Interpretation of WTO Investment Facilitation Agreement Negotiations by the Ministry of Commerce | Conference. July 6, 2023 | Achievements

Release time:Apr 14, 2024 02:32 AM

On July 6th, the World Trade Organization held an ambassadorial level meeting on investment facilitation negotiations. At the meeting, the joint coordinators of the negotiations, Chilean Ambassador to the World Trade Organization Bossa and South Korean Deputy Representative to the World Trade Organization Park Jung seong, issued a statement announcing the successful conclusion of the negotiations on the text of the Investment Facilitation Agreement. The head of the World Trade Department of the Ministry of Commerce interpreted the significance, main content, and impact on Chinese enterprises of the Investment Facilitation Agreement.

Background and Process of 1. Negotiation

In order to implement the "Global Investment Guiding Principles" reached at the 2016 G20 Hangzhou Summit, China has set up and initiated investment facilitation issues at the WTO. The purpose of the negotiation is to enhance the transparency of investment policies of participants, simplify investment approval procedures, strengthen international cooperation in the field of investment, further enhance the level of global investment facilitation, and promote a smoother flow of global investment. In September 2020, the issue officially entered the text negotiation stage. After nearly three years of intensive consultations, all parties have reached agreement on all issues. On July 6, 2023, the WTO Investment Facilitation Negotiations held an ambassadorial meeting. At the meeting, the joint coordinator of the negotiations, Chilean Ambassador to the WTO Bossa and South Korea Deputy Representative to the WTO Park Zhengcheng issued a statement announcing the end of the text negotiations and distributing the text of the Investment Facilitation Agreement.

2. the significance of the outcome of the negotiations

According to the World Investment Report 2023 released by the United Nations Conference on Trade and Development, global foreign direct investment will be $1.3 trillion billion in 2022, down 12% year-on-year. At the same time, the current geopolitical, inflation and financial market pessimism have brought huge downward pressure on global foreign direct investment. The "Investment Facilitation Agreement" is the world's first multilateral investment agreement, which will help enhance the stability and predictability of global investment regulatory policies, further boost global investor confidence, and promote stable growth of global investment.

At the same time, the outcome of this negotiation is conducive to bridging the issue of uneven development between the North and the South. The negotiations on the Investment Facilitation Agreement were initiated by developing members and received support from over two-thirds of WTO members, with developing members contributing over 70% of the proposed text. According to the negotiation results, the Investment Facilitation Agreement will provide corresponding technical assistance to developing members in need, helping them enhance their ability to fulfill the agreement, optimize the business environment, and promote sustainable development.

Main elements of the 3. Investment Facilitation Agreement

The agreement includes seven chapters and 45 articles, including scope and general provisions, transparency, simplification and acceleration of administrative procedures, domestic regulatory consistency and cross-border cooperation, special and differential treatment, sustainable investment and institutional arrangements. Its main disciplines mainly include improving the transparency and predictability of investment measures, simplifying and accelerating administrative approval procedures, and promoting sustainable investment.

Chapter on Transparency of Investment Measures. The core discipline of this chapter includes disclosing the procedures, requirements, materials, and expenses required for investment approval, and establishing a "single window" to disclose information; No fees shall be charged for providing information; Publish the proposed measures in advance and provide opportunities for stakeholders to comment, reserving reasonable time between the announcement and implementation of relevant measures; Publish the procedures, requirements, materials, and fees required for the entry of investment related personnel; Notify the World Trade Organization of existing and proposed measures affecting investment.

Chapter on Simplifying and Accelerating Administrative Procedures. This chapter mainly stipulates that investment regulatory measures should be reasonable, objective, and fair, and the approval process should not unreasonably delay investment activities; Reserve reasonable time for investment project applications, provide a timeline for processing approval, and use a "single window" to receive applications; For complete investment applications, they should be processed within a reasonable time. For incomplete applications, they should be informed of how to supplement them. If the application is rejected, the applicant should be informed of the reasons and given the opportunity to reapply; The approval fees should be reasonable, transparent, and have legal and regulatory basis; The approval authority should maintain independence from the applicant; Provide judicial and administrative relief channels for investors to safeguard their rights, and regularly review whether investment measures are effective in achieving policy objectives.

