RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTI/M/20
6 February 2003
(03-0770)
Working Group on the Relationship
between Trade and Investment
REPORT ON THE MEETING H ELD ON 3-4 DECEMBER 2002
Note by the Secretariat
1. The Working Group on the Relationship between Trade and Investment met on
3 and 4 December 2002 under the Chairmanship of Ambassador de Seixas Corrêa (Brazil).  The
Working Group adopted the agenda contained in WTO/AIR/1978.
2. The Chairman said that the purpose of the mee ting was three-fold:  (i) to continue discussion
on Paragraph 22 subjects, especially in light of the new contributions from Members;  (ii) to receive
an update from the Secretariat on technical assistance;  (iii) to consider the Working Group's draft
Annual Report;  and (iv) to discuss the Working Group's work programme for the coming year – the
schedule of meetings, their content, and how the work programme might feed into the General
Council's preparations for the 5th Ministerial Conference.
A. PARAGRAPH 22 OF THE DOHA MINISTERIAL DECLARATION
3. The Chairman invited delegations to continue discussions on the topics listed for clarification
in Paragraph 22 of the Doha Ministerial Declaration and drew attention to recent communications that
had been received from India on the subjects of "Development provisions", "Non-discrimination", and
"Modalities for pre-establishment commitments based on a GATS-type positive list approach
(WT/WGTI/W/148, 149 and 150, respectively).  He also drew attention to a joint communication that
had been received from China, Cuba, India, Kenya, Pakistan, and Zimbabwe on "Investors' and home
governments' obligations" (WT/WGTI/W/152), and to a communication from the EuropeanCommunities on "Balance-of-payments safeguards" (WT/WGTI/W/153).
4. The representative of India introduced the three submissions.  He noted that India had actively
participated in the Working Group's discussions on various subjects in accordance with the mandate
outlined in Paragraphs 20-22 of the Doha Ministerial Declaration, read in conjunction with the
Chairman’s statement at the Ministerial Conference.  He recalled that discussions on some of thesetopics, namely development provisions, non-discrimination and modalities for pre-establishment
commitments had been held at the Group's July meeting where his delegation had expressed its views.
He considered that the Group had had a useful exchange of views which had enabled Members to
better understand each others' perspectives as well as deepen their understanding of the issues at hand.
5. His delegation had submitted its three papers (WT/WGTI/W/148, W/149, and W/150) as its
contribution to the learning process without prejudice to India’s known position that the need for a
multilateral framework on investment within the WTO had not been established.  As his delegation
had stated at previous meetings of the Working Group, India's knowledge of this complex issue was
limited and his delegation therefore reserved its right to revert to these subjects as and when its
knowledge increased.WT/WGTI/M/20
Page 2
6. He then highlighted some of the points contained in the three papers.  First, on development,
he noted that the process was complex and that there was no single formula that could fit into every
situation in such a manner that it would inevitably  lead to economic growth.  Developing countries
needed policy space so that they could determ ine for themselves how the process of economic
development could be speeded up.  This included policy space to determine the manner in whichinvestment should be regulated and channelled.  Any multilateral disciplines that sought to limit this
policy space, by their very definition, would reduce the policy options available to developing
countries to use foreign investment for promoting development and economic growth.  Any
movement of capital that would cause damage to the domestic industry and have adverse effects on
small- and medium-sized enterprises and employment would need to be carefully regulated.
Developing countries needed to retain the ability to screen and channel foreign investment in
accordance with their domestic interests and priorities.  They should be given not only policyflexibility but should also be able to use instru ments such as performance requirements in order to
achieve their development objectives.  Developing countries required development space and it was
therefore imperative that the determination of deve lopment priorities should be left to the country
concerned.  The “one-size-fits-all” approach would not work.
7. He suggested that one-sided arguments that focussed on host-country obligations without
considering home-country obligations as well as investors’ obligations were not tenable.  It was
important that the Working Group also discussed a binding code of conduct on investors with a
further stipulation that it should be enforced by home countries through a set of precise domestic laws
that could be activated by any Member.
8. His delegation also believed that there were severe limitations to the extension of the concept
of non-discrimination to capital flows − and that a certain degree of discrimination between different
kinds of investments was unavoidable.  The principles of free trade in goods and services could not be
applied to the movement of capital and investment.  When it concerned trade, national treatment had a
special relevance and the multilateral trading system was established on the basis of the non-
discrimination principle.  However, traditionally in international law, control of entry and
establishment − including the entry and establishment of foreign investment − had been the
prerogative of national governments.  International investment agreements (IIAs) in general did not
envisage national treatment at the pre-establishment stage.  When certain of them did, it had beennoted that such instruments were not binding.
9. He noted that there had been some attempt to draw a parallel between Mode 3 of the GATS
and investment disciplines, but India did not consider it appropriate to compare investment as defined
and dealt with under GATS with investment as pr oposed for negotiation by some Members under the
aegis of the WTO.  Commercial presence was covered under the GATS only to the extent that it
facilitated the delivery of services – and that, too, was subject to various conditions and limitations.
10. Given the complex nature of capital flows, his delegation believed that the application of the
non-discrimination principle, as it existed in goods and services, to investment could not be automatic.
Developing countries needed to retain the ability to screen and channel FDI in accordance with their
domestic interests and priorities.  He suggested that bilateral investment treaties (BITs) were preferred
the world over for precisely the flexibility they provided to the host country while at the same time
extending necessary protection to foreign investors.
11. The point was that financial flows in no way resembled flow of goods and services.  Money
by its very nature was more fluid and less transp arent in its movement; it fell into the category of
neither goods nor services.  WTO was a trade-negotiating forum and India was not convinced that the
issue of investment lay in the domain of the WTO.WT/WGTI/M/20
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12. The representative of Japan recognized the essential point made in India's papers regarding
the importance of securing sufficient "policy space" for developing countries to regulate FDI flows
and to pursue individual economic and development objectives.   At the same time, his delegation felt
it was important to recall that at Doha Ministers had clearly recognized the case for a multilateral
framework to secure transparent, stable and predictable conditions for FDI flows.  Japan believed thatmany delegations shared its view that creating new multilateral investment rules could go hand-in-
hand with pursuing development objectives.  While there were clearly issues that needed to be
resolved in order to ensure that these objectiv es were compatible, Japan remained convinced that
multilateral investment rules were fundamentally in developing countries' interests.  Given that India
itself placed the most importance on attracting FDI, Japan urged India to take a more constructive
approach to investment discussions in the WTO, rather than placing too much emphasis on the
negative aspects of FDI.
13. He noted that the Working Group had already spent considerable time discussing modalities
for pre-establishment commitments based on a GATS-type positive list approach.  Without repeating
the main points raised in previous discussions, he stressed that incorporating the principle of national
treatment in the pre-establishment phase was important for investors and had already been accepted in
various bilateral agreements − including the Japan-Singapore Ec onomic Partnership Agreement.  He
also suggested that the positive list approach to scheduling pre-establishment commitments would
provide sufficient flexibility for all WTO Members.  Developing countries themselves could decide
on the sectors in which they wished to make commitments to liberalize FDI in accordance with their
national development strategies and priorities.   At the same time, the positive list approach would
provide greater predictability and certainty for inve stors.  His delegation was convinced that such an
approach could provide a solid basis for future discussions in the Working Group.
14. India had argued that it was not appropriate to draw parallels between GATS Mode 3 and a
possible investment agreement.  While Japan agreed that the purpose of Mode 3 was to ensure the
supply of services through the establishment of a commercial presence, once Member countries made
commitments in certain services sectors under Mode 3 access for foreign investment in those sectorswas ensured.  Thus it could safely be said that FDI in services sectors was covered by the GATS.
15. Regarding performance requirements, Japan was of the view that such requirements could be
burdensome for investors and that, in any event, many were prohibited under the TRIMs Agreement.
Discussion of this subject in the Working Group s hould keep in mind the need not to undermine the
TRIMs Agreement.   In Japan's view a more effective way to facilitate the transfer of technology andother development-related goals was to implement policies aimed at enhancing human resource
capacity and the competitiveness of supporting industries.
16. Japan also agreed that balance-of-payments issues were important and needed to be further
discussed in the Working Group.  However, Japan did not share India's view that performance
requirements were appropriate to addressing balance-of-payments difficulties.
17. India had pointed to MFN exceptions as an example of how the GATS could be development
"unfriendly", but Japan felt that this assessment was not accurate.  His delegation pointed out that
more than half of the MFN exceptions in GATS schedules were registered by developing countries,
and that all exceptions were to be phased out within 10 years of the Agreement coming into effect.
18. Finally, Japan fully agreed with India that the issue of sub-national governments' obligations
under any prospective multilateral investment framework was an important one, and it needed to be
further discussed by the Working Group.
19. The representative of Korea, in commenting on the papers submitted by India, recalled
statements and written contributions his delegation had already made at previous meetings of theWT/WGTI/M/20
Page 4
Working Group.  His delegation noted that India assumed in its paper on non-discrimination
(WT/WGTI/W/149) that “investment” per se  was distinct from “trade in goods and services” per se
for the following reasons:  first, investments were money flows, which were different in character
from flows of services and goods;  second, money markets were considerably more opaque, less
predictable, and far more subject to purely speculative movements than global markets for goods andservices;  and third, the concept of “commercial presence” in the GATS was introduced only to
facilitate the supply of services, and thus could not be used automatically to justify the inclusion of
“investment under goods” in the WTO.  Based on this assumption, India concluded that the WTO
principles of non-discrimination in trade of goods and services could not be applied to investment.
20. Korea noted that Ministers had recognized the case for a multilateral investment framework to
secure transparent, stable and predictable conditions for long-term cross-border investment,
particularly foreign direct investment, that will contribute to the expansion of trade.  Ministers
themselves clearly recognized that investment, espe cially FDI, contributed to the expansion of trade −
and Korea shared this position.  The goal was to develop the framework.
21. Korea did not share India’s assumption that investment was exclusively a question of money
flows. Investment was also frequently linked to trade flows, through multinational enterprises
establishing a commercial presence in host countries. At the same time, trade flows were themselves
linked to financial flows.  This was why the GATT contained provisions on Restrictions to Safeguard
the Balance of Payments in Article XII and Exchange Arrangements in Article XV.  The GATS also
had numerous provisions relating to the transfer of money in connection with trade in services.  Given
the dynamic nature of contemporary business practices , money flows from either investment or trade
had similar characteristics, though there were certainly differences in degree.
22. Korea also believed that "commercial presence", as defined in the GATS, should be
understood as covering investment provisions in the se rvices sector.  He drew attention to the fact that
many bilateral and regional investment agreements did not distinguish between services and goods,
but dealt with them together as regards their specific provisions on investment.
23. In this respect, Korea believed that the GATS could provide useful guidance as regards the
application of the principle of non-discrimination in any prospective WTO investment agreement
covering non-services sectors.  This was the key argument in Korea's written contribution
(WT/WGTI/W/123).  His delegation did not see any reasonable basis for concluding that the five
fundamental principles of the WTO outlined in an earlier paper submitted to the Working Group by
Korea (WT/WGTI/W/96) could not be applied to a future investment agreement for goods.  In Korea'sview, these five principles, including non-discrimination, should be duly incorporated in any
prospective multilateral investment agreement.
24. India had cited paragraph 18 of Korea’s paper (WT/WGTI/W/123), suggesting that Korea
recognized that commercial presence in the GATS bore no relationship to investment provisions.
However, his delegation stressed that this was an incorrect interpretation of this paragraph inparticular, and Korea's position in general.  When seen in the context of paragraph 4 of the same
paper, Korea clearly stated that investment in the services sector was implicit in Mode 3, which was
defined as the supply of a service by a service s upplier of one Member through commercial presence
in the territory of any other Member.  Similar references could be found throughout the paper.
Furthermore, unlike India, Korea believed that national treatment at the post-establishment stagewould be more appropriate in a multilateral framew ork, even though national treatment applied to the
services sectors committed in a Member’s schedule under GATS.  Korea's understanding was that
providing assurances of a stable environment for foreign investors willing to maintain a long-term
business relationship with a host country was a minimum requirement.WT/WGTI/M/20
Page 5
25. Another mis-contrued interpretation of Korea's position was made in paragraph 6 of India’s
paper.  India correctly quoted one of the questions raised in Korea’s paper (WT/WGTI/W/96) − i.e.,
“How should we bridge the differences in the definition of investment between any multilateral
framework on investment and the GATS in which investment is defined as “commercial presence”?”
However, this was the second question in Korea’s paper and it was in a sequence logically linked to
the first question − i.e., “Should we incorporate the services sector in the new investment rules or
should we only include the non-services sector”?  His delegation wished to be clear that the first
question raised by Korea was whether or not a single investment agreement for goods and services
was needed.  If a single agreement were not thought to be optimal, then another key issue arose - i.e.,
how to deal with any differences between an investment agreement on goods and the existing
provisions of the GATS.  India quoted only this second question in Korea’s paper, thus leading to a
misinterpretation of Korea’s position.
26. In conclusion, Korea wished to reiterate its suggestion that the core principles of the WTO
should apply to any prospective multilateral investment agreement, in order to enhance both the
predictability and transparency of the internationa l investment climate.  At the pre-establishment
stage, a GATS-type approach could provide a useful model - i.e., providing conditional national
treatment to foreign investors according to specific commitments granted by host countries.
However, at the post-establishment stage, national treatment should be accepted as a general
obligation.  Korea firmly believed that this would result in benefits for investors as well as host
countries.
27. The representative of Costa Rica in thanking India for its important contributions, made
several general comments on the three papers. First, India appeared to start from the principle that a
multilateral investment agreement would prevent coun tries from exercizing the right to apply their
own regulations.  The freedom to apply national regulations was also a subject of great importance to
Costa Rica, and, unlike India, his delegation believed that an international agreement in the WTOwould strengthen Costa Rica's national capacity to  implement domestic regulations.  Accordingly, a
multilateral investment regime would be of great benefit for small developing countries such as Costa
Rica.  He also felt that India might speak of its own experience, but that Costa Rica did not share
these perspectives and therefore India did not speak on its behalf.  Finally, he asked India to explain
what had led it to assert, in paragraph 2 of its paper on non-discrimination (WT/WGTI/W/149), that
"unlike domestic investment, where funds remain with in the country, foreign investment can flow in
and out, depending on speculative factors and short-term changes in different investment
destinations".  This assertion served as the central premise of India's position on the principle of non-
discrimination, and for affirming the validity of discrimination.  His delegation's impression was that
both domestic and foreign investors tended to react in the same way in the face of a specific risk, and
his delegation wished therefore to have more information from India on the particular subject.
28. The representative of Poland suggested that FDI should not be analysed solely in monetary or
financial terms.  There were in fact many ways in which FDI could make a positive contribution to
economic growth.  For one thing, much FDI was lin ked to "greenfield" investment, thus helping to
augment a country's productive capacities and employment.  Typically foreign investors also had
knowledge of opportunities for their products in international markets, which could reduce
information costs and risk.  Foreign enterprises also often had access to wider distribution channels,meaning that they faced lower barriers to entering new markets.   The import of technology and
knowledge was also linked to foreign investment , creating spillovers to the economy as a whole.
Finally, foreign investment was linked to the import of tacit knowledge and governance that could
make foreign owned companies more successful and generate positive spillovers for the economy as a
whole.
29. The representative of Brazil noted that Paragraph 22 of the Doha Ministerial Declaration gave
the Working Group a clear mandate to clarify a number of topics relevant to the assessment of theWT/WGTI/M/20
Page 6
implications of closer multilateral cooperation in th e investment for all Members.  In that respect,
India's contributions were entirely consistent with the spirit and letter of the mandate.  His delegation
took issue with the assessment of some Members that these contributions were not constructive; quite
the contrary, they helped clarify the concerns that India had in the investment area, and that it wanted
to explore further as part of the Group's common educative process.
