U.S. Wants 'High-Standards' Investment Pact At WTO, But Will Not Block Progress In Talks

International Trade DailyISSN 1533-1350Lead Report

The United States plans to push for a 'high-standards' agreement on new global investment rules in the World Trade Organization but will not block progress in talks leading up to the negotiations taking place over the next four months, U.S. trade officials said May 15. An official who spoke on condition of anonymity said that the preparatory talks at the WTO were still in an 'early stage'--despite the fact that trade ministers agreed 18 months ago to work toward reaching agreement on the 'modalities,' or framework, of the proposed WTO investment negotiations by this September.

'It's a fairly difficult process,' the official said. 'But we're hopeful.'

Other officials said that the U.S. domestic constituency for the investment negotiations--businesses and nongovernmental organizations--remain 'skeptical' of what can be achieved in the talks given existing wide differences among WTO members.

The officials said that the fear is that the negotiations could lead to a 'lowest-common-denominator' agreement that would not match the 'high standards' of investment protection contained in U.S. free trade agreements (FTAs) and Bilateral Investment Treaties (BITs).

At a WTO ministerial meeting in Doha, Qatar, in November 2001, trade ministers agreed among other things to begin negotiations on investment (one of the four so-called Singapore issues, which also include competition policy, trade facilitation, and transparency in government procurement) following agreement 'by explicit consensus' at the next ministerial--set for Sept. 10-14 in Cancun, Mexico--on the modalities of the talks.

The ministers agreed to work between the two ministerials to 'clarify' seven possible elements of the talks: scope and definition; transparency; nondiscrimination; modalities for 'pre-establishment' commitments based on a GATS-type positive list approach; development provisions; exceptions and balance-of-payments safeguards; and consultations and dispute settlement among WTO members.

U.S. Has Not Taken Position

A U.S. trade official said May 15 that the United States has not yet taken a position on which if any of the seven elements would be part of any eventual investment agreement concluded among WTO member countries. 'We see them as areas of study,' the official said. 'We do not view them necessarily as essential elements of an eventual agreement. We believe that we need to understand better what [they] would entail.'

But the official said that the United States plans to engage in 'good-faith' discussions with other WTO members on modalities over the next few months.

' We do not intend to block progress,' the official said. 'But it's premature to say whether we will reach agreement [by or at Cancun].'

Last month, a senior Japanese trade official said that WTO members were likely to agree on a minimalist set of modalities for future negotiations on investment rules at their upcoming ministerial meeting in Cancun, if agreement can be reached at all.

Yoshihiko Sumi, deputy director-general at Japan's Ministry of Economy, Trade and Industry, told reporters in Geneva April 16 that the only solution to bridging differences over whether and what to negotiate on investment might be to adopt a 'short, crisp' modalities text in Cancun outlining the procedures, time frame, and schedule for negotiations, as well as the topics to be negotiated.

However, since the topics themselves are a subject of debate, 'it will be hard to firm up the substance of these negotiations' prior to Cancun, according to Sumi, who was speaking after an April 14-15 meeting of the WTO's working group on investment.

'Some feel we shouldn't be too specific in the modalities paper, while others feel we need the specifics,' the Japanese official said.

Final Meeting Before Cancun

U.S. officials said May 15 that the final meeting of the investment working group before Cancun will be held in Geneva June 10-12. WTO members agreed at their November 2001 ministerial conference in Doha, Qatar, that negotiations on the Singapore issues will take place after the Cancun meeting 'on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations.'

EU Pushing for Decision

The European Union, meanwhile, backed by Japan and others, is pushing for a decision at Cancun to launch negotiations on the so-called Singapore issues of investment, competition policy, trade facilitation, and transparency in government procurement as part of the Doha Round mandate. But developing countries such as India insist that the issues should either be discussed outside of the WTO context or should be deemed not yet ripe for negotiation.

The EU said in a proposal offered at the WTO last February that the elements of modalities for the four sectors should cover three main areas: procedural issues pertaining to the negotiating phase, such as the number of meetings, timing, and deadlines for tabling proposals; the scope and coverage of the negotiating agenda; and special and differential treatment for developing countries.

By Gary G. Yerkey

Copyright