 
 RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/WGTI/M/11 
24 July 2000 
 (00-3038) 
Working Group on the Relationship 
between Trade and Investment  
 
 
 
REPORT ON THE MEETING OF 8 JUNE 2000 
 
Note by the Secretariat  
 
 
1. The Working Group on the Relationship between Trade and Investment held its eleventh 
meeting on 8 June 2000 under the chairmanship of Ambassador Man Soon Chang (Korea).  The 
Working Group adopted the agenda as proposed in WTO/AIR/1289.  
A. IMPLICATIONS OF THE RELATIONS HIP BETWEEN TRADE AND INVESTMENT 
FOR DEVELOPMENT AND ECONOMIC GROWTH (ITEM I OF THE CHECKLIST OF 
ISSUES SUGGESTED FOR STUDY)  
2. The representative of Korea  introduced a written contribution (WT/WGTI/W/82) on the 
relationship between foreign direct investment (FDI) and the transfer of technology to host countries.  
The access to the technology and other know-how of  multinational enterprises was one of the most 
significant benefits of FDI for host countries.  In ad dition to the internal transfer of such technology 
and know-how from the foreign parent firm to its foreign affiliate, positive ex ternalities resulted from 
the training of locally hired employees of foreign affiliates and from the establishment of linkages between multinational enterprises and local firms a nd institutions.  Korea's economic development of 
the past decades illustrated how technology transfers associated with FDI had promoted economic 
growth.  Until the 1970s, inward FDI in Korea ha d played an important role in building the 
foundations of the Korean economy by bringing in expertise, capital and technologies.  Once 
absorbed and used by lo cal firms, these technologies had contributed to the creation of the research 
and development capabilities which were necessa ry to shift production from low value-added 
activities to high value added activities.  Korea had initially tried to impose transfer of technology 
requirements, but it had eventually realized that  foreign investors subject to such requirements 
preferred to transfer less advanced technologies which were not necessarily what the Korean economy 
needed.  As a result, after a period of trial and e rror, Korea had adopted a hands-off approach which 
proved better than the imposition of technology transf er requirements, as the natural diffusion of such 
technology through training of local staff or coopera tion with local firms was a more efficient way of 
absorbing new technologies.  This hands-off approa ch had been supplemented by efforts to improve 
Korea's overall investment environment through invest ment in infrastructure, education and training.  
His delegation considered that the Working Group s hould devote more attent ion to the relationship 
between FDI and the transfer of technology in its futu re work and to how the issue of the transfer of 
technology and related incentives and requirements c ould be dealt with in multilateral rules.  The 
developmental aspects of this matter should be taken into account.  He proposed that a recent study by 
the World Bank on trade, FDI and the transfer of technology be circulated to the Working Group.  
3. The representative of the United States
 said that Korea's experience with the transfer of 
technology was relevant to other countries contem plating or currently implementing transfer of 
technology requirements.  The transfer of technology which could be a benefit of investment was best 
achieved through market mechanisms, and countries th at sought to increase technology transfer into 
their economies in fact often acted to reduce such fl ows or at least reduce the value of such flows by WT/WGTI/M/11 
Page 2  
 
 using non-market mechanisms.  While there might not be economic reasons for mandating it, there 
were some situations where, in the exercise of le gitimate environmental or public health regulatory 
authority, limited kinds of technology transfer mi ght be required.  This was one category of non-
market approaches that her delegation did not want to prohibit and which it supported.  As correctly 
noted in Korea's contribution, the fact that t echnology transfer requirements resulted in foreign 
investors transferring less advanced technology w as understandable given that often such technology 
was achieved through expensive research and developm ent procedures, and, if shared, could lead to a 
loss of a hard-earned competitive advantage.  One wa y in which the voluntary transfer of technology 
could be enhanced was through the adequate enfor cement of intellectual property rights.  Because a 
country that mandated technology transfer ofte n received only low-level technology, it failed to 
capture the maximum benefits of technology transf er, such as the training of locally hired employees, 
the development of world class suppliers and linkages with local technology institutions.  
Additionally, some companies might simply deci de not to establish in a country which mandated 
technology transfer.  As described in Korea's contri bution, the market mechanisms that lead to the 
transfer of technology included the movement  of skilled labour, relationships with local 
subcontractors, in-house research and development and enhanced competition.  These factors negated 
the need for non-market approaches to technology tr ansfer for economic purposes.  In regard to the 
suggestions made in Korea's contribution regarding fu ture work on this matter in the Working Group, 
she said that her delegation was open to such an ap proach but would need more information from the 
Korean delegation on the areas that might be ad dressed through this process.  In general, her 
delegation was of the view that work on more central  investment issues might be more useful at this 
juncture.  
4. The representative of Japan
 agreed that the transfer of technology was one of the main 
benefits of FDI.  Discussions in the Group had ma de it clear that the transfer of technology was 
associated with direct investment, as distinguished from portfolio investment.  The establishment of a 
framework of international rules on FDI could assi st host countries in providing a predictable legal 
framework, which was an essential condition for host c ountries to be able to benefit from the transfer 
of technology associated with FDI.  
5. The representative of Costa Rica  concurred with the views expressed in Korea's contribution 
regarding the benefits of FDI in relation to th e transfer of technology to host countries.  The 
contribution of FDI to the technological devel opment of host countries arose not only from the 
transfer of technology from the parent firm to its foreign affiliate but also from various indirect 
mechanisms, such as sub-contracting relationships w ith local suppliers.  He agreed with the points 
made in Korea's contribution that a predictable environment was important to the transfer of 
technology and that transfer of technology re quirements were often counterproductive.   
6. The representative of the European Communities  stated that the contribution by Korea 
underlined the positive linkages between FDI, the tr ansfer of technology and economic development 
and demonstrated that policies in this area needed  to be based on an evolutionary approach that 
reflected the particular situations of  individual countries.  Of particular  interest in the latter regard was 
how Korea's policies had evolved as a result of the increasing capacity of the Korean economy to absorb advanced technology.  The Working Gr oup would benefit from contributions by other 
Members on their policy experiences in this area.  His delegation agreed that attempts to force foreign 
investors to transfer the most advanced technolog y were not necessarily productive.  There was an 
interesting parallel in this regard between the issue of the transfer of technology and the issue of the 
fostering of backward linkages between foreign inv estors and local firms.  In the latter regard, he 
referred to a recent World Bank study
1 that stressed the n eed for tailor-made programmes to spread 
the benefits of FDI to the local economy through demand-driven incentives that took into account the 
                                                      
