March 21, 2003
A group of more than 50 NGOs and social society movements from developed and developing countries has called for the rejection of the launch of negotiations on an investment agreement at the next WTO Ministerial meeting in Cancun in September.
The group made this call when they gathered here Friday to launch a new campaign against investment negotiations at the WTO. The NGOs and social movements contend that instead of promoting sustainable development, the WTO negotiations on investment, promoted by the EU, the US and Japan, will create a global bill of rights for TNCs and infringe upon government's right to regulate the entry, operation and exit of foreign investors for development purposes.
The Group argues that while FDI can make a positive contribution to sustainable development, it can also lead to foreign exploitation with TNCs enjoying many rights and making huge profits at the expense of workers' salaries, local firms' capacity to survive, environmental protection and macroeconomic stability.
Most, if not all, developed countries have made use of policy tools to ensure that incoming investment would help to develop infant industries, enhance export capacities, and promote inward technology transfers.
Yet, say the NGOs, many developed countries are now seeking to "kick away the development ladder" by denying developing countries the right to use identical policies.
Moreover, despite claims by the EU, there is no empirical evidence that an investment agreement would lead to increased quantity or quality of FDI going to developing countries, the group notes.
The group also released a declaration explicitly rejecting the launch of negotiations on investment and other Singapore issues at the WTO Cancun meet. The group argued that the WTO is the wrong forum for global investment talks and adding the Singapore issues to an already crowded agenda will prevent the WTO from undertaking the reforms and rebalancing necessary.
The group calls for WTO members to:
â€¢ Explicitly reject the launch of negotiations on investment and the other Singapore issues at the Ministerial Conference in Cancun this September;
â€¢ Reject the NAFTA/MAI approach to investment liberalization.
Peter Hardstaff of the World Development Movement and S2B network, a loose coalition of groups in Europe, said that they were opposed to the proposed investment agreement and the EU plan at the WTO to expand the GATS into other sectors like mining, agriculture and fisheries.
According to Martin Khor of Third World Network, the most important decision in Cancun is whether there is an explicit consensus among WTO members on starting negotiations on investment. However, so far there has been no sign of consensus due to some contentious issues in the negotiations. There was no time between now and Cancun in September to reach consensus even on modalities, which is the most important part of any negotiations.
Khor said the NGOs from the South are opposed to an agreement which would be "very one-sided" by disciplining governments from regulating investment, allow investors to transfer funds out easily, and would have measures on expropriation mechanisms similar to those in the NAFTA agreement.
Any investment agreement along the lines mooted by the EU and Japan will severely prevent governments from undertaking positive investments geared towards development. The WTO had other important items on the agenda - like agriculture, special and differential treatment and implementation - that have not been resolved yet and these had already missed their deadlines.
Just to be able to cope with these issues was proving difficult and the rush to negotiations on the new issues will cause the trading system to be overloaded, Khor warned.
Also, while an investor-to-state dispute mechanism will intensify opposition to an investment agreement, this was not really the biggest issue. The major point over which the NGOs took issue, was the one-sidedness of the investment agreement. It will tilt the balance against the host country governments just as the TRIPS agreement had done in favour of holders of IPRs.
Ms Celine Charveriat of Oxfam International said the NGOs are launching the campaign so that negotiations for an investment agreement would not be launched in Cancun in September. The groups would also be mobilizing for the G8 summit in Evian in June to bring this message across.
Asked about the Iraq war and its effect on the negotiations for an investment agreement, Khor hoped that there would be no agreement due to the war. However, he noted, the industrialized countries are quite serious about moving the negotiations forward, judging by a recent EU paper on modalities and EU Trade Commissioner Pascal Lamy's apparent keenness as well.
Khor said if negotiations were to be launched on the new issues and new agreements as proposed by its proponents ensue, then the results will be very damaging for the South, and the new agreements could perhaps constitute "instruments for economic mass destruction."
"We urge WTO members to reject plans for a new WTO investment agreement. A decision to launch negotiations at Cancun would put the nail on the coffin of the Doha Development Round," said Oxfam's Charveriat.
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