30. Against this background, his delegation wished to highlight several issues that were raised in
India's submissions which, in Brazil's view, warranted further consideration.  The first was the issue
of securing "policy space" for developing countries, so that they could maintain their autonomy and
flexibility, especially as regards social and technological development.  A second issue − linked to
policy space − was pre-establishment rights.  As had been pointed out by India and the Secretariat in
their papers on modalities for pre-establishment commitments, most IIAs were limited to granting
national treatment at the post-establishment phase of investment − and Brazil felt that this would also
be an appropriate way to define a prospective WTO agreement in order to strike a balance betweenthe right to regulate (including for development purposes) and predictability and stability for FDI.
The third issue which warranted further discussion was the matter of performance requirements.  A
fourth issue raised by India that required further exploration was the treatment of sub-national
measures.
31. The representative of Venezuela considered that India's communications were substantively
important and constructive.  In particular, his delegation stressed the importance for his country of
"policy space".  Venezuela had just completed its Trade Policy Review (TPR) − a process which went
into issues beyond trade policy.  One of the conclusions of the TPR was that Venezuela had an urgent
need to find ways to diversify its economy.  Venezuela understood that such diversification could not
be achieved without active development policies which would remedy market deficiencies.  Hisdelegation believed that the trend of the multilateral trading system was to limit the space within
which developing countries could apply development policies.  His delegation also felt that
safeguarding that space was important to ensure that future policy tools and options remained
available to developing countries.
32. His delegation also agreed with India's point regarding the difference between financial and
trade flows.  Identifying these differences was important and relevant to the analysis being carried out
by the Working Group.
33. Lastly, his delegation also agreed with India's efforts to draw parallels between investment
and labour as factors of production, and the different emphasis placed on each issue in current
negotiations.   It might be meaningful to ask whether the liberalization of one factor of productionshould not go hand-in-hand with liberalization of another (as was the case with personal services).  He
concluded by noting that many of the questions raised in India's papers were highly relevant to
reaching an eventual multilateral agreement on investment.
34. The representative of the European Communities agreed with India's emphasis in its
submissions on the importance of policy space for developing countries, and maintaining the right to
regulate and to pursue development measures.  However, his delegation questioned the assumption
implicit in these papers that international rules would by definition prevent developing countries frommaintaining sufficient policy space.  Regardless of the merits of such policies, his delegation had
stated many times that policy space was essential − and that a "one-size-fits-all" approach to rule
making was not appropriate in the investment context.  This was precisely why Paragraph 22 of theDoha Ministerial Declaration set out a number of subjects for clarification that addressed the issue of
policy space, in particular modalities for pre-establishment commitments based on a GATS-type
positive list approach.  India and other developing countries had rightly pointed out that the entry of
foreign investors − and particularly the right to screen or channel foreign investment − could beWT/WGTI/M/20
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sensitive for the development policies of any host countries.  Recognizing these concerns, his
delegation asked how the GATS − whose provisions dealt with the pre-establishment treatment of
foreign investment in the services sector − had prevented countries from pursuing such policies?
35. His delegation also wanted to address the point raised by India about the differences between
financial and trade flows.  While Members might agree or disagree about the causes of the volatility
of certain financial flows, he wanted to reiterate that there was now a wide consensus in the Working
Group that they were not the kind of financial transaction that Members wished to incorporate in a
multilateral investment framework.  What Members were discussing was long-term foreign
investment, particularly foreign direct investment − and his delegation was at a loss to find a single
financial crisis that had been caused by sudden in flows or outflows of FDI.  As in the GATS, his
delegation felt an agreement should deal with financia l flows only to the extent that such flows were
necessary to the transactions of a specific investment or enterprise (e.g., banking) − an issue which the
EC would return to when it presented its paper on balance-of-payments safeguards.
36. Regarding India's paper on development provisions (WT/WGTI/W/148), the representative of
Switzerland said that, while his delegation shared the view that international capital markets were not
perfect, it noted that international trade did not take place under perfect market conditions either.  Thiswas not an argument for avoiding multilateral liberalization and rule-making in the trading system;
on the contrary, this explained on-going efforts to address issues ranging from non-tariff barriers tocompetition policy in the current negotiations.  Regarding the roots of financial instability, he noted
that much of this instability flowed from exce ssive domestic consumption fuelled by unsustainable
macroeconomic policies.  In a previous submission (WT/WGTI/W134), Switzerland had cited
UNCTAD statistics which demonstrated that between 1995 and 1999 FDI flows had remained at
$20 billion for the five Asian countries most affected by the Asian financial crisis while bank loansand debt securities became negative.  On the subject of policy space, Switzerland agreed with India,
and emphasized in its written contribution that any prospective multilateral framework must contain
development provisions, and that developing countries should undertake only those commitments
commensurate with their national policy objectives and levels of development.  Any agreement
should strike a balance between common principles, today's FDI regimes, and the ability of Membersto pursue essential national policies.  Regarding India's support for BITs, his delegation wished to
emphasize that while BITs were important agreements, it would surely be preferable for business to
deal with a single set of multilateral investment rule s, rather than with over 2000 separate agreements.
His delegation believed that performance requirements were subjects already dealt with in the TRIMs
Committee.  Switzerland did not consider investment an activity reserved to bankers and monetaryeconomists.  The linkages between trade flows and financial flows were already well established.
37. The representative of the United States made a number of points on India's submissions.
Regarding development provisions (WT/WGTI/W/148), he noted that the United States disagreed
with a fundamental premise of the contribution, which was stated in the first tiret:  “Any multilateral
discipline that seeks to limit this policy space” – referring to the ability of developing countries to
regulate investment – “by its very definition, would reduce the policy options available to developing
countries to use foreign investment for promoting development.”
38. On its face, this was a true statement.  As w ith any discipline agreed in the WTO, multilateral
investment disciplines would constrain, to some degree, the capacity of Member countries to impose
certain domestic policies.  But by now all Members surely recognized and accepted that governments
often voluntarily agreed to comply with such disciplines because they had concluded that doing so
would be beneficial in ways that more than compensated for any limitations on their freedom ofaction domestically.  Applying this logic to international investment, a persuasive case had been made
that countries that choose to adhere to certain multilateral principles relating to the treatment of
investment at the domestic level would attract increased private capital flows.  Members had not yet
agreed, of course, on what those principles should be, but his delegation urged India and otherWT/WGTI/M/20
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Members not to dismiss the idea of multilateral investment disciplines, simply because they might
involve certain limits on their freedom of action.  A perspective such as this would be at odds with the
logic of every WTO agreement – indeed, of every international treaty.
39. This same sentence in the Indian communication also talked about the need of developing
countries to "use foreign investment" to promote development.  The language here appeared toendorse investment screening and other regulatory measures designed to influence the content and
destination of incoming investment.  The United States did not believe that governments should give
up their rights to regulate investment flows for legitimate public welfare purposes and the protection
of national security.  However, his delegation did believe that screening and other measures that
sought to regulate investment flows beyond what  was necessary often proved, in practice, to be
counterproductive.  As a large, dynamic, and growing economy – an economy that had been attracting
significant amounts of foreign investment in recent y ears – India might feel that it was in a position to
turn away foreign investment that did not meet  certain standards for the promotion of economic
development.  But for many other developing c ountries, the fundamental problem with foreign
investment was that there was just too little of it.  The United States believed that a high-standards
multilateral investment agreement would generate increased international flows of investment – and
promote economic development in all signatory countries.
40. In the second tiret, India stated that "the basic assumption underlying the proposal for
multilateral disciplines on investment is that the principle of free trade, which permeates WTO rules
in respect of goods and services, would apply equally to movement of capital".  The United States
could not speak for other countries, but this was not an accurate characterization of his delegation's
own thinking on these issues.  The United States' position was not a theoretical one.  His delegationdid not support investment disciplines merely because it believed the principle of free trade for goods
and services somehow automatically or inevitably  applied – or should apply – to capital.  His
delegation supported multilateral investment disciplines on their own merits – because, as already
noted, it believed that broad, multilateral adoption of certain standards of treatment for foreign
investment would stimulate international investment flows, benefiting all WTO members.
41. His delegation also took issue with India’s contention that developing countries could not
achieve liberalization of capital movements because of inherent distortions, e.g., continued protection
of import-competing industries, inflexible real wages, and asymmetric information in domestic
financial markets.  These concerns were genuine.  But their existence, rather than arguing for
abandoning the goal of capital movement liberalization, showed instead the need for developing
countries to support financial liberalization with structural reforms – e.g., ending subsidies to
import-competing firms, improving bank oversigh t, and upgrading the flow of information in
financial markets.
42.  In tiret 4, India's paper stated that "financial flows in no way resemble flows of goods and
services.  There is no tangible link between buyers and sellers".  Hid delegation agreed that there weredifferences between international flows of capital, on the one hand, and of goods and services, on the
other.  But he wanted to make several points in this regard.  First, as in markets for goods and
services, buyers and sellers of financial instruments were linked in tangible, transparent ways.
Governments and firms wishing to sell bonds made offers on the open market, where potential buyers
were free to accept the terms offered or invest elsewhere.  Banks that lent to private business knewwith whom they were doing business, and vice versa.   Shareholders in publicly traded corporations
were free to glean all kinds of public information about their investments, and the corporations
themselves were required to be accountable to the shareholders.  Second, while there were also
significant differences between international flows of goods and of services, that fact had not
prevented the WTO from extending multilateral disciplines to the latter.  Third, it was practically
impossible to isolate financial investments from direct investment.  It was hard to imagine how an
investor could manage a direct investment, e.g., in a manufacturing plant, without carrying out localWT/WGTI/M/20
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financial transactions that were necessary for the operation of the business.  These, too, could be
difficult to monitor, record, and assess, but such difficulties had not prompted governments to stop
trying to remove barriers to the free movement of goods and services.
43. In tiret 7, India's paper stated that "empirical studies have shown that affiliates of certain
transnational corporations buy the bulk of their inputs from parent companies and other affiliatedcompanies".  The paper suggested that this reinforced  the case for local content restrictions and other
performance requirements.  As his delegation had stated recently in several other WTO bodies, the
United States believed the existing multilateral prohibitions on performance requirements were sound.
These prohibitions had been part of the GATT for more than 50 years, and many current WTO
Members had been subject to them for that long.  GATT disciplines on performance requirements
were reaffirmed by WTO Members just 8 years ago, in the TRIMs Agreement.  His delegation
believed that restoring performance requirements to the multilateral trading system would have ahighly adverse impact on trade and investment flows.
44. Regarding India's paper on non-discrimination (WT/WGTI/W/149), he noted that it made an
argument concerning the nature of capital flows that was similar to one made in the Indian paper on
development provisions.  According to tiret 2 of the paper, there might be many channels of capital
flows, and the ultimate investor might not be the original investor or lender.  There was no clearbuyer-seller linkage, as with goods and services, and no certainty regarding the source of funds.
There was also no certainty regarding the manner in which funds would be retained in the host
country and when, and in what manner, funds would flow out.  In tiret 4, the paper stated that "money
flows are essentially different in character from flow s of services and goods."  According to the paper,
all of these characteristics of international capital flows made it difficult to apply the principle ofnon-discrimination to them.  The paper stated, "certain degree of discrimination between different
kinds of investment is unavoidable".
45. The United States certainly agreed with the assertion that some discrimination with respect to
foreign investment might be appropriate.  The United States' BITs contained an exception to treaty
obligations where needed to protect national security.  His delegation hoped that no country wouldpermit foreign investors to support activities that clearly threatened the public welfare.  But his
delegation thought India's paper endorsed a much  broader and potentially damaging principle of
discrimination on the basis of some unfortunate comparisons between capital flows, on the one hand,
and trade in goods and services, on the other.  In this regard, he reiterated some of the points he had
made with respect to India’s paper on development pr ovisions.  First, the differences between capital
flows, on the one hand, and goods and services trade, on the other, could be overstated.  The
United States believed that trade and investment complemented each other;  and for this reason, hadincluded investment chapters in its Free Trade Agreements with Chile and Singapore, in NAFTA, and
in the FTAA.  Both trade and investment thrived under conditions of openness, transparency, and
sound macroeconomic and structural policies.  Furthermore, acknowledging that there were
differences among international flows of capital, goods, and services did not by itself prove the case
that the principle of non-discrimination could not be applied to investment flows.  His delegation did
not believe that the particular qualities of capital flows made it inherently difficult to apply the
principle of non-discrimination to them.
46. In tirets 5 and 6, India suggested that the treatment of commercial presence under the GATS
did not offer a model for the treatment of investme nt in a WTO investment agreement.  He pointed
out that many international agreements already covered investments that produced goods, and“commercial presence” for service providers, in one investment chapter.  For example, the US-Chile
and US-Singapore FTA’s currently under negotiation covered service providers in the investment
chapter.  Moreover, the US BIT, like many other countries’ bilateral treaties, applied the same
obligations to both goods and services providers.WT/WGTI/M/20
Page 10
47. In the last tiret of the paper, India stated that "developing countries need to retain the ability to
screen and channel foreign direct investment consistent with their domestic interests and priorities".
He asked the Indian delegation whether the emphasis in this passage on pre-establishment treatment
meant that India would be willing to support the application of the principle of non-discrimination to
post-establishment treatment of investment?
48. With regard to India's paper "Views on Modalities for Pre-Establishment Commitments
Based on a GATS-Type Positive List Approach" (WT/WGTI/W/150), India made the case in tiret 4
that national treatment should not apply to the pre-establishment phase of investment - and that such
commitments were absent from the majority of existing investment agreements.  The United States
believed the paper mis-characterized the BITs to which the United States was a party.  A similar mis-
characterization was made in tiret 8 of the Indian paper on non-discrimination.
49. In the present paper, India stated that only two countries, the United States and Canada, were
known to insist on pre-establishment national treatment provisions in their  BITs.  However, together
the two countries had negotiated over 60 BITs, many with developing and emerging market
economies.  He noted that, by concluding a BIT with the United States, each recent treaty partner had
also embraced the idea of national treatment with respect to pre-establishment and that most of the
United States' treaty partners were developing countries.  His delegation therefore saw no reason why,in principle, countries at different levels of development could not commit themselves to guaranteeing
national treatment at the pre-establishment as well as the post-establishment phase of an investment.
50. Third, for reasons noted earlier, his delegation did not think it was correct to suggest, as the
paper had done in tiret 9, that “binding national treatment and MFN provisions”, were only
appropriate for “some regional trading arrangements covering advanced stages of integration.”  Thepaper cited the NAFTA Agreement as an example of such a regional agreement.  NAFTA, of course,
included countries at different levels of development.  The successful, broad application of national
treatment and MFN principles in NAFTA, as well as in US BITs with developing countries,
undermined the argument that these principles could not work in the WTO because of the widely
varying levels of development of Member countries.
51. Finally, the last tiret asserted that the "complex nature of capital flows and investments" made
it neither "feasible nor necessary" to impose binding rules on "pre-establishment commitments".  As
his delegation had noted with respect to the other Indian papers, it was not clear that any
characteristics of capital flows, which included direct investment, required that they be excluded from
multilateral disciplines relating to non-discrimination.  Here, and in the other papers, India referred to
the "complexity" of investment flows, but the United States did not believe they had made a
persuasive case that these flows were inherently more complicated or needful of national regulationthan goods or services flows.  It was important to note that most financial market regulations need not
discriminate between foreign and domestic investors, and therefore were consistent with an agreement
to provide national treatment.  In a United States' BIT, for example, the transfers provision permitted
financial market regulators to prevent or delay a transfer if necessary to fulfill a court judgment, and
allowed for the mandatory reporting of transactions that might be required by financial regulations,regardless of the source of the money to be transferred.
52. He agreed that multilateral disciplines for investment would not be identical to those for
services, just as the disciplines for services were different than those for goods.  But the fact that
investment flows had certain unique qualities did not mean that multilateral disciplines could not be
applied to them effectively and to the advantage of all WTO Members.