1 See WT/WGTI/M/10, para. 4.  WT/WGTI/M/11 
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 structure of the local economy.  He emphasized the important role of adequate protection of 
intellectual property rights as a means of encour aging the transfer of advanced technology.  
7. The representative of Pakistan  observed that the basic assertion that FDI could encourage the 
transfer of technology was not in dispute and that the discussions in the Working Group should therefore concentrate on the extent to which such tr ansfer of technology actually occurred in different 
contexts, and on the policy frameworks that would be  most conducive to the effective transfer of 
technology.  The notion that a uniform approach wa s appropriate for all count ries, regardless of their 
varying levels of development, was questionable.  In regard to the statement in Korea's contribution 
regarding the negative effects of technology transfer  requirements, it was important to clarify whether 
this observation only meant that, at Korea's present stage of development, such requirements were not 
appropriate, or whether it meant that Korea now cons idered in retrospect that such requirements had 
not contributed to its development.  While in th e latter case Korea's experience might indeed be 
relevant to the development policies of other coun tries, he doubted that such a conclusion could in 
fact be drawn from Korea's experience.  The argument of the United States that non-market 
mechanisms were counterproductive needed to be  substantiated by empirical evidence on the 
experiences of countries at different levels of develo pment.  Regarding the reference made to the role 
of intellectual property protection as an incentive for th e transfer of technology, he observed that this 
was a fairly complex issue requiring further analysis .  While he agreed with Japan on the need for a 
predictable climate for foreign investment, predicta bility did not imply a specific set of policies but 
rather that a country had a defined set of policies wh ich it applied in a transparent manner.  He agreed 
with the European Communities that it was important  for the Working Group to have information on 
the policy experiences of individual countries regard ing the relationship between FDI and the transfer 
of technology.  His delegation would consider making a contribution in this respect.   
8. The representative of India
 endorsed the views of Pakistan and wondered what guarantees a 
host country had that it would receive the best technology from FDI if it did not apply technology 
transfer requirements.  He questioned the assertion in Korea's contribution that mandatory technology 
transfer requirements would result in the transfer of less advanced technology.  
9. The representative of Hungary  agreed with Korea that the transfer of technology was one of 
the most important potential benef its of FDI and that the extent to which such transfer actually 
occurred depended to a large extent upon the abso rption capacity of host countries.  Two important 
effects of the transfer of technology were increa ses in productivity and shifts towards higher value 
added activities.  Empirical evidence on these ef fects in the case of Hungary was provided in 
Hungary's recent contribution in WT/WGTI/W/83.  Key to ensure technology transfer was a sound 
regulatory framework, including effective protection of  intellectual property protection.  In addition, 
governments also needed to ensure the diffusion of modern technology, for example by fostering backward linkages between foreign investors and dom estic enterprises.  Buying foreign technology as 
an alternative to relying on FDI was not always a r ealistic option, for example because of shortage of 
capital.  In any event, important elements of the technology linked to FDI, such as know-how and 
management methods, usually could not be bought.  
10. The representative of Canada
 agreed that technology transfer requirements could have an 
important impact on investment decisions.  Such  requirements could deter investment, prevent the 
transfer of the best or most needed technology a nd induce policy makers to neglect the elaboration of 
a proper domestic framework designed to favour the adoption and diffusion of new technologies.  The 
Note by the Secretariat on the technology and other know-how spillover effects of FDI 
(WT/WGTI/W/65) observed that a review of the eco nomic analysis and empirical evidence suggested 
that such spillover effects were capable of ma king a significant contribution to the economic 
development of manufacturing and services sector s in developing countries.  A study recently 
undertaken by the Conference Board of Canada  on decision making and innovative capability of 
foreign-owned subsidiaries in Canada reinforced th is positive view.  The study had found that foreign-WT/WGTI/M/11 
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 owned subsidiaries were more innovative than their Ca nadian counterparts.  They were more likely to 
have in-house research and development programm es and to provide training directly related to 
innovation.  In addition, they were more res earch-and-development intensive, as measured by 
research and development spending as a proportion of company revenue.  The commitment to 
innovation could also be seen on the output side.  Foreign-owned subsidiaries were more likely to 
have introduced product-, process and organizational innovation.  T hus, foreign-owned subsidiaries 
that had introduced new products also derived a larg er share of their revenues from the sales of such 
products than their Canadian counterparts.  
11. The representative of Malaysia
 considered that the transfer of technology requirements used 
by Korea at least until the early 1970s had played  a positive role in Korea's economic development 
and that the general assertion that such requireme nts were always counterproductive was unfounded.  
His delegation considered that it was not possible to re ly completely on market forces in this respect.  
Rather what was needed was a combination of f actors, such as political stability, macroeconomic 
stability, a sound regulatory framework, including protection of intellectual property rights, the provision of incentives, joint research and deve lopment and investment in human resources to 
enhance training, capacity and infrastructure.  The experience of Malaysia illustrated that some kinds 
of mandatory requirements were necessary and did not result in the transfer of less advanced 
technology.  
12. The representative of the United States
, referring to the comments by Pakistan, stated that, 
although there were some situations in which, in the exercise of legitimate environmental or public 
health regulatory authority, limited kinds of t echnology transfer might be required, empirical 
evidence, including the studies men tioned in Korea's contribution, demonstrated that if the objective 
of a policy was to attract the most advanced technology, mandatory technology transfer requirements were counterproductive.  
13. The representative of Brazil
 observed that in analyzing the issue of FDI and the transfer of 
technology it was necessary to consider the comp lex matrix of factors governing the international 
flow of investments, both internally and externally .  The analysis of costs and benefits of policies 
aimed at the transfer of technology was a preroga tive of national governments.  Identical measures 
might have a different impact according to the par ticular market situation of different countries.  
Excessive performance requirements regarding the tr ansfer of technology could effectively discourage 
investors.  Conversely, measures that were att uned to the specific circumstances of the domestic 
market could yield the desired results in terms of  the impact on the technological development of the 
host country.  The idea that the transfer of technol ogy should be subject to market forces was not 
totally unfounded, but performance requirements fo r the transfer of technology could effectively 
achieve objectives that would not materialize if such tr ansfer was left exclusively to market forces.  In 
this regard, his delegation considered that th e Working Group should discuss this matter from an 
overall perspective of the possible ga ins achieved by such requirements. 
14. The representative of the European Communities , responding to an observation by Pakistan, 
stated that predictability of the regulatory frame work was obviously a necessary, but not a sufficient 
condition to achieve the transfer of technology fro m FDI.  While some delegations appeared to 
believe that it was necessary to demonstrate in th e abstract that mandatory transfer of technology 
requirements could never be effective, a more producti ve approach was to examine this matter in light 
of the concrete experiences of individual count ries.  Korea's recent written contribution clearly 
showed that such requirements had not worked in th e case of Korea.  It would be interesting for the 
Working Group to receive information on any pos itive experiences of Members with the use of 
mandatory transfer of technology requirements.  Regarding the issue raised by India of possible alternative policy tools to enhance transfer of tec hnology, he stated that a fundamental consideration 
in this context was that measures aimed at impr oving the overall investment climate were more 
effective than measures directed to individual firms.   Thus, for example, the subsidization of research  WT/WGTI/M/11 
 Page 5 
 
