Remarks by DG Okonjo-Iweala
Ambassador Sofia Boza, Ambassador Jung Sung Park,
Excellencies,
Dear friends and colleagues,
Delighted to join you this afternoon, the fact that the stocktaking meeting is being dne during the time when people are trying to achieve things, this is one of the really good things. I am proud of what you are doing, and the diverse membership of the group. Congratulations. The agreements is one of the things to deliver, as soon as possible.
This high-level stocktaking marks an important milestone in your negotiations towards a WTO Agreement on Investment Facilitation for Development.
I understand you are working towards a text that is ‘as clean as possible’ by the end of this year, as a stepping stone, we are at the end of the year, and hope that you get something clean that will deliver us to a meaningful and effective Agreement that will help WTO Members attract and retain more and higher quality investment — investments that are aligned with their respective development priorities.
Attracting more sustainable FDI flows is particularly important given the need to increase investment to drive growth, create jobs, enhance living standards, and reduce poverty. The current interconnected global crises of food, energy and debt distress, and lack of fiscal space make facilitating investment even more pressing. After falling for decades, extreme poverty levels are rising again, putting the Sustainable Development Goals further out of reach.
The tightening in financial conditions worldwide is weighing on FDI flows, especially to poorer countries. After a brief rebound in early this year, global FDI flows dropped by 31% in the second quarter as compared to first quarter. New investment project announcements, a leading indicator, weakened in the first three quarters of 2022.1
According to the OECD, the SDGs financing gap has widened since the start of the pandemic to at least US$ 3.9 trillion USD per year, with the gap estimated to widen by a further US$ 400 billion per year until 2025.
In sum, sustainable investment needs are growing — the low-carbon transition needs trillions in green investment not billions but trillions, while economic and supply chain diversification requires countries to attract investment in new sectors. But resources, particularly for poorer developing countries, are diminishing.
In this situation, investment facilitation becomes particularly important — and the kinds of practical, business-enabling measures envisioned by the draft IFD Agreement become even more valuable.
Key determinants of international investors’ locational decisions — such as the size of the market or the availability of skilled human resources — cannot be quickly improved by governments, especially poorer ones. However, it is within their power — with technical assistance and capacity building support — to cut red tape and implement investment facilitation best-practices that reduce transaction costs for foreign as well as domestic investors and help attract and retain sustainable FDI flows.
These are the kinds of transparency- and predictability-enhancing measures you are considering – such as single investment portals, streamlined investment authorization procedures and enhanced international cooperation to share practices that work, and change policies that don’t.
Viewed in this light, it makes sense why this Initiative has been driven by developing countries since its start in 2017.
Through your hard work — marked by a Member-driven, bottom-up approach open to all who wished to participate — you have arrived at a ‘draft IFD Agreement’.2
This has been a step-by-step process, from what I’m told, through which Members have enhanced their understanding of investment facilitation — what the IFD negotiations are about and also what they are not about. In particular, the draft Agreement clearly excludes market access, investment protection and investor-state dispute settlement. It does contain innovative provisions on ‘Responsible Business Conduct’ and on ‘Measures against Corruption’.
The text you are doing stocktaking of today, is the result of discussions held by more than 110 participating WTO Members since the negotiations’ formal launch in September 2020. It builds on around 60 text proposals submitted by participating Members, the vast majority of them from developing country and LDC groups — as well as text contributions from open-minded ‘Discussion Groups’.
I understand, the ‘draft IFD Agreement’ includes ‘convergence’ text for all the main sections of the future Agreement. Importantly, though the negotiations were plurilateral, participants aim to apply the agreement in accordance with the most-favoured-nation principle.
While ‘nothing is agreed until everything is agreed’ the draft text constitutes a major step towards finalizing an Agreement.
Beyond addressing in the ‘draft IFD agreement’ — I am told that participants in the negotiations plan to use this text as a basis for starting critical work on needs assessments for developing and LDC Members — as well as for further outreach towards WTO Members who have not yet joined the Initiative. I think this is extremely important and exciting.
In conclusion, I hope today’s meeting will help you move forward, particularly on a strong pro-development implementing mechanism, in the form of an IFD needs assessment for developing and LDC Members as you propose, that will signal what the future Agreement has to offer in terms of technical assistance and capacity building support to help the poorest members them attract more sustainable investment.
Your efforts demonstrate that when Members work together constructively and pragmatically, they can respond to economic shifts and better serve their own evolving needs. Like one or two other plurilateral agreements that are working very well like the ITA, I look forward to IFD being a treasured agreement. Thank you, keep working and now you got me excited and waiting for the finalised text.
Source: wto.org