53. The representative of Nigeria shared the concerns raised in India's papers and welcomed and
supported all the elements contained therein.  His delegation also reserved its right to make further
comments on the papers at a later stage.WT/WGTI/M/20
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54. The representative of Hong Kong, China note d that India's papers provided the Working
Group with an opportunity to review some of the key elements which were the subject of discussion at
the Working Group's meeting in July.  Thus he first wa nted briefly to revisit and identify some of the
main points raised at that July meeting.  On development provisions, there was general agreement on
the need for such provisions in a possible multilate ral investment framework.  His delegation also saw
such provisions as indispensable tools for incorporating policy flexibility, and the Working Group
should be guided by three fundamental principles − flexibility, transparency and predictability.  The
road ahead was to balance policy flexibility in the host countries with the need of predictable, stable
and transparent conditions for international investments.  The Working Group's previous discussions
had generated many possible options that Members might wish to consider further, including:  lowerlevel of commitments for developing countries;  asymmetrically-phased implementation timetables;
exceptions from certain obligations;  best-endeav our commitments;  a mechanism for scheduling of
commitments similar to the GATS approach; techni cal assistance and capacity building;  etc.  Some
Members, including India, also suggested bringing in other related elements such as performance
requirements, technology transfer, investment incentives and home-country obligations.
55. Regarding non-discrimination, Hong Kong, China believed that this principle was an essential
precondition for creating a level playing field for FDI worldwide, though Members should also
consider possible scope for flexibility.  For example, a considerable number of developing-country
Members considered there was a need to retain the ability to screen and channel foreign investments
in a way consistent with their domestic interests and priorities.
56. On modalities for pre-establishment commitments, there was general recognition of a
government's right to suitably regulate the entry of  foreign investment at the pre-establishment stage.
The challenge was to decide whether − and how − to translate this "right" into multilateral investment
disciplines.  On this question, views diverged.  There was considerable support for using the GATS-
type positive list approach as a starting point of discussions.  Nevertheless, there were also Memberswho believed that binding rules on pre-establishment commitments were neither feasible nor
necessary.  Permanent carve-out for developing-country Members and a negative-list approach to pre-
establishment commitments were also raised as possible options.
57. As far as these three elements were concerned, his delegation believed that past discussions
had helped to clarify the positions and concerns of different Members, though there had been nosubstantive breakthrough in achieving consensus.  The challenge ahead was to arrive at an integrated
set of provisions that could satisfy the needs of all Members and contribute positively to a predictable,
stable and transparent environment for cross-border investment.  Given the diverse interests of
Members, Hong Kong, China was under no illusion that this would be an easy task.  In his
delegation's view, it was important that any possible multilateral framework should have sufficient
built-in flexibility to allow individual Members to pursue national policies that were commensurate
with their needs and interests.  The gaps among Members remained wide.  The collective will ofMembers was needed to find common ground.
58. The representative of Australia noted that India's opposition to any multilateral framework on
investment seemed to be motivated by concerns that such an agreement would reduce its flexibility to
regulate foreign investment in accordance with na tional government priorities.  Associated with this
was the concern that any multilateral framework would be obliging host countries to accord anunqualified right of establishment to foreign investment.  On these concerns, he wanted to reiterate
Australia's view that a GATS-type approach to pre-establishment commitments should provide the
necessary flexibility − and ability − to host governments to regulate foreign investment.  In India's
paper on development provisions, foreign investment was characterized as a financial flow with a
speculative and volatile nature.  As other delegations had pointed out, this was not a complete
definition of foreign investment.  Direct investment was not as speculate as portfolio investment, and
longer lead times were involved with FDI.  India had also questioned the value of any multilateralWT/WGTI/M/20
Page 12
rules on investment by de-linking flows of goods an d services from flows of capital.  His delegation
believed that given the complementarity between trade and foreign investment the inter-linkages
between them were growing rather than diminishing.  Investment was now accepted as more
important to global growth than trade in goods and services.  The latest World Investment Report
noted that the sales of foreign subsidiaries and affiliates amounted to almost $19 trillion in 2001, morethan twice the value of world exports.  Australia therefore considered the link between investment and
trade was too great for the WTO not to address it.
59. Regarding non-discrimination, India's critique of the principle − including national treatment
and MFN treatment − appeared to be premised on the view that non-discrimination was an absolute
principle incompatible with the sovereign right of Members to control entry and establishment.  The
paper concluded that BITs were preferred because developing countries could retain the right to
screen and channel FDI so that it remained consiste nt with their development priorities.  Prima facie
Australia believed that a multilateral framework would not remove this right because the principles of
non-discrimination were unlikely to be applied absolutely.  Moreover, on the basis of Australia's
current and emerging treaty practice, his delegation found it difficult to agree that such a standardcould be totally without exception.  As his dele gation had noted on previous occasions, national
treatment was unquestionably a more demanding standard to meet than MFN treatment because its
intent was to prevent host countries from discriminating in favour of its own domestic investors.
Australia was not aware of any investment agre ement where national treatment applied without
qualification or exemptions.
60. The representative of Mexico noted that the growth and development dimension of foreign
investment was a subject with which all countries were concerned, especially developing countries.
The Working Group faced a dilemma.  On the one hand, there was widespread understanding that any
prospective framework must give flexibility to Members to enable them to undertake obligations and
commitments in keeping with their particular needs and circumstances.  On the other hand, it neededto be recognized that the sources of growth were  no other than domestic or foreign investment, and
that to attract and retain investment it was necessary to provide clear, fixed and simple rules for
economic operators.
61.  With this in mind, the Working Group had received a number of proposals that allowed for
the flexibility that developing countries required in order to attain their development objectives.  Anexample was the hybrid GATS approach, which allowed countries to liberalize on a selective basis,
undertake commitments in keeping with their circ umstances, and maintain the freedom of manoeuvre
that they required to adapt their domestic policies accordingly.  Clearly it was not possible to make a
"mere copy" of the GATS structure in the goods sector.  However, that agreement might indeed serve
as the inspiration for finalizing investment rules in the goods sector, along the lines of those that
investors already had in the service sector.  Moreover, to attempt to make a distinction between
services and goods would be an artificial distinction, especially when not even the domesticregulations that governed investment regimes distinguished between investment related to services
and to manufacturing.
62. On the other hand, his delegation reiterated its view regarding the benefits that foreign
investment might have for recipient countries, noting that many studies demonstrated the positive
external effects with regard to technology transf er, human capital development, and integration into
international trade that it could flow from FDI.  In addition, speaking from Mexico's experience, these
benefits were not just theoretical, as there were successful cases of developing countries that had used
international investment as a tool in their strategies of growth and development.
63. Finally, his delegation noted with concern the attempt to bring into the Working Group a
topic which belonged to a separate agreement  Performance requirements was a subject which fellunder the rubric of the TRIMs Agreement, and his delegation felt that it should continue to beWT/WGTI/M/20
Page 13
analysed within the context of that Agreement.  It would be very dangerous to try to move the
discussion of an element that not even Paragraph 22 of the Doha Ministerial Declaration considered to
be a subject that required clarification.
64. The representative of Argentina noted that some delegations had tried to portray India's
papers as ideologically motivated and theoretically based.  This was not Argentina's view.  On the
contrary, his delegation viewed India's papers as important practical contributions to the Working
Group's deliberations.  Investment was not a new issue.  There were many bilateral and regional
investment agreements that had been in existence for some time, and which had generated many
different effects, both positive and negative.  The debate about a prospective multilateral investment
agreement was complex and could not be seen in terms of black and white.  Any such agreement
would necessarily inhibit the regulatory power and discretion of the state.  He had never seen an
agreement that did not exhibit those characteristics.  The debate was not whether an investmentagreement would constrain state action in the investme nt area, but rather would it include a provision
which would allow some flexibility for development within these more general constraints.  In other
words, the debate needed to focus on the nature and substance of "flexibility" − including
development policies and the right to regulate in the public interest, which were issues clearly
highlighted in the Working Group's Ministerial mandate.  The fact that these issues were identified by
Ministers demonstrated that any prospective multilateral framework had to represent an improvement
on the existing international investment architecture.
65. His delegation also questioned the assumption of some Members that the development
dimension was somehow antithetical to the transparency  and predictability of investment rules.  It was
clear that investment rules had to be transparent and predictable; but this same transparency and
predictability had to be something which the state could use as a tool in its development.  His
delegation believed that India conceptually had brought out the development dimension, but that this
concept had to be translated into substantive provisions.  Whereas the development dimension in most
existing IIAs was limited to declaratory or preambular statements, his delegation believed that it
should be embedded in every provision of a prospective multilateral investment framework.Furthermore, his delegation believed that any such agreement should not only be limited to negative
obligations − i.e., delineating what a state should not do − but should also incorporate positive
elements, in areas such as performance requirements and investment incentives, which the state coulduse in order to promote development.  Generally investment agreements were established to help
promote and protect investment.  Perhaps it would be more appropriate therefore to have an
agreement which promoted both development and investment.
66. Finally, his delegation wished to underline the complexity of attempting to transfer
automatically the core principles contained in the GATT or the GATS to a multilateral investment
framework.  Argentina saw non-discrimination as a particularly complex issue − one which
underscored the intrinsic differences between goods and investment flows, especially in the pre-
establishment phase.  Equally complex was the distinction between national treatment and MFN
treatment − as well as between the de facto and de jure application of the principle of national
treatment.  This latter distinction became particularly relevant if a decision was made to extend
national treatment to the pre-establishment phase of investment − raising the issue of whether
protection should extend to potential investors.  A number of World Bank investment arbitration
panels had tried to grapple with just this issue.  His essential point was that investment could not belooked at in a generic way.  The subject needed to be looked at, not only from a theoretical view
point, but also from a realistic and results oriented perspective as well.
67. The representative of the Philippines noted that India's three papers largely reflected his
delegation's thinking on the relevant subjects.  First, the Philippines agreed that policy flexibility was
of utmost importance for developing countries − including as regarded the issues of performanceWT/WGTI/M/20
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requirements.  While he agreed with other delegations that this issue was being addressed in the
context of the TRIMs review, he did not believe that  this precluded further discussion of performance
requirements in the Working Group.  Second, his delegation also agreed that pre-establishment
commitments were not compatible with the idea of policy space, as envisaged by the majority of
Members in the Working Group.  Third, like India, the Philippines remained unconvinced thatinvestment rules were needed in the WTO.
68. As regards the possibility of using existing WTO agreements as possible models for an
investment agreement, his delegation did not believe that the basic principles or architecture of the
GATT or the GATS were automatically adaptable to  investment issues as there was an intrinsic
difference between trade and capital flows − a point also made by India and other delegations.  A case
in point was the safeguards issue.  There were no  rules in GATS for safeguards, while the existing
rules in GATT would prove utterly inadequate to address the unique circumstances of investment.
69. Finally, he noted that his delegation regretted very much the statement of Japan to the effect
that India should be more constructive.  In his delegation's view, India had been very constructive.
Japan may not like what India had submitted to th e Working Group but this did not mean that India
was being unconstructive.  The three papers submitted by India were a good illustration of how
constructive India had been in the Working Group.
70. The representative of China noted that ev erything in the world had pros and cons − and this
was also the case with FDI.  In considering and exploring the possibility of negotiating a multilateral
investment framework, the Working Group should certai nly take into account all the elements related
to FDI, both positive and negative, so as to en sure that such a framework would promote the
economic and social development of the host Members, particularly the developing ones, while at the
same time helping avoid anything that might have a negative impact on their development policies
and objectives.  India's submissions were a simple reflection of its own views − views that might be
different from those of some Members, and shared by others.  Almost all the issues referred to by
India in its submissions had been discussed and de bated in previous meetings of the Working Group.
Regardless of its views and positions on specific issues, India's submissions were enlightening,
constructive and beneficial, at least from the perspective of further deepening and developing the
Working Group's deliberations.
71. The representative of Cuba considered that India's submission were in keeping with the
Working Group's terms of reference, and that they represented a constructive contribution to striking
an appropriate balance in the Group's debate.  Her delegation supported India's basic approach which
underlined the importance of developing countries having margins to pursue development policies,
including the manner of channelling and regulating inward investments.  Her delegation also
concurred with India's concern that any prospective multilateral agreement might find it difficult toguarantee the development objectives of Members wo uld not be adversely affected.  For example, the
principle of non-discrimination as conceived by certain Members in the course of the debate would
undermine these development objectives.  In order to strengthen domestic economic security, it was
necessary to regulate inward investment.  To meet development objectives, it was necessary to
stimulate investment in certain sectors, and discourage it in others.  Binding, irreversible provisions −
together with progressive liberalization along the lines of the GATS − increased the risk of an adverse
impact on the lengthy process of development in many countries.
72. The representative of Egypt felt that India's papers represented for the first time a pragmatic
and constructive developing-country perspective on the relationship between investment and trade.
His delegation concurred with the statement in India's paper that developing countries needed the
highest flexibility to screen and channel foreig n investment in order to guarantee growth and
development goals.  Egypt believed that more careful study was needed in order to clarify the linksWT/WGTI/M/20
Page 15
between the flows of capital, goods and services.  It was only reasonable, in light of the recurrance of
financial crises in recent years, that developing countries would wish to preserve the right to regulate
the entry of foreign investment.  In examining the kind of policy space that was needed to regulate
against possible adverse effects of capital moveme nts, Members should not exclude from discussion
relevant issues such as performance requirements and investment incentives. His delegation was notof the view that the TRIMs Agreement was applicable to all kinds of performance requirements, even
within the context of the Article 9 review, and that the subject was a legitimate and important one for
the Working Group to discuss.
73. The representative of Djibouti suggested that the issues which India had raised in its
submissions and intervention were of great importance to developing countries.  What was
particularly important to African and least-developed countries was to become familiar with the
global environment within which investment flowed, and to use the formulation of international rules
to help attract it.  His delegation remained hopeful that such a system of multilateral rules would be
realized.
74. The representative of Kenya felt that India's contributions were constructive and in keeping
with the Doha mandate, and his delegation agreed with most of the issues which they raised.
Moreover, his delegation did not believe that being constructive meant looking at issues from asimplistic point  of view.
75. The representative of Pakistan suggested that, unlike trade, investment represented a long
term relationship between the investor and the host country, and therefore a careful analysis of
bilateral or multilateral investment regimes was needed.  His delegation agreed with many of the
views expressed by India, and considered its papers to be a constructive contribution to the WorkingGroup.
76. The representative of Japan agreed with Brazil, Pakistan and others when they noted that
India's submissions had raised critical questions in a legitimate way.  His delegation also felt that
India had stimulated a constructive exchange in the Working Group.  However, there were a number
of points raised in India's papers with which Japan disagreed.  It was true, as India had argued, thatflows of FDI were associated with the movement of  capital, but this was also true of flows of goods
and services.  Japan was not advocating the liberalization of short-term or volatile capital flows, but
those flows of FDI related to trade.  Regardin g the principle of non-discrimination, his delegation
reiterated its belief that national treatment and MFN treatment were beneficial, not just for home
countries, but for host countries as well.  He drew attention to a recent report of the Indian Steering
Committee on Foreign Direct Investment which highlig hted the importance of investment to India's
economic growth, and the impediments which a lack of transparency and unnecessarily complexinvestment rules posed to the attraction of FDI.  He also drew attention to the importance given to
principles of non-discrimination in APEC 's non-binding investment principles.
77. Japan agreed with India's emphasis on the need to secure policy space − not just for
developing countries, but for all countries.  That was why his delegation had urged the Working
Group to examine ways of striking an appropriate balance between non-discrimination and policy
space.  One possible answer to this challenge was to adopt a GATS-type positive list approach to pre-
establishment commitments.  Finally Japan cautioned against accepting a dated model of foreign
investment flows which assumed that all host countries were developing economies and all homecountries were advanced economies.  This was an obsolete model which ignored the extent to which
developing countries were increasingly investment exporters and homes to multinationals.
