From Singapore To Cancun- Knowledge, Power And Hegemony In The Negotiation Of Investment Rules At The Wto

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From Singapore to Cancún: Knowledge, Power and Hegemony in the Negotiation of Investment Rules at the WTO

Elizabeth Smythe Concordia University of College of Alberta 7128 Ada Blvd Edmonton, Alberta Canada T5B 4E4 [email protected]

Paper presented at the annual meeting of the International Studies Association, Montreal, Quebec, March 18, 2004

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Introduction: On September 14 the 146 members of the World Trade Organization came together once more in what was to be the last meeting of ministers in Cancún Mexico. After a meeting of Heads of Delegation that had gone on until 1 a.m., followed by small group meetings until 4 a.m. and a resumption of larger group consultations in the morning, the Mexican Minister of Foreign Affairs Luis Ernesto Derbez, had to inform the group that he had found no basis for consensus. The most severe divisions among WTO members which he identified centered around the four “so-called” Singapore issues: investment, competition policy, transparency in government procurement and trade facilitation.

When attempts to

reconcile positions on these issues failed the chair, seeing no basis of compromise on which discussion could go forward provided a text for Ministers’ approval which acknowledged the impasse and then declared the meeting adjourned. This outcome was perhaps surprising, certainly seeming to shock the most powerful members of the WTO, in particular the United States and the European Union. The fact that investment, as one of the so-called Singapore issues, contributed, along with agriculture, to the breakdown of the meeting was perhaps not such a surprise. Those favouring the inclusion of the negotiation of an international investment agreement within the agenda of the WTO negotiations had some reason to have been optimistic perhaps. A new round of negotiations had been launched in Doha in 2001 and they had worked long and hard since 1996 to forge a consensus among WTO members that investment negotiations should be undertaken. Given that the demandeurs on investment rules included members of the supposedly very powerful Quad, that competition among (in particular) developing countries for new investment had led to a proliferation of incentives and Bilateral Investment Treaties

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(2181 by 2003, WIR) along with liberalization of entry and regulation of foreign investment in many host countries throughout the 1980s and 1990s, a positive outcome from their years of effort and eleventh hour negotiations in Cancun might have been anticipated. Moreover “high standard” investment rules, which gave investors protection and ensured national treatment, had been included in a regional trade agreements, most notably the NAFTA. In addition a set of disciplines, limiting a number of trade-related investment measures (TRIMs) had been agreed to in the Uruguay Round negotiations and the General Agreement on Trade in Services (GATs) also recognized a mode of service delivery which included foreign investment. Yet there were many signs of the political sensitivity of multilateral investment rulemaking in the past decade. Beginning with the difficulties and controversies around the OECD negotiations of a Multilateral Agreement on Investment (MAI) which ultimately failed and the growing number of controversial investor-state disputes under Chapter 11 of the NAFTA it could be argued investment agreements were not easy to achieve or live with. Even earlier however, this paper will argue there were signs that developing countries at the WTO were very reluctant to engage in negotiations. Because of that fact proponents of multilateral investment rules devised a strategy to build consensus based around an “educative” process which would persuade them of the need for a multilateral agreement on investment as the best way for them to attract new investment. The assumption was that information on the merits of foreign investment and need for protection of investors would lead to a shared knowledge on the issue, which, combined with technical assistance and expertise, would reassure members and make them

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comfortable with the idea of negotiating. A number of problems emerged however, with this strategy as this paper will identify. The strategy failed to recognize that there were alternatives in terms of information and knowledge on investment that would challenge their version and re-frame the debate about investment rules. Second they assumed that the increased capacity of developing countries would only come through the technical assistance provided by multilateral organizations like the WTO that have a built in preference for investment rules. However, alternative sources of expertise began to emerge within many developing countries and as a result of the activism of non-governmental organizations around trade and investment issues in the late 1990s. While some like the Economist magazine deplore the role of NGOs in this regard, they acknowledge its impact (Sept 18, 2003) Finally the question of negotiating investment rules cannot be isolated from other issues and developments at the WTO. The growing numbers of developing country members and their real concern with both their capacity to implement Uruguay Round (UR) agreements and the failure, in their view, of developed countries to fully implement these agreements has aroused a level of distrust and scepticism that only come with experience. They have been, moreover, as a result of the TRIPs experience leery of any agreement which supposedly gives them “flexibility” Thus the way in which the issue of an investment agreement was framed by the demandeurs did not go unchallenged. The attempt of the demandeurs to construct a problem for which an international investment agreement, negotiated at the WTO, was the only solution was never fully persuasive. They were never able to forge a consensus that there was a problem, nor that the negotiation of a multilateral investment agreement was the preferred

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solution to it. If anything the re-branding of the Doha round as the Doha Development Round only increased the challenge. This paper has seven sections. The first provides an overview of the issue of multilateral investment rules and explains the emergence of the investment issue as one of four Singapore issues and the creation of the Working Group on Trade and Investment (WGTI) . The second section describes the work of the WGTI in the early period. The third section examines the period from the Seattle Ministerial in late November 1999 to the 2001 Doha Ministerial focussing on the WGTI and efforts to push the issue further. The fourth section examines the post Doha final push of proponents of investment negotiations after their partial victory in Doha. The fifth section of the paper examines how, given the Doha mandate, efforts were made to build up the technical capacity of developing countries to engage in negotiations. The sixth section however, raises the question of alternative sources of information and knowledge about investment issues, namely non-governmental organizations in the South as well as Northern developmental and environmental groups. The seventh section deals with the struggle before and in Cancun over investment and the Singapore issues. The paper then follows with some brief concluding comments.

It’s a Long Way From Singapore to Cancun: The Singapore Issues and the Origins of the Working Group on Trade and Investment The issue of investment rules at the WTO grows out of the increasing desire of capital exporting countries in the 1990s to secure stronger investment protection through a multilateral investment agreement. Such an agreement would provide for national treatment of foreign investors (ie non-discrimination), set limits on host state regulation of entry of investment (liberalized access) and provide strong protection of investors through effective

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and ensure adequate compensation for expropriation, along with effective dispute resolution measures. The first agreement to embody many of these provisions was chapter 11 of the North American Free Trade Agreement. In the mid 1990s the debate centered around the issue of which venue, the OECD or the WTO, offered the best prospects for a “high standards” agreement. (Smythe, 1998) Those who wanted to see negotiations at the WTO included the European Commission, Canada and Japan. Despite US led efforts to launch negotiations on an MAI at the OECD these WTO members pushed the issue throughout the spring and summer of 1996, with a view to building momentum for the first full WTO ministerial meeting in December, 1996 in Singapore. Canada hosted a meeting in the fall of 1995 with sixteen middle-sized countries including Australia, Hong Kong, Indonesia, Singapore and Thailand where the investment issue was raised. (Smythe, 1998) The European Commission began preparing the way through a series of informal discussions in the fall of 1995 with various WTO representatives in Geneva and Trade Commissioner Leon Brittan’s public endorsement of the WTO (Brittan) . The United States remained opposed to any push to put investment on the agenda of the WTO because the completion of an MAI at the OECD was considered to be the top priority.( Aaron, 1995) and given the limits of the trade-related investment measures (TRIMs) in the Uruguay Round it was pessimistic about the prospects at the WTO. Despite US opposition, expressed informally at the Quad trade ministers meetings with Canada, the EU and Japan persisted in their efforts. These included the sponsoring of two seminars organized and offered under the auspices of UNCTAD, an organization that enjoyed the trust of developing countries but a certain amount of developing country opposition to initiating negotiations on investment at the WTO.

