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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 275  April 6, 2020
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Alexa Busser ([log in to unmask])
*Enabling the full participation of developing countries in negotiating an
Investment Facilitation Framework for Development*
<https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=d47e8eb602&e=763bcf158c>
* <#m_-4582653736516883966__edn1>
by
Karl P. Sauvant** <#m_-4582653736516883966__edn2>

Negotiations on an Investment Facilitation Framework for Development were
scheduled to begin in March 2020 at the WTO. Given the COVID-19 pandemic,
all in-person meetings at the WTO have been suspended, but progress is
being made through written submissions. A new consolidated text reflecting
these submissions will provide an updated basis for the negotiations.

WTO members may also wish to initiate a voluntary arrangement allowing the
full participation of developing countries—and especially the least
developed among them—in these negotiations. In particular, participation
from the competent authorities in capitals is required, including from
their investment promotion agencies (IPAs).

Such participation is important because:

   - Bringing representatives from capitals into the
   negotiations—especially policy makers from ministries in charge of
   investment policy—helps to ensure that any agreement is closely linked to
   the development goals of governments in facilitating FDI. It would
   strengthen the interaction between Geneva delegates and capital-based
   experts. It could furthermore foster dialogue and cooperation among
   domestic stakeholders, as experts prepare themselves for Geneva, and it is
   also critical for implementation.
   - Bringing representatives of IPAs into the negotiations helps to ensure
   that ground-level practical experience is taken into account, resulting in
   text that is more realistic and can be implemented. It would also create a
   stronger sense of ownership, which is important for the implementation of
   an eventual agreement.
   -  Most developing countries (especially in Africa) simply do not have
   the resources to bring technical expertise from their capitals to the
   negotiating table in Geneva. They need support.

Hence, a trust fund should be established to facilitate the full
participation of developing countries in the negotiations of an Investment
Facilitation Framework for Development.

Such a trust fund could be used to pay for the travel expenses of
developing country experts from capitals to participate in the negotiations
in Geneva once negotiations resume. The trust fund could be administered by
the WTO Secretariat[1] <#m_-4582653736516883966__edn3> or the International
Trade Centre (ITC—a joint center of the WTO and UNCTAD); ITC is already
implementing a project on “Investment Facilitation for Development” in
support of developing countries,[2] <#m_-4582653736516883966__edn4> and
could conceivably expand its work in the direction suggested.

There is a precedent for such support of WTO negotiations. When the
Organization negotiated the Trade Facilitation Agreement, a number of
members provided funding to the WTO Secretariat to help capital-based
developing country experts, especially from least developed countries, to
participate in those negotiations. Donors included a number of European
countries, as well as Canada and Japan. The sums involved were relatively
small—amounting only to a few million Swiss francs—but they were crucial in
ensuring adequate participation and input by developing countries. The
support was particularly important when text-based negotiations began
during the second half of 2009, and it continued until the very end of the
negotiations, at the Bali WTO ministerial meeting in December 2013.

This approach could be pursued also in relation to the
investment-facilitation negotiations. These negotiations are important
because:

   - FDI can contribute significantly to development. In fact, FDI flows
   may well decrease by half in 2020 compared to 2019 on account of the
   current crisis, and this makes a successful outcome of the negotiations
   even more urgent, especially for developing countries.
   - Reaching the Sustainable Development Goals requires substantial
   additional resources. Investment facilitation can help achieve the Goals,
   especially when it is geared specifically to increasing the developmental
   impact of FDI. This consideration is all the more relevant in the immediate
   future, as countries will likely place more emphasis on the quantity rather
   than the quality of FDI they seek to attract.

Hence, it is important that an Investment Facilitation Framework for
Development be negotiated on the basis of substantive input by as many
countries as possible, to sustain investment globally and to ensure that it
benefits development as much as possible.

In a broader context, a successful outcome of the negotiations would send
an important message in the face of growing FDI protectionism. It would
also signal that, in spite of the turbulence in which the WTO and the
global economy find themselves at the moment, the WTO can agree and deliver
on matters of importance to members, including investment facilitation for
development.