78. Regarding India's paper on non-discrimination, the representative of Switzerland noted that
while it was true that many developing countries had been adversely affected by destabilizing
outflows of short-term capital, it was also true th at during these same periods stocks of FDI hadWT/WGTI/M/20
Page 16
remained largely unchanged, suggesting that direct investment represented a stable economic
influence.  This was because foreign direct investors generally had more medium- or long-term
objectives.  Referring to the distinction between the GATT and the GATS, his delegation felt it was
useful to highlight the fact that, in the same way that many services suppliers required a "commercial
presence" in order to deliver products to markets, so, too, did many goods manufacturers undertakeinvestments for market access reasons.
79. With regard to India's paper on modalities for pre-establishment commitments, his delegation
agreed that substantial investment flows had taken place without multilateral rules, driven by other
considerations such as market size and macroeconomic stability.  However, it followed that a
multilateral agreement on investment might be particularly attractive for all those economies that at
present did not attract sizable inward investment.  It was also important to remember that it was not
only large multinational corporations that conducted foreign investment.  There were many small- andmedium-sized firms which were also increasingly active investors globally.  These firms in particular
would benefit from an agreement that aimed to simplif y global investment rules.  In thanking India for
its contribution, he stressed the importance, not just of expressing Members' differences in the
Working Group, but also of understanding the nature of these differences − and whether these
differences could be overcome in eventual negotiations.
80. The representative of India said that his delegation had benefited from a useful exchange of
views on the subjects raised in its papers discussed at previous meetings of the Working Group.  It
was in this spirit that India expressed its own perspective.  In response to comments about the
distinction between trade and capital flows, his dele gation recognized that money played a central role
as a medium of exchange of goods and services.  But this was not quite the same as the financialflows involved in investment.  As his delegation had suggested many times, it was difficult in practice
to differentiate between short-term and long-term capital flows, given that the nature of financial
transactions could change between buyers and sellers.  India's basic point was that the issues related to
investment and money flows were very complex and beyond the understanding of trade negotiators.
He also wished to emphasize that the views expressed in the three papers were his delegation's views,and were in no way intended to represent the views of all developing countries.  Finally, he noted that
while FDI could certainly have positive effects on a host country - just as it could have negative
effects - these effects were not automatic.  This was why India believed that countries needed policy
space in order to regulate and channel FDI in a way that maximized its positive effects while
minimizing negative effects.
(ii) Investors' and Home Countries' Obligations
81. The representative of India introduced the joint communication circulated in
WT/WGTI/W/152.  He noted that while the subject of investors’ and home governments’ obligations
was not new, it had not been adequately discussed in the Working Group.  At the Working Group's
meeting in April, the representative of UNCTAD had raised the issue of the need to discuss homegovernments' and investors' obligations besides host country obligations.  A number of delegations
had also expressed interest in the subject of investors’ and home governments’ obligations.
82. He noted that annual flows of FDI had risen sharply from US$200 billion in 1990 to
$1271 billion in 2000, and had become an important channel of cross-border business activity.  FDI
flows could provide supplementary financial resources, technology, managerial skills and
employment opportunities and could play a positive role in the economic and social development of
many host countries.  FDI flows were generally undertaken by multinational enterprises which were
characterized by their large scale of operations across many locations worldwide.  Given the
economic power and global reach of these corporations, countries faced limitations in regulating their
conduct.  Conflicts of interest could also arise between the development policy objectives of host
Members and the objectives of multinational enterprises.  Neither inflows of FDI nor the benefitsWT/WGTI/M/20
Page 17
from such inflows were automatic.  While recognizing the positive role of FDI, there was also a need
to address its negative effects − such as balance-of-payment problems and the crowding out effects of
FDI activities in developing countries.
83. There had been several notable attempts in international fora to develop standards for the
conduct of transnational corporations (TNCs).  Important attempts included the Draft Code ofConduct on TNCs and the UNCTAD Code of Conduct on Transfer of Technology.  These could not
be adopted because of differences, among other issues, between developed and developing countries
over the legal status of the Codes.  In 1980, UNCTAD adopted the Set of Multilaterally Agreed
Equitable Principles and Rules for the Control of Restrictive Business Practices.  The OECD adopted
Guidelines on International Investment and Multinational Enterprises in 1976.  Although, a number ofsteps had been taken by the international community  to evolve a code of conduct for multinational
enterprises, all existing attempts had been of a voluntary nature.
84. As a result, he observed that the growing internationalization of corporate activities since the
1990s had taken place without an effective global code that regulated the behaviour and operations of
multinational enterprises.  The absence of an enforceable global code of corporate conduct had beenhighlighted by the recent spate of cases of fraudulent corporate practices involving some leading
multinational enterprises.  Legally enforceable norms of investors or corporate conduct were urgently
required to prevent such crises from recurring.  The need for effective inter-governmental agreements
and measures aimed at corporate responsibility and corporate accountability had been most recently
recognized by the World Summit on Sustainable Development held in Johannesburg.  It was
important that the Working Group, as a matter of priority, take on the task of examining legally
binding measures aimed at ensuring corporate responsibility and accountability relating to foreigninvestors, including measures that clearly spelled out investors' and home governments' obligations.
85. He noted that the proponents of a multilateral framework on investment in the WTO had been
seeking binding rights for foreign investors that the host country should agree to provide.  However,
the rights of foreign investors had to be balanced against those of host governments and against the
obligations of investors and home governments.  In Paragraph 22 of the Doha Ministerial Declaration,it was noted that any framework should reflect in a balanced manner the interests of home and host
countries, and take due account of the development polices and objectives of host governments as
well as their right to regulate in the public intere st.  While recognizing the protection of legitimate
rights and interests of the investing multinational en terprises, his delegation believed that the right of
host Members to regulate foreign investors and the need for investors to undertake obligations in linewith host-countries’ interests, development polices and objectives, should be an indispensable part of
the Working Group's discussions.
86. He pointed out that the joint submission listed some possible general principles that would
need to be kept in mind while drawing up any investors’ obligations.  The paper also outlined possible
obligations of investors in the context of restrictive business practices;  technology transfer; balance-of-payments;  ownership and control;  consumer and environmental protection;  disclosure and
accounting.
87. In short, the paper had outlined some of the key issues that could be usefully discussed with
respect to investors’ and home governments’ obligations.  The recent disclosures of corporate fraud
had only underlined the need for greater disciplines on multinational enterprises to bring about greatercorporate responsibility and accountability.  What was important to many developing countries was to
ensure that the operations of foreign investors had positive effects which contributed to the national
goals and development objectives of host government s.  Home governments’ policies could influence
the behaviour of their multinational enterprises.  It was important, therefore, that home-country
governments undertook obligations to ensure responsible behaviour of multinational enterprises.WT/WGTI/M/20
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88. The joint paper was an initial reflection of views of the co-sponsors with regard to the issue of
achieving a balance of interests between home- and host-country governments as emphasized in the
Doha Ministerial Declaration.  The co-sponsors of the paper reserved their right to further elaborate
on all the relevant issues in this regard.  This subject was of particular interest to the co-sponsors of
the paper, and he looked forward to a substantive discussion on this subject in the Working Group.
89. The representative of China observed that his country attached great importance to FDI for its
economic development.  Since 1979, when China first adopted its policy of economic reform and
opening to the outside world, to the end of 2001, China had made use of an accumulated stock of
US$512.3 billion of FDI, and had became the largest absorber of FDI among developing countries for
the last nine years.  FDI had on the whole played a significant role in China's national economy.  It
had helped to a great extent to supplement the in adequacy of China's own financial resources for its
economic development, introduced some useful technologies, and raised the level of managerialskills.  On the other hand, it had also initiated certain negative economic and social effects on China's
development process, such as the crowding out of domestic enterprises.
90. He noted that these achievements could be entirely attributed to China's stable political and
economic environment, its constantly improved legal framework and physical infrastructure, as well
as its network of bilateral investment protection treaties with relevant countries.  Its achievements hadlittle to do with any multilateral instrument with regard to investment issues.  The Government of
China also took some necessary measures to address the negative side effects of the FDI.  By co-
sponsorship of this submission to the Working Group, his delegation by no means implied that China
would change its policies and practices with regard to foreign investment.  He hoped that this action
taken by China in the Working Group would not be misinterpreted, or send a wrong and unintendedsignal to the international community.
91. As illustrated in the report to be presented to the General Council, the Working Group had
during the last year discussed several issues on the relationship between trade and investment in
accordance with the mandate as laid down in the Doha Ministerial Declaration.  His delegation
believed this process was useful in order to clarify some basic elements that might be incorporatedinto possible negotiations on a multilateral framework on trade and investment, should an explicit
consensus be reached before Cancún.  The Doha Ministerial Declaration also provided that "any
framework should reflect in a balanced manner the interests of home and host countries, and take due
account of the development policies and objectives of host governments as well as their right to
regulate in the public interest" and that "the special development, trade and financial needs of
developing and least-developed countries should be taken into account as an integral part of any
framework".  Politically, economically, commercially and legally speaking, an agreement reflecting abalanced treatment of all relevant elements of interest to all constituencies would represent an
important prerequisite for any possible explicit consensus on the modalities for any negotiations that
might be launched after Cancún.  This submission represented a concrete step to realize such an
objective, and that was why China had decided to join it.
92. The representative of Japan noted that as the globalized of economic activities evolved, it was
reasonable to expect responsible behaviour from investors and multinational enterprises, as they
increasingly operated across borders and jurisdictions.  His delegation understood the concerns of
developing countries regarding the operations and conduct of multinational enterprises and foreign
investors.  Having said that, Japan had somewhat different views as to how to ensure their responsible
behaviour.  His delegation was not in a position to support the idea of binding rules.  Rather Japanbelieved in the freedom of investors and multinationals to operate, but within the domestic laws and
regulations of host countries, and in accordance with  international guidelines of corporate behaviour
as set out in instruments such as the OECD Code.  This concept had already been discussed at the
Working Group's meeting in September by a number of delegations, including the EC, to which Japan
associated itself.  In this regard, his delegation wanted to make several points.  First, he pointed outWT/WGTI/M/20
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that host countries were free to institute domestic laws and regulations to achieve policy objectives,
including rules to control the behaviour of multina tional enterprises or foreign investors.  There was
no reason to discriminate between foreign and domestic firms in terms of the application of domestic
laws.  Second, even if one assumed there was a case for binding home-country obligations, the issue
arose as to whether such obligations would have an y meaning in international law.  Third, there were
also important legal questions raised by the possibility of the extra-territorial application of domestic
laws to investors and corporations operating in foreign countries.  Fourth, there was the practical
matter of whether and how home countries could actually enforce any binding obligations that might
be developed.  The fact remained that home-country governments were not well placed to monitor or
control all the foreign activities of their investors or corporations.
93. Finally, Japan disagreed with some of the points raised in the joint submission about
performance requirements.  It was clear not only that the imposition of many performancerequirements was inconsistent with the TRIMs Agreement, but, as argued by his delegation on
previous occasions, such requirements often undermined the very economic and development
objectives for which they were designed.  A more effective development strategy was to improve the
competitiveness of indigenous industries and the quality of domestic products and services, so that
investors had an incentive to locate and expand their operations in host countries.  His delegationpointed out that China, in its accession to the WTO, had undertaken not to introduce performance
requirements, and he believed that this decision would have a positive impact on China's
attractiveness to foreign investors.
94. The representative of Canada drew somewhat different conclusions about the UN Centre for
Transnational Corporations (UNCTC) Code.  Her de legation had no desire to re-kindle the debate,
other than to observe that many of the ideas associated with it were fundamentally hostile to benefits
that private investors could bring when they invested, and to market-based responses to economic
growth and development.  Nonetheless, like many Members, Canada shared the concerns about a
number of issues raised in the paper.  Indeed, whether it was with respect to general principles,
restrictive business practices (which, as an aside, her delegation felt fell under the rubric ofcompetition policy), technology transfer, balance-of-payments, consumer and environmental
protection, or disclosure and accounting, Canada believed that to varying degrees all governments, not
just home governments, had a role to play.
95. Her delegation also noted that some important issues had not been raised in the paper,
including bribery and corruption, and employment and labour standards, which were part of a broad
package known as the revised OECD guidelin es for MNEs which had been issued in 2000.
Delegations recalled that these guidelines were the subject of a presentation by the OECD to theWorking Group in 2001 (WT/WGTI/W/93).  At this stage, it could simply be observed that home
countries already encouraged corporate social responsibility, covering a whole host of issues on the
part of their investors regardless of where they invested.
96. It should also be recalled that other stakeholders, aside from investors and home and host
countries, had been involved in this debate.  Shareholders, as well as non-governmental organizations,had performed a valuable function in this regard, an d could be expected to do so in the future.  For
instance, many shareholders and institutional investors had already made a strong case for triple-
bottom-line reporting on social and environmental issues, as well as financial issues.  There was a
realization that this − and other mechanisms to ensure corporate responsibility − was in the long term
interest of the firm.  And, of course, consumer and environmental NGOs remained vigilant over the
trade implications of the Working Group's work.
97. It was also important to recall that the codes - such as the OECD's Guidelines and the UN's
Global Compact − were not a substitute for law, nor for weak or unobserved legislation at the
domestic level.  In the absence of enforceable and enforced domestic frameworks, the politicalWT/WGTI/M/20
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problems associated with developed countries imposin g laws in other jurisdictions on such issues as
competition policy, environment policy, bribery and corruption, labour and employment standards,
and other issues could prove problematic.  Furthermore, the WTO might not be the optimal institution
to consider the broader governance questions that such a debate would inevitably entail.  Having said
that, Canada remained ready and willing to assist  any host-country government wishing to enhance
domestic frameworks on this issue, as well as to promote the observance of similar norms by host-
country firms as they increased inve stment abroad in their own right.
98. With respect to restrictive business practices, Canada supported the establishment of a WTO
agreement on competition policy.  Such an agreement could include inter alia  commitments to the
core principles of non-discrimination, transparency, and procedural fairness, to combat hard-core
cartels, and a flexible framework for voluntary cooperation.  It could also give consideration to many
developing and least-developed countries, recognizing that not all WTO Members currently hadcompetition policy regimes.  These were many of the same elements that were captured in
UNCTAD's set of multilaterally agreed principles on restrictive business practices.  Her delegation
believed that the work plan currently being undertaken in the WTO Working Group on the Interaction
between Trade and Competition Policy could advance many of these goals.
99. With respect to technology transfer, a regulatory approach, which aimed to rectify perceived
inequalities between technology owners and recipients through forced technology transfers − e.g., by
means of performance requirements − was ineffective.  WTO Secretariat analysis had identified the
major barriers to technology transfers to developing countries as:  lack of access to information aboutthe full range of technological alternatives; inabil ity to identify a technology best suited to needs;
limited access to finances; inadequate level and quality of education and skills; insufficient linkages
between universities and research institutes on the one hand, and industries on the other; regulatory
constraints; market distortions; and weak and insufficient institutions.  Submissions to the Working
Group on the Relationship Between Trade and Technology Transfer had largely substantiated thesemessages.  Similarly the World Bank had pointed to qualitative gains in terms of technology diffusion
and total factor productivity that could result from  an open trading environment, particularly between
developed and developing countries.  Throug h case studies of its own, UNIDO had further
substantiated the Secretariat's work on successful private-sector focussed and market-driven
approaches to technology diffusion.  It was her delegation's view that technology policy should not beviewed in isolation from other policy goals or tools.  National policies did have a role to play in
successful technology transfer.  However, the price of too heavy a public policy hand could be all too
real, whether measured in terms of reduced technol ogy transfers or diminished FDI and other flows.
As her delegation had noted in the Working Group on Trade and Technology Transfer, Canada's
experience suggested that general business framework policies provided a critically important
underpinning to all other efforts to support techno logy transfer.  Such policies included intellectual
property protection, competition policy, and regulatory transparency.  Many of these policies could be
furthered in the context of WTO obligations.
