INDIA OPPOSES MULTILATERAL AGREEMENT
ON INVESTMENT
India has reiterated
that it has serious apprehensions regarding a proposed multilateral
agreement on investment within the World Trade Organisation (WTO)
and its apprehensions have not been cleared during the clarification
process. This was indicated by India's Ambassador to the WTO,
Shri K.M. Chandrasekhar at a Seminar on Investment organised by
Actionaid - TVC in London on 11 July, 2003. Most developing countries
including India would not be in a position to enter the negotiations
without a clear picture of the structure and content of each issue,
he said, adding that this view has been expressed by the Ministers
of Trade of the African Union in the Mauritius Declaration adopted
on 28 June; by the LDC (Least Developed Countries) Trade Ministers
in the Dhaka Declaration on 26 June; by the Trade Ministers from
Eastern and Southern African in the Nairobi Declaration on 28
May; and by various other developing countries through interventions
and papers. Shri Chandrasekhar further said: "There is no serious
attempt to engage in debate and address concerns.. At this stage,
it is obviously inopportune to press for a multilateral agreement
on investment, when there are other more important issues for
consideration of the WTO, such as the development issues and the
market access issues".
While pointing out
that there is no government in the world that does not place its
foreign investment policy under constant review and make changes
that are necessary to promote FDI, he said that while FDI could
be beneficial from the stand point of the economic growth, many
analysts also talked of its negative aspect, the most prominent
of which is the "crowding out" effect on the domestic industry.
This is particularly significant in respect of developing countries
like India, which have developed appropriate technologies that
could sustain production at low capital cost. Small scale and
cottage industries in India provide employment to millions of
people at relatively low capital cost and it is important to ensure
that these sectors are sufficiently protected as the social cost
otherwise would be very high, he said.
Some of the advantages
that could accrue from FDI would be available to host countries
only as a result of affirmative regulatory control. "Performance
requirement stipulations in certain areas has an advantage for
investment have resulted in growth of ancillary industry and consequent
multiplier effects which have contributed to overall growth. Stipulations
relating to sharing of technology, employment of local labour
and joint ventures with domestic entrepreneurs have had a beneficial
and positive impact on various sections of the economy and society
in developing countries. China has successfully enforced an export
obligation on foreign investors that has given its economy enormous
strength and resilience", Mr. Chandrasekhar said. Predictability
and certainty are no doubt important objectives but this can be
built into a domestic policy framework, along with other investment
goals, he said. "After the Doha Ministerial meeting, developing
countries have been engaging actively in the process of clarification
of issues initiated by the Ministers. We have placed our concerns
and views clearly on the table and endeavour to engage in a serious
clarification exercise. We must say, however, that the situation
continues to be as unclear as it was at Doha. There is no convergence
of opinion on most issues discussed in the Working Group, including
such basic issues as scope and definition. While the Ministers
spoke of long-term cross-border investment, particularly FDI that
will contribute to the expansion of trade and while the EC and
Japan have been talking about FDI, the US, in a communication
entitled 'Covering FDI and Portfolio Investment in WTO Investment
Agreement', has argued strongly in favour of including portfolio
investment. Many other issues remain the subject of complete divergence
of views, including the principle of non-discrimination, performance
requirement and dispute settlement", he said. He also indicated
that on the issue of investors' and home governments' obligations,
a paper had been presented by China, Cuba, India, Kenya, Pakistan
and Zimbabwe at the Working Group on Trade and Investment in the
WTO.
