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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 292  November 30, 2020
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Riccardo Loschi ([log in to unmask])
*The development dimension of an investment facilitation framework*
* <#m_-6061470806823857092__edn1>
Khalil Hamdani** <#m_-6061470806823857092__edn2>

There was apprehension in April 2017 when 14 developing and least-developed
countries proposed a multilateral investment facilitation framework for
development, to be negotiated in the WTO. Some feared that a WTO process
would impose international disciplines, marginalize stakeholders’ input and
neglect the development dimension. Nevertheless, structured discussions
commenced, and the participants now include nearly two-thirds of the WTO

Investment and trade are two sides of the same coin but also different, and
the respective policies, institutions and cross-border regimes have evolved
in separate ways. From a development perspective, what matters is that the
two contribute to building productive capacity. Investment enlarges trade
capacity. The challenge is to delineate a framework for investment
facilitation to complement trade facilitation, without impinging on other
aspects of investment decision-making, while conforming to the overall
features of the international trading system. Whatever the outcome, the
development dimension should be central to the discussions.

The structured discussions follow in the footsteps of the
consensually-adopted Trade Facilitation Agreement (TFA), which featured
special and differential treatment for developing and least-developed
countries, and technical assistance and support for capacity building.
Potential new features (as reported by IISD[i]
<#m_-6061470806823857092__edn3>) are corporate responsibility, home country
actions in support of host country measures (mentioned by China) and a
future WTO Investment Facilitation Committee for the framework’s
development and cooperation dimensions (proposed by Brazil). Although
development policy is outside the structured discussions, the following
provisions are “development friendly”.

*Special and differential treatment*. The proposed host country measures
relate to regulatory transparency (e.g., publication of information),
streamlining of procedures (e.g., e-documentation) and dispute prevention
(e.g., ombudspersons). There is no one-size-fits-all presumption or set
timeframe, and policy space is respected. Countries decide ways to
implement, suited to their situations (e.g., self-designating provisions
that require capacity building or request additional time as in the TFA).

*Technical assistance*. Implementation is linked to technical assistance
and support for capacity building. Weak implementation may obstruct rather
than facilitate investment. Technical assistance expedites effective
implementation. A future investment facilitation framework could encourage:

   - Advisory assistance, ranging from streamlining investment procedures
   to appraisals of complex projects or assessments of environmental and
   development impacts. The facilitation perspective is to involve
   stakeholders in streamlining and assessments.
   - Training, delivered with diagnostic toolkits, teaching manuals and
   workshops to share experiences. The facilitation perspective is to cull
   relevant lessons from investors’ feedback, civil society benchmarks and
   peer-to-peer learning with counterparts in comparator countries.
   - Institutional support, mainly strengthening investment promotion
   agencies. The facilitation perspective is to extend services to aftercare,
   the development of linkages and dispute prevention. This benefits local
   enterprises, while investment inflows are sustained over time through
   investor retention and sequential reinvestment.

*Development priorities*. Technical assistance should be embedded in larger
capacity building and delivered by existing organizations. Although
facilitation is one aspect of the investment process, technical
assistance—available at countries’ requests—should strengthen the overall
investment framework in line with national objectives. UNCTAD, the World
Bank and other agencies (already) provide advice and support on investment
matters. There are also nongovernmental and private-sector actors.
Coordination is desirable—but at the country level, with stakeholder

*Corporate responsibility*. Investors are expected to advance the
Sustainable Development Goals in their corporate practice and operate in
respect of national regulations and international standards (e.g., the OECD
and ILO guidelines). In the facilitation perspective, corporate
responsibility extends beyond internal operations and encompasses wider
impact on society and environment. Governments, investors and other
stakeholders should cooperate in partnership to design sustainable business
opportunities that reduce the environmental footprint and enhance social
value creation.

*Home country support*. Regulatory transparency also applies to outward
investment measures. Given a tendency of countries to protect their
investors’ interests (as evidenced in bilateral treaties or toward state
enterprises), it is desirable to balance any bias with affirmative home
country support of host country investment-facilitation efforts. Policy
support typically includes insurance, guarantees and promotion services,
which can also nurture development activity and corporate responsibility.
Home countries should make available their support measures and provide
access to relevant information on investors.