A trust fund to assist developing countries fully to participate in the
negotiations of a well-conceived Investment Facilitation Framework for
Development should therefore be established now.

------------------------------
* <#m_-4582653736516883966__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
series.*
** <#m_-4582653736516883966__ednref2> Karl P. Sauvant ([log in to unmask])
is Resident Senior Fellow, Columbia Center on Sustainable Investment, a
joint center of Columbia Law School and the Earth Institute, Columbia
University. The author is grateful to Nora Neufeld for her helpful comments
on an earlier draft of this text, and to Axel Berger, Khalil Hamdani and
Matthew Stephenson for their helpful peer reviews.
[1] <#m_-4582653736516883966__ednref3> It may be difficult for the WTO
Secretariat to administer such a trust fund as not all members have signed
up to the negotiations, though the number of supporters is increasing and
is now higher than 100.
[2] <#m_-4582653736516883966__ednref4> As part of this project, the views
of international investors, as well as those of other stakeholders, are
also elicited through various events (some of which are co-organized with
the World Economic Forum) and brought to the attention of negotiators.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Karl P. Sauvant, ‘Enabling the full
participation of developing countries in negotiating an Investment
Facilitation Framework for Development,’ Columbia FDI Perspectives, April
6, 2020. Reprinted with permission from the Columbia Center on Sustainable
Investment (**www.ccsi.columbia.edu <http://www.ccsi.columbia.edu>**).” 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,
Alexa Busser, [log in to unmask]

*Most recent Columbia FDI Perspectives*
<https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=57a55c36bd&e=763bcf158c>


   - No. 274, Marta Soprana, ‘Outward FDI and a global compact on
   home-country investment incentives,’ March 23, 2020
   - No. 273, Ricardo Figueiredo de Oliveira, ‘The useful institution of an
   investment ombudsperson,’ March 9, 2020
   - No. 272, Wolfgang Alschner, ‘Squaring bilateralism with
   multilateralism: What investment law reformers can learn from the
   international tax regime,’ February 24, 2020

*All previous FDI Perspectives are available at
**http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/
<http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/>**. *

*Other relevant CCSI news and announcements*

   - *CCSI prepared a Scoping Study on Securing Adequate Legal Defense in
   Proceedings under International Investment Agreements (Scoping Study)
   <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ee75343734&e=763bcf158c>*
for
   the Ministry of Foreign Affairs of the Netherlands. A summary version (33
   pages) is available here
   <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=602489e7a2&e=763bcf158c>.
   A webinar (March 24, 2020) discussing the study and its findings is here
   <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=63e4ca4d8c&e=763bcf158c>
(and
   accompanying slides with speaking notes here
   <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=f7207c26d9&e=763bcf158c>
   ).
   - *CCSI announces a call for papers for the Global Research Alliance for
   Sustainable Finance and Investment (GRASFI) 3rd Annual Conference*,
   hosted by CCSI on September 10-11, 2020. The deadline for paper submission
   has been *extended to April 15, 2020*. Themes for papers include
   climate-related risks and finance, the role of the state (e.g., central
   banks, development banks, and regulators) in advancing sustainable finance,
   and social and human rights dimensions of sustainable finance, among
   others. A full list of themes, further information about the conference and
   submission details can be found on our website
   <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=d6251d7f4d&e=763bcf158c>
   .

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 © 2020 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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*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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"Concrete Measures for a Framework on Investment Facilitation for
Development", "Making FDI more Sustainable", "Facilitating Sustainable FDI
by...", "An International Framework to Discipline Outward FDI Incentives?",
"The Case for an Advisory Centre on International Investment Law", "An
Advisory Centre on International Investment Law: Key Features",
 "Incentivizing Sustainable FDI: The Authorized Sustainable Investor", "The
Potential Value-added of a Multilateral Framework on Investment
Facilitation for Development",  "International Investment Facilitation: By
Whom and for What?", "Towards an Investment Facilitation Framework: Why?
What? When?" are available at https://ssrn.com/author=2461782 .

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