*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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"International Investment Facilitation: By Whom and for What?", "Moving the
G20's Investment Agenda Forward", "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"
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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 235  September 24, 2018
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Marion A. Creach ([log in to unmask])
*Investment facilitation: new dynamism at the WTO on investment*
* <#m_-8072689113616127777__edn1>
Reji K. Joseph** <#m_-8072689113616127777__edn2>

The deliberations at the WTO since the second quarter of 2017 on an
investment facilitation agreement (IFA) have brought about a new dynamism
at the WTO. A past attempt by developed countries to initiate formal
negotiations on an investment agreement at the WTO, as part of the
Singapore issues, was blocked by developing countries, arguing that
investment does not come under the mandate of that Organization and that
the relationship between trade and investment is unclear. However, the
developing countries now champion the deliberations of an IFA at the WTO,
mainly led by China, Brazil, the Republic of Korea, Argentina, and Russia,
for two reasons.

First, some developing countries have become prominent sources of outward
FDI (OFDI). Out of the 15 countries that originally proposed an IFA in
March-April 2017, five economies (Brazil, China, Hong Kong (SAR), Mexico,
the Republic of Korea) have substantially increased their share in the
global OFDI stock; their combined share has risen from 3% in 1990 to 13% in
2016.[1] <#m_-8072689113616127777__edn3> China, along with Hong Kong,
accounted for about two-thirds (62%) of the OFDI stock of this group of
economies in 2016. A multilateral regime focused on the simplification of
FDI approval procedures would be of interest to these countries, as it
would help their OFDI.

Second, there is a growing need in many developing countries and least
developed countries (LDCs) to attract FDI and integrate into global supply
chains. Rising populations, a growing demand for jobs and rampant poverty
pose critical challenges for them. According to the United Nations, the
world population will increase from currently 7.3 billion to 8.5 billion by
2030, and 9.7 billion by 2050.[2] <#m_-8072689113616127777__edn4> This
increase will take place mainly in Africa. Many poor countries that are not
able to generate sufficient resources internally to promote growth and
create jobs look toward trade and FDI as a means for addressing these
challenges. Hence the 2017 Abuja High Level Trade and Investment
Facilitation Forum for Development, organized by Nigeria, the Economic
Community for West African States and the WTO Friends of Investment
Facilitation for Development, sought to mobilize African countries,
spelling out in its concluding statement why an IFA is important and what
is expected from it.[3] <#m_-8072689113616127777__edn5>

Some countries also need FDI to sustain their economic growth. In 2017, the
countries with the highest GDP growth were developing countries. In some of
them, growth is underpinned by public investment which requires borrowing
significant amounts of funds, thus resulting in huge public debt. Ethiopia
(the fastest growing economy for the past few years), for example, has
invested massively in infrastructure. Its public debt rose from 40% of GDP
in 2014 to 50% of GDP in 2016. Countries are promoting FDI as a means for
sustaining investment by facilitating non-debt creating investments.

The IFA proposal also reflects a critical shift in the position of
developing countries on the relationship between trade and investment and
the WTO’s adequacy for addressing investment issues. The Abuja statement
observed that “trade and investment are inseparable – and remain
indispensable 'twin engines' for economic growth, modernization, and
development.”[4] <#m_-8072689113616127777__edn6> Currently, the
IFA-supporting developing countries are clear about the relationship
between trade and investment. According to Chiedu Osakwe, Director General
and Chief Negotiator at the Nigerian Office for Trade Negotiations, the WTO
is the most suitable forum for negotiating an IFA because investment
facilitation needs to be coupled with trade to be effective; decoupling
investment facilitation from trade and the WTO would result only in minimal
implementation with perverse outcomes.[5] <#m_-8072689113616127777__edn7>

This change in the approach of many developing countries and LDCs indicates
that their resentment about investment at the WTO is waning. This change in
attitude will potentially alter the WTO dynamics on investment matters.
Accordingly, developed countries will find it much easier to promote a
full-fledged investment agreement instead of a mere IFA, if they choose to
do so. That would also help obtain the support of major countries (e.g.,
the US) which have been keeping themselves away from the deliberations on
an IFA, being reluctant to prioritize one area of investment (i.e.,
facilitation) over other areas such as market access and investment

Moreover, while submissions at the WTO on an IFA and the Joint Ministerial
statement on investment facilitation issued during the WTO Buenos Aires
Ministerial Conference have emphasized the implications of facilitation for
development, the deliberations on an IFA so far have focused only on
facilitation. The need to channel FDI into development by screening,
selecting and regulating FDI should be brought into the discussions on an
IFA with the same vigor.

