Why MC13 is important for investment facilitation in Bangladesh

The WTO's 13th Ministerial Conference (MC13) is knocking on the door and is going to be held on 25-29 February 2024, in Abu Dhabi, UAE. MC13 will probably be the last ministerial for Bangladesh to participate as an LDC. Now, Bangladesh has to play a double role in exploiting the already available exemption allowed as an LDC, and pleading for the continuation of some similar exemption as a graduating LDC. 

Preparation for participating in the multilateral negotiation to seize some effective benefits is now very critical for the country. Bangladesh participated strongly in the MC12 and has achieved some progress, one of which is the announcement of the WTO general council on 23 October 2022 for the extension of unilateral tariff or duty-free and quota free (DFQF) preference programmes for graduating LDCs to support their smooth transition. 

Thus, Bangladesh will be able to enjoy trade benefits beyond its graduation in 2026, similar to least-developed countries (LDCs). 

MC13 is relevant for Bangladesh on several grounds, such as: Agreement for fisheries subsidies, which will consider Bangladesh's capability as the fourth largest exporter, an extension of Trade-Related Aspects of Intellectual Property Rights (TRIPs) related issues, specially compulsory licensing benefits for Covid vaccines; technology transfer under article 66.2 of TRIPS agreement; trade and environment etc.

Investment Facilitation for Development (IFD) is one of the Joint Statement Initiatives (JSIs), which is almost similar to plurilateral initiatives in the WTO. IFD has 120 participating members, most of them are from developing countries, and 23 of them are from LDCs. From South Asia, Maldives and Afghanistan, are its participants. India has not joined yet and Bangladesh is still assessing the situation.

Negotiations on IFD are led by co-coordinators, Ambassador Sofía Boza of Chile and Ambassador Jung Sung Park of the Republic of Korea. It has been continuing since 2017 to establish a multilateral framework for the JSI for investment facilitation. Its main objective is to consider the importance of reinforcing the relationship between Trade and Investment. 

Initially, 70 WTO Members at MC11 commenced a Joint Ministerial Statement calling for structured discussions on IFD. Later, 98 WTO members issued a second Joint Ministerial Statement committing to work towards a 'concrete outcome' on IFD at MC12. 

The joint initiative formally launched negotiations on a future IFD agreement in 2020. Participants signed a third Joint Statement in December 2021. In December 2022, the 'Draft IFD Agreement' was circulated. Concluded negotiations on the text of the IFD Agreement were circulated on July 6, 2023. 

In 1995, for the first time, the WTO put important obligations on governments with regard to the treatment of foreign nationals or companies within their territories — particularly in the General Agreement on Trade in Services (GATS), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the plurilateral Agreement on Government Procurement (GPA).

The Agreement on Trade-Related Investment Measures (TRIMs) is the only WTO agreement to look into the issue of investment, and prohibits the application of certain investment measures related to trade in goods to enterprises operating within the territory of a member. The TRIMs Agreement is concerned with the discriminatory treatment of imported and exported goods, and trade restrictions. 

In 1996, the First Ministerial Conference of WTO in Singapore decided to establish a working group on trade and investment, with a mandate to carry out analytical and exploratory discussions. Thenceforward, investment was included in the Doha Round agenda launched in 2001, but it was finally postponed for two years. At the Cancún Ministerial Conference in 2003, ministers were unable to reach consensus on the start of the negotiations. Finally it was dropped from the Doha Round agenda.

Despite all the above, discussion on IFD has progressed, considering the importance of maintaining transparency and also to consider sustainability aspects for investment facilitation. UNCTAD in its 2023 report indicated that the investment gap in 2023 surged to USD 4 trillion, up from $ 2-5 trillion in 2015.

Meanwhile, FDI flows to developing countries experienced a 9% decline in 2023. Developing and LDCs need more and more investment, for sustenance and addressing climate change. 

Aligning with the setting of international benchmarks on investment facilitation, IFD includes comprehensive S&DT provision following the Trade Facilitation Agreement(TFA). It will support LDC members to implement the agreement on their own place. 

It should also be noted that developing countries would need to identify its need, assessing technical assistance and capacity building priorities. Facilitating greater participation of developing and least-developed members in global investment flows also constitutes a core objective of the future agreement. 

Participating WTO members have mostly discussed some important issues such as improving the transparency and predictability of investment measures; simplifying and speeding up investment-related administrative procedures; strengthening the dialogue between governments and investors, and promoting the uptake by companies of responsible business conduct practices, preventing and fighting corruption; and ensuring special and differential treatment, technical assistance and capacity building for developing and least-developed countries.

The co-coordinators reported on their consultations on 'most-favoured nation (MFN) treatment/non-discrimination' and the definition of 'authorisation' for an investment as part of the section on scope and general principles in the future Agreement on Investment Facilitation for Development.

It included provisions on 'other possible exclusions', based on the report of the facilitator of the discussion group on 'scope/exclusions' about possible exclusions from the scope of application of the future IFD Agreement for government procurement, certain subsidies and taxation measures.

IFD is open to all and Bangladesh can opt for joining. Bangladesh so far is in the process of having a number of discussions on bilateral and regional agreement, and CEPA is also considering its post-LDC status. 

This allows negotiation leverage and is driven by reciprocity, political considerations, bilateral relations and national interests. This might help preserve policy space and the right to regulate in accordance with its development priorities. 

Bangladesh also believes and is interested to opt for multilateral aspects rather than plurilateral agreements within the WTO, as these may outwit the consensus decision-making process. 

Nonetheless, Bangladesh so far has not been able to establish many preferential trade agreements (PTAs). On the other hand, whatever regional agreements have been initiated have not provided enough benefits to the country. 

IFD is like trade facilitation that can contribute to investment facilitation in the future, if it can be nurtured properly. Participation in IFD can assure foreign investors, as it provides a harmonised policy to bring confidence in policy lines. MC13 can give a good headway for IFD. However, considering its Joint Statement Initiatives (JSIs), counting it as a multilateral agreement may need some more time. 

Bangladesh would need to concentrate more and follow-up on the case so that if the negotiation lingers, it can take an opportunity to get some more time for further analysis to join on an as-is basis. 

Bangladesh Investment Development Authority (BIDA), as the lead national organisation for investment attraction, could take a holistic approach to a study for neutral judgement on the issue, so that Bangladesh can suggest some policy options in favour of the country in the discussion. 

In the coming days, being a developing country, Bangladesh will need to be more concerned about international policies and would need to open the door for full reciprocity. 

The MC13 is very important for us, so there should be more dialogues in that respect to make our position clear and gain as much as possible from multilateral negotiation and before that, we need to understand and analyse our home-grown stand-point clearly for investment, following changed global and multilateral issues. 

Ferdaus Ara Begum is the CEO of BUILD, a public-private dialogue platform that works for private sector development.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.