100. Regarding balance-of-payments, it was generally agreed that rights accorded under
international trade and investment arrangements should not unduly destabilize a country's balance-of-
payment situation.  Nor should these rights be inconsistent with obligations under the IMF Articles of
Agreement.  A balance-of-payments provision was therefore an important component of the Working
Group's discussion of possible exceptions in an in vestment agreement.  Exceptions which would
facilitate redressing a temporary balance-of-payments problem existed in many trade and investment
agreements, including those to which Canada was a party.  To be effective a balance-of-payments
provision needed to be transparent and predictable, and to be based on procedures of consultation and
notification.  In this respect, the balance-of-pay ments provisions of the GATT and the GATS, which
were often reproduced or modified in regional and bilateral agreements, could usefully serve as a
model in an investment context.  In focussing on selected aspects of FDI, however, her delegation felt
that the joint paper unfortunately suggested that the overall effect of FDI was negative on the balance-WT/WGTI/M/20
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of-payments, and ignored the significant positive balance-of-payments effects.  Canada was of the
view that the key issue associated with FDI and balance-of-payments was the effect on current
accounts over time, and the contribution that FDI made to possible long-term outcomes and
sustainable balance-of-payments positions.  The paper proposed a range of solutions to balance-of-
payments problems that could well lead to less foreign investment, not more, and exacerbate, ratherthan improve, the host countries' situation.  In this regard, her delegation was very concerned about
any government policies that would direct firms to use domestically sourced inputs.  Canada believed
that this would be inconsistent with existing TRIMs obligations.  Canada supported the discussion of
a balance-of-payments provision in the investment context, but believed it needed to be based on −
and perhaps linked to − existing balance-of-payments provisions.  Her delegation had serious doubts
about imposing other types of restrictions to deal with balance-of-payments problems because it could
have a significant negative effect on foreign investment.  Other types of measures, such as GATS
treaties, were more appropriate.
101. She concluded by noting that one of the key reasons underlining Canada's support for the
launch of negotiations on a multilateral investment framework in Cancún was that the net effect ofinvestment liberalization would be economic growth and development.  Indeed, Canadian firms made
an important contribution to the development of the economies in which they operated.  Many of
these firms operating internationally already used codes of conduct or other business ethics in their
operations.  Canada believed that voluntary initiatives could contribute to and advance public policy
objectives in a way that was more easily accommodated to changing circumstances, that encouragedinnovation, and that were less costly to administer than regulation.  Moreover, they could be used to
go beyond the minimum standards set by law.  The inclusion of provisions on investors and home
governments' obligations in a prospective multilateral framework would be a second best and
ineffective policy instrument.  Instead of securing transparent, stable, and predictable conditions for
long-term cross-border investment, such provisions  would deter foreign investment, thereby lowering
the prospects for economic growth and development.
102. The representative of Costa Rica noted that his delegation did not yet have a well defined
position on the issue of investors' and home countries' obligations.  From a first reading of the
document, three questions arose in relation to the subject.  The first question was the extent to which
such obligations would be binding.  How might such obligations relate to implementation provisions,in particular the Dispute Settlement Understanding?  What type of penalties would be established?
Would it be solely a framework for intergovernmental cooperation?  If obligations were established
for investors, how was this situation to be reconciled with the intergovernmental nature of the WTO?
103. Second, his delegation wished to draw attention to the relationship between these proposed
rules and an agreement on competition policy in the WTO.  Costa Rica recognized that the proponents
had taken this factor into account in paragraph 13 of their communication.  However, where would
the line be drawn between these provisions and a WTO agreement on competition?
104. Third, on the subject of home country obligations, his delegation would like to know the
different proponents' views about the types of provisions and commitments that might be undertaken
by developing countries and whether they thought that these should differ from those undertaken by
developed countries.  His delegation asked this question taking into account the fact that developing
countries had, little by little, become a source of FDI and therefore a home country to multinationalenterprises.
105. The representative of Kenya noted that his delegation, as co-sponsor of the paper, had
attempted to draw up some preliminary thoughts on the question of investors' and home governments'
obligations.  His delegation wished to make it clear from the outset that this initiative should not be
construed as implying that Kenya was enthusiastic about proposals for a multilateral framework oninvestment.  These preliminary thoughts were only triggered by the fact that the proponents of aWT/WGTI/M/20
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multilateral framework on investment had been seeking binding rights for foreign investors that host
country governments would agree to provide, while nothing had been proposed in terms of binding
obligations of investors or home governments.  The joint paper, therefore, was an attempt to inject
some balance into the debate on the relationship between trade and investment, in order to enhance
Members' understanding of issues.
106. His delegation believed that any multilateral framework on investment had to be balanced
one, defining the rights and obligations of all the actors involved − i.e., the host country, the investor
and the home country.  The importance of this balance had been recognized in Paragraph 22 of the
Doha Ministerial Declaration, which stated in part that: "any framework [on investment] should
reflect in a balanced manner the interest of home and host countries, and take due account of thedevelopment policies and objectives of host governments as well as their right to regulate in the
public interest.  The special development, trade and financial needs of developing and least-developed
countries should be taken into account as an integral part of any framework, which should enable
Members to undertake obligations and commitments commensurate with their needs and
circumstances."
107. His delegation highlighted the fact that FDI flows were generally undertaken by multinational
enterprises and that, given their global operations and massive financial power (some exceeded the
GDP of the host countries), developing and least-developed countries faced limitations in regulating
their conduct.  In this respect, the benefits of FDI could not be taken for granted.  The extent to which
FDI contributed to development goals depended on many factors including the right of the host
governments to regulate and monitor investments in a manner that led to social and economic
development and minimized the negative impact.
108. The limitations of national regulations in dealing with the operations of multinational
enterprises had been recognized, and a number of steps had been taken by the international
community to establish codes of conduct for MNEs.  Such steps included the UN code of conduct on
TNCs;  attempts by the UN to establish international code of conduct on transfer of technology under
the auspices of UNCTAD;  and the OECD Guidelines on International Investment and MultilateralEnterprises.  However, almost all the existing attempts by the international community to evolve
codes of conduct for MNEs remained voluntary in na ture.  And yet the growing internationalization of
corporate activities since the 1990s had highlighted a number of issues that needed to be addressed
through legally binding instruments.  These included restrictive business practices; the manipulation
of transfer prices;  restrictions on transfer of technology;  cases of corrupt corporate practices andfraud;  financial crises triggered by speculative investments in financial markets;  effects of the
operations of MNEs on balance-of-payments; consumer protection;  ownership and control;  and the
need to define home governments' obligations that could contribute in a positive way to the
development goals of the host country.
109. The joint paper gave the Working Group an important opportunity to reflect carefully on
these issues − a process which Kenya believed should not be undertaken in isolation.  These issues
should be placed squarely in the context of curren t instruments including existing draft codes.  Also,
account should be taken of other international and regional organizations that dealt with investment
issues in order to ensure coherence among all the international actors.
110. The representative of Mexico suggested that the Working Group needed to be very careful in
the way it dealt with the subject of regulating corporate responsibility since, as his delegation had
noted on other occasions, this was not an element considered in Paragraph 22 of the Doha Ministerial
mandate.  It was of fundamental importance that Me mbers read into the content of those paragraphs
nothing more than Ministers themselves had stated.  It should also be kept in mind that to include a
subject of this kind could overload the work agenda, which was already quite complicated.WT/WGTI/M/20
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111. He suggested that it was dangerous to try to use – as has happened in other forums – a
possible agreement on investment as a means of trying to overcome concerns that had their proper
place either in other international forums or in other working groups of the WTO itself.  In addition,
as Canada had pointed out, such measures should not be considered substitutes for domestic
legislation.
112. As for home countries' obligations, his delegation believed that this could lead to a conflict of
interests that would not only affect the MNEs themselves but also the countries receiving investment.
The fact that the home countries might impose specific regulations on their enterprises that operated
abroad might lead to a conflict over the application of the rules and consequently, might inhibit
investment.  That would not, under any circumstances,  benefit developing countries.  Finally, Mexico
agreed with Japan's comments with regard to paragraph 17 of the joint document.
113. The representative of Hong Kong, China observed  that Paragraph 22 of the Doha Ministerial
Declaration had not specifically included investors' and home governments' obligations as elements to
be clarified in the Working Group.  However, as China had pointed out, Paragraph 22 had provided
that "any framework should reflect in a balanced manner the interests of home and host countries".
Hong Kong, China had no difficulty with discussing the subject in the Working Group to facilitate
Members' consideration of whether − and if so, how − any relevant obligations should feature in a
possible multilateral investment framework.  His delegation kept an open mind and encouraged
Members to exchange their views.
114. Hong Kong, China had some preliminary observations: First, regarding restrictive business
practices, as Japan and others had noted, this subject was also being discussed in the Working Group
on the Interaction between Trade and Competition Policy.  In order to minimize duplication of workand to have a more focussed discussion on the subject, his delegation thought that Members should
consider whether the matter would more appropriately be followed up in the other Working Group.
115. Second, on balance of payments, he recalled that Members had had a good exchange of views
on the subject at the Working Group's September meeting.  One view expressed in Korea's paper
(WT/WGTI/W/143) was that provisions on the free transfer of payments were core elements forinclusion in the possible multilateral investment fr amework given that an investment could hardly be
considered protected unless the host country had committed itself to permitting the free transfer of
payments related to the investment in question.  That view could, to a certain extent, be contrary to the
theme of the joint paper − i.e., that foreign investors should be obliged to follow the host
government's policies towards a healthy balance-of-payments situation and to contribute to this
objective.
116. Hong Kong, China considered that both views had their respective legitimate policy intents.
What his delegation wanted to find was an appropriate balance between rules guaranteeing the free
transfer of investment on the one hand, and the host country's desire to protect itself from balance-of-
payment difficulties, on the other.  Further discussion on this issue was essential.
117. Third, on home governments' obligations, paragraph 21 of the joint paper presented the view
that home government should also undertake obligations to ensure that investors' behaviour and
practices were in line with − and would contribute to − the interests, development policies and
objectives of host Members.  This implied that the policies of home governments would apply to
MNEs that originated in their territories and that were invested in another Members' territory.  As a
preliminary thought, such application of home government policies to their investors in another
country might raise a number of issues, including:  the need to define the territorial identity of MNEs
under the current highly globalized investment en vironment where the ownership of MNEs might be
widely dispersed among shareholders residing all over the world; the legal and practical difficulties of
holding MNEs responsible for their behaviour in other countries through home government policies orWT/WGTI/M/20
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regulations;  the operation mechanism for gathering hard evidence of MNEs' investment behaviour by
the home governments without unnecessarily intruding into the internal affairs of host countries.
118. As the joint paper had correctly pointed out, all existing attempts to develop codes of conduct
for MNEs were voluntary in nature.  He noted that it would be breaking new ground if a set of
multilateral rules on investors' and home governments' obligations were to be developed in the WTO.Hong Kong, China saw merit in approaching the subject with an open mind and careful assessment on
its implications as well as its pros and cons.  His delegation looked forward to further exchanges
among Members.
119. The representative of the United States noted that his delegation could only offer a
preliminary response to the joint paper on "Investors' and Home Countries' Obligations", and he
looked forward to discussing this and other cont ributions during the next meeting of the Working
Group.  He suggested that the proposals in the paper reflected a perspective on how best to enhancethe contribution of MNEs to development with which the United States fundamentally disagreed.  His
delegation did not object to national regulation of domestic and foreign investment, which the United
States itself practiced.  His delegation also understood that developing countries would want to do
what they could to maximize the benefits of foreign investment.  But the proposals in the paper went
much too far.  In some respects, they sought to  turn foreign private corporations into tools of
industrial policy.  If these proposals were implemented, his delegation believed they would severely
chill investment.  Private firms would be unwilling to subject themselves to the kinds of requirements
envisaged in the paper.  They would choose to stay at home or seek opportunities in economies that
did not impose equivalent requirements.  At a time when the vast majority of developing countries
were attracting too little rather than too mu ch investment, these proposals would be highly
counter-productive.
120. His delegation wished to comment on several other elements in the joint paper.  First, he
believed the paper overstated the power of multinational corporations.  It recited some familiar claims
about the excessive economic power of MNEs rela tive to developing country governments, but
offered little, if any, evidence to support these claims.  In tiret 2, the paper referred to "the negativeeffects of the FDI activities by MNEs", but it did not describe these effects in any detail.  In tiret 1 and
elsewhere, the paper referred to the global scale of operations of MNEs, their presumed ability to
avoid taxes and circumvent financial regulations, their control over technology, their bargaining
leverage, and their manipulation of prices and ability to engage in other restrictive business practices.
But the paper offered no data or evidence on the frequency of these restrictive business practices, nor
did it describe in any detail the consequences of these practices and MNE features for the welfare of
developing countries.
121. In tiret 6, and indirectly in tiret 22, the paper cited the recent cases of corporate fraud
involving United States-based corporations as evidence of the problems caused by the absence of an
enforceable global code of conduct for MNEs.  His delegation did not find this argument persuasive.
It seemed highly unlikely that even a binding co de of corporate conduct would have prevented the
alleged abuses of these corporations.  Furthermore, these cases actually made a very strong argumentfor the adequacy of national-level policing of corporate conduct.
122. The paper also cited the late 1990’s financial crises in support of its argument for legally
enforceable investor and corporate norms of conduct, but here, too, his delegation did not believe the
relationship between the problem and the solution was well-established.  The fact that private capital
was able to flow rapidly both into and out of certain emerging market economies, precipitatingfinancial crises, was foremost an indictment of policies, not of investors and corporations.  But
concern about volatile capital flows could be met much more effectively through improved bank
regulation, prudential standards, and other safeguards.  The problem was not short-term capital, but
weak oversight and poorly developed bank regulation.  The solution was better financial supervisionWT/WGTI/M/20
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and surveillance, such as through standards developed by the Financial Stability Forum which was
established shortly after the Asian financial crisis to strengthen international financial cooperation.
123. It was not clear to his delegation precisely wh at was the problem with corporate power that
the proposals in this paper were meant to address.  The paper made no effort to describe the frequency
of the abuses it attributed to MNEs or the consequences either of those abuses or of excessivecorporate power more broadly.  His delegation would also add that no effort to analyze these matters
in greater detail would be credible without some effort to weigh any adverse consequences against the
overall benefits of foreign investment, which he believed were significant.
124. This raised the second issue his delegation wished to address, which related to the capacities
of developing countries.  This paper painted an inaccurately weak portrait of developing countries in
their dealings with MNEs.  If this were ever the case, it was certainly less so today.  As Members
were aware, MNEs could only establish themselves in a country, under conditions set by theappropriate regulatory authorities of that country’s government.  Once established, MNEs were fully
subject to the laws and regulations of the host country.  If those laws and regulations were transparent
and were implemented fairly and with adequate notice, there was very little that most home country
governments could or would do to help a home-country corporation that ran afoul of the laws or
regulations of their hosts.
125. In this regard, it was critical for Members to note that, outside of the TRIMs Agreement, there
existed relatively few multilateral disciplines on the treatment of foreign investors by host country
governments.  Yet as the paper pointed out, there were in effect today a number of voluntary codes
relating to the conduct of corporations in their foreign operations.  Furthermore, several Members of
the WTO had enacted laws that prohibited domestically-based corporations from engaging in corruptor abusive practices in their foreign operations.  In their dealings with each other, it was arguable that
corporate investors, not governments, faced the more substantial set of multilateral constraints.
126. His delegation's third major concern about the paper was its suggestion that the jurisdiction of
the WTO should be extended both to the activities of private corporations and to the policies of home
governments in relation to the foreign conduct of their corporations.  The United States firmlybelieved that the WTO lacked both the competence and the resources to take on these responsibilities.