* <#m_-8072689113616127777__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_-8072689113616127777__ednref2>Reji K. Joseph ([log in to unmask])
is Associate Professor at the Institute for Studies in Industrial
Development in New Delhi. The author is grateful to Richard Newfarmer,
Miguel Rodriguez Mendoza and Pierre Sauve for their helpful peer reviews.
[1] <#m_-8072689113616127777__ednref3> UNCTAD, *World Investment Report
2017 *(Geneva: UNCTAD, 2017). The data have been computed by the author,
using the data on OFDI stock provided in the annex tables.
[2] <#m_-8072689113616127777__ednref4> United Nations, *World Population
Prospects: 2015 Revision *(New York: United Nations, 2015)
[3] <#m_-8072689113616127777__ednref5> WTO, “Deepening Africa’s integration
in the global economy through trade and investment facilitation for
development. Abuja statement,” Ministerial Conference, Eleventh Session,
WT/MIN(17)/4 WT/GC/186, Nov. 7, 2017
[4] <#m_-8072689113616127777__ednref6>* Ibid. *1.4, p. 2.
[5] <#m_-8072689113616127777__ednref7> Intervention of Chiedu Osakwe at the
conference “Facilitating Investment for Sustainable Development,” organized
by ICTSD, the WEF and the Government of the Netherlands, Geneva, Sept. 26,
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Reji K. Joseph, ‘Investment facilitation: new
dynamism at the WTO on investment,’ Columbia FDI Perspectives, No. 235,
September 24, 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. 234, Jan Knoerich, “Do developing countries benefit from outward
   FDI?,” September 10, 2018
   - No. 233, Meg Kinnear, “Moving with the times: amending the ICSID
   rules,” August 27, 2018
   - No. 232, Kavaljit Singh, “Investment facilitation: Another fad in the
   offing?,” August 13, 2018

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

*Other relevant CCSI news and announcements*

   - *On October 11, 2018*, CCSI will will launch its* Fall 2018
   International Investment Law and Policy Speaker Series
   We’re delighted to announce that this year’s speakers will include Patricio
   Grane Labat, Philippe Sands, QC, Eugenio Hernández-Bretón, Ko-Yung Tung,
   Colin Brown, Ana Novik, and Zoe Williams. This fall, the series will be
   co-sponsored by Arnold & Porter and Baker McKenzie. The series will be
   moderated by Grant Hanessian, Maria Chedid, and Kabir Duggal. All talks
   will take place at Columbia Law School. Select presentations will be
   webcast; please see our website
   the schedule and more details. No registration is required.
   - *On September 27-28, 2018*, CCSI will hold its 13th Annual Columbia
   International Investment Conference (CIIC) on “Rethinking International
   Investment Governance: Principles for the 21st Century.” This conference
   seeks to elaborate principles of a progressive investment agenda. It will
   reflect on the current investment regime – of the network of over 3,000
   investment agreements – and the extent to which the regime aligns with or
   undermines the principles. We will then re-imagine investment governance,
   and consider the role that international cooperation could play to advance
   sustainable, development-oriented investment. *Registration is free but
   required...for more information, and to register, please visit our
   website here
   - *On September 26, 2018*, CCSI and the UN Sustainable Development
   Solutions Network (SDSN), under the guidance of Prof. Jeffrey Sachs,
   Special Advisor to the UN Secretary-General on the SDGs, and
   Laurent Fabius, President of the Constitutional Council of the French
   Republic, will host a conference to discuss the Global Pact for the
   The Global Pact for the Environment aims to unify international
   environmental governance and codify a human right to the environment in
   international law. *For more information, and to register, please see
   our website here
   - *On September 26, 2018*, CCSI and the Sabin Center for Climate Change
   Law will host a conference on "Climate Change, the Courts, and the Paris
   Agreement." In recent years citizens, sub-national governments and NGOs
   have turned to litigation to hold governments and corporations accountable
   for their contributions to climate change. *For more information about
   this event, including registration, 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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