 
 and development projects at universities and laboratori es was a far more effective policy tool than the 
direct subsidization of individual high technology firms.  
15. The representative of Mexico  observed that Korea's experience was especially interesting 
with respect to the shift from a policy involving the use of transfer of technology requirements to a 
more liberal regime.  As indicated by Korea, tran sfer of technology require ments had not achieved the 
desired aims and had not resulted in the intr oduction of the most advanced technologies or 
technologies best suited to the needs of Korea.  By contrast, following the elimination of such 
requirements, the transfer of technology occurred in  a more efficient manner as a logical consequence 
of the linkages established between foreign-owned firm s and domestic firms.  This new approach had 
been supplemented by measures aimed at creati ng a favourable investment environment through 
improvements to infrastructure and training.  Thus, co nsistent with various ot her contributions on this 
subject that had been submitted to the Working Gr oup, Korea's experience c onfirmed that the most 
efficient manner to capitalize on and assimilate the benefits associated with FDI in the field of 
technology development was through the establishm ent of a stable and transparent regulatory 
framework favourable to investme nt, accompanied by a general environment propitious to economic 
activity, including the promotion of local technol ogical capacity, infrastructure and human skills.  
Other policies, such as competition policy and the protection of intellectual property rights also 
contributed to reap the benefits of FDI with re spect to technology.  Her delegation supported the 
proposal by Korea to continue the study of the issue of transfer of technology, including with respect to incentives and performance requirements, and to  explore possible international disciplines on 
certain aspects.  In this connection, she reiterated her delegation's interest in examining the issue of 
investment incentives in a broader cont ext, including fiscal incentives.  
16. The representative of Switzerland
 underlined the need for a more detailed study in the 
Working Group of the rationale and operation of mandatory performance requirements in relation to 
the transfer of technology as a basis for consider ation of possible multilateral rules in this area. 
17. The representative of Pakistan  welcomed the clarification by the United States that it was not 
ruling out the possibility of using non-market mechanis ms, especially in the areas of public health and 
the environment.  This implied that in certain cases market mechanisms were not adequate to transfer 
technology.  While the United States had menti oned public health and the environment, it was 
possible to envisage developmental situations wher e market mechanisms were not entirely adequate 
or where, because the particular market situati on did not provide sufficient incentives to firms to 
transfer technology, a regulatory mechanisms was necessary.  Thus, theoretically, the list of areas in 
which such market mechanisms were not adequate  could be expanded, depending upon the specific 
economic environment.  In response to the statement by the European Communiti es, he reiterated that 
it could perhaps be concluded from Korea's e xperience that mandatory technology transfer 
requirements were no longer appropriate at Korea's present level of development, but not that the use 
of such requirements at earlier stages of Korea's development had been counterproductive.  In respect 
of the statement by Canada that transfer of t echnology requirements deterred foreign investment and 
lead to lower grade technology, he stated that asser tions of this kind required a more careful analysis 
and empirical substantiation.  For example, the u se of such requirements by China evidently had not 
deterred inflows of investment.  More generally, th e costs and benefits of transfer of technology 
requirements needed to be assessed in light of the pa rticular circumstances of individual countries and 
were not amenable to generalisations.  
18. In response to the question by the United Stat es on Korea's proposal for further work on the 
issue of the transfer of technol ogy, the representative of Korea  stated that this issue was closely 
related to investment incentives and performance requirements.  While incentives and performance 
requirements were widely seen as distorting FDI flows, there was also a view that they were necessary to attain certain policy objectives, for example with  respect to technological development.  It was 
therefore necessary to consider how the distortive effects of incentives and performance requirements WT/WGTI/M/11 
Page 6  
 
