India against China-led investment facilitation proposal at WTO

Context: India is against the move led by countries such as
China to push a proposal on investment facilitation at the World Trade
Organization (WTO). A China-led group of 128 countries is pushing for the
Investment Facilitation for Development (IFD) proposal. The proposal will be
binding for only the signatory members. The IFD was first mooted in 2017 by
China and other countries that depend heavily on Chinese investments, and
countries with sovereign wealth funds are party to that pact. Among major
countries, the US is also sitting out of the agreement.

Key points

·      
Overview: India will submit papers to the WTO against the
investment facilitation, in addition that such agreements would dilute the multilateral
nature of the Geneva-based organization.

·      
Plurilateral
Agreement/Pact: A
plurilateral agreement is a trade agreement between more than two countries,
but not necessarily encompass all members of a larger organization such as the
World Trade Organization (WTO). These agreements are binding only on the
signatories and not on the entire membership of the organization under
annexure-4 of the WTO. They allow for deeper integration among interested
parties without requiring full consensus, which can be difficult to achieve in
larger multilateral frameworks.

·      
China-led
Investment Facilitation for Development Agreement (IFD): The IIFD Agreement is a proposed pact by China, with
support from other countries, to streamline and facilitate foreign investment. The
proponents of the IFD argue that it would bring benefits to all WTO members,
especially developing and least-developed countries, by creating a more
predictable and transparent investment climate.

Objectives - Enhancing transparency of investment measures. Streamlining and
speeding up investment-related authorization procedures. Promoting
international cooperation, information sharing, and exchange of best practices.
Encouraging sustainable investment practices.

·      
India’s
stand: India has taken a firm stance
against the inclusion of the IFD Agreement in the WTO framework for several
reasons:

Investment is Not a Trade Issue - India argues that investment does not fall within the
traditional purview of the WTO, which primarily focuses on trade issues. It
points out that past Ministerial decisions have explicitly kept investment
outside the WTO’s scope.

Sovereignty Concerns - A significant concern for India is the potential impact on its policy
space. The IFD Agreement includes provisions that would require the government
to consult with investors on policy matters, which India fears could undermine
its ability to make sovereign decisions.

Lack of Consensus - India, along with South Africa, has highlighted the absence of a
unanimous consensus among WTO members regarding the inclusion of the IFD as a
plurilateral agreement. They argue that without exclusive consensus, it should
not be brought onto the formal agenda.

Policy Autonomy - India is wary that the IFD Agreement’s requirements could constrain its
autonomy in regulating investments to align with national development
priorities and strategies.

Procedural Concerns - India contends that the issue should not have been part of the MC13
agenda and instead, should be discussed at the General Council, given the
divisive nature of the proposal among WTO members.