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28th March 2024 (12 Topics)

WTO’s investment facilitation negotiations are not illegal

Context:

The failure to adopt the agreement on investment facilitation for development (IFD) at the 13th Ministerial Conference (MC13) of the World Trade Organization (WTO) has raised concerns regarding the inclusion of investment within the WTO framework and the negotiation process followed for the IFD agreement.

Concerns over IFD Agreement:

  • Concern:The IFD agreement, aimed at facilitating investment flows, was opposed by countries like India due to concerns regarding its inclusion within the WTO framework and the negotiation process.
  • Issues in agreement: The IFD agreement lacks provisions on market access, investment protection, and investor-state dispute settlement (ISDS), which have been contentious issues, especially given the WTO's dispute settlement mechanism.
  • India's Objections:While India acknowledges the need to update WTO rules, it questions the legality of launching negotiations on the IFD agreement without multilateral consensus and emphasizes the importance of adherence to existing mandates.

Reconsidering Approach to Plurilateral Agreements:

  • Plurilateral agreements (PAs) like the IFD agreement can play a vital role in revitalizing the WTO's legislative function amidst challenges in arriving at consensus for multilateral agreements.
  • Defensive stance: India, as a major economy and upcoming global player, may need to reconsider its defensive stance towards PAs and recognize their potential for updating and modernizing WTO rules.
  • Deadlock in WTO decision-making highlights the importance of exploring alternative mechanisms like PAs to address contemporary trade issues and adapt to the evolving nature of international trade.
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