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In April 1996 Canada presented a proposal to begin a work program at the WTO on investment, an attempt to move the process forward by proposing detailed analytical work on FDI and the various international rules dealing with investment (Canada, 1996). The effort was portrayed as an educative one that did not presuppose future negotiations even though the goal was clearly to build a consensus on investment recognizing that any immediate attempt to launch would have been doomed to failure.

While countries such as India and

Tanzania were opposed (Ramaiah) and questioned the need to undertake research in an organization like the WTO, others such as Brazil and Mexico, were somewhat more supportive When the issue was raised later in June developing country opposition had begun to coalesce. Eventually the US also supported the proposal largely for its educative value, but insisted at a later Quad trade ministers meeting that Canada, the EU and Japan reaffirm their support for the negotiation of the MAI at the OECD. (Inside US Trade, Sept 28, 1996) From the US viewpoint any effort to push investment at the WTO would fail and risked building an intransigence to future investment negotiations among a number of countries. While a number of international business groups, such as the International Chamber of Commerce and the Trans Atlantic Business Dialogue, supported simultaneous efforts at the WTO and the OECD to negotiate investment rules, the US Advisory Committee on Trade Policy and Negotiation (ACTPN, 1996) and the US Council for International Business were strongly opposed to the efforts at the WTO claiming that the EU Commission would “use the WTO work program to frustrate our OECD investment objectives”(Inside, August 23, 1996). The European Union supported the work program with a view to “aiming toward a consensus which might lead in time to the negotiations of a WTO investment instrument”(EU, 1996).

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The Director-General Renato Ruggiero and the Secretariat of the WTO also seemed to support the inclusion of investment in a WTO work program arguing in the annual report that FDI required a set of global rules that could take the interests of all economies into account and that “only a multilateral negotiation at the WTO, when appropriate, can provide such a global and balanced framework”(WTO, 1996).In his speeches then Director-General Ruggiero repeatedly underlined the linkage of FDI and trade and the need for a set of multilateral rules, given the patchwork of regional and bilateral agreements. Efforts to forge a developing country consensus to stop the inclusion of investment and a number of other new issues on the Singapore agenda were spearheaded by India which hosted a meeting of 14 countries in September 1996. The meeting’s communiqué raised the question of the role of UNCTAD, which also had a mandate, as a result of the UNCTAD IX, to study the issue of FDI and pointed out the fact that the TRIMs agreement already called for a review in 1999- 2000. The communiqué was critical of the idea of an MAI: While countries are trying to promote inward investment autonomously in different degrees and some countries have more liberal inward investment regimes, the efforts to bind all countries into a common framework of disciplines concerning transnational investments does not in the view of many participants appear to be well-considered and equitable. (Inside,Oct 4)

No consensus was achieved among WTO delegates on the investment issue prior to the Singapore meeting and a last minute compromise was forged at the meeting itself.. The ministerial declaration which emerged from the Singapore meeting had only a few sentences on investment, greatly reduced from the initial proposal. Ministers agreed to “establish a working group to examine the relationship between trade and investment” the work of which “shall not prejudice whether negotiations will be initiated in the future”. The process was also to draw upon the work at the UNCTAD and “other intergovernmental fora

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”. For promoters of investment rules UNCTAD could provide some analytical capacity on the investment side which the WTO lacked and also had the trust of many developing countries, even though it risked turning the investment issue into one that pitted north against south. The declaration also noted the existing built-in agenda in the TRIMs review, due in four years. Little support to launch any negotiations on an MAI. was frankly acknowledged at the WTO press briefing, “there is disagreement over the extent to which the WTO should be involved in setting international rules for foreign investment.” (WTO, 1996) As part of the compromise the declaration also created a second parallel working group on the relationship between trade and competition policy. This working group would provide an opportunity to address questions relating to the potential market dominance of multinationals and other issues related to the behaviour of firms in host countries, in contrast to the focus on restraining state regulation which forms the thrust of discussion of investment rules - a chance, in other words, to address the other side of the foreign investment issue. The Working Group on Trade and Investment and Investment Rules: A Solution in Search of a Problem. As the Singapore Declaration indicated this working group was established as part of an "educative" process and was not intended to seek or generate a consensus vis a vis future negotiations. The Declaration reiterated several times that the working group would operate without prejudice to any future decisions regarding negotiations. In agreeing to this compromise. however, a number of actors did have specific preferences regarding future negotiations which coloured their activities within the working group as they sought to use it to further their goals. For the European Commission, Japan, Canada and a number of other states which favoured liberalization of investment regulations and the creation of multilateral rules to that end, the idea was to use the working group as a basis to begin the process of building consensus on the need for investment to be included on the agenda of a future round of negotiations. The US was not, however, in contrast to the Uruguay Round, at the forefront of these efforts. Having decided on a strategy of pushing for a binding investment agreement

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at the OECD US officials acquiesced with the working group only to the extent that the process as educative, allowing them to proselytize on the benefits of investment and liberalization without much of a negative impact on the OECD process. In contrast, opponents of investment negotiations at the WTO, and others who were at least sceptical, viewed the working group with more suspicion. Nonetheless by stressing the education aspect, encouraging lengthy research questions and a general de-linking of the working group from any processes of decision-making in the WTO, they felt they could minimize its impact and use it to highlight their concerns about the push to liberalize further and their opposition to future negotiations. For others who were very active in the group, such as Korea, it provided an opportunity to show their credentials as an investment friendly country and an emerging player on trade issues. By being active and engaged in the work of the group they could establish their credentials to be included in future, informal meetings which are often critical to negotiations at the WTO. The working group also reflected an additional compromise made in Singapore regarding what other international organizations would be drawn into its work. A number of developing countries pushed for the inclusion of UNCTAD, an organization seen as both having a mandate to address investment issues (discussed below), as well as the research capacity on as a result of its absorption of the former UN Commission on Transnational Corporations and the Centre on Transnational Corporations in 1993. More important, perhaps, was the role of UNCTAD in articulating the interests of developing countries and ensuring the inclusion of the development dimension in any discussion of multilateral rules on FDI. While some actors, such as the US, are distrustful and sceptical regarding UNCTAD other actors who favour negotiations on investment rules saw its involvement as a way to bring reassurance to developing countries who were nervous or hesitant about being involved in the working group and actively worked with UNCTAD to promote discussion of investment issues. While a number of other organizations such as the IMF, the World Bank

