*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
| p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask]
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"Emerging Markets and the International Investment Law and Policy Regime",
"Sustainable FDI for Sustainable Development", "Towards an Investment
Facilitation Framework: Why? What? When?", "Beware of FDI Statistics!",
"Towards an Indicative List of FDI Sustainability Characteristics", “The
Importance of Negotiating Good Contracts", "A New Challenge for Emerging
Markets: the Need to Develop an Outward FDI Policy”, "China Moves the G20
toward an International Investment Framework and Investment Facilitation", "The
Next Step in Governance: The Need for Global Micro-regulatory Frameworks",
and "The Evolving International Investment Law and Policy Regime: Ways
Forward" *are* available at and


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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 226  May 21, 2018
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Marion A. Creach ([log in to unmask])
*Investment facilitation at the WTO is not investment redux*
* <#m_-1403454031527260377__edn1>
Khalil Hamdani** <#m_-1403454031527260377__edn2>

A unified investment framework has eluded the international community for
decades, including at the WTO twenty years ago (as part of the 1996
Singapore Issues). Yet, 71 developing and developed countries—over a third
of the WTO members—started structured discussions in March 2018 to
establish a multilateral framework on investment facilitation. Why does
investment warrant a fresh approach at the WTO?

To begin with, investment facilitation concerns the application of
investment policy. It is not about the right to regulate or to formulate
investment law. It is not about investment protection, policy
liberalization or even investment promotion. Rather, it is a downstream
activity that involves engagement with investors and other stakeholders in
the application of policies in practice. Such interaction improves the
efficiency and efficacy of the overall investment process.

Investment facilitation improves the efficiency of policies by shaping them
in an accessible and transparent manner, applying them in a predictable and
consistent fashion and having simplified administrative procedures. Such
efficiencies made up less than 10% of the investment measures recorded by
United Nations Conference on Trade and Development in 2010-2017. Countries
that are liberalizing policies are overlooking the application of those
policy changes in practice.  For example, when India opened up its economy
in 1991, investment approvals tripled, but only 20% of approved investments
were realized. By 1998, annual approvals reached US$11 billion, but the
rate of realization remained low at 34%. A Foreign Investment
Implementation Authority was established in 1999, and in 2002, a
Parliamentary Standing Committee recommended practical measures to address
bottlenecks.[1] <#m_-1403454031527260377__edn3> By 2004, the realization
rate had risen to 205%, a figure presumably explained by the fact that many
investments no longer required approval. There was an overall improvement
in the investment environment.

Investment facilitation also improves the efficacy of policies, in two
ways. First, downstream engagement with investors identifies opportunities
for sequential and new investment and thereby underpins investor retention.
Such interaction was a key feature of the smart industrial policies of the
Asian tigers. Second, downstream engagement with investors and other
stakeholders provides tacit feedback to upstream policymakers on potential
partnerships to enhance the impacts of existing investment.

Investment partnerships are important for advancing the Sustainable
Development Goals. Their implementation requires massive investment in
areas usually allotted to the public sector. It also needs to feature
sustainability: innovative technologies with a wide reach and a small
environmental footprint. Suitable policy frameworks will need discovery and
definition, with the involvement of stakeholders—business and civic,
domestic and foreign—and the support of the international community.[2]
<#m_-1403454031527260377__edn4> Successful discovery requires dynamic
feedback from downstream engagement with stakeholders to upstream
policymakers. Investment facilitation provides such interaction, creating
constructive multi-stakeholder relationships that nurture new roles for
investment to play.

Investment, of course, is critical for trade. Preferential trading schemes
attracted investment to Africa for the export of garments. Facilitation of
investment in broader activities would diversify production, increase value
addition, alleviate the saturated market for apparel exports, and take
fuller advantage of existing preferences. Thus, investment facilitation is
a natural complement to trade facilitation. It is even a necessary
complement if developing countries are to benefit from the full potential
of the Trade Facilitation Agreement. However, the capacities of countries
vary greatly. The investment facilitation efforts of the least developed
countries require capacity building and related international support.

In summary, facilitation of investment, including investment in services,
is relevant for discussion at the WTO for five reasons. First, investment
is an issue of empirical relevance to multilateral trade. Second, an
investment facilitation agreement at the WTO is not investment agreement
*redux*; it focuses on practical matters and avoids investment issues that
have proved contentious in past discussions. The sovereign right to
regulate is acknowledged at the outset. The discussion shifts the
investment debate from being all about “protection” to focus more on
“facilitation” said WTO Director-General Roberto Azevêdo.[3]
<#m_-1403454031527260377__edn5> Third, investment facilitation is an issue
on which developing countries are among the *demandeurs*. It is not, as
before, a bargaining chip to be played by one side for concessions by the
other side on negotiations in other areas.