 could be minimized while at the same time rec ognizing their contribution to the achievement of 
developmental objectives.  In response to the comme nts by Pakistan and Malaysia, he observed that 
during the 1960s and 1970s Korea had pursued a policy of import protection, restrictions on FDI and mandatory technology licensing.  This centrally di rected public intervention had channelled resources 
to highly concentrated industries to help them  master reverse engineering and efficient mass 
production techniques.  Two negative effects of this  policy should be noted.  First, by directing 
resources to a few selected industries, the policy ha d given rise to the creation of large conglomerates 
which had engaged in rent- seeking behaviour that was contrary to the broader national interest.  Thus, 
the preferences accorded to these conglomerates, in cluding, for example, government-directed loans 
to uncompetitive businesses, had been a major cause of th e financial crisis in 1997.  Secondly, the use 
of mandatory technology licensing requirements as part of the policy favouring such conglomerates 
had resulted in a dearth of independent and innova tive small and medium-sized supplier firms.  This 
meant that the extent of technology diffusion was limited and that Korea's entire economy could be 
affected by the failure of a few conglomerates.  Regarding the observation by India on the need for 
mandatory transfer of technology requirements, he reiterated that such requirements were not 
conducive to the transfers of the most advanced t echnologies.  At the same time, a hands-off approach 
had to be supplemented by policies to improve the overall investment environment.  A number of 
empirical studies had shown a trend toward the reduction of the use of performance requirements, 
reflecting the experience of countries that these requi rements, once seen as essential, in the end had 
proved detrimental.  Korea's experience was a case in point.  The imposition of mandatory requirements might also deter FDI.  Rather than focusing on the question of whether or not countries 
should obligate multinational enterprises to transfer technology, the Working Group should 
concentrate on the identification of market-frien dly and WTO-consistent policy instruments to 
promote the transfer of technology. 
19. In response to the comment by Pakistan , the representative of the United States
 reiterated that 
the transfer of technology was best achieved thro ugh market mechanisms and that, while mandatory 
requirements might be necessary for public health and environmental purposes, in considering which 
other policy areas might require transfer of technol ogy, the negative effect of such requirements on 
the level of investment and the level of t echnology transferred should be kept in mind. 
20. The representative of Malaysia  stated that the conglomerates referred to by Korea had played 
a key role in Korea's industrialization and that this constituted evidence of the positive role of 
mandatory technology transfer requirements.  He e xpressed doubts as to whether the financial crisis of 
1997 could be attributed solely to Korea's past industrial development stra tegy and reiterated his 
delegation's view that policies in the field of tec hnology development could not rely exclusively on 
market forces. 
21. The representative of Kenya  said that it appeared that the Korean contribution did not 
comprehensively reflect Korea's experiences of the last several decades and focused more on recent 
developments.  The debate on the relationship between FDI and the tr ansfer of technology tended to 
become dogmatic and was too much influenced by  the views of delegations on whether or not a 
multilateral framework of rules on foreign investment  was necessary.  What w as needed was a factual 
analysis prepared by the Secretariat, possibly in cooperation with other inte rnational organizations, on 
the experiences of countries that were now industr ialized with various aspects of FDI, including the 
transfer of technology.  
22. The representative of Ivory Coast  suggested that studies be undertaken to assist developing 
countries in the formulation of investment and technology policies.  WT/WGTI/M/11 
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 23. The representative of India  made a statement of a general nature on the work of this Working 
Group.2  After recalling the mandate of the Working Group, he highlighted certain themes which had 
emerged from the Group's discussions over the past years:  the complexity of the relationship between trade and investment;  the central importance of the developmental dimens ion in the educational 
process and the need for developing countries to retain  policy flexibility;  the inconclusive nature of 
the evidence of the benefits of FDI;  the flexib ility provided for in the present regime of bilateral 
investment treaties which enabled countries to channe l FDI into priority areas;  the lack of evidence 
that multilateral investment rules would have any si gnificant effect on the pattern and flow of FDI;  
the negative impact of multilateral investment ru les in limiting the policy flexibility currently 
available to developing countries;  and the fact th at a country's investment regime was only one of 
many factors affecting FDI.  In light of these cons iderations, his delegation was of the view that the 
Working Group should continue its work in accordance with the existing mandate.  
24.   The representative of India
 then suggested specific themes which should be the subject of 
further examination in the Working Group.  First, the Working Group should consider in more detail 
the implications of the relationship between tr ade and investment for development and economic 
growth, with a focus on FDI, as distinguished from other capital flows.  This should include an 
examination of the interrelationship between trade and investment, on the one hand, and the stages of 
economic development and trade profiles of individual  countries, on the other, and an analysis of the 
experiences of different countries, including the present industrialised or newly industrialising 
countries, at various stages of their development.  Closely related to this was the need for developing 
countries to be able to regulate FDI through polic ies that took into account the differences between 
particular sectors of economy activity and between  particular kinds of FDI in terms of their 
contribution to the development process.  Sec ondly, the Working Group needed to address the 
inconsistency between the treatment of the issue of movement of labour, on the one hand, and the 
treatment of movement of goods, services and capit al, on the other, in which connection it was 
important to  recognize the basic complementarity be tween the international movement of labour and 
the international movement of capital.  He recalled,  in this regard, the specific suggestions made by 
his delegation on earlier occasions to examine ways to  enhance the international mobility of labour.  
Thirdly, the advantages of bilateral investment treaties, as compared to multilateral rules on 
investment, required further consideration, given th at bilateral treaties were adequate to provide 
protection of foreign investment while at the same  time allowing host countries policy flexibility, and 
that the recent increase in FDI flows had occurre d in the absence of a multilateral framework.  
Fourthly, the positive role of performance requireme nts in ensuring a level playing field between 
foreign and domestic investors and in enhancing the benefits of FDI for the host country needed to be 
examined.  Fifthly, there was a need to consider more closely the costs and benefits of multilateral 
investment rules, bearing in mind that global welf are gains alleged to result from such rules did not 
necessarily translate into national welfare gains fo r the host country.  Sixthly, the Working Group 
should take into consideration the view expressed in  a recent analysis of the potential benefits of 
multilateral investment rules that priority should be  given to exploiting the potential offered by the 
GATS before seeking to negotiate general disciplines on investment policies.  Seventhly, the question 
of investment incentives was an im portant issue and needed to be reflected upon carefully by all WTO 
Members.  Eighthly, the important question of fo reign investors' obligations should be examined, 
especially given that a large share of world trade w as accounted for by transnational corporations.  In 
this regard, his delegation considered that the i ssue of restrictive business practices of foreign 
investors had not received sufficient attention in th e Working Group on the Interaction between Trade 
and Competition Policy and that a more critical ex amination of the relationship between investment 
and competition policy was required.  
25. The representative of India  then observed that, even though many of the above-mentioned 
issues required further study and that there wa s no hard evidence on the advantages of possible 
                                                      
2 The full text of this statement has been circulated in document WT/WGTI/W/86. WT/WGTI/M/11 
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 multilateral rules on investment, proposals had been ma de to proceed to negotiations on this subject.  
Many of the arguments advanced in this context might  be relevant for countries which were at similar 
levels of development and which had already crossed a certain threshold in their development process.  
However, if this matter was not addressed from the viewpoint of the entire membership of the WTO, 
it was possible that any premature move in th is regard would only widen the developmental 
disparities to which today's globalisation paradigm had not provided clear solutions yet.  It was 
therefore important to revisit and discuss these issu es more intensely in the Working Group before 
specific conclusions could be arrived at.   
26. A number of delegations indicated that they would comment on the points made by India at 
the next meeting.  
27. The Working Group took note
 of the statements and agreed  to revert to Item I of the Checklist 
at its next meeting.  It also agreed  to the circulation of the World Bank study on trade, FDI and 
transfer of technology.3  
B. THE ECONOMIC RELATIONSHIP BETWEEN TRADE AND INVESTMENT (ITEM II 
OF THE CHECKLIST OF ISSUES SUGGESTED FOR STUDY) 
28. The representative of Hong Kong, China  stated that the issue of the possible need for, and 
nature of, WTO disciplines on investment incenti ves merited further examination because of the 
widespread use of investment in centives and their impact on trade and investment flows.  Although 
his delegation considered that such incentives might  distort investment flows, it recognized that 
incentives might be necessary in the context of deve lopment policies or for other justifiable policy 
reasons, for example to stimulate the adoption of environment-friendly technologies.  His delegation 
therefore did not favour the phasing out of all investme nt incentives at this juncture.  Future work on 
this topic should focus on two important policy questions.  The first question was whether it was 
possible to develop commonly accepted criteria to distinguish between desirable and undesirable investment incentives.  In this regard, it was useful to examine to what extent  the experience with the 
negotiation and operation of the Agreement on Subsidies and Countervailing Measures (SCM 
Agreement) was relevant to investment incentives, especi ally in respect of the distinction made in this 
Agreement between prohibited, actionable and non-ac tionable subsidies.  In this connection, he 
proposed that the Secretariat prepare a study on th e relevance of the SCM Agreement to investment 
incentives.  The second important policy question me riting further consideration by the Working 
Group was whether, assuming that Members would con tinue to be allowed to use certain types of 
investment incentives, disciplines could be designed to ensure that these incen tives were applied in 
conformity with the WTO objective of maximizing globa l welfare. In order to minimize the distorting 
effects of investment incentives, they should be subject to the WTO princi ples of transparency and 
non-discrimination.  With respect to the principle of  transparency, he observed that, other things being 
equal, the more information on investment incentives was accessible to prospective investors, the less 
likely they would make a sub-optimal investment decision.  It would therefore be useful to require 
that information on all investment incentives (incl uding those granted by sub-national public entities) 
be made publicly available, including informati on on the form and amount of incentives which had 
been or would be granted and the criteria for awar d.  Such transparency could be achieved through 
notification to the WTO or through publication at a do mestic level in official gazettes.  Further work 
was necessary on how to ensure transparency while at the same time avoiding requirements that might 
be too onerous for developing count ry Members.  Non-discrimination in the granting of investment 
incentives would provide a level-playing field for invest ors.  This meant that investment incentives, if 
applied, should be made availabl e to all investors and that Member s should grant to foreign investors 
incentives no less favourable than those granted to domestic investors in like circumstances.  WTO 
                                                     