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and the OECD have also been involved, only UNCTAD has a formal ongoing role in the working group. The Working Group began its operations in the spring of 1997 under the chairmanship of the Thai Ambassador Krirk-Kai Tiarapaet and held its first meeting in June 1997, followed by two more in October and December 1997, and then meetings roughly every other month in 1998. After initial submissions a checklist of issues was proposed by the chair and agreed upon and included four aspects: 1. Implications of the relationship between trade and investment for development and economic growth 2. The economic relationship between trade and investment. 3. A stocktaking and analysis of existing international instruments dealing with investment. 4. Based on this research an assessment of the "gaps" in existing instruments and the advantages of multilateral over regional or bilateral rules. According to participants"i the meetings operated in a fairly positive and non-adversarial way with no rigid rules regarding the order of discussion members were free to raise issues and revisit them in subsequent meetings. As a consequence, the final two issues on the checklist were not dealt with until much later in the process (March 1998). This too reflected strategies. Even among proponents of negotiating investment rules there was a recognition that an early or too vigorous push to discuss rules would simply lead to entrenched opposition and limit dialogue. To be credible with the large number of developing country members they had to focus on the economic research and seriously address development issues. They were also aware that the ultimate decision on the agenda of any future round would be made at the next ministerial due in the fall of 1999. Ultimately any discussion of gaps in existing rules could serve as the building block to a consensus later.in 1999 as long as the working groups mandate was extended. Opponents of investment rule negotiations wished, on the other hand, to drag the process out by focussing on the first two economic research items in the checklist to avoid the development of any consensus on the need for new rules and to avoid reaching any conclusions that would precipitate a decision. Presentations of members reflected competing views. A number of delegations emphasized the close integration of trade and investment, the benefits of foreign investment

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and the need for greater overall coherence, transparency and predictability in investment policies and stressed the role that the WTO could play in this process. On the other side a number of members questioned the nature of the trade and investment link for developing countries, arguing that investment work was already being done in a number of other organizations and need not be addressed at the WTO, or stressing the purely educative role of the Working Group and focussing on a number of issues of concern to developing countries. Typical of these competing positions were the early written submissions to the Working Group from the EU and India. In the case of the European Commission its written submission of May 30, 1997 focussed on the growth and significance of FDI in the global economy, the growth of intra-firm and that the "current patchwork of rules" in "inefficient" and "non-transparent". The submission pointed out the fact that the WTO already had investment on its agenda as a result of the GATS and the TRIMs and that the WTO is in the best position to "level the playing field" so that small and medium enterprises are more willing and able to undertake the risk of foreign direct investment (FDI). They also argued that increased competition for FDI could lead to a race to the bottom with incentives that would hurt developing countries and that these countries could gain much from a balanced set of rules. This was followed at a later date by the submission of a survey of UK companies examining the factors which shaped their outward FDI. Factors identified included macroeconomic growth and the presence of a predictable, transparent and open regime for trade and investment. The EU paper had also to acknowledge however, record levels of investment flows (UN, 1998) including an increasing proportion to developing countries, in the absence of any WTO rules. The EU pointed out however, that most of this FDI was concentrated in only a few economies and argued that smaller developing economies would thus benefit if flows became more dispersed. In contrast India’s written statement (India, June, 1997) reminded members of the Singapore Declaration and the purely educational and non-prejudicial role of the Working Group and argued that the "development perspective should be all-pervasive". Concerns to be addressed in the study should include the impact of FDI on the balance of payments, technology transfer, and a recognition of the need of states to pursue their national industrial 12

policies. India proposed an exhaustive list of twelve elements that should be the focus of the study which would include "the business practices and corporate strategies of transnational corporations" and the "interrelationship between mobility of capital and mobility of labour". After eighteen months of work only a few areas of consensus had been identified by the participants. Over all there was an acceptance of the idea that FDI could provide benefits for economic development. There was an acceptance too that trade and investment were closely linked. Neither meant, however, that FDI was not without problems for some developing countries. Moreover, on the issue of existing agreements and the need for new rules there was much less agreement. Among those supporting the need for new multilateral rules were the EU, Japan, Canada, Hong Kong, Switzerland, Korea, Brazil and Mexico the argument tended to be that FDI was beneficial, that state intervention in the investment process, either in the form of incentives or regulation, caused distortions in the process, inefficiency, and even worse, uncertainty for investors. This, in turn, would ultimately depress investment flows. Multilateral rules, on the other hand, they argued, would bring transparency, efficiency and certainty which would enhance flows and ultimately benefit all countries. Clearly many developing countries needed and wanted increased flows of investment. The link, however, between multilateral rules and investment flows is a tenuous one that is hard to demonstrate or support with much research data. Opponents of investment rules, which included India, Pakistan, Egypt, Morocco, Cuba and the ASEAN group pointed to particular problems with FDI, or to the fact that many of them already had numerous Bilateral Investment Treaties which provided protection to foreign firms, once established, and which appeared to be operating well. Moreover the ASEAN countries were quick to point to the conflicting research on incentives and the success they had had with incentives that targeted certain sectors and were linked to a firm’s performance. Clearly the ASEAN countries could hardly have been seen as countries in the 1990s with difficulties attracting investment. When it came to reviewing existing agreements there was little consensus on the merits of various approaches to the questions of whether a broad or narrow definition of investor was preferable, how to define national treatment or whether most favoured nation or national treatment is really the prevailing international norm.

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The one concrete issue about which the group had to make a decision, that is, deadlines even ended in a stalemate and reflected the two opposing camps. Those who generally opposed the idea of investment negotiations were quite happy to see the working group continue far into the future, if not indefinitely. In contrast those favouring negotiations sought to bring some sort of closure to the group’s work which would force some conclusions, preferably in mid 1999, so that they would have an impact on the deliberations leading up to a late fall ministerial in 1999 where a decision on any agenda would be taken. Unable to reach any consensus the group merely recommended that it continue and decided to leave the matter of a timetable to be decided by the General Council For a number of the opponents of the negotiations such as India there was little likelihood of a change of view. Many were still struggling with controversial domestic legislation to implement the Uruguay Round commitments (for example intellectual property) and already dissatisfied with the slow implementation of trading partners’ commitments in areas such as textiles and agriculture see no priority to address investment rules in the near future if ever. For proponents the working group had yielded fairly limited results but other avenues of suasion and opposition were also ongoing. Even at this early stage in the effort to build consensus that some attention would need to be paid to capacity building and that UNCTAD which already had a mandate to address investment issues as a result of the UNCTAD IX meeting in Midrand South Africa referred to "identifying and analyzing the implications for the development of issues relevant to a possible multilateral framework on investment (MFI). The work programme for the secretariat was to be aimed a helping developing countries participate as effectively as possible in various bilateral and multilateral discussions and negotiations already ongoing. UNCTAD had already established a role in research through its absorption of the Centre on Transnational Corporations and the publication of its wellregarded annual World Investment Review . The new UNCTAD work program included a wide variety of activities comprising research, technical papers, a series of seminars held in Geneva and various regions began to accelerate in 1997-98 and culminated in November 1998 with the release of the World Investment Review which discussed a multilateral