He reminded Members, in that regard, that any co mmitments Members were to make with respect to
the foreign conduct of home-based corporations w ould be reciprocal.  Corporations based in many
developing countries – including several of the countries that submitted this paper – had been rapidly
expanding into foreign markets in recent years.  These countries needed to reflect on the possibility
that their supervision of the foreign conduct of th eir own MNEs would be under scrutiny, and subject
to challenge within the WTO, if the proposals in this paper were adopted.
127. The suggestion that the WTO take on these issues also presupposed that Members could agree
on a code of conduct for MNEs.  His delegation doubted that this would be possible, in practice and
he cited some examples for this reasoning.  Tiret 17 proposed several binding obligations relating to
the balance-of-payments.  One suggested that invest ors should be required to "apply fair pricing
policies in intra-corporate trade and curb transfer pricing manipulations".  It was difficult to imagineMembers of the WTO reaching agreement either on the meaning of these terms or on a methodology
for evaluating compliance.  Another suggested that investors should be required to "contribute to the
promotion and diversification of exports and to increased utilisation of goods, services, and other
resources available locally".  This was a proposal, of course, for the restoration of trade-related
investment measures, which all WTO Members pledged to eliminate under the TRIMs Agreement in1994.
128. These two examples alone – and his delegation could have cited others – clearly suggested
how difficult it would be to conclude an agreement on a code of corporate conduct in thisWT/WGTI/M/20
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organization.  His delegation also argued that this kind of exercise would require a highly detailed and
sophisticated understanding of a wide range of corporate practices, standards, national regulations,
and international conventions.  WTO delegations and the WTO Secretariat lacked expertise in these
areas.
129. He made several other points about specific parts of the paper.  Tirets 15 and 16 proposed
measures relating to the transfer of technology.  The United States again stated its unqualified
opposition to any proposal to mandate the international transfer of technology under any agreement
concluded in the WTO or elsewhere.  Commercially  applicable technology was almost exclusively in
private hands in the United States, as it was in most free-market economies.  The United States
Government was neither able, under US laws, nor willing to require private actors to hand technology
over to other private actors or governments on a non- commercial basis.  Technical assistance, other
forms of development cooperation, and technology transfer incentives were another matter, and theUnited States had committed in several WTO and other agreements to support measures in these
areas.
130. Tiret 20 addressed the issue of the disclosure of corporate finances.  Here again his delegation
wished to state its strong opposition to any proposal to require broad disclosure of the financial
records of private firms or individuals, particularly a requirement that related to transactions, as thepaper put it, "not only within the host member but with reference to all other transactions of the MNE
which may impact in some way or another on host members’ operations".  His delegation again urged
developing country Members whose corporations we re now moving abroad to think about whether
they would want to subject their corporations to such a sweeping and open-ended disclosure
requirement.  It should also be recognized that reasonable reporting requirements could beincorporated into their domestic regulations and that there was no need to have a one-size-fits-all
obligation in an international agreement.  Each country should decide for itself what type of
information it felt was important enough to spend the resources in collecting and reviewing.
131. The representative of the European Communities did not agree with the view that an
international investment agreement would only impose obligations on host governments and grant
rights to foreign investors.  His delegation was not proposing new rights for foreign investors.  It was
proposing a basic framework to be implemented by all WTO Members on non-discrimination and
transparency.  Foreign investors were first of all subject to the laws and jurisdiction of the country in
which they operated, with or without an investme nt agreement.  An investment framework would
simply improve the transparency of conditions for foreign investors and include principles of non-
discrimination.  It would not prejudge the host c ountry's right to regulate.  Thus, any obligation on
investors to comply with the laws and policies of the host countries did not need a multilateralagreement since they already applied.
132. As a general point, it was in the interest of every country, developed and developing alike, to
open its economy to FDI.  Opening up by a host country to FDI in any given sector could not be seen
as a concession to be paid by home countries.  On the contrary, it was in the interest of the host
country to liberalize the entry of FDI.  If a host country wished to keep its economy closed to FDI or
to impose burdensome conditions on the entry and operation of FDI, it had the right to do so.
133. His delegation wished to clarify another matter .  China and India were home countries as well
as hosts to FDI.  The question arose as to whether the proponents were prepared to accept themselves
− and on behalf of their investors − the obligations on home countries and investors that were
proposed in their paper (e.g., the draft UN Code and the OECD guidelines)?  Would China and India
accept that an internationally binding code would impose on them and on their investors certain
specific rules of behaviour regarding environmenta l standards, for instance, or on employment and
industrial relations (as included in the OECD guidelines)?WT/WGTI/M/20
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134. Regarding restrictive business practices, the submission stated that "competition policy at the
national or international level will take care of the anti-competitive practices".  The EC fully agreed
with that statement, just as his delegation had argued that a WTO framework agreement on
competition could go a long way towards achieving that end.  However, he noted that the submission
did not answer whether the drafters agreed or not with the role competition policy could play.
135. As regards the UNCTAD set of multilaterally agreed principles, the submission noted that it
was not a binding instrument and was thus non- enforceable.  It should be noted, however, as
UNCTAD had acknowledged, that most developing countries had yet to implement that set of
principles.  Moreover, Section E of the set of principles essentially spelled out an obligation to have a
legal framework which was non-discriminatory, procedurally fair and transparent;  that there should
be cooperation between competition authorities;  and that confidential information should be
protected.  The submission did not mention this aspect of the UNCTAD principles.  He wondered
whether the proponents were ready to adhere to − and fully incorporate − all sections of the set of
principles?
136. His delegation also noted in paragraph 14 of the joint paper that the predominant anti-
competitive practice mentioned was that of hard-c ore cartels (i.e. price fixing, bid rigging, output
restrictions and market allocation schemes).  These were exactly the practices which the EC had long
been arguing should be prohibited in a WTO agreement as they were the most pernicious violations of
competition law.  He asked whether this meant that the proponents would agree with what was being
proposed in the Working Group on the Interaction between Trade and Competition Policy by the EC
and others on hard-core cartels?
137. His delegation noted that the authors of the joint paper seemed well aware of the various
international initiatives (including the OECD guid elines for multinational enterprises) intended to
regulate the behaviour of MNEs.  Their main concerns appeared to be that these instruments were of a
non-binding nature.
138. He also noted that all EU-Member states had, as members of the OECD, adhered to the
OECD Guidelines for Multinational Enterprises,  thereby committing themselves to promote
responsible corporate behaviour world-wide, consistent with existing legislation of host countries, and
to set up National Contact Points.  Furthermore, after the 2000 Review, the OECD Guidelines now
contained far-reaching changes that reinforced the economic, social and environmental elements of
the sustainable development agenda.  Hence, the OECD Guidelines now included all internationally-
recognized core labour standards, recommenda tions on human rights, sections on combating
corruption, extended consumer – and environmental protection, and updated chapters on disclosure
and transparency.  The 2000 Review also improv ed the implementation mechanism with enhanced
guidance to help National Contact Points to carry out their duties, and it had established mechanisms
for promoting transparency, accountability and best practice.
139. His delegation fully recognized the need for home and host countries to cooperate and to
exchange information.  However, it was not realistic to expect home governments to be held legally
responsible to ensure the responsible behaviour of their corporations.  Such an assurance would
require binding laws and regulations, which would have to be monitored in order to be enforceable.
He argued that it would be extremely difficult for a home country to enforce and monitor such
regulations without interfering with − and limiting − the host country's right to regulate.  Moreover,
home country measures, as proposed in the paper, seemed to refer to some kind of extraterritorial
jurisdiction of domestic laws by home countries, which his delegation believed was unacceptable
under international law.
140. It was therefore questionable why such provisions would be desirable from the host country's
point of view.  The current debate on corporate social responsibility had moved on from a too simpleWT/WGTI/M/20
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dichotomy between non-binding versus binding instru ments, towards the more challenging objective
of achieving the effective implementation of comm itments and verification mechanisms in order to
ensure compliance with the principles of good behaviour.
141. The representative of Brazil said that sin ce the joint paper was still being examined by
capital-based officials, her delegation would comment at a later date.
142. The representative of Korea noted that the joint paper tackled complicated and complex issues
which needed to be reviewed carefully from the broadest perspective.  In this sense, his delegation's
comments were limited to raising questions for further consideration, without prejudging any position.
First, his delegation recalled the mandate set out in Paragraph 22 of the Doha Ministerial Declaration
instructing  that "any framework should reflect in a balanced manner the interests of home and host
countries".   It was his delegation's view this principle should be at the core of any multilateral
investment agreement.  Korea also highlighted the importance of the non-discriminatory applicationof general principles to foreign, as well as to domestic, companies.  He understood by this that
additional burdens should not be imposed on foreign investors only, and that burdens should be
reasonable, feasible, fair and predictable.  This would increase the opportunities for higher levels of
FDI in host countries.
143. With respect to restrictive business practices, he noted that this matter was closely linked to
the work currently being undertaken by the Working Group on the Interaction between Trade and
Competition Policy.  It was important to identify any common themes and issues in the two Working
Groups in the future discussions.  Regarding balance-of-payments, Korea wondered whether in a
prospective investment agreement further guidelines should be introduced which went beyond the
IMF Articles of Agreement, given that most WTO members were also members of the IMF, and theyhad already agreed to IMF principles.  Regarding ownership and control, it was Korea's view that this
matter should be discussed in connection with negotiations on market liberalization for investment.
As regards consumer and environmental protection, Korea supported the view that MNEs should pay
due regard to effective consumer and environmental protection, keeping in mind that unreasonable
burdens should not be imposed on the private sector.  Regarding home governments’ obligations, his
question was whether − given the limited role of government in a market economy − this ambitious
idea was practical and realistic.  In conclusion, Korea welcomed the discussion on this matter, and
believed that the OECD Guidelines on International Investment and Multinational Enterprises, as well
as other related codes, would provide useful guidance for future consideration.   
144. The representative of Australia noted that although many of the views set out in the joint
paper were consistent with OECD Guidelines on International Investment and Multinational
Enterprises, and that Australia supported the need to consider obligations extending to investors and
home countries, his delegation was of the view that any such obligations should be voluntary.
Previous experience suggested that it would be difficult to reach a consensus on a binding agreement,
and that any binding code of conduct could be used as yet another reason not to invest.  His delegationreserved the right to return to this issue at a later date.
145. The representative of Cuba noted that while her delegation co-sponsored the paper, this in no
way pre-judged Cuba's position of the work of th e Working Group in light of the Doha Development
Agenda.  Her delegation felt it was important that the debate be broadened to take into account
questions which, although not explicitly stated in Paragraph 22 of the Doha Ministerial Declaration,were nonetheless pertinent given the mandate that any framework "should reflect in a balanced way
the interests of home and host countries, and take due account of the policies and development
objectives of host governments, as well as their right to regulate in the public interest".
146. These were questions and concerns for many developing countries − which were
fundamentally host countries for foreign investment, rather than home countries.  The Working GroupWT/WGTI/M/20
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needed to explore how to ensure or guarantee that multinational enterprises that invested in
development countries had a positive impact on their economic development goals.  She took note of
the comments from delegations which represented home countries.  Her delegation's point of view
was that there were legitimate questions that required a balanced debate, and for this reason Cuba was
in favour of continuing this work.
147. The representative of Switzerland noted that the proposal raised many difficult issues
conceptually and methodologically.  The extraterritorial implications of home government obligations
in particular were viewed by his delegation as problematic.  He pointed out that a number of issues
raised in the joint paper referred to the policies to be implemented by host countries, while many
Members of the Working Group were requesting greater policy flexibility.  His delegation believed
that the issue of restrictive business practices would be best dealt with by national legislation, as well
as internationally in the Working Group on the In teraction between Trade and Competition Policy.
He also saw issues of consumer and environmenta l protection falling within the realm of national
legislation, with all the flexibility that was provided for at that level.  Regarding disclosure and
accounts, his delegation believed that host countries' laws should apply.  He also noted that the issues
of technology transfer and home country obligations were too complex to be captured in multilateral
rules.
148. The representative of Argentina suggested that the joint paper touched on a subject which was
of importance to his delegation − namely the search for an appropriate balance between rights and
obligations, both for states and investors.  It was clear that national governments should have
authority and freedom to regulate in the public intere st.  But it was also clear that international rules
and legal regimes could define or influence countries' policy flexibility, sometimes in unforeseenways.  This tension was even more significant in instances where foreign investor had recourse to
arbitral bodies or international jurisdiction owning to a lack of guarantees in national jurisdictions.
149. Argentina concurred with those delegations wh ich argued that it should suffice to apply
domestic legislation and the guarantees given by national tribunals to rule on abusive practices.
However, this right to regulate should be sufficie ntly guaranteed in any prospective multilateral treaty.
His delegation also thought it was important to analyze carefully the feasibility of establishing home
country responsibility for private investors in a treaty.  However, treaties should not necessarily
contain responsibilities to be borne by a foreign investor.  Rather they should set out conditions or
minimum standards of conduct that must be met by the foreign investor in order to benefit from the
treaty.  His delegation had listened to arguments which suggested that any additional obligations orconditions imposed on foreign investors would diminish their incentive to invest.  Argentina did not
understand this argument.  Did it imply that in orde r to maximize foreign investment investors should
be allowed to operate in the absence of a legal framework − or that the foreign investor must have the
guarantee of impunity?  His delegation did not believe that this was the intent of those advancing this
line of argument but he wanted to draw out the logical implications of this position in order to makethe point.  As regards home county obligations, it was asserted by some that this raised intractable
legal difficulties, in particular difficulties of identifying corporate nationality.  However, he pointed
out that any investment treaty would cont ain criteria for identifying nationality.
150. The representative of Kenya, responding to the poin t that some of the issues raised in the joint
paper were being discussed in other working groups, suggested that he could see no difficulty in
analyzing subjects from various perspectives − and in different fora − as long as the appropriate
analysis was carried out.  Against the argument th at the paper's proposals might have a chilling effect
on foreign investment, his delegation doubted there was any empirical evidence to support this claim.The basic thrust of the joint paper was the need to  achieve a balance of obligations among investors,
host countries and home countries − thus maximizing the benefits of FDI and minimizing its negative
effects.  Nor did his delegation accept the argument that financial instability was the result of weak
domestic regulation, institutions, and oversight.  There were a number of examples of countries withWT/WGTI/M/20
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perfectly adequate regulatory frameworks which ha d been struck by financial crises.  Regarding
concerns that Members should not seek to overextend the resources or jurisdiction of the WTO, he
pointed out that this argument had not stopped proponents from urging the negotiation of a new
multilateral investment framework in the WTO.  If the WTO lacked expertise in certain areas the
answer lay in improving staffing decisions, not in resisting new issues or concerns.  His delegationcould not support the view that the issues raised in  the joint paper pitted developing against developed
countries − although it was true that the power of multinational enterprises was often felt more
strongly by developing countries.  The real objective of the joint paper was to achieve a better balance
in the obligations of host and home countries.  Regarding the argument that the issues raised in the
joint paper were too complex and sensitive, his delegation responded that the whole of the investmentdebate was very sensitive for many delegations.
151. The representative of China offered the following responses and explanations regarding
comments on the joint paper.  By submitting a joint proposal on investors' and home governments'
obligations, and by pointing out the necessity of regulating TNC activities, China in no way wanted to
convey a negative sentiment towards TNCs.  The paper's objective was to explore an appropriatebalance between home- and host-country interests, as mandated in the Doha Ministerial Declaration,
and to address any negative effects that TNCs might have on the development policies of the host
members, particularly the developing ones.  From this perspective, the co-sponsors of the submission
could actually be viewed as supportive of TNCs through efforts to provide as favourable an
environment for their investment operations as possible.
152. It was true that China had committed itself not  to impose TRIMs.  This commitment remained
unchanged.  However, delegations should recognize that the problems noted in the joint submissionhad nothing to do with China's obligations.  The paper did not address the problems faced by China,
but those faced by many other developing countries with regard to TRIMs − problems which had
already been revisited and reviewed on a case-by-case basis within the framework of the TRIMsCommittee.  This process demonstrated that many developing countries continued to face serious
difficulties implementing aspects of the TRIMs Agreement − and indeed TRIM was highlighted as
one of the outstanding "implementation" issues to be resolved by Members.  Moreover, there were
indications, from discussions of the Committee, that this issue seemed unlikely to be resolved in the
near future.  It was therefore absolutely necessary for the Working Group to touch upon these issuesas they were closely related to investment, and to the creation of a possible multilateral investment
framework in the future.
