At the 13th WTO Ministerial Conference (MC13) in Abu Dhabi, WTO member countries hope to achieve important results or milestones in the Investment Facilitation for Development (IFD) agreement, such as issuing a Joint Ministerial Declaration, which will formalize the finalization of the IFD Agreement and publish it to the public.
So far, around 110 countries have joined and agreed to discuss the IFD agreement, including Indonesia. Where this agreement focuses on foreign direct investment (FDI); this applies to foreign investment in all economic sectors. The main pillars of the IFD Agreement are regarding transparency of investment steps; simplify and speed up authorization procedures related to capital investment; enhance international cooperation, exchange of information, and exchange of best practices; as well as sustainable investment. In addition, each participating member also agrees to further discuss the provisions regarding “Responsible Business Conduct” and “Measures Against Corruption” and “Measures Against Corruption”.
Even though the pillars are aimed at increasing investor confidence, domestic problems such as in Indonesia regarding the high number of corruption cases are still a difficult task and require a lot of time, regardless of the technical assistance and guidelines contained in the IFD agreement. Apart from that, accelerating and simplifying the capital investment process which is the key to holding an IFD agreement can be a double-edged sword for developing countries, especially Indonesia, which does not yet have strong single submission-based laws and administration.
Additionally, from the start of the Initiative, the IFD Agreement explicitly excluded market access, investment protection, and investor-State dispute settlement (ISDS). Government procurement and certain subsidies are also excluded from the scope of the Agreement. However, the current scheme for resolving investment disputes through international/bilateral investment agreements that have been established has opened up great opportunities for countries to be sued.
In the agreement it was also decided that in line with Special and Differential Treatment (S&DT) treatment, developing countries and least developed countries would be divided into three categories (A, B or C). According to its category, the country will be permitted to use the provisions of the IFD Agreement to request additional time, including technical assistance and capacity building to implement the provisions of the IFD. These S&DT principles also include other flexibilities such as ‘Early Warning Mechanisms’. However, the category package that provides time and technical assistance to developing and least developed countries is still not enough to guarantee the implementation of the investment acceleration provisions without obstacles as expected in the IFD agreement.
Written by:
Komang Audina Permana Putri
Program Coordinator on Sustainable Finance and Debt
Indonesia for Global Justice
References:
WTO IFD Agreement Fact Sheets , sumber https://www.wto.org/english/tratop_e/invfac_public_e/factsheet_ifd.pdf
WTO News Article, 2023. “Negotiators advance discussion on IFD Agreement integration into WTO legal structure” sumber https://www.wto.org/english/news_e/news23_e/infac_13oct23_e.htm