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framework on investment. This was followed by a high profile meeting in Lyon France with heavy private sector participation designed to foster partnerships for development. What is perhaps the most interesting aspect of UNCTAD’s program was how it was financed. by a trust fund which the cash strapped organization needed. A number of actors favouring the negotiation of investment rules (EU, Japan, Switzerland, Netherlands, Norway and Brazil) played a role in financing these activities through their contributions. Clearly they hoped that resistance to negotiation based on a lack of expertise or unease with the issues or concepts might diminish and that proponents of investment rules at the WTO would be seen to take development concerns seriously. The working group continued to meet through 1999 as a result of an extension of their mandate agreed to in the General Council in December 1998. They continued to focus on the checklist outlined above. By 1999 two external events had begun to impact discussions. One was the Asian Financial crisis and the second was the collapse of the OECD negotiations on the Multilateral Agreement on Investment in December 1998. While both tried to use the former to justify their arguments (investments can be volatile and endanger developing countries vs foreign direct investment is stable, long-term and therefore worth attracting through transparent, stable, predictable rules.) The latter development however, was clearly a blow to proponents in the sense that it highlighted the difficulties of agreeing on rules and second it ensured that the vocal international campaign of opposition to a multilateral agreement would turn their attention to the WTO. As the group finally engaged the fourth item on the check list that of identifying the "gaps" in existing instruments and the advantages of multilateral over regional or bilateral rules the real engagement in the issue of whether to negotiate an agreement began. Much of the debate centered around the issue of how developing countries could have policy flexibility and provide investors with predictability and stability. The answer which investment proponents began to posit was the model of the bottom up, positive list approach of the General Agreement on Trade in Services. Despite the shift away from the top down MAI like model which would have involved general obligations across sectors and few exemptions, there was still no consensus by the fall of 1999 on whether or not to launch negotiations .

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From Seattle to Doha: Getting nowhere fast? Divisions on the WGTI are reflected in the report to council of Oct 22. Two views had emerged which are reflected in the draft ministerial declaration of October 19 which WTO members discussed in the final weeks before the Seattle meeting. It contained two competing paragraphs both in brackets: 41. [Taking into account the work already undertaken in the WTO Working Group on the Relationship between Trade and Investment, negotiations shall aim to establish a multilateral framework of rules on foreign direct investment, to further the objectives of the WTO and to complement its rules, so as to enhance the contribution of international trade and investment to economic growth and development, and to help create a stable and predictable climate for the treatment of foreign direct investment world-wide. The framework should (a) contain provisions on scope and definition; (b) be based on WTO principles of non-discrimination, while respecting the ability of hot governments to regulate the activity of investors in their respective territories; (c) ensure transparency and predictability of domestic investment regimes, and the dissemination of information in this respect; (d) address as an integral part of the framework the special needs of developing and least-developed country participant with respect to the contribution of foreign direct investment to their development and economic growth; (e) provide for negotiated, positive commitments by participants regarding access to investment opportunities in their territories, with a view to achieving a progressively higher level of liberalization; (f) address investment-distorting and trade-distorting policies and practices; (g) take account of, and ensure consistency with, relevant WTO provisions related to investment; and (h) provide for the applicability of the WTO dispute settlement mechanism to resolve disputes between governments.

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Consideration shall be given to the possible need for provisions on other matters, such as protection of investment and investors’ responsibilities, and to existing bilateral and regional arrangements on investment.] Versus……………..

56. [The Working Group on the Relationship between Trade and Investment shall pursue its present mandate, building on work undertaken to date. Further work should focus on issues of interest to developing countries, in particular, the effects of foreign direct investment, positive and negative, on the development objectives of host countries, the obligations of foreign investors to host countries, and the obligations of home countries in respect of disciplines on their investors. The Working Group shall report to the Fourth Session of the Ministerial Conference on the results of its work [with its findings, and its recommendations].] In Seattle the divisions over investment continued. India made its continued opposition clear. In the words of its Minister of Commerce and Industry (Maran, 1999) “We do not subscribe to the view that a multilateral framework on investment is either desirable or necessary” Despite the collapse of the MAI at the OECD, or perhaps because of it, the United States also continued to oppose a push to add investment to the agenda of any new round seeing it as an issue not ripe for negotiation and perhaps part of an EU diversionary “anything but agriculture tactic.” (Bridges, Nov. 24, 1999). The events of Seattle are widely known and the collapse attributed in part to the inability of the EU and the US to bridge their differences on agriculture. On investment the opponents had the upper hand as the draft chair’s text of December 2 reveals in paragraph 38 which outlines further “educational and analytical work on FDI based on the proposals of members and including consideration of: • The need to preserve the ability of host governments to regulate the Activity of investors in their respective territory • The transparency, stability and predictability of domestic investment regimes • The positive list approach to access to investment opportunities in Member’s territories • Dispute settlement provisions which exclude investor-state dispute resolution

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• •

The specific needs of developing countries And the relationship between multilateral, plurilateral and bilateral rules and agreements on investment.

However paragraphs 39: “ This work will be purposeful and focused and aim to assist all Members prepare for, and adequately assess the possible outcomes and implications of, negotiations on this issue.” And 40: “ A report on this work shall be presented to the fourth Ministerial Conference which shall decide whether specific guidance is needed for any negotiation to be launched at that time under the single undertaking. Taken together the latter two paragraphs seem to suggest a timeline for decision and ultimately negotiations. With the collapse of the ministerial however, it is back to business once more for the working group in Geneva. In the year 2000 and 2001 the working group met a further five times under the chairmanship of the Turkish ambassador covering all four areas outlined in the chairs’s 1997 checklist. Some felt it was “spinning its wheels in this period” but it is with the Doha Ministerial meeting that the working group finally got the specific mandate and impetus it had lacked. Three key paragraphs of the Declaration address investment:

20. Recognizing the case for a multilateral framework to secure transparent, stable and predictable conditions for long-term cross-border investment, particularly foreign direct investment, that will contribute to the expansion of trade, and the need for enhanced technical assistance and capacity-building in this area as referred to in paragraph 21, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations. 21. We recognize the needs of developing and least-developed countries for enhanced support for technical assistance and capacity building in this area, including policy analysis and development so that they may better evaluate the implications of closer multilateral cooperation for their development policies and objectives, and human and institutional development. To this end, we shall work in cooperation with other relevant intergovernmental organisations, including UNCTAD, and through appropriate regional and bilateral channels, to provide strengthened and adequately resourced assistance to respond to these needs. 18

22. In the period until the Fifth Session, further work in the Working Group on the Relationship Between Trade and Investment will focus on the clarification of: scope and definition; transparency; non-discrimination; modalities for pre-establishment commitments based on a GATS-type, positive list approach; development provisions; exceptions and balance-of-payments safeguards; consultation and the settlement of disputes between Members. Any framework should reflect in a balanced manner the interests of home and host countries, and take due account of the development policies and objectives of host governments as well as their right to regulate in the public interest. The special development, trade and financial needs of developing and least-developed countries should be taken into account as an integral part of any framework, which should enable Members to undertake obligations and commitments commensurate with their individual needs and circumstances. Due regard should be paid to other relevant WTO provisions. Account should be taken, as appropriate, of existing bilateral and regional arrangements on investment. The wording however, raised an element of ambiguity to the point where the host minister chairing the meeting had to further clarify the meaning of paragraph 20. Drawn up after another long marathon night session, which critics charged was less than transparent, a small group of developing countries led by India the next afternoon requested a change to the text to ensure that consensus would be required to for negotiations and not merely the modalities. Despite that effort the proponents and opponents of negotiations on investment rules continued to dispute its meaning and significance. Finally the Qatar chair Finance Minister Kamal had to further the meaning at the final formal session, “Let me say that with respect to the reference to an explicit consensus being needed, in these paragraphs for a decision to be taken at the Fifth General Session of trhe Ministerial Conference, my understanding is that, at that session, a decision would indeed need to be taken by explicit consensus, before negotiations on trade and investment, and trade and competition policy…..could proceed. (Khor, 2003) While proponents did not fully achieve their goal to launch negotiations the language of Doha set the basis for a more focussed effort in the working group and launched a major program of technical assistance and capacity building among developing countries discussed 19