The WTO should play a catalytic role once the process advances beyond
plurilateral discussion. In collaboration with other organizations, it
should help countries participate in future negotiations and assess
follow-up technical assistance needs (as it did for the TFA). Preparatory
assistance could commence with the actual framework negotiations. Follow-up
assistance to successful negotiations would benefit from an Investment
Facilitation Facility (analogous to the TFA Facility), which would also be
useful if integrated with WTO’s trade-related technical assistance
activities, thereby enlarging their scope to investment and reinforce
productive capacity building. Additionally, a WTO Committee on Investment
Facilitation should be established for review and appraisal—with
appropriate involvement of stakeholders.

Advancing development ultimately rests on national efforts. An investment
facilitation framework can boost those efforts by engaging investment
stakeholders and trading partners and making the multilateral trading
system more central to sustainable development. All countries should
participate in the structured discussions to ensure that development
provisions are more than hortatory language.

* <#m_-6061470806823857092__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_-6061470806823857092__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 in
webinars organized by the International Trade Centre (ITC) and the German
Development Institute during March-June 2020. The author would like to
thank Valéria Mendes Costa Paranhos, Hamid Mamdouh, Howard Mann, and an
anonymous peer reviewer for their helpful peer reviews.
[i] <#m_-6061470806823857092__ednref3> Sofía Baliño, Martin Dietrich Brauch
and Rashmi Jose, “Investment facilitation: History and the latest
developments in the structured discussions,” Negotiating Brief (Geneva:
IISD, 2020)
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Khalil Hamdani, ‘The development dimension of an
investment facilitation framework,’ Columbia FDI Perspectives, No. 292,
November 30, 2020. 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,
Riccardo Loschi, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 291, Rudolf Adlung, Pierre Sauvé and Sherry Stephenson,
   ‘Investment facilitation and the GATS: Do overlaps matter?,’ November 16,
   - No. 290, Roberto Echandi, ‘The blind side of international investment
   law and policy: The need for investor-state conflict-management mechanisms
   fostering investment retention and expansion,’ November 2, 2020
   - No. 289, Maria Adele Carrai, ‘Outward FDI under China’s Belt and Road
   Initiative: Between regulation and adaption,’ October 19, 2020

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

*Other relevant CCSI news and announcements*

   - CCSI’s 15th annual International Investment Law and Policy Speaker
   will be *virtual* this fall! The series will focus on the perspective of
   policy makers on central topics in investment law and policy.* Dec 1:
   Chantal Ononaiwu*, Trade Policy & Legal Specialist, Office of Trade
   Negotiations (OTN), CARICOM Secretariat; *Dec 4: Heidi Hautala*, MEP and
   Vice-President of the European Parliament; and* Dec 7: H.E. Ambassador
   Albert Muchanga*, Commissioner, Department of Trade and Industry,
   African Union Commission. Each session will allow for Q&A and discussion
   with the speakers. The series is co-sponsored by Arnold & Porter. *Please
   visit our website
   the schedule and to register.*
   - CCSI announces a *call for papers* for the 2020 edition of
   the Yearbook on International Investment Law and Policy. Original
   contributions to be considered for publication in the Yearbook will be
   accepted on a rolling basis until *February 28, 2021.* More information
   can be found here
   - *CCSI is accepting applications until March 31, 2021* for its
   Executive Training on Sustainable Investments in Agriculture, which will
   take place online June 15-25, 2021. Please visit our website
   for more information, including on how to apply.
   - *CCSI is accepting applications until February 28, 2021* for
   its Executive Training on Extractive Industries and Sustainable Development,
    which will take place online June 7-18, 2021. Please visit our website
   for more information, including on how to apply.

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]
| w: | t: @CCSI_Columbia

"Note on the Costs and Financing of an Advisory Centre on International
Investment Law", "Insulating a WTO Investment Facilitation Framework from
ISDS", "A G20 Facility to Rekindle FDI Flows", "Enabling the Full
Participation of Developing Countries in Negotiating a WTO Investment
Facilitation Framework", "Advancing Sustainable Development by Facilitating
Sustainable FDI, Promoting CSR, Designating Recognized Sustainable
Investors, and Giving Home Countries a Role", "Making FDI more
Sustainable", "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",
"The Potential Value-added of a Multilateral Framework on Investment
Facilitation for Development", "International Investment Facilitation: By
Whom and for What?" are available at .

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