Fourth, discussions of investment facilitation at the WTO would follow the
successful model of trade facilitation, which was focused, open-ended,
inclusive, and allowed for individual country implementation capacity and
relevant technical assistance. These elements are unique to the Trade
Facilitation Agreement and absent from other WTO instruments (such as that
for services). Structured discussion at the WTO in the model of trade
facilitation would lead to the engagement of trading partners in capacity
building of weaker members. In this respect, the structured discussions
should aim at creating the counterpart to the Trade Facilitation Agreement,
namely an investment facilitation agreement.

Fifth, discussions of investment facilitation at the WTO will engage
investment stakeholders and make the multilateral trading system more
central to sustainable development. In this regard, the proposed Committee
on Investment Facilitation would provide a useful platform for the
discovery and diffusion of best practice, and related stakeholder
responsibilities, for sustainable investment facilitation.

* <#m_-1403454031527260377__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do not
reflect the opinions of CCSI or Columbia University or our partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
** <#m_-1403454031527260377__ednref2> Khalil Hamdani ([log in to unmask])
is Visiting Professor, Graduate Institute of Development Studies, Lahore
School of Economics. This *Perspective* elaborates the author’s remarks at
a dialogue with WTO delegates organized by the International Centre on
Trade and Sustainable Development in Geneva on March 5, 2018. The author is
grateful to Douglas van der Berghe, Reji Joseph and Stephen Thomsen for
their helpful peer reviews.
[1] <#m_-1403454031527260377__ednref3> For details about the investment
facilitation measures and data, see New Delhi Foreign Service
Institute, *Reports
on Investment Approvals and FDI in India* (New Delhi: Academic Foundation,
[2] <#m_-1403454031527260377__ednref4> Karl P. Sauvant and Khalil Hamdani,
“An International Support Programme for Sustainable Investment
Facilitation,” *E15 Task Force on Investment Policy Think Piece* (ICTSD,
World Economic Forum, 2015).
[3] <#m_-1403454031527260377__ednref5> Roberto Azevêdo, Address to the
Informal Dialogue on Investment Facilitation for Development of the WTO,
Apr. 23, 2018.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Khalil Hamdani, “Investment facilitation at the
WTO in not investment *redux*,” Columbia FDI Perspectives, No. 226, May 21,
2018. Reprinted with permission from the Columbia Center on Sustainable
Investment (** <>**).” A
copy should kindly be sent to the Columbia Center on Sustainable Investment
at **[log in to unmask]* <[log in to unmask]>*.*

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Marion A. Creach, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 225, Michael J. Enright, “To succeed in China, focus on interests
   rather than rules,” May 7, 2018
   - No. 224, Axel Berger, “What’s next for the investment facilitation
   agenda?,” April 23, 2018.
   - No. 223, David Chriki, “Investment arbitration liability insurance: a
   possible solution for concerns of a regulatory chill?,” April 9, 2018.

*All previous FDI Perspectives are available at
<>**. *

*Other relevant CCSI news and announcements*

   - *Save the Date: September 27-28, 2018:* This year, CCSI’s Annual
   Columbia International Investment Conference (CIIC) is on “Multinationals
   in the Age of Sustainable Development: New Thinking on the Role of
   International Investment Agreements.” The Conference, taking place
   alongside the 73rd Session of the UN General Assembly in New York, will
   build on a multi-year effort to identify guiding principles and practical
   approaches for aligning international investment treaties with the
   Sustainable Development Goals (SDGs). Additional information will be posted
   shortly on our website here
   - CCSI is still accepting applications on a rolling basis for
   our upcoming executive training: Investment Treaties and Arbitration for
   Government Officials
   30-August 9, 2018). The program is designed to equip participants with the
   necessary skills, analytical tools, and frameworks to address relevant
   challenges and opportunities, and to encourage a rich dialogue about best
   practices from around the globe. *More information about the training,
   including the brochure and application, is available at the link above.*
   - In January 2018, The *Yearbook on International Investment Law and
   released*.* The *Yearbook* monitors current developments in
   international investment law and policy, focusing (in Part One) on trends
   in foreign direct investment (FDI), international investment agreements,
   and investment disputes. Part Two, then, looks at central issues in the
   contemporary discussions on international investment law and policy. This
   volume includes a chapter by CCSI's Lisa Sachs, Lise Johnson and Jesse
   Coleman, with CCSI Fellow Kanika Gupta. *For more information, please
   see our website here

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2018 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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