below. Opponents of negotiations had got wording on an explicit consensus, a reflection, moreover, of a growing unease on the part of many developing country members with the whole process of WTO decision-making and its lack of internal transparency. Critics of the WTO (Jawara and Kwa) point to the particularly heavy handed arm twisting (by the EU in particular) and threats to some developing countries which, they claim, characterized the Doha ministerial. In achieving the success of launching the Doha round of negotiations the developed country members had resorted to a re-branding of the negotiations as a development round, a title slavishly adhered to by WTO staff and members. While this may have assuaged some concerns and reluctance on the part of developing country members it also set high expectations for development-oriented results, expectations, it could be argued, that failed to be met in Cancun. In the case of the WGTI it did put the addressing of development concerns front and center in the final push to build a consensus on the launching of negotiations on investment. The working group began its deliberations around a new checklist, under Brazil’s chairing. with a defined deadline at the end of 2002. From Doha to Cancun: The Push for Consensus in the WGTI With the specific mandate of the Doha ministerial declaration behind it the WGTI resumed its work under a Brazilian chair and with China as a new member. It met six times over the next 19 months but the pace had clearly picked up given the big jump in written contributions to 56 in this period. While these included a number of studies and clarifications by the secretariat as the following breakdown indicates a major effort was under way by proponents of an investment agreement Table 1 Country

Number of written submissions

European Union 9 Japan

8

Canada

8

20

Taiwan

6

Korea

4

India

4

China

3

Mexico

2

Switzerland

1

Costa Rica

1*

Kenya

1*

Pakistan

1*

Zimbabwe

1* * joint submissions with other countries

Discussions and submissions reflected the main areas of concern and continued disagreement over the scope and definition of investment. Some (such as the US ) wanted a broad assets based version which they claimed reflected the new reality of financial flows, many developing countries were concerned about balance of payments, and volatile capital flows, sought a definition which would strictly limit any commitments to long-term foreign direct investment. Transparency, while a motherhood type goal everyone could subscribe to elicited disagreement over whether rules were needed. Development provisions sparked a lot of attention, debate and disagreement, an area where, given the Doha mandate, it was imperative to at least appear to accommodate the needs and concerns of developing countries, particularly the least developed and smaller developing countries. The EU pushed this hard in its two concept papers dealing with the issue and talking in terms of a multilateral Investment for Development agreement (EU April 7, 2003). The debate centered around the concept of flexibility and the need for developing countries to have the policy space necessary to take the measures needed to promote development. Some opponents of an investment agreement

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argued that binding rules would not leave adequate space for development policies. Proponents argued that such rules could be fully compatible and a way of securing that policy space. The stability, transparency and predictability of investment rules would enhance attractiveness and promote (although they had to admit a weak link) investment flows. The EU also tried to suggest that smaller developing countries would be better able to protect their interests in a multilateral rather than a bilateral investment agreement where the asymmetry of power leaves them more vulnerable. The key, however, for the proponents in answering the flexibility concern was the embracing of a GATs type bottom up model for the agreement. This model, it was claimed would allow countries to choose which sectors they wish to see covered by investment disciplines and obligations. Members had already, it was argued, accepted the presence of investment disciplines in the GATs since mode three of provision of services involved, a commercial presence, that is, foreign investment. Critics however, expressed concerns about the implications of the GATs model for the ability of states to screen and impose conditions on the entry of investment, the extent to which it could be a model for all investment and just how much flexibility there was. By far one of the most controversial issues, much as it had been in the MAI, was the issue of national treatment and how it applied to both pre and post establishment stages of investment.. For some developing countries the need to be able to treat domestic and foreign investment differently and to screen and channel incoming investment in line with policy objectives was seen as crucial. None of the demandeurs on investment broached the subject of the obligations of investors. It took a joint paper by China, Cuba, India, Kenya, Pakistan and Zimbabwe to stir things up in the fall of 2002 by calling for “legally enforceable norms or corporate conduct.” Some delegates expressed a bit of surprise, or indignation that China, which had to date played a “constructive” role in the working group should join in this endeavour. Capitalizing on recent corporate scandals in the United States and the call in paragragh 22 of the Doha Declaration, the paper argued a need for a balanced approach to investment rules which would address an issue the WGTI had to date ignored, that is, the obligations on the part of investors or home governments. The paper raised issues of disclosure, accountability, restrictive business practices, technology transfer ownership and control, consumer protection and environmental protection and the obligations of host country governments.

Critics

argued the notion of binding rules on corporations or home countries was “inappropriate” and that host states could use domestic regulation to address these concerns. Clearly the purpose had been

22

one of making a point about the imbalance of seeking to only address the binding obligations that might be imposed on host countries in any investment agreement. By June 2003 the WGTI had covered all of the areas addressed in the Doha Declaration and a number of proponents felt the time had come to move beyond the “analytical phase”. Opponents however, argued that there was more that needed clarification. While there had been a high quality of discussion and debate in the WGTI according to some delegates it had also been clear that certain groups of countries had less capacity than others to engage in debate, discussion and ultimately negotiations on investment issues. Capacity Building, Technical Assistance and the Development of Knowledge One of the main arguments against the launching of investment negotiations had been the lack of capacity on the part of a number of developing countries to deal with additional new issues on the WTO agenda. While this argument applied to all of the Singapore issues it applies also to the whole question of how effectively developing countries, especially the least developed can effectively participate in the WTO. Of the thirty least developed members twenty are unable to even afford to maintain an ongoing presence in Geneva. Efforts have been made to bring them in for briefings at least one week a year (Geneva Week). Even those countries which can afford to fund a small delegation in Geneva have limits on their capacity to staff meetings let alone engage in research and analysis on the implications of complex negotiations. There has been a long time recognition of the need to provide technical assistance and training at the WTO. In the case of investment rules the demandeurs had realized as early as 1996 that many developing countries were reluctant to engage in negotiations partly because of a lack of capacity and that they would need to address this issue if they were to have any hope of building a consensus to launch negotiations. The Doha Declaration builds even more directly on this concern and called for “enhanced support for technical assistance and capacity building”. A trust fund was quickly established to which member could contribute to fund this work. Most of the training was provided by WTO and UNCTAD working together. Reports to the WGTI indicate that an extraordinary number of investment training events were held in 2002-3 (42) either in Geneva, or in various locations in developing countries to provide either intensive training or regional seminars for developing country members. Given the small staff of both the WTO and the UNCTAD who focus on investment issues this meant that they were very stretched. A number of these events were held in Geneva with travel to Geneva funded for participants timed to coincide with meetings of the