 
3 See document WT/WGTI/W/88 forhtcoming.  WT/WGTI/M/11 
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 disciplines along these lines, if developed and enforced de facto  and de jure , would go a long way to 
reducing the incidence of special deals cuts  for a specific investor or investment.  
29. The representative of the European Communities  concurred with the view expressed by 
Hong Kong, China that the use of investment in centives needed to be s ubject to disciplines.  
Regarding the applicability of the SCM Agreement to  incentives, he observed that, to the extent an 
incentive was a subsidy within the meaning of the SCM Agreement and had an impact on the price of 
a product resulting from an investment, the SCM Agre ement already applied to investment incentives 
in the area of goods.  However, the effectiveness of  the SCM Agreement with respect to investment 
incentives was limited because such incentives were granted at the time of an investment while the 
remedies provided for under the SCM Agreement were  applicable only once there was an effect on 
trade in goods.  The issue of investment incentiv es would need to be addressed in any future WTO 
negotiations on investment.  Since the SCM Agreement had proven to be fairly efficient in regulating 
the use of subsidies in the field of trade in g oods, it was logical to consider this Agreement as a 
possible model for disciplines on investment incen tives in the context of such negotiations.  The 
approach adopted in the SCM Agreement would need to be adapted to take into account the specific 
nature of investment incentives.  For example, an important question was whether disciplines should 
be developed regarding incentives that  were not subsidies within the meaning of the SCM Agreement.  
He agreed that transparency was an important a nd well established WTO principle that could apply to 
incentives, and he noted in this connection that in designing rules on transparency of investment 
incentives, it was possible to build on the provisi ons on notification in the SCM Agreement, which 
included sub-national levels of government.  At the same time, he wondered whether lack of 
information on incentives was a genuine policy pr oblem, as public authorities wishing to attract 
investment through the granting of incentives were likely to ensure that the availability of such 
incentives was known to potential invest ors.  He therefore considered th at this issue of availability of 
information on incentives was less important than the issue of the substantive criteria for the granting 
of investment incentives.  Regarding the principle of non-discrimination, he pointed out that in the 
European Community no distinction was made in  the granting of investment incentives between 
domestic investors, on the one hand, and foreign-ow ned or controlled firms established in a Member 
State, on the other.  In this connection, he suggested that it might be useful to reflect further on whether the issue of discrimination between dom estic and foreign investors in the granting of 
investment incentives was perhaps l ess relevant than the issue of discrimination between domestic and 
foreign products in the granting of subsidies.  
 
30. The representatives of New Zealand
, Mexico , Argentina  and Costa Rica  expressed support for 
the suggestion made by Hong Kong, China for a mo re detailed consideration of the issue of 
investment incentives and for a note by the Secretar iat on the applicability of the SCM Agreement to 
investment incentives.   
31. The representative of Malaysia  observed that the SCM Agreement already applied to 
incentives to the extent they were subsidies.  His de legation saw no need for a Secretariat study on the 
applicability of the SCM Agreement to investment  incentives.  Rather, the debate on this matter 
should proceed on a Member-driven basis.  Disc ussions on investment incentives should include 
incentives granted at sub-national le vels of government and incentives pr ovided in the form of grants.  
In the latter regard, he observed that such grants, provided on an ex ante  basis, were frequently used 
by developed countries, whereas incentives offere d by developing countries typically were 
performance-based and granted on an ex post facto  basis.  
32. In response to the comments made by Mala ysia, the representatives of Hong Kong, China , the 
European Communities  and Argentina  observed that work on investment incentives should be 
comprehensive in coverage and include any form  of incentive granted at whatever level of 
government.  The representative of Hong Kong, China  stated in this regard that his delegation WT/WGTI/M/11 
Page 10  
 
 considered that both the kind of incentives typically  granted by developed countries and the incentives 
granted by developing countries were harmful and necessitated international disciplines, but did not 
wish to proscribe incentives that were beneficial to development.  The representative of Argentina
 
