Brazil Circulates Proposal for WTO Investment Facilitation Deal

Brazil submitted an extensive draft proposal for a potential agreement on investment facilitation to the WTO’s General Council last week, in a bid to jumpstart more “structured discussions” on the subject.

The proposal, which was circulated on 1 February, serves as a response to the call made by 70 WTO members in a “Joint Ministerial Statement on Investment Facilitation for Development,” which was released on 13 December on the margins of the WTO’s Eleventh Ministerial Conference (MC11).

The MC11 statement followed the work done by the “Friends of Investment Facilitation for Development” (FIFD) group, which had led to informal discussions on the subject last year. The FIFD group had also helped convene a high-level investment facilitation meeting in Abuja, Nigeria, with the support of regional partners last November.

That same MC11 document had confirmed that this group of members would begin holding “structured discussions with the aim of developing a multilateral framework on investment facilitation,” along with welcoming any other interested members to join the initiative.

This framework, they said, would be “flexible” and “responsive” given members’ respective priorities, while also preserving the right to regulate “in order to meet their policy objectives.”

The group had also confirmed plans to meet early in the new year “to discuss how to organise outreach activities and structured discussions on this important topic,” without setting a concrete date for doing so. The Brazilian proposal is the first formal document to emerge on investment facilitation and the WTO since MC11 drew to a close in mid-December.

Illustrative example of a future deal

In its submission, the Brazilian delegation clarifies that the draft proposal is not intended to serve as a negotiating text, but rather is meant to serve as a “concrete illustration” of what an agreement on investment facilitation could look like. The submission, they say, could help serve as a starting point for a “more focused and text-based discussion” on the subject, along with supporting outreach efforts towards bringing more WTO members on board.

The Brazilian text is more extensive and detailed compared to earlier proposals submitted by various delegations in 2017. The scope and the main elements, however, remain the same. These include articles that aim to improve the transparency, predictability, and efficiency of regulatory and administrative frameworks related to investment policies and measures. Proponents of these measures say that these would then provide a more stable and secure enabling environment for investors to undertake sustainable investments in host economies, thus promoting trade and economic growth.

The Brazilian proposal includes examples of articles that would strengthen institutional or “electronic” governance, such as by setting up a “single electronic window” that would publish relevant documents and help streamline the application and admission procedures for incoming investments.

The proposal also includes an article that would establish a national focal point, in other words a delegated authority which would mediate and facilitate investor concerns with public authorities and would also operate the above-mentioned single electronic window.

In line with previous proposals submitted last year by other delegations, the Brazilian text emphasises that issues such as investment protection, dispute settlement “not foreseen” under current WTO dispute rules, and market access, as well as government procurement, are outside the ambit of an investment facilitation accord.

Brazil has also included a range of other illustrative articles, such as “voluntary principles and standards of corporate social responsibility” for investors to undertake in other countries, along with suggested provisions for special and differential treatment (S&DT) for developing country and least developed country (LDC) members. These provisions include technical assistance, additional time for implementing certain articles, and the exclusion of LDCs from meeting some requirements.

The South American country has also outlined how a potential “WTO Committee on Investment Facilitation” could work, including reviews on implementation, cooperation with other international agencies, and the potential establishment of subsidiary bodies.

Questions remaining

Going forward, it remains to be seen how the proposal will be received among both current participants in the investment facilitation joint statement, as well as the WTO’s wider membership. Earlier attempts to discuss investment facilitation-related issues at the General Council last year and in minister-facilitated meetings during MC11 were strongly opposed by a coalition of countries, which included India and South Africa.

Some sceptics of the investment facilitation initiative have suggested that the subject falls outside the organisation’s mandate, while some have said the issue of investment facilitation is no different than the original “Singapore” issue of investment that had been considered for inclusion in the Doha Round of trade talks, only to be dropped from consideration.

Along with trade and investment, the other “Singapore” issues, so named for the location of the 1996 WTO ministerial which set up working groups to discuss certain subject areas, were trade facilitation, trade and competition policy, and transparency in government procurement. Only trade facilitation advanced to formal WTO negotiations from this working group process.

Another open question is whether and how the process for more “structured discussions” on new issues, such as investment facilitation, would be integrated within the WTO’s structures and formal processes.

The investment facilitation talks are not the only new initiative being pursued by WTO member groups in the wake of MC11. Joint ministerial statements were also released on e-commerce and on micro, small, and medium-sized enterprises (MSMEs), along with a declaration on trade and women’s economic empowerment. All of these drew the backing of several WTO members, who urged others to consider signing on.