23

WGTI, thus enabling their limited participation. Even with these efforts many small African countries in the WGTI were largely marginalized and their participation was minimal. Over all UNCTAD reported a high level of satisfaction on the part of participants with the program. Additional on-line and distance education modules have been produced by UNCTAD which have gone some way to develop greater understanding of the technical terms and issues involved in investment rules (UNCTAD, 2003a) However, a number of delegates and critics questioned the overall impact of these efforts pointing to the need inherent bias toward ensuring developing countries comply with agreements, liberalize and integrate. They point to a lack of analysis of the limits of infrastructural and other requirements in participating countries to benefit fully from technical assistance programs. Rather, some critics charge (Seatini) much of the technical assistance programs tended to be about giving the impression that something is being done actually better preparing developing country negotiators to engage in future negotiations fully able to analyze the impact of agreements on their economies, assess their own interests and determine how best to advance them.. UNCTAD has increasingly played a role here as have non-governmental organizations and networks in the South. On the investment issue they have been joined by a number of Northern NGOs, especially environmental and development groups who have taken on the task of challenging and ,in their view de-bunking, some of the key arguments in favour of the negotiation of an investment agreement at the WTO. Non-Governmental Organizations and Investment Rules Along with UNCTAD, Third World Network, based in Penang Malaysia, the Southern and Eastern African Trade and Information and Negotiations Initiative (SEATINI) and the South Centre, which grew out of the South Commission, have played an active role in providing seminars, research and analysis available to developing countries. They have facilitated and coordinated south-south contact and coordination in Geneva as well. A number of these organizations also have researchers in Geneva who provide monitoring and analysis of the state of play of negotiations (TWN, Focus on the Global South, IATP, IISD) which is fed electronically to groups and individuals around the globe. The International Institute for Sustainable Development went so far as to find foundation funding for an electronic newsletter specifically devoted to developments on foreign investment issues, whether multilateral, bilateral or regional. Other newsletters, such as the well-respected weekly newsletter, Bridges, published by the International

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Centre for Trade and Sustainable Development (ICTSD) in Geneva. in several languages, reaches thousands of groups and individuals and is regularly consulted by negotiators. In addition the defeat of the MAI at the OECD and the clear desire of powerful actors such as the EU and corporate organizations to have investment negotiations advance at the WTO also led to renewed efforts on the part of development and environmental NGOs based in the North to increase their level of engagement in opposition to the proponents of investment negotiations. These efforts were most evident in the period after the Doha Declaration. They included the publication of a number of reports or research papers distributed widely to negotiators which have challenged a number of the assertions made about investment agreements. For example, a number of development organizations have sponsored a research study which purports to show that most of the countries who successfully developed in the past did so by regulating foreign investment (Chang and Green), pointing to the mixed record of multinational firms in promoting sustainable development in the absence of strong host state regulations (WWF) or challenging some of the “myths” around an investment agreement based on the GATs model (Unwanted, Unproductive, 2003). At the same time many have been lobbying or challenging northern delegates (especially the EU) and their own governments to drop demands for negotiations. In addition a number of organizations and networks organized panels and seminars at the WTO (June 2003) or elsewhere in Geneva (March 20) to discuss the negotiation of investment rules with a view to further challenging the arguments of the demandeurs. From Geneva to Cancun: Investment rules and the Ministerial It was clear in the summer of 2003 there was little consensus on investment issues WTO members would be called on once more in Cancun to make a clear decision on whether to continue studying the issues or decide to launch negotiations. As the Indian ambassador recounted at an NGO seminar on investment in the spring, the discussions of the WGTI “have shown that there is not clarity, even among it proponents and their allies regarding the structure of the MAI or its components. In fact this difference extends even to basic issues such as the scope and definition of investment.” (Chandresekhar) Two factors added to the likelihood that the outcome at Cancun would be far different from the victory that a number of developed members had claimed in Doha. First the atmosphere and progress in many areas of negotiations had deteriorated. Deadlines were missed, little progress in agriculture, and ominous signs of US protectionism emerging in the Bush Administration added to

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the difficulties to form a consensus around the Cancun meeting. Progress on the development part of the DDR was seen to be less than might have been expected. Developing countries’ deep concerns about implementation issues outstanding from the Uruguay Round remained unaddressed. Many developing countries remained deeply sceptical about the balance of benefits in agreements and as the TRIPs agreement suggested promises of flexibility were seen to be worth little. The second factor related to the success of the developed countries in the post September 11 atmosphere of Doha to split blocs and limit solidarity among developing countries. India was targeted in particular. In the case of the investment portion of the Doha declaration, the US, although no fan of negotiating investment rules at the WTO, did come to the support of the EU on the Singapore issues after some progress had been made on agriculture (Jawara and Kwa) . The US targeted and worked to isolate India as a holdout on investment. Traditional like-minded allies such as Malaysia did not come to India’s aid . Although India was able to achieve the “explicit consensus” wording at Doha, the declaration had given momentum to the proponents of negotiations. In contrast in the months leading up to Cancun India made efforts to build and maintain solidarity among developing countries. While much of this developing country solidarity was linked to agriculture, the limited results of two years of the development aspect of the Doha round also played a role. India’s minister had met with a number of blocs of developing countries in the spring on the Singapore, as well as other issues. These meetings included the Ministers of Trade from Eastern and Southern Africa in Nairobi, May 28-29, the LDC trade ministers meeting in Dhaka May 32-June 2 and the Trade Ministers of the African Union in June 19-20 in Grand Baie, Mauritius. The disagreement on the Singapore issues and developing country solidarity are reflected in a communication to the General Council for its meeting in July from the Indian embassy of a joint comment from 12 countries (Bangladesh, Cuba, Egypt, India, Indonesia, Kenya, Malaysia, Nigeria, Pakistan, Venezuela, Zambia and Zimbabwe) that directly in refuted the continued insistence of the EU that the Doha declaration in fact authorized the start of negotiation after Cancun as part of a single undertaking. It reminded delegates of the explicit consensus provision. The comment also pointed to the division even among proponents of negotiations on issues of scope and definition and the need for more capacity building and technical assistance in developing countries and concluding that ultimately further study and

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clarification of the issues not negotiation was required (Comments on the EC Communication, July 8, 2003). The General Council meetings in the summer of 2003 reflected these divisions among WTO members on the Singapore as well as other issues.