153. Every Member of the WTO was entitled to adopt its own domestic policies and measures
unilaterally − or as part of bilateral treaties − with regard to foreign investment in order to realize its
own development objectives, as long as these policies were consistent with relevant WTO disciplines.
In his earlier supplementary statement on the joint submission, he had listed all of the general reasons
for China's success in attracting FDI, as well as some specific policies and measures that China had
implemented in order to create an environment fav ourable to FDI.  If the Working Group were going
to discuss comprehensively a possible multilateral framework, it was important to bring all of the
relevant elements related to investment − including TRIMs, technology transfer, and competition
policy − into the picture, regardless of whether these issues were also being addressed in other WTO
bodies.  These issues had nothing to do with the domestic policies and measures adopted by Members
to encourage inward FDI.
154. Several delegations had suggested that the issue of investors' and home governments'
obligations was not listed in Paragraph 22 of the Doha Ministerial Declaration, and thus there was no
mandate to discuss the issue in the Working Group.  On this point China agreed with Switzerland that
the list of issues set out for clarification in Paragraph 22 was only an indicative list, not an exhaustive
one.  Moreover, Paragraph 22 also instructed Members to strike a balance between the interests ofWT/WGTI/M/20
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home and host countries − which justified the submission of proposals on investors' and home
countries' obligations for discussion by the Working Group.
155. He noted that one delegation had raised the question of whether obligations sketched out in
the proposals  would apply those activities of TNCs originating in developing countries.  China's
answer was yes − were such rules to be incorporated in a prospective multilateral framework.
Another delegation had suggested that certain TNCs operating in China had incurred losses.  While
this might be true, his delegation did not believe that this problem was relevant to deliberations on the
topic under discussion in the Working Group.  As an aside, he noted that making profits or losses
were normal in any investment situation, and the r easons varied.  Transfer-pricing in order to evade
tax, for example, might be one of the reasons for some "losses" incurred.  Moreover, regardless ofwhether losses were being incurred, these TNCs were still operating in China and FDI was still
flowing into China on a large scale.  He believed there must be some reason behind these inflows −
expectations of future profit and the long-term strategic goals might offer some explanation.
156. The representative of India, in responding to comments and questions about the joint paper,
noted that his delegation would examine the points raised in greater detail, both in Geneva and in
capital, and would respond appropriately at a future meeting.  India also looked forward to further
debate on the subject and more contributions from Members.  At present, he would confine himself to
making only broad comments on a few of the issues raised.  One set of issues related to investors’obligations and those of home countries.  There was a view expressed by some delegations that
investors’ obligations should be voluntary in nature.  There was another question on how binding
rules could be enforced for investors, the WTO being a Member-driven organization.  There were also
several comments on home country obligations, relating to limitation on the role of the home
governments in market economies and the implications of extra-territorial application of law.
157. In response, his delegation pointed out that many WTO agreements had a direct impact on
private business activity.  The TRIPS Agreement, for example, contained a set of provisions enforcedthrough domestic law by countries which impinged on private business.  The Anti-Dumping
Agreement and the Subsidy and Countervailing Measures Agreement similarly related to multilateral
provisions impinging on private business activity in an extra-territorial manner.  Even some of the
provisions under Article XX of GATT had been imposed in an extra-territorial manner.  His
delegation thought, therefore, that it would be possible for the Working Group to find solutions thatfell within the framework of the WTO's multilateral system of rules.
158. Another set of issues related to the nature of the suggestions made in the joint paper and their
relevance in the context of the Doha Ministerial Declaration.  He reminded all Members that
Paragraph 22 of the Doha Ministerial Declaration very clearly provided that "any framework should
reflect in a balanced manner the interests of home and host countries and take due account of thedevelopment policies and objectives of host Governments as well as their right to regulate in the
public interest".  The suggestions made in the joint paper were, therefore, well within the mandate of
the Doha Ministerial Declaration.  As mentioned by China, the list of items in Paragraph 22 of the
Doha Ministerial Declaration was only indicative.  For India, investor obligations and home country
obligations had to permeate all aspects of the discussion in the Working Group, as had beendetermined by Ministers.
159. Another point raised was that the issues addressed in the paper were complex and sensitive,
and that the WTO might not be the right forum for a discussion of such issues.  It was his delegation's
opinion that the entire subject of trade and investment was complex and sensitive.  Taking it up for
discussion in the Working Group meant that issues that constituted an intrinsic part of the wholesubject could not be excluded. Some delegations expressed concerns regarding performance
requirements.  It was India's view that performance requirements were of great significance from theWT/WGTI/M/20
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development perspective and that, therefore, they needed to be discussed in the context of
development provisions relating to any multilateral framework.
160. A question was raised in the context of companies from developing countries investing
abroad, and whether developing countries would also undertake home-country obligations.  He
pointed out that the co-sponsors of the paper had made no distinction between developing anddeveloped countries in this regard, and the measur es proposed would apply to both.  Another view
expressed was that the joint paper overstated the power of multinational enterprises and that no hard
data had been given.  There were any number of treaties on the power and functioning of
multinational enterprises, and he believed it would not be too difficult to provide a huge mass of data
on the subject.
161. There was also a reference to restrictive business practices, which it was pointed out, was
being discussed in the Working Group on the Interaction between Trade and Competition Policy.There was a close relationship between trade and investment and trade and competition policy, which
was recognized even in the Singapore Ministerial Declaration.  The two Working Groups were
required under the Singapore Declaration to draw upon each other’s work, if necessary.  It was his
delegation's view that there could be no discussion on a multilateral framework on investment which
excluded restrictive business practices.
162. Another point mentioned was that FDI was in the interest of the host country and not a
concession that needed to be negotiated.  His delegation again needed to reiterate that the current
discussion was not about FDI per se  but about the need for a multilateral framework.  FDI had both
negative and positive effects, and the objective of host countries was to maximize the positive effects
and to eliminate, as far as possible, the negative effects.  The joint paper highlighted measures thatcould be taken to eliminate the negative effects.
(iii) Exceptions and balance-of-payments safeguards
163. The representative of the European Communities introduced its submission
(WT/WGTI/W/153).  He noted that the EC was often asked by developing countries to advise on
investment promotion activities, and that the advice it first offered was to negotiate a multilateralinvestment framework in order to avoid wasteful co mpetition for investors.  His delegation noted that
the issue of balance-of-payment was not specific to developing countries, but it was one of the issues
which was of special interest to them.  His delegation considered it as a very useful and central part of
a multilateral investment framework aimed at supporting development activities − in other words, an
investment for development framework.
164. His delegation believed that a future investment framework should allow the possibility for
Members to take safeguard measures in case of balance-of-payments crises.  This kind of safeguard
clause was particularly important for − but not particular to − developing countries whose financial
systems might be more fragile and more exposed to potential instability.  The first section of the paper
defined the nature of financial crises, and noted that safeguards should only be applicable within welldefined and accepted criteria.  The second section of the paper explained the relevant provisions in the
EC Treaty which pertained to balance-of-payments issues.  The third section addressed the issue of
freedom of transfers in IIAs.  It noted that most  BITs did not include binding obligations on the
admission of investment; thus the transfer obligations included in these agreements often did not
cover those transactions that were necessary to undertake new investments, but only thosetransactions necessary (i) for the repatriation of profits, (ii) for the development of an existing
investment, and (iii) for the liquidation of the capital relating to those investments.  Other agreements
which included rules on the admission of investments required parties to explicitly or implicitly
ensure the capital transfers necessary for the maki ng of new investments.  For example, the GATS
required Members to guarantee current payments re lating to their specific commitments, and providedWT/WGTI/M/20
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that when a Member undertook a market access commitment under Mode 3 that Member would also
guarantee the relevant transfer of capital into its territory.  The OECD Codes also required Members
to allow the free transfer of current payments relate d to a covered investment as well as to the capital
movements needed for the "making, the development,  and the liquidation of the investment".  Under
the IMF Articles of Agreement every IMF Member was required to allow all international currentpayments and transactions to non-residents.  These included the repatriation in convertible currency of
all income arising from foreign investment.  Howe ver, the IMF might allow a Member "to maintain
and adapt to changing circumstances restrictions on payments and transfers for current international
transactions that were in effect on the date on which it became a Member".
165. The fourth section of the paper referred to existing balance-of-payments safeguards in
international agreements.  It noted that most BITs did not include specific balance-of-payments
safeguards.  However, some recent bilateral and regional agreements − such as NAFTA − allowed
restrictions on capital movements in cases where a party "experiences serious balance-of-payments
difficulties or the threat thereof".  Regarding the OECD Codes, it was noted that they provided for
Members temporarily suspending their measures of liberalization "if overall balance-of-payments ofMembers develops adversely at a rate and in circumstances which it considers serious".  Turning to
the GATS, he noted that Article 12 allowed Members to adopt or maintain restrictions on payments or
transfers for transaction related to its commitments  in the event of serious balance-of-payments and
external financial difficulties or threat thereof.  The GATS had a special reference to Members in the
process of economic development and economies in transition to maintain a level of financial reserves
adequate for the implementation of economic development programmes.  Finally under the IMF
Articles of Agreement, Members might be allowed to take special exchange measures, includingrestrictions on current transactions, for balance-of-payments reasons.
166. The fifth section of the EC paper concluded that a future multilateral investment framework
should provide as a general rule that Members allow all current and capital transfers related to
established investment and, as far as the maki ng of new investment was concerned, to those
investment covered by a country in its list of commitments.  However, his delegation believed that asafeguard clause should be provided to allow Members to impose temporary restrictions on the
outflow of current and capital account transfers related to covered investments in cases of serious
balance-of-payment difficulties.  Such a safeguard was one example of an escape clause particularly
relevant to development countries.  However, this safeguard should remain exceptional and its
imposition should follow strict criteria.  In the EC's  view, this meant that any restrictions should be
non-discriminatory, should be consistent with other relevant provisions, should be limited in time and
phased out progressively, should be applied in a way that did not exceed what was necessary to deal
with sudden difficulties, should avoid unnecessary damage to the interests of other Members, and
should not be used to justify measures adopted to protect specific industries or sectors.
167. The representative of the United States noted that the issues raised by the EU in its paper were
of significance to his delegation, and the United States would be responding in detail at a future
meeting.
168. The representative of Japan thought that it was important to agree on the general rule that in
any multilateral investment rules the freedom of transfer of all current and capital account transactions
should be guaranteed.  In its previous submission (WT/WGTI/W/139), he noted that Japan had putforward a similar idea, as had Korea in its submission on the subject.  The first step was to address
freedom of transfers and only then issues of balance-of-payments safeguards, as an emergency
measure, could be discussed.  Japan also held that a possible balance-of-payment safeguard should be
(i) exceptional, (ii) temporary, (iii) subject to clearly defined conditions for its imposition and
operation, (iv) phased out when the balance-of-payments difficulties have improved, and (v) be
consistent with IMF Agreements.  His delegation concurred in particular with the points outlined in
paragraph 18 of the EC paper.WT/WGTI/M/20
Page 34
169. The representative of Hong Kong, China no ted that the EC paper suggested a number of
useful criteria concerning balance-of-payments safeguards provisions in a possible multilateral
framework on investment, and he observed that the proposals looked similar to existing related
provisions in GATS Articles XI and XII.  At th e September meeting of the Working Group, the issue
of balance-of-payments safeguards had been discussed thoroughly.  Though there was no commonview on their precise nature and scope, it was generally accepted that balance-of-payments safeguards
were useful when a country was facing serious difficulties. It was also emphasized that such
safeguards should be in full accordance with the relevant obligations of the IMF.
170. In view of this previous discussion, Hong Kong, China suggested that future deliberations
might be based on, among other things, the followin g two criteria.  First, he reiterated that the
approach used in the GATS was of particular relevance, as it covered investment in services.  Given
the close relationship between the GATS Mode 3-type of investment and a possible multilateralinvestment framework, his delegation saw every reas on to make reference to the balance-of-payments
provisions in GATS Articles XI and XII.  To maintain coherence and consistency, any prospective
multilateral investment framework should be complementary to all existing WTO Agreements
concerning investment, including the GATS.  His delegation therefore agreed in principle with the
ideas raised in paragraphs 17–19 of the EC paper, though details would need to be further elaborated.
171. Second, he suggested that any future formulation regarding balance-of-payments safeguards
should also be consistent with the IMF Articles of Agreement.  He noted that GATS Article XI
contained a similar requirement.  To facilitate future discussions in this regard, perhaps the Working
Group might consider inviting contributions from IMF experts to provide an analysis on the issues
relating to balance-of-payments safeguards.
172. The representative of India noted that his delegation had expressed its view on this subject at
the September meeting of the Working Group, and as  the EC paper was being reviewed currently in
his capital, his wished to reserve his right to return with comments at a future meeting.
173. The Working Group took note of the statements.
B. PARAGRAPH 21 OF THE DOHA MINISTERIAL DECLARATION
174. The Secretariat noted that an updated report on technical assistance had been distributed in
WT/WGTI/W/151, to provide Members with information to enable them to judge the effectiveness
and usefulness of the technical assistance activities carried out jointly with UNCTAD.  It showed the
number of participants who had taken part in technical assistance seminars, costs to the WTO, and the
satisfaction of participants.  To the extent that the mandate in this field was renewed, the WTO and
UNCTAD were committed to continuing to cooperate in providing technical assistance.  Costs
incurred by the WTO Doha Trust Fund to date had been relatively low, due to the generosity of
several Members that had contributed financing directly and to other intergovernmental organizations.
However, there could be no guarantee of this being repeated in the future, and the Director-General
had noted the importance of providing necessary financing to maintain joint WTO/UNCTAD
activities in this area.  He referred in this re gard to the most recent workshop for English-speaking
African countries jointly organized with the International Cooperation Agency of Japan and withUNCTAD, expressed the Secretariat’s thanks for the cooperation received from the Government of
Japan and the hope that it would be possible to repeat the process for French-speaking African
countries in 2003.  WT/WGTI/W/151 also provided details of projected technical assistance activities
for 2003.
175. The representative of UNCTAD noted that during October and November the technical
assistance work on international investment agreements was extended to Latin America.  A Regional
Seminar for South American countries had been held in Lima, Peru, on 7-8 October 2002 to discussWT/WGTI/M/20
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"the relationship between trade and investment" and the implications for developing countries of
strengthening multilateral cooperation in this area.  Ten countries from that region had participated
and there had also been a number of observers from the Andean Community.  The Seminar had been
followed by an intensive training course on "Key issues in international investment agreements"
which ran from 9-18 October.  The course had been attended by 21 participants from 15 LatinAmerican countries.  The Lima events had been implemented in cooperation with the Inter-American
Development Bank.  In addition, two national seminars had been held in Latin America since last
September, one in Venezuela and the second in Guatemala.
176. She noted that technical cooperation had also continued in Asia.  A national seminar had been
held in Sri Lanka on 20-21 November, to reflect on the implications of international investment
agreements for that country.  It had been attended by 50 participants from government and the private
sector.  Shortly after that seminar, on 25 November, a second intensive training course for Asia andthe Pacific had started in New Delhi, which was due to last until the 6 of December.
177. In Geneva, joint technical assistance work had continued with the briefing of Geneva-based
delegates in Spanish on 29 November.  Also in Geneva, a special technical workshop for
English-speaking, capital-based African officials had been held on 1-2 December.  It was intended to
respond to the particular needs of African countries for enhanced support to participate effectively inthe WTO Working Group.  A second workshop of this kind, for French-speaking African countries,
would be organized in 2003.  Also, the current prog ramme of regional seminars and training courses
would be repeated for African countries in the first half of 2003.