Chapter on Promoting Sustainable Investment. This chapter mainly stipulates that investors are responsible for business behavior and anti-corruption measures. In terms of responsible business behavior, to promote sustainable development, encourage members to require investors and businesses within their territory to incorporate internationally recognized principles, standards, and guidelines for responsible business behavior, such as the United Nations Guiding Principles on Business and Human Rights, into their business behavior and internal decision-making in accordance with their legal provisions; Encourage investors and businesses to maintain contact and dialogue with local residents, communities, etc. in accordance with internationally recognized principles, standards, and guidelines for responsible business behavior; Recognizing the importance of investors and businesses identifying and addressing negative impacts in their operations, supply chains, and other business relationships through due diligence; Strengthen the sharing and exchange of experience in responsible business behavior. In terms of anti-corruption measures, the rules require members to apply anti-corruption measures to investment activities related to this Agreement in accordance with their domestic laws and international commitments; Recognizing the importance of transparency, reliability, and integrity in formulating anti-corruption policies, adhering to transparency when taking measures that affect investment, and avoiding conflicts of interest and corrupt behavior.

The Impact of the 4. of the Investment Facilitation Agreement on Chinese Enterprises

In recent years, China's foreign investment has grown rapidly. According to the Statistical Bulletin of China's Foreign Direct Investment in 2021, by the end of 2021, the stock of China's foreign direct investment reached 2785.15 billion billion US dollars, distributed in 190 countries and regions around the world. The participants in the investment facilitation negotiations include more than 110 WTO members, including the European Union, Japan, Canada, Brazil, Indonesia and Nigeria, and most European, South American, Asian and African countries where China has invested more. The investment facilitation agreement will simplify the investment approval procedures of participants, improve the efficiency of investment approval, reduce the cost of enterprises, and provide more protection for Chinese enterprises' foreign investment.

After the Investment Facilitation Agreement takes effect, it will become an international treaty obligation of the participating parties under the framework of the World Trade Organization. Participants should ensure that their investment regulatory measures comply with their international commitments. If domestic enterprises find that the regulatory authorities in their host country have not fulfilled their contractual obligations, they can consult with the regulatory authorities in their host country to remind them to fulfill their obligations under the agreement, or provide relevant information to the Ministry of Commerce of China. The Ministry of Commerce will raise concerns based on the situation, urge relevant members to comply with the discipline of the agreement, and safeguard the legitimate rights and interests of Chinese enterprises.

5. China to play active role in negotiations

Multilateral investment negotiations have always been a difficult issue in the formulation of global trade and investment rules. The WTO and the OECD have tried to formulate multilateral investment rules before, but they all ended in failure. Taking the opportunity of reaching the G20 Global Investment guiding principles, China actively works with other members to seize the rapid growth trend of facilitation rules in international investment agreements, and put forward an initiative on investment facilitation in the WTO. It successfully issued a joint ministerial statement on investment facilitation during the 11th Ministerial Conference in 2017, and successfully launched consultations on this issue.

During this period, China formed "Friends of Investment Facilitation" with developing members such as Brazil, Nigeria, and Kazakhstan, maintained close communication with other participating parties, convened two special WTO ministerial meetings, and promoted the achievement of three joint statements, which led to over 110 members joining the negotiations. During the negotiation process, the Chinese side has put forward 15 formal proposals, covering all areas of investment facilitation rules, based on the transformation of government functions and comprehensive deepening of reform practices. The Chinese proposal leads the construction of high standard international rules. At the critical stage of negotiations, China has repeatedly proposed practical solutions to difficult issues in negotiations, played a key role in promoting negotiations and peace, and gained high recognition from all parties.

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