WORLD TRADE
ORGANIZATIONWT/WGTI/W/85
16 June 2000
(00-2422)
Working Group on the Relationship
between Trade and InvestmentOriginal:  English
COMMUNICATION FROM UNCTAD
Reproduced hereunder is a statement delivered by the representative of UNCTAD at the
8 June meeting of the Working Group on the Relationship between Trade and Investment.
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INTERNATIONAL INVESTMENT AND DEVELOPMENT:
A REPORT ON UNCTAD'S WORK PROGRAMME
IN THE AREA OF INVESTMENT AFTER UNCTAD X
1. Thank you for this opportunity to bring you up-to-date on UNCTAD's continuation of its
work programmes on investment policies and international investment agreements (IIAs). Since yourlast session in September 1999, we have, in accord ance with our mandate, continued our efforts aimed
at capacity-building in developing countries (and economies in transition) on issues that arise in
relation to discussions or negotiations on investment policies, be they at the national or international
levels. In connection with our work at the international level, a detailed progress report on our
activities has been made available to you under the title UNCTAD's Work Programme on
International Investment Agreements: From UNCT AD IX, Midrand (1996) to UNCTAD X, Bangkok
(2000) .
2. Today, I will briefly report on events since your last session that might be of some interest to
this Working Group. The first of these events is the meeting of the 4th session of the Commission on
Investment, Technology and Related Financial Issues, which took place in October 1999.
3. The Commission’s deliberations were informed by the World Investment Report , the theme of
which, last year, was foreign direct investment (F DI) and development. During the deliberations, the
importance of appropriate investment policy fr ameworks for the attraction of FDI was widely
recognized as a contributing factor, and complementary to other factors such as macroeconomic and
macro-organizational policies, market size and access to regional markets, trade policy, and tax
regime. This is not inconsistent with the observation in this Working Group’s 1999 report that the
availability of natural resources, market size, existence of a suitable platform for exports, strength oflocal institutions, quality of local infrastructure and of the work force, and, a degree of macro-
economic stability all played a role in the attraction of FDI.
4. The Commission also carried out, for the first time, a review of national investment policies.
The countries presenting their policies included Egypt and Uganda. The Commission recognized the
role that UNCTAD’s Investment Policy Reviews  could play by providing a novel form of
intergovernmental discussions for understanding the diversity of development experiences and
contributing to deliberations on and the disseminati on of best practices in investment policy. At the
next session of the Commission, the Governments of  Peru, Ecuador, Mauritius and Zimbabwe will
present their investment policies. This exercise also  allowed us to interact with the WTO SecretariatWT/WGTI/W/85
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through the sharing of information and comparing experiences with those gained on trade policy
reviews.
5. With respect to international investment frameworks, the Commission underlined the
importance of the development dimension in international investment agreements, and recognized the
contribution of UNCTAD’s Series on Issues in International Investment Agreements  (the Series ) in
helping to reach a deeper understanding of internat ional investment issues. In this connection, since
your last meeting, we have published papers on  flexibility for development, lessons from the MAI
negotiations, the taking of property, employment and taxation. In all, fourteen papers have been
published or are at the printer, which are listed in the Annex attached to the text of my presentation.
Currently, work is underway on papers dealing with host country operational measures, home country
measures, environment, social responsibility, dispute settlement (State-State), and dispute settlement
(investor-State).
6. The development dimension is an issue that has been the subject of discussions in the
Working Group. As our work on the Series  progresses, we go beyond the core elements that comprise
international investment agreements and study deve lopment issues associated with the interaction
between investment and policy areas such as employment, environment, and social responsibility. We
try to focus in our analysis on how the development dimension in this context can find effective
articulation and application in investment rules. In this regard, the Commission noted that anotherelement of the development dimension that should be addressed is the lack of human resources
necessary to negotiate and implement international investment agreements, especially as regards
developing countries in Africa and LDCs. In this  regard, I should note that UNCTAD has developed a
10-day programme of intensive training on the negotia tion of international investment agreements.  Its
primary purpose is to allow negotiators of IIAs to delve as deeply as possible into key issues related tothe negotiation of such agreements. The courses provide for capacity building both in terms of human
resources and institutions.
7. UNCTAD also carries out other activities in response to requests from capitals within
developing countries for technical co-operation in the area of investment. We do so often in
cooperation with other agencies, particularly, UNIDO.  In the area of international investmentagreements, the activities carried out since your last meeting included:
• An inter-regional symposium held in September in Xiamen, China. The symposium brought
together the experience of government experts from over 30 countries, and the discussions
examined the development dimension of IIAs. The symposium concluded by adopting the
"Message from Xiamen", a declaration noting that, and I quote:
“the key for a balanced framework in international negotiations are rules that
encapsulate an appropriate mix of predictability, stability and transparency on the one
hand and provisions for an appropriate space for national development policies which
are consistent with international agreements on the other.”
• This event was followed by a symposium for least-developed countries on the development
implications of IIAs, held in Geneva in October 1999.
• In December, a seminar was held for Latin American and Caribbean countries, in Caracas,
Venezuela, and another for Central American countries was held in Guatemala City, Guatemala.
• We ended 1999 with a sub-regional symposium for South Asian countries, which took place in
Colombo, Sri Lanka.
8. In all, the regional symposia organised up until December 1999 attracted some 300
participants from 104 countries. We were gratified to hear from the preceding speakers that thesymposia were considered useful.WT/WGTI/W/85
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9. In addition, the UNCTAD Secretariat has continued to provide technical assistance to
developing countries. For example, at the reques t of the G-15 we organized, in cooperation with the
United Nations Department for Economic and Social Development and the Government of Sri Lanka,
a double taxation treaty negotiation round in Colombo, Sri Lanka, in December 1999, where six
member countries of the G-15 negotiated a number of double taxation treaties. In addition, we
provided assistance to the ANDEAN Secretariat on the modernisation