EU and other WTO Members reach landmark deal to facilitate investment and support development
Harnessing the economic potential of foreign direct investment to boost development in poorer countries has taken a major step forward at the WTO, as negotiations on an Agreement on Investment Facilitation for Development (IFD) concluded at the WTO today.
The IFD Agreement responds to concrete day-to-day challenges to new investments, particularly in developing countries, by making rules transparent, streamlining investment procedures, and improving the relationship between investors and administrations.
Initiated by a group of developing countries, the negotiations were concluded between 113 WTO Members, including the EU. As the world’s main source of foreign direct investment, the EU has a clear interest in promoting a more transparent, efficient, and predictable investment environment.
Following on from the Joint Statement Initiative on Domestic Regulation in Services in 2021 and the multilateral Agreement on Fisheries Subsidies in 2022, the IFD Agreement demonstrates again that the WTO is being made fit for purpose to tackle the economic and broader sustainable development challenges of the 21st Century.
Streamlining procedures, encouraging sustainable investment
The IFD Agreement aims to:
- Enhance the transparency and predictability of investment-related measures;
- Simplify and speed up investment authorisation procedures, and foster e-government;
- Facilitate interactions between investors and local administrations through the establishment of focal points and stakeholder consultations, and;
- Encourage sustainable investment by promoting responsible business conduct and the fight against corruption.
The Agreement will apply to foreign direct investment in all sectors of the economy, and will thus promote economic diversification. It will cover the whole investment lifecycle, including the operation and expansion of investment, with a view to ensuring a long-term positive impact on the host country.
Next steps
The parties to the negotiations will now work towards integrating the IFD Agreement into the WTO rulebook, which requires consensus by all WTO Members.
As regards implementation, the Agreement stipulates that developing countries will self-determine when they will implement each of the individual provisions. Each country will also itself decide whether or not it requires technical assistance or capacity-building support.
The EU is already engaged in pilot projects to help developing countries assess their future needs for assistance to implement the agreement.
Background
Developing countries face a $4 trillion annual investment gap to reaching the WTO’s sustainable development goals by 2030.
At the 11th WTO Ministerial Conference (MC11) held in Buenos Aires in December 2017, 70 WTO Members (including the EU) sponsored a Joint Ministerial Statement calling for the start of “structured discussions” on investment facilitation. The IFD negotiations were formally launched in September 2020, with the Commission negotiating on behalf of the EU on the basis of a mandate granted by Member States in September 2019.
For more information
Statement delivered by EU Ambassador João Aguiar Machado
WTO webpage on Investment Facilitation for Development
