Brexit jail?

No, and this has been pointed out repeatedly. And yet Iain Duncan Smith, David Campbell Bannerman and co, still think it does, judging by their piece for the Telegraph on August 30, 2019.

They are wrong because they misunderstand the provision they cite: Article 24 of the General Agreement on Tariffs and Trade (GATT). They are wrong because they overlook the realities of what it means.