observed that competition between governments to a ttract investment through  the use of incentives 
was harmful to developing countries not only wher e incentives were granted by developed countries 
but also where they were granted by other developing countries.  The representative of the 
United States  reserved her delegation's right to revert to the issue raised by Malaysia regarding the use 
of grants by developed countries. 
33. The Working Group took note  of the statements and agreed  to revert to Item II of the 
Checklist at its next meeting.  
C. STOCKTAKING AND ANALYSIS OF EXISTING INTERNATIONAL INSTRUMENTS 
AND ACTIVITIES REGARDING TRADE  AND INVESTMENT (ITEM III OF THE CHECKLIST OF ISSUES SUGGESTED FOR STUDY) 
(i) WTO provisions on matters related to investment 
34. The representative of Hong Kong, China
 stated that investment-related provisions were now 
scattered in various WTO Agreements with different  emphases and in an uncoordinated manner.  The 
TRIMs Agreement and the GATS were commonl y identified as the two Agreements most 
instrumental in promoting investment liberalization.   In addition, the SCM Agreement was relevant to 
the issue of incentives.  The TRIMs Agreement, which obviously applied to trade in goods only, 
prohibited the application of trade-related investme nt measures inconsistent with the WTO obligations 
of national treatment and elimination of quantitativ e restrictions.  The GATS treated investment as a 
mode of trade in services through establishment of commercial presence and movement of natural 
persons.  It adopted a sectoral and "positive list" appro ach to the liberalization of trade in services.  As 
a result of the increasingly integrated and tec hnology-driven nature of the world economy, it was 
necessary for WTO Members to seek a progressively higher level of investment liberalization.  Pending a convergence of views on whether and how to negotiate investment rules in the context of a 
possible new round, his delegation suggested that Members build on existing WTO rules to ensure 
that the benefits of trade liberalization were not  eroded by distortive investment measures.  Apart 
from the mandated services negotiations under way, th e review provided for in Article 9 of the TRIMs 
Agreement represented an important avenue to make collective efforts to address the implications of 
the interactions between trade and investment.  At  present, the list of prohibited TRIMs annexed to 
the Agreement covered only a few performance re quirements, for example, local content, trade 
balancing and domestic sales requirements.  Suggesti ons had recently been made to expand this list to 
include other performance obligations imposed on i nvestors by host governments, for example, export 
performance requirements, local ownership- and tran sfer of technology requirements.  His delegation 
saw merit for the Working Group to devote more time to examining the merits or otherwise of such 
suggestions and of proposals to establish disciplin es in respect of investment incentives.  Any 
outcomes reached by this Group on these issues could gainfully be fed into the parallel process in the 
Council for Trade in Goods.  
(ii) Bilateral, regional, plurilateral and multilateral agreements and initiatives;  implications for 
trade and investment flows of existing international instruments 
35. Several delegations pr ovided information on recent regional initiatives.  Specifically, the 
representative of Guatemala
 informed the Working Group of a symposium held in Guatemala City on 
9-10 December 1999, with the cooperation of UNCT AD, on international investment arrangements 
and their implications for regional integration in Central America, and of the conclusion in January 
2000 of a treaty between El Salvador and Guat emala on trade in services and investment.  The 
representative of Bolivia  drew attention to a meeting orga nized by UNCTAD in Lima on 29 March- WT/WGTI/M/11 
 Page 11 
 
 
 3 April 2000 to enable participants  to conclude bilateral investment treaties.  At this meeting Bolivia 
had concluded such treaties with Venezuela and Uruguay.  The representative of Venezuela  informed 
the Working Group of a regional seminar on interna tional investment arrangements organized by 
UNCTAD in Caracas in December 1999 for La tin American and Caribbean countries.  
36. The representative of UNCTAD  made a statement on relevant recent activities undertaken by 
UNCTAD.  This statement has been circulated in document WT/WGTI/W/85.  
37. The representative of Japan , referring to recent press reports on Japan's negotiations on 
bilateral investment treaties with developing countries , stated that Japan believed that such bilateral 
investment treaties were a useful tool to enhance the predictability of investment regimes and that 
bilateral investment treaties and a multilateral approach each had their distinct objectives and 
advantages.  The conclusion of bilateral investment  treaties was therefore not inconsistent with the 
pursuit of a multilateral framework  as a long-term approach.  
38. The Working Group took note  of the statements and agreed  to revert to Item III of the 
Checklist at its next meeting. 
D. ITEM IV OF THE CHECKLIST OF ISSUES SUGESTED FOR STUDY 
39. The representative of the European Communities  introduced a written contribution, 
subsequently circulated in WT/WGTI/W/84, on the impact of international investment rules on national policies.  The contribution focused on the question as to whether international rules 
necessarily had a certain impact on national policies or  whether such rules could be designed in such a 
way as to grant countries flexibility to develop th eir own domestic policies.  The first aspect of 
international rules examined in the contribution con cerned the entry of foreign investment.  In this 
respect, the conclusion drawn from an analysis of state practice and international arrangements was 
that a multilateral agreement that would require a widespread and across-the-board liberalization of 
restrictions on the entry of foreign investment would probably be regarded by many countries as 
excessively restrictive.  However, the actual behaviour of most WTO Members with respect to the regulation of the entry of foreign investment was fa r more liberal than this preoccupation suggested.  
His delegation therefore believed that there was r oom for developing rules on this matter, possibly on 
the basis of positive commitments.  The second subject dealt with in the contribution was standards of 
treatment of foreign investment.  The conclusion drawn from the analysis in this part of the 
contribution was that there was widespread acceptance of the principle of non-discrimination of 
foreign investment once admitted, but that countries typically maintained a measure of flexibility by subjecting the application of this principle to a numbe r of exceptions that were either general in nature 
or that pertained to specific sectors or policies.  The contribution had not found any obvious negative 
impact of such standards of treatment on domestic policy objectives in various areas, including development, education, training, employment and environmental protection.  Thus, it was perfectly 
possible to craft provisions on most-favoured-nation treatment and national treatment in a way that 
permitted countries to continue to apply domestic policies aimed at such objectives.  Finally, the 
contribution examined the issue of preferential tr eatment of FDI and noted that the provision of 
benefits to investors was widespread in both de veloped and developing countries.  Normally, these 
benefits were not granted on a discriminatory basis.   The overall conclusion of this contribution was 
that an examination of existing international inv estment arrangements indicated that there was no 
reason why such arrangements could not be designed in such a way as to preserve the flexibility of a 
host country to pursue its domestic policy objectives.  
40. The representative of Japan
 introduced a written contribution, subsequently circulated in 
WT/WGTI/W/87, on the issue of how to improve the tr ansparency of laws and regulations concerning 
FDI.  This contribution should be seen in conjuncti on with a previous contribution by Japan on this 
subject (WT/WGTI/W/75).  The contribution first highlighted the growing importance of WT/WGTI/M/11 
Page 12  
 