Table 2 Country Positions Demandeurs ie Pro-negotiating and agreement

European Union J Japan

Friends of Investmentsupport idea but not necessarily timing Argentina Chile

Swing countries, may link to other issues or wait and see

Opponents of negotiationsvery vocal

Brazil (chair had said little publicly) South Africa

India Malaysia

i Philippines

Zimbabwe

Canada

Mexico

South Korea

Turkey

Indonesia

tSwitzerland

Poland

Egypt

Zambia

Taiwan

t Costa Rica

Cuba

Kenya

Norway

Hungary

Dominican Republic

Tanzania

Sri Lanka

Jamaica Columbia

Thailand Bangladesh

Would support only a rnarrow agreement w New Zealand Hong Kong Singapore t Australia

Pakistan E

Uganda Sri Lanka CARICOM

Ecuador

Belize

China Venezuela

Source: Adapted from Luke Peterson, Oxfam and WWF May 2003

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The United States remained sceptical and unenthusiastic about investment negotiations but indicated it would not block a consensus to undertake negotiations should it develop. Once again the draft ministerial declaration discussed by the General Council at the end August seemed at first glance to fully capture the level of division on investment. However, in the game of adding the annex, the second part appears to pre-suppose that negotiations will begin post Cancun. Draft Declaration Cancun Ministerial 24 August 2003

Investment 13. [Taking note of the work done by the Working Group on the Relationship between Trade and Investment under the mandate in paragraphs 20-22 of the Doha Ministerial Declaration, we decide to commence negotiations on the basis of the modalities set out in Annex D to this document.] [We take note of the discussions that have taken place in the Working Group on the Relationship between Trade and Investment since the Fourth Ministerial Conference. The situation does not provide a basis for the commencement of negotiations in this area. Accordingly, we decide that further clarification of the issues be undertaken in the Working Group.] However, this was followed by….

Annex D Relationship between Trade and Investment 1. The objective of the negotiations shall be to establish an agreement to secure transparent, stable and predictable conditions for [long term cross-border investment, particularly foreign direct investment][foreign direct investment], that will contribute to the expansion of trade, and the need for enhanced technical assistance and capacity-building in this area. Any agreement will reflect in a balanced manner the interests of home and host countries, and take due account of the development role and view of business organizations policies and objectives of the host government as well as their right to regulate in the public interest.

2. Paragraphs 45-51 of the Doha Ministerial Declaration shall apply to these negotiations. 3. The Chair of the Negotiating Group on Investment shall hold the Group’s first meeting within one month from the date of this decision. The Chair of the Negotiating Group shall conduct the negotiations with a view to presenting a draft text by no later than [30 June 2004].

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4. On the basis of paragraph 22 of the Doha Ministerial Declaration and the work done thus far under the Working Group on the Relationship between Trade and Investment, the multilateral framework shall include the following elements: - Scope and Definition ([long-term cross-border investment, particularly FDI][Foreign Direct Investment]); - Transparency; - Non-discrimination (MFN and NT with limited exceptions); - Pre-establishment commitments based on a GATS-type, positive list approach; - Exceptions and balance-of-payments safeguards; - Consultations and the settlement of disputes between Members (investor to state dispute settlement mechanisms shall not be included); - Special and Differential Treatment for developing and least-developed country Members including flexibility regarding transparency obligations, commitments (NT, MFN and pre-establishment commitments) and transition periods, as necessary; - Provisions as necessary to clarify the relationship between this Agreement and relevant WTO provisions; - Provisions to clarify the relationship between this Agreement and existing bilateral and regional arrangements on investment; Other issues that participants may wish to put forward.

5. Recognizing the needs of developing and least-developed countries for enhanced support for technical assistance and capacity building, including policy analysis and development so that they may better evaluate the implications of closer multilateral cooperation for their development policies and objectives, and human and institutional development, we shall work in cooperation with other relevant intergovernmental organizations, including UNCTAD, and through appropriate regional and bilateral channels, to continue to provide strengthened and adequately resourced technical assistance and capacity building to respond to these needs during the negotiations and after their conclusion. This annex clearly laid out the modalities for negotiations as they had been outlined in the position papers of the EU and Japan and had never been agreed to in the WGTI. Similar concerns about other issues in the text were brought forward at the Council meeting of August 2627. The chair Carlos Perez del Castillo refused to alter the text, but was forced by protests of members to prepare a cover letter to accompany it that reflects the extent of disagreement over it. The deliberations at Cancun followed the normal practice of WTO ministerial

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Meetings with a formal opening, set piece speeches by Ministers in plenary sessions and smaller issue specific discussions led by facilitators. These facilitators, who critics claim are known to be friendly to the powerful Quad members, are chosen by the chair, always the host-country minister, to work through the issue and report back. For the Singapore issues Canada’s trade minister Pierre Pettigrew was chosen shortly after his arrival in Cancun. He had played the same role in Doha and thus, one assumes, was very familiar with the issues. Canada, however, had also been an active proponent of negotiating investment rules and the other issues at the WTO. At the smaller meeting, confessionals as they are called in WTO parlance, the extent of disagreement on the Singapore issues was evident. Evident too was the link for a number of developing countries between these issues and real progress on agriculture. No agreement on the first was likely without the second. On September 12 a group of about 30 countries plus Bangladesh speaking for the LDCs (for a total of 60) sent a letter to Pettigrew expressing their opposition to negotiations on any of the four Singapore issues and expressing concerns about the capacity both to negotiate more new issues and to implement any commitments arising from them.(Aziz, 2003) They also raised concerns about the process and reminded the Minister of the clear absence of an explicit consensus. They offered alternative wording which would simply call for further clarification of these issues. A number of countries also demanded the unbundling of the four Singapore issues. The following day (Sept 13) , however, the second revised text appeared. On a broad range of issues, especially agriculture the developing countries were disappointed. The September 13 Chair’s draft read as follows: Investment 14. We note with appreciation the valuable work that has been carried out in the

Working Group on the Relationship between Trade and Investment under paragraphs 21 and 22 of the Doha Ministerial Declaration. In accordance with relevant provisions of the Doha Ministerial Declaration, we commit ourselves to provide strengthened and adequately resourced technical assistance to developing and least-developed countries to respond to their needs for enhanced support in this area. We agree: • to intensify the clarification process called for in paragraph 22 of the Doha Declaration, covering the elements listed in that paragraph as well as other elements raised by Members, including the elements identified in WT/MIN(03)/W/4; • to convene the Working Group in Special Session to elaborate procedural and substantive modalities on the basis of paragraphs 20, 21 and 22 of the

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Doha Declaration, and other elements raised by Members. We reiterate that the special development, trade and financial needs of developing and least developed countries should be taken into account as an integral part of any framework, which should enable Members to undertake obligations and commitments commensurate with their individual needs and circumstances. Consideration should be given to the relationship of the negotiations to the Single Undertaking; • modalities that will allow negotiations on a multilateral investment framework to start shall be adopted by the General Council no later than [date ]1. 1 The date will coincide with the date for agreeing on modalities on agriculture and NAMA.

The text approving negotiations, given the level of opposition, seemed in itself stunning. Tying the start of negotiation on investment to agreements in agriculture meant that many of the proponents of investment negotiations such as the EU, Japan and Korea would have to give way there in order to see talks start. The dissatisfaction with other elements of the text was high. The strategy that Mr Derbez adopted of seeking a resolution first of the impasse on the Singapore issues has been criticized. The initial refusal of the EU to unbundle the issues and drop investment until the eleventh hour has also been criticized. When a recess failed to breach the impasse and Botswana informed the chair that the African Union countries would not accept negotiation on any of the four issues and Korea (backed by Japan) insisted on all four the chair called the meeting to an end citing the entrenched position on these issues. For the investment issue, the Cancun ministerial appears to be the end of the road after seven years. The Working Group has not been reconstituted and no chair has been named. The EU has sent confusing signals but claims it is no longer a demandeur on investment issues. No one it appears has any appetite to talk further about the negotiation of an agreement. Conclusion After seven years of trying to “educate” developing countries to accept the idea of negotiating an investment agreement at the WTO, it appears the developing country proponents have given up. What does this case have to tell us about the way in which multilateral economic organizations like the WTO function? Realists would point to the dominance of the Quad at the WTO. However, in this case, the US remained largely unengaged in the investment issue for much of the period under study. First because it sought a high standard agreement at the OECD, later because it was highly pessimistic that anything produced at the WTO would surpass what the US alone could achieve regional or bilateral investment agreements.