178. Within UNCTAD's Work Programme on International Investment Agreements, she noted that
the UNCTAD Secretariat had organized a BITs negotiation facilitation event at the request of severalLDCs.  This  event, which coincided with UNCTAD's Expert Group Meeting on the Development
Dimension of Foreign Direct In vestment, took place from 4-13 November and brought together
19 countries, including three developed countries. It resulted in the completion of 28 BITs.  The event
also served as a platform to hold preliminary discussions on a regional investment agreement between
France and the Zone Franc countries.
179. She observed that the activities undertaken in 2002 had not covered all UNCTAD members.
Activities that responded to the needs of countries in the Caribbean, West Asia, and Central and
Eastern Europe were being proposed as a matter of priority in the technical assistance programme for
2003.  UNCTAD estimated that by the end of 2002, about 500 officials (and a substantial number of
private sector representatives) would have participated in one or more of the technical assistance
activities in this field.  The UNCTAD and WTO Secretariats had carried out assessments of each
technical assistance activity based on written comments by participants, and had adjusted theprogramme of future events in the light of the comments made.  Generally, the activities had been
viewed as relevant and useful to the responsibilities of participating officials.
180. Finally, she mentioned with gratitude that since the last briefing on this matter, UNCTAD had
received a pledge from the United Kingdom to support this work.  In addition, several other
governments were considering supporting UNCTAD's activities in the area.  As part of the reportingand evaluation procedures of its work programme,  UNCTAD had had an informal meeting with donor
and beneficiary country representatives on 6 November.  The mid-term evaluation of this project had
commenced in September.
181. The representative of Peru noted that the regional seminar and the intensive training course
were of the highest standard and quality.  His delegation believed that the joint efforts of the WTO
and UNCTAD Secretariats had facilitated dialogue among countries in the region on this issue, and
had involved sectors that would be impacted by any future negotiations.  He also highlighted the valueWT/WGTI/M/20
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for his country of future plans to initiate a programme of "training for trainers" − as well as follow-up
activities.
182. The representative of Sri Lanka noted that the recent national seminar had been very well
attended − by both private and public sector participants − and of the highest standard.  She added that
government officials and business representatives had deepened their understanding of the relevant
issues and were now better equipped to evaluate the implications of a possible multilateral investment
framework.  She noted that Sri Lanka had requested a regional seminar for 2003 in order to build
upon this educative process.
183. The representative of Venezuela noted that the national seminar held in his country in
October had been timely and effective, in particul ar with regard to the flexibility of the WTO and
UNCTAD secretariats in designing the programme with input from the host government.
184. The representative of the United States noted that the Secretariat's planning on technical
assistance appeared to be highly responsive to the Members' needs and requests.  He also commended
the Secretariat on its successful partnering with other multilateral institutions and national
governments which had enabled it to increase the frequency and scope of its training activities.
185. The representative of Japan, in reviewing the Secretariat's report, was encouraged to see so
many workshops and seminars being held in various parts of the world.  It was commendable that
approximately 500 people from developing countries had had the opportunity to learn at these
workshops.  He also took note of the Secretariat's evaluation that 90 per cent of the participants felt
that the workshops and seminars had been carried out competently and effectively by the WTO andUNCTAD Secretariats.  Regarding the WTO/ UNCTAD Workshop supported by the Japanese
International Cooperation Agency, he noted that some 15 English-speaking African nations had been
represented and that the major issues had been effectively presented and discussed.  Japan planned to
support another seminar for French-speaking African countries which would be held at the initiative
of Egypt next February in Cairo.  Regarding Japan's regional and bilateral technical assistanceactivities, he noted that Japan was planning a national seminar in Jakarta, Indonesia and in Shanghai,
China in January.  Under the umbrella of APEC, two regional seminars were planned for Thailand
and China in the spring of 2003.
186. The representative of Guatemala wished to note that a successful national investment seminar
had been held in his country in October.
187. The representative of Mexico noted that officials from Mexico had attended the two seminars
in Peru in October.  While the regional seminar was useful in outlining the state of discussions on
investment in the WTO, Mexico felt that the seminar could have benefited from a more thorough
discussion of the issues highlighted in Paragraph 22, rather than a general stocktaking.  Certainly
more time to discuss specific initiatives − and the concerns of specific countries − would have been
worthwhile in this type of activity.  Efforts to bring in regional experts would also have been
worthwhile.
188. The representative of Kenya registered on behalf of the African Group appreciation for the
Geneva-based Workshop supported by Japan.  He also welcomed Japan's offer to host another
initiative in Egypt in January 2003.
189. The representative of India noted that a number of workshops and seminars had been held in
India jointly by the WTO and UNCTAD Secretariats which had helped improve understanding of the
issues at hand.  His delegation believed that, as mandated in Paragraph 21 of the Doha Ministerial
Declaration, technical assistance should focus on th e implications of closer multilateral cooperation inWT/WGTI/M/20
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investment for the development policies and objectives of developing and least-developed countries,
as well as on human and institutional development.
190. The representative of Egypt extended his Government's special thanks to Japan for its
initiative to hold a workshop in Egypt in February 2003.  It was his delegation's view that this seminar
would deepen analytical skills and widen perspectives with respect to the different elements of FDIand a possible multilateral framework, and the implications these might have for developing
countries.
191. The representative Nigeria informed that his delegation had benefited immensely from current
technical assistance, and was gratified to hear that additional events were planned for the African
region.  In particular, his delegation looked forward to the organization of a national seminar for
Nigeria.
C. ANNUAL REPORT
192. The Chairman informed the Working Group that, as requested at its September meeting, a
draft annual report had been prepared by the Secretariat (Job(02)/192) which reported in a factual way
on the three formal meetings that the Group had held in 2002.  He noted that the discussions
undertaken at the present meeting would be the su bject of the Annual Report for 2003, in keeping
with WTO practice.  He explained that the report was intentionally comprehensive and detailed withthe objective of offering a precise and accurate summary of Members' views and positions as
expressed in the course of the Working Group's deliberations, without undue emphasis on any one
point of view or another.  This objective was not easy to achieve.  He noted that in any document of
this nature, there was always room for improvement and it was only natural that delegations might
wish to propose some editorial amendments as far as their individual contributions were concerned.
He noted that the Secretariat had received several editorial and drafting suggestions in that regard −
which in no way altered the substance of the report − and he invited delegations who might wish to
make similar suggestions or corrections to convey these to the Secretariat.  One proposed amendmentin particular he wished to mention involved the final section of the report entitled "conclusion" where
he initially felt it might have been useful to highlight some of the issues, and their cross-linkages, that
could serve as a basis for further discussion the following year.  However, some delegations felt it was
premature to include such a reference in the annual report, and he could agree with this deletion
should other delegations not object.
193. The representative of Japan believed that the draft annual report served, not only as a
summary of the year's work, but as a starting-point for the following year's discussion.  However, his
delegation felt that there were several places where the report was biased and did not accurately
reflect the Working Group's discussion.  For example, while the Working Group had discussed the
issue of investors' and home countries' obligations, the report gave too much emphasis to arguments
that such obligations were needed or required.  Likewise, Japan believed that the report did not
accurately reflect objections that had been raised to the idea that performance requirements werebeneficial to development.  Japan also felt that greater emphasis needed to be given in certain parts of
the text to the way that a GATS-type positive list approach to pre-establishment commitments could
address developing-country concerns about regulating and channelling investment inflows.
Regarding technical assistance, he asked that the Secretariat make reference in the report to the
activities taking place in APEC as well as to existing bilateral contributions.
194. The representative of Canada viewed the annual report as balanced and objective.  While her
delegation deferred to the Chairman's judgement, Canada found the section entitled "conclusion" an
excellent piece and would prefer to keep it in the report, perhaps re-titling it "key questions".  Two
alternative suggestions were to keep it as a separate annex, or at the very least to use it as a basis of
discussion − perhaps with minor additions − for the following year.  Given the importance ofWT/WGTI/M/20
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technical assistance, her delegation also wondered whether a list of the year's activities could be
attached as an annex to the report.
195. The Chairman suggested that his reasons for agreeing to the removal of the section entitled
"conclusion" was that whereas the rest of the report was factual in nature, this section was more of a
suggestion.  As an alternative he suggested that Members might request that the Secretariat issue a"checklist of issues", under the Working Group's collective responsibility, that might be discussed and
analysed the following year.
196. The representative of China did not hesitate to support the adoption of the report, as it
represented a factual representation of what had been discussed in the Working Group.  At the same
time his delegation thought that the present meeting's discussion of investors' and home countries'
obligations should also be reflected in the report.
197. The Chairman reiterated that unfortunately the content of the present meeting's discussion
could not be reflected in the current report.
198. The representative of Australia agreed with Canada that the report provided a solid basis for
discussion next year.  He understood the Chairman's rationale for deleting the "conclusion" section,
and supported the idea of the Secretariat issuing a checklist early the following year.
199. The representative of Venezuela agreed with other delegations that the draft report
represented a factual and balanced summary of the Working Group's discussion.  He was surprised
that some delegations wanted the "conclusion" section removed, as it represented a useful tool for
taking stock of discussions in this and other groups.
200. The representative of India fully subscribed to the view that the report should be balanced and
factual.  His delegation had also availed itself of the opportunity to make factual or editorial
suggestions to the Secretariat.  Regarding the "conclusion" section, his delegation felt that the report
should focus on past discussions, not future work, and India was in favour of its removal.  His
delegation was open to the idea of possibly a checklist of issues, based on consultations with
Members.
201. The representative of Mexico agreed that the report should be a factual one, and supported the
removal of the "conclusion" section.  Mexico was not opposed to the idea of a checklist so long as it
was made clear that such a list should not prejudge Members' positions on the subjects listed.
202. The representative of Peru found it very useful that the report contain a section entitled
"conclusion".  His delegation felt that there were key issues noted in this section − along with
paragraph 134 − that were worth preserving, noting that it represented by no means a closed or
exhaustive list.  Peru supported Canada's suggestion that it be removed from the body of the report,
but kept as an annex.  Or as the Chairman hims elf had suggested, it could be issued as a separate
document with the heading "Checklist" to provide gu idance to capitals for discussions the following
year.  His delegation also agreed with the addition of an annex on technical cooperation.
203. The representative of Switzerland noted that the report's section on "relations with other IIAs"
raised a number of important legitimate questions.  Switzerland supported the proposal to issue the
"conclusion" section as a "checklist of issues", noting that many other subjects could be included as
well.  This list should be distributed early, to help prepare the Working Group's work, and it should
focus on the most important issues − those critical to moving the work forward in the timeframe
available.WT/WGTI/M/20
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204. The Chairman noted that paragraph 134 was not entirely factual − and in the same spirit as his
earlier suggestion, his inclination was to remove the two bullets contained in paragraph 134 from the
text.
205. The representative of the European Communities concurred with the Chairman's proposal to
remove the "conclusion" section but perhaps retain it as a kind of exemplary list of issues, if time
allowed.
206. The representative of Egypt agreed with the suggestion that the Secretariat issue a checklist to
help guide the Working Group's work in 2003.  However, his delegation believed that such a checklist
should not be exhaustive − and should remain open to any additional subjects or suggestions raised by
Members.  With respect to proposed changes to paragraph 134, while he agreed that this shouldremain a factual report, his delegation wanted to retain the two bullets and did not want to see them
deleted.
207. The Chairman took note of the comments and agreed to transmit the Report, as amended, to
the General Council.  He also noted that there seemed to be an emerging consensus that a checklist −
including, if Egypt agreed, the bullets in paragraph 134 − should be issued by the Secretariat, to which
any delegation could contribute.
D. OTHER RELATED ISSUES
208. The representative of UNCTAD informed the Working Group that the UNCTAD
Commission on Investment, Technology and Relate d Financial Issues had convened an Expert
Meeting from 6-8 November 2002 to examine the development dimension of FDI and related policy
issues in the national and international context.  The terms of reference of the Expert Meeting
included a number of issues of relevance for the post-Doha discussion on investment.  The meeting
was structured around a few main themes:  host country policy measures and the role of performancerequirements, home country policy measures and corporate social responsibility, the right to regulate
and safeguards, and she noted that the Chairman's summary had been made available to the Working
Group.
209. The Expert Meeting discussed in detail the content and effectiveness of policy measures as
well as different concepts and approaches related to the issues of corporate social responsibility andthe right to regulate.  Host country policy measures, incentives and performance requirements were
discussed at some length.  Following a long debate, no consensus had been reached as to whether the
use of performance requirements should be made more restrictive or less restrictive.  On home
country measures, experts noted that this was an often overlooked aspect of FDI's relationship which
involved TNCs, host countries and home countries.  Nonetheless home country measures could playan important role in influencing the direction, magnitude and quality of FDI flowing to developing
countries, and the contribution it could make to development.  In the context of the balance between
investors' rights and obligations in international in vestment agreements, experts recognized that there
were many different ways to address issues related to corporate social responsibility.  The issue of
linkages between corporate social responsibilities initiatives and trade and investment agreements
could be further analyzed.  Regarding the right to  regulate, the meeting reviewed various approaches
in the context of trade and investment agreements.  Experts recognized that international agreements
might limit the sovereign autonomy of the parties and that some of these limitations might affect the
ability of governments to regulate, including economic, social, environmental and administrative
regulations.  The tension between the need for go vernments to regulate and international obligations
was central to the question of preserving the national policy space for governments to pursue their
development objectives.WT/WGTI/M/20
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210. The representative of OECD alerted Members to the fact that the OECD Trade Directorate
and the OECD West Africa Club, Saharan West Africa Club were organizing a Conference on Trade
and Investment to be held in Dakar, Senegal on 14-16 April 2003 and that the title of the Conference
was "Maximizing the Benefits of Globalization for Africa".  Further details were available from the
OECD Trade Directorate.
E. OTHER BUSINESS
211. The Chairman proposed that the Working Group hold two formal meetings in 2003 in order to
complete its mandated work before the 5th Ministerial Conference - and he noted that the Secretariat
had set aside two available dates, one on 31 March-1 April and a second on 10-12 June.  He felt that
this would provide ample time to digest all th e material produced and to examine the proposed
informal checklist.  The second formal meeting would obviously be a crucial one because at that time
the Working Group would need to report to the General Council, which in turn would have to make
whatever political decision was necessary as far as the future work of the Working Group was
concerned on the basis of the "clarification" work that had already been undertaken.  Given the
pressing demands on delegations in the lead up to Cancún, he felt that the five days of discussionspread over two meetings was a realistic and adequate timeframe for the Working Group.
212. As regards the agenda for these meetings, he suggested that the Working Group might
continue its consideration of the seven items set out in Paragraph 22, of the WTO's technicalassistance activities, and of other topics which had been raised by Members in the course of the
Group's discussions.  He also thought that the Wo rking Group would have time to consider in greater
detail the inter-connection or inter-action among the different issues that might be set out in the
Secretariat's informal checklist.  Early in the following year, he would hold consultations with
delegations about the establishment of the agenda for the two formal meetings.
213. The representative of India said that his delegation could agree with the Chairman's proposal
regarding the Group's future work programme.  With regard to the proposed checklist of issues, he
emphasized that his delegation would like to see the issues that had been discussed at the presentmeeting also reflected in the proposed list of issues to be discussed.  He also took note of the
Chairman's suggestion that delegations could provide suggestions in order to enrich the checklist and
to help guide the Group's future work.
214. The Chairman suggested that one of the benefits of extruding parts of the draft annual report
and incorporating them in a checklist was that it would allow subjects raised at the present meeting to
be included in the informal document proposed.
215. The representative of China suggested that any proposed checklist should be indicative.
216. The Chairman concluded by remarking that the Working Group had had a productive year.  It
had carried out its mandate in an efficient manner, and had succeeded in engaging delegations in the
issues at hand.
217. The meeting was adjourned.
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