 transparency to the promotion of FDI, especially  in light of the accelerating pace of regulatory 
changes in many countries.  To illustrate this point , the contribution described how in the context of a 
comprehensive regulatory reform process initiated in the early 1990s the Japanese Government had 
taken certain measures to enhance the transparency  of the regulatory framework.  This was followed 
by a discussion of various means by which transparency  could be enhanced at the international level.  
The contribution emphasized the benefits of e nhanced transparency from the perspective of 
developing countries, but acknowledged the need  to take into account possible administrative 
burdens.  The contribution also discussed provi sions on transparency contained in existing 
international investment arrangements, particul arly the WTO Agreement, and highlighted the 
advantages of the WTO as an institutional framework  to promote the transparency of laws and 
regulations affecting foreign investment.  Finally,  the contribution made c oncrete suggestions on 
specific transparency provisions that could be  included in a possible multilateral framework.  
41. The representative of Hungary
 introduced a written contribution (WT/WGTI/W/83) on the 
need for a multilateral framework for FDI.  The purpose of this contribution was to describe Hungary's positive experience with the role of FDI in  the process of Hungary's transition to a market 
economy and to explain why, in light of that e xperience, Hungary favoured the establishment of a 
realistic multilateral framework for FDI.  The c ontribution highlighted the significant presence of FDI 
in Hungary's economy, as reflected in the share of FDI in GDP, manufacturing value added and employment.  The very rapid growth of exports  experienced by Hungary since 1993 was directly 
linked to the presence of FDI.  This growth of e xports had been accompanied by drastic changes in 
the geographic and product patterns of Hungary's ex ports, which reflected the growing international 
competitiveness of Hungary's products.  In the past ten years, inward FDI had contributed 
significantly to the all-important process of structur al adjustment, brought in modern technologies and 
management methods, as a result of which efficien cy and productivity had improved considerably.  
The competitiveness of exports had increased, the trade balance had improved and the inflow of FDI had helped finance the deficit on the current account.  The inflow of FDI had greatly contributed to 
the turnaround of the Hungarian economy, which since 1997 had been growing by over 4 per cent 
annually.  Based on these experiences, Hungary had concluded that a multilateral framework for FDI 
was necessary.  Hungary's experience regardi ng the benefits of FDI was not unique and was 
instructive for countries facing problems similar to  those that Hungary had encountered at the 
beginning of its transition process.  Hungary aimed at  maintaining a stable and substantial inflow of 
FDI in the coming years and believed that, by improvi ng legal certainty with respect to the entry and 
treatment of FDI, a multilateral framework of rules would bring stability and predictability for 
investors and host governments and would lead to increased overall FDI flows.  Such a framework 
should concentrate on FDI and exclude volatile short-te rm capital flows, be based on the principles of 
non-discrimination, follow the positive list approach of the GATS, and not allow for investor-to-state 
dispute settlement procedures.  The establishmen t of multilateral framework for FDI in the WTO 
would also resolve the systemic problem of the inconsistency between th e coverage of foreign 
investment in services in the GATS and the lack of c overage of foreign investment in manufacturing.   
42. The representative of Malaysia
 stated that the contribution by Japan on transparency was a 
welcome new element in the debate of the Working Group.  Given that transparency was important to 
all Members, his delegation was willing to discuss th is matter further at future meetings of the 
Working Group although certain proposals made in  this contribution might be too onerous for 
developing countries.  
43. The representative of Pakistan  stated that there were elements in the contribution presented by 
Japan that appeared to be more realistic than cer tain other themes that had been discussed in this 
Working Group.  The notion of transparency was sub scribed to by all Members and this was therefore 
an area in which one should perhaps more closely examine what was practical.  The Working Group 
could learn from the experience of the Working Gr oup on Transparency in Government Procurement, 
for example regarding the difficulty of defining tran sparency and avoiding requirements that were too  WT/WGTI/M/11 
 Page 13 
 
 
 onerous for developing country Members.  In the latt er regard, he observed that the suggestions made 
in Japan's contribution with respect to the advance publication of regulations and the provision of an opportunity for comment required careful considera tion.  He noted that the contribution by the 
European Communities also referred to increased tr ansparency –albeit as a starting-point.  It was 
interesting that there appeared to be a willingn ess to consider transparency issues as a way of 
exploring what might be feasible in this area. 
44. The representative of Korea
 underlined the importance of the conclusion drawn in the 
contribution by the European Communities that it was possible to design international investment 
rules without interfering with important domestic policy objectives.  As had been explained by his 
delegation in various contributi ons, a multilateral framework on FDI should be based on a realistic 
approach that would provide for adequate flexib ility along the lines of the GATS.  With respect to 
Japan's contribution, he stressed that lack of transparency was a major impediment to foreign 
investment and that rules on transparency should be a core element of a multilateral framework.  In 
regard to Hungary's contribution, he welcomed the fact that Hungary had pr ovided concrete examples 
of the benefits of FDI to its economic developmen t and expressed his delegatio n's agreement with the 
approach of Hungary to a realistic multilateral framework for FDI based on non-discrimination and a 
bottom-up approach.  
45. The representative of Costa Rica  stated that the conclusions drawn by Hungary in regard to 
the positive role of FDI in the process of Hungary's transition to a market economy were also valid for 
many developing countries, particularly as regards the points made in Hungary's contribution on the 
relationship between FDI and the growth and change  in the composition of Hungary's exports.  He 
agreed with the views expressed in Hungary's cont ribution on the need for a multilateral framework 
on investment.  Regarding the contribution by the Eu ropean Communities, he stated that the themes 
raised in this contribution were very important and recalled that his delegation had addressed similar 
issues in WT/WGTI/W/68.  The Working Group would benefit from a more focused consideration of some of these issues, for example, the extent to which national invest ment regimes included 
admission clauses;  whether national treatment and MFN treatment were applied unconditionally or 
only subject to such terms as specified in domestic legislation;  whether national treatment and MFN 
treatment were applied with respect to both pre-  and post-establishment;  the criteria to define 
potential investors if national treatment was accorded  to foreign investors in the pre-establishment 
phase;  and the exceptions to national treatment and most-favoured-nation treatment that would be 
necessary to ensure flexibility.  Regarding Japan's contribution, he agreed with the importance of 
transparency in the promotion of undistorted investme nt flows.  With respect to the analysis in this 
contribution of WTO provisions on transparency, he noted that certain provisions of the GATS on transparency had in practice not r esulted in the expected benefits. 
46. The representative of Chile
 stated that the fact that there was now a specific contribution on 
the subject of transparency of investment rules woul d be a very important element in the future work 
of the Group.  A key question was whether exis ting WTO provisions on transparency, such as 
Article X of GATT 1994, could apply to investment .  He also welcomed the contribution by the 
European Communities as a good basis for a pr agmatic discussion on a multilateral framework.  
47. The representative of Hong Kong, China  stated that his delegation agreed with the importance 
attached to transparency, but also saw the need for a careful cost-benef it analysis in order to avoid too 
onerous transparency requirements.  He supported the GATS-type, bottom-up approach to multilateral 
investment rules advocated by the European Comm unities.  More generally, he suggested that the 
Working Group could usefully examine how Members' views diverged on specific elements that had been proposed.  Thus, it appeared that some elem ents commanded support, such as the application of 
the principles of transparency and non-discrim ination in the post-establishment phase of an 
investment and respect for the development dimensi on, while other elements, such as investor-to-state 
dispute settlement, disciplines on portfolio investme nt and investment protection, did not command WT/WGTI/M/11 
Page 14  
 