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Still powerful business interests in Europeii and Japan backed the aggressive push of three of the four Quad members to forge a consensus on investment rules at the WTO. Their failure to achieve it merits explanation. One answer lies in the changing membership of the WTO which, in the face of its past practices, has led, some would argue, to a legitimacy crisis, centered around its decision-making and lack of internal transparency which has fostered a healthy mistrust on the part of many developing country members. This has been complimented by a rising critique of the WTO from the civil society sector, which although the media focus is heavily on what occurs in the streets, has actually been doing much behind the scenes to bring forward alternative knowledge and framing of issues. This has helped to build a stronger capacity in many WTO members to challenge and question the extent to which agreements serve their interests. The result has been perhaps that the old business as usual approach at the WTO will no longer suffice and that more balanced agreements, that are truly sensitive to the needs of developing countries will have to be the order of the day.

Bibliography Aaron, David (1995) “After GATT US Pushes Direct Investment” Wall Street Journal, (February 2) Action Aid, Cafod, Christian Oxfam,Save the Children and WDM, (2003) Unwanted, Unproductive and Unbalanceed: Six Arguments Against an Investment Agreement at the WTO, May Aziz, , Seri Rafidah (Malasyia ) and Arun Jaitley (India) Letter to Hon Pierre Pettigrew (Sept 12, 2003) Bridges, various issues 1999-2004 Brittan, Sir Leon (1995) “Investment Liberalization: the next great boost to the world economy” Transnational Corporations 4:1 (April), 1-10. Business Roundtable (2003) How the WTO can promote the benefits of International Investment, May Canada (1996) Preparations for the Singapore Ministerial Conference: Draft Decision on Trade and Investment non-papers presented in October and November. Chandrasekhar, K.M. (2003) “Trade and Investment: Some Issues” presentation given at the Seminar on Investment, Geneva, March 20. 32

Chang, Ha-Joon (2003) Kicking Away the Ladder: The Real History of Free Trade (Foreign Policy in Focus special report, December, www.fpif.org Chang, Ha-Joon and Duncan Green (2003) The Northern WTO Agenda on Investment: Do as we say, Not as we did (Geneva: South Centre) CUTS, (2002) Putting Our Fears on the Table: Analyses of the proposals on investment and competition agreements at the WTO (India) “Developing Countries Take 'Wait And See' Attitude Towards WTO Talks on Investment “ International Trade Reporter Dec 6, 2002. Economist (2003) “Why Did the Trade Talks Fall Apart? And Who is to Blame? (September 18) European Community (1996) Council Paper on the Singapore Issues (September) European Commission, Directorate-General for Trade (2003), Singapore Issues – Options postCancun, NOTE TO THE 133 COMMITTEE Brussels, 30 October Inside US Trade, (1996 ) August 23, Sept. 28, and Oct 4 International Chamber of Commerce, (2002) Expectations regarding a WTO investment Agreement Prepared by the Commission on Trade and Investment Policy International Trade Reporter, various issues 2003 Investment, Doha and the WTO (2003) Background Paper to the Chatham House Meeting convened by Royal Institute of International Affairs and International Institute on Sustainable Development, on Trade and Sustainable Development Priorities Post-Doha, London April 7-8 Jawara, Fatoumata and Aileen Kwa, (2004)Behind the Scenes at the WTO: The Real World of Trade Negotiations, (London: Zed books) Khor, Martin (2003) “The Investment Issue in the WTO” Seatini Bulletin, April 30. Kurtz, Jürgen (2002) A General Investment Agreement in the WTO? Lessons from Chapter 11 of NAFTA and the OECD Multilateral Agreement on Investment (New York: NYU School of Law Jean Monnet Working Paper 6/02), R.B. Ramaiah, “Towards a Multilateral Framework on Investment? Transnational Corporations, 6:1 (April, 1997), 116-135. Seatini (2002) “A Brief History of Capacity Building attempts within the WTO, 19942001.Bulletin 5:12, (June 30)

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Sell, Susan and Aseem Prakash (2004) “Using Ideas Strategically” International Studies Quarterly 48: 143-175. Singh, Kavaljit (2003) Multilateral Investment Agreement in the WTO Issues and Illusions ASIA-PACIFIC RESEARCH NETWORK Smythe, Elizabeth (1998) “Your Place or Mine? States, International Organizations and the Negotiation of Investment Rules” Transnational Corporations 7:3 (December), 85-120. UNCTAD (2003) Progress Report: Implementation of Post-Doha Technical Assistance Work in the Area of Investment Report to UNCTAD by the Secretariat (Geneva) UNCTAD (2003) World Investment Report 2003, FDI Policies and National Development: National and International Perspectives (Geneva: United Nations) ”U.S. Wants 'High-Standards' Investment Pact At WTO, but Will Not Block Progress in Talks” International Trade Daily, May 16, 2003 Wade, Robert Hunter (2003) “ What Strategies are viable for developing countries today? The World Trade Organization and the shrinking of ‘development space’ “ Review of International Political Economy 10:4 ( November), 621-44. World Wide Fund for Nature (WWF) (2003) Searching for the Holy Grail: Making FDI Work for Sustainable Development (Gland, Switzerland, May) WTO, Working Group on Trade and Investment (WGTI) (2002) Communication from China, Cuba , India, Kenya, Pakistan and Zimbabwe, “Investors and Home Governments’ Obligations, November 18, WT/WGTI/W/152 WTO, Working Group on Trade and Investment (WGTI) (1999), Report of the Working Group on the Relationship Between Trade and Investment to the General Council, Oct 22. WGTI, (2002)Report of the Working Group on the Relationship Between Trade and Investment (WTO December) WTO, (2003) Preparations for the Fifth Session of the Ministerial Conference Draft Cancún Ministerial Text Revision 24 August WTO, (2003) Preparations for the Fifth Session of the Ministerial Conference, Draft Cancún Ministerial Text , Second Revision September 13

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i

This discussion of the working group is based on interviews in November 1998 and 2003 in Geneva with some participants, officials at the WTO and UNCTAD ,as well as a review of WTO documents dealing with the working group (WT/WGTI), which are available on the WTO website (www.wto.org) ii

The International Chamber of Commerce demands included the following key elements in a multilateral agreement on investmentii: a broad definition of investmentii; „ transparency; „a

negative list approach for pre-establishment including national treatment, MFN treatment and market access provisions;

„ national „a

treatment and MFN treatment in the post-entry stage;

high standard of investment protection;

„ provisions for comprehensive „ an

and unrestricted transfer of funds; and

obligation for member countries to provide for investor-to-state dispute settlement procedures.

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