The China-led Investment Facilitation Development (IFD) Agreement has received the support of 128 countries in the World Trade Organisation (WTO), but India, South Africa, Namibia and Turkey will oppose it due to its potential impact on the policy independence of weaker countries.
Key points of the Investment Facilitation Development (IFD) Agreement
- China-led IFD Agreement: Proposed by China in 2017, the agreement has received the support of 128 WTO member countries.
- Opposition from India and other countries: India, South Africa, Namibia and Turkey are opposing it, as it may threaten the policy independence of weaker countries.
- Pressure from China: China has received the support of 128 of the 166 WTO members, including Pakistan.
- Communication: The aim of IFD is to improve the global investment climate and facilitate FDI to developing countries.
- US position: The US is not opposing the agreement, but is choosing to stay out of it.
- Investment shift from China: The US-China trade war and declining consumer demand in China have led to a shift in investment flows away from China and towards ASEAN countries.
Investment Facilitation for Development (IFD) Agreement
- Launch: The IFD initiative was launched by 70 countries at the 11th WTO Ministerial Conference (MC11) in December 2017.
- Objective: The agreement aims to create legally binding provisions to facilitate investment flows.
- Goal: The main objective of IFD is to increase the participation of developing and least developed countries in global investment flows.
Reforms in key areas
- Improve regulatory transparency and predictability: publishing investment-related measures and setting up query points.
- Simplifying administrative procedures: Removing excessive steps in the approval process and simplifying applications.
- Enhancing international cooperation: Providing technical assistance and capacity building for developing countries and least developed countries.
- Promoting responsible trade behaviour: Enforcing provisions to encourage fair trade behaviour.
World Trade Organization
- Establishment: The World Trade Organization (WTO) was established in 1995 with the aim of promoting rule-based trade among countries.
- Main functions: The WTO is a global membership group that promotes and manages free trade. It provides a forum for governments to negotiate trade agreements and resolve trade disputes.
- Objective: It aims to help producers, exporters, and importers of goods and services conduct international trade more easily.
Members and Observers
- Members: The WTO currently has 164 members (including the European Union).
- Observers: 23 governments are observers (like Iraq, Iran, Bhutan, Libya etc.).
Main objectives of WTO
- To formulate and enforce rules for international trade, thereby promoting economic growth and employment.
- To provide a platform for negotiating and monitoring trade liberalization by reducing trade barriers and applying non-discriminatory principles.
- To resolve trade disputes and contribute to world peace and stability.
- To increase transparency of decision making process, so that weaker countries get a stronger voice.
- To cooperate with other major international institutions involved in global economic management.
- To help developing countries take full advantage of the global trading system, so that trade costs can be reduced.