 such support.  If the Working Group could narrow the de bate to the less contentious issues, this might 
provide some comfort to Members who were concerned about the direction of discussions in this area.  
48. The representative of the European Communities
, responding to a comment by Pakistan, 
observed that his delegation had always viewed tr ansparency and non-discrimination as core elements 
of a multilateral framework for FDI.  The contribution by Hungary was significant in that it illustrated 
the point that, while investment regimes varied in light of the particular circumstances of individual 
countries, the creation of an open, transparent a nd stable legal framework was a common element of 
successful investment regimes.  With respect to the contribution of Japan, he drew attention to a 
recent survey of European investors which had shown that lack of transparency was seen by investors 
as one of the most important impediments to foreign investments and that these investors accordingly 
attached priority to transparency provisi ons as a topic for multilateral rule-making. 
49. The representative of Canada  stated that transparency was a key element of international 
investment agreements to which Canada was a part y.  Transparency was highly valued by Canadian 
investors who favoured the development of a stab le and predictable international investment 
environment.  In addition to the general provisi ons of the NAFTA and the Canada-Chile Free Trade 
Agreement relating to publication, notification and administration of laws, transparency was further 
enhanced through the annexes to the investment chapters of these ag reements.  The use of a negative 
list approach to reservations ensured that parti es listed all their non-conforming measures which they 
wished to exclude from certain obligations.  This a pproach offered the highest degree of certainty and 
transparency to investors.  In Canada's bilatera l foreign investment protection agreements a more 
generic approach was used whereby all non-confor ming measures existing on the date of entry into 
force of the agreement were automatically "g randfathered" and thus protected from dispute 
settlement.  Each such agreement also provided that , after the signature of the agreement, a list of 
non-conforming measures would be exchanged between the parties for the purposes of transparency.  
The bilateral agreements also included a general tran sparency provision whereby the parties agreed to 
ensure, to the extent practicable, that their la ws regulations and pro cedures were published or 
otherwise made available.  They also provided th at, upon request of the other party, information be 
exchanged on measure that might impact on new inv estments, investments or returns covered by the 
agreement.  
50. The representative of the United States  stated that her delegation supported further discussion 
in the Working Group on the issues raised in the contributions presented at this meeting.  As these 
contributions had just been received, her delega tion would make comments at the next meeting.  
51. The representative of Australia  stated that she was interested  in exploring further the notion 
advanced in the contribution by the European Comm unities of the GATS as a realistic approach.  In 
respect of the statement by the European Communities that there was no reason to believe that a 
multilateral framework would adversely impact on the ab ility of states to regulate, she considered that 
this was still a major concern among Members and th at it might therefore be preferable to focus 
consideration on non-controversial issues, such as transparency.  She agreed  with the principles 
expressed in Japan's contribution and agreed that the WTO had a role to play in enhancing 
transparency in all trade-related  matters.  Australian investors had indicated that lack of transparency 
was a major barrier to investment.  
52. The representative of Japan  stated that Hungary's recent e xperience with inward FDI clearly 
showed the importance of a stable and predictabl e legal framework, as illustrated by the fact that 
while at the beginning of the 1990s most inward FDI was accounted for by small and medium-sized 
firms, today there was a substantial number of large foreign investors in Hungary.  
53. In response to a question raised by Korea, the representative of Hungary  stated that Hungary 
did not use technology requirements as it believed that  the best way to encourage technology transfer  WT/WGTI/M/11 
 Page 15 
 
 
 was to provide for a sound regulatory environment and to rely on market forces.  In respect of the 
contribution submitted by the European Community and its Member States, he supported the launch 
of a discussion on the possible impact of investment rules on domestic policy tools.  Such a discussion 
would be highly relevant to the point raised by In dia in its general statement regarding the need for 
developing countries to retain policy flexibility.  He  agreed with the idea of a bottom-up approach and 
with the observation that the GATS approach left room for individual countries to pursue their 
domestic policy objectives.  In respect of the cont ribution by Japan, he shared its premise that 
enhancing transparency was a key factor in promoting investment.  
54. The representative of the European Communities  explained that, while his delegation 
obviously agreed that transparency of investment  rules generally was important, the notion in 
paragraph 19 of WT/WGTI/W/84 of transparency as a starting-point pertained specifically to 
transparency in the contex t of investment incentives. 
55. The representative of India  stated that the contributions tabled  at this meeting were interesting 
and that his delegation would offer comments at the next meeting. 
56. The representative of Malaysia  clarified that his previous comments should not be taken as 
indicative of a change in his delegation's position th at a multilateral framework of rules on investment 
was not necessary. 
57. The Working Group took note  of the statements and agreed  t o  r e v e r t  t o  I t e m  I V  o f  t h e  
Checklist at its next meeting.  
E. OBSERVER STATUS FOR INTERNATIONAL INTERGOVERNMENTAL 
ORGANIZATIONS 
58. In light of ongoing consultations in the fra mework of the General Council, the Working 
Group agreed  to maintain the status quo.    
F. DATES OF NEXT MEETING 59. The Chairman
 suggested that the next meetings of the Working Group take place on 
4-5 October4 and 14 November 2000.  In regard to the suggestion made by the Chairman that the 
meeting in November would be for the purpose of adopting the annual report to the General Council, 
the representatives of the European Communities , Japan  and Hong Kong, China  wished to leave open 
the possibility of engaging in subs tantive debate at that meeting, while the representatives of Pakistan  
and Malaysia  indicated that that meeting should be li mited to the adoption of the annual report. 
60. The Chairman  stated that, as requested by several dele gations in the debate under Items I and 
II of the Checklist, the Secretariat would pro duce background notes on the experiences of more 
economically advanced countries with FDI regulati on and liberalization and on the relevance of the 
SCM Agreement to investment incentives.   
61. The representative of Malaysia  reiterated his delegation's reservations with respect to the 
preparation by the Secretariat of a study on the relevance of the SCM Agreement to investment 
incentives and requested that this matter be considered at the next meeting.  
__________ 
                                                      
4 In light of meetings in the context of the GATS  that will take place in that same week, it is now 
proposed to hold the next meeting of the Working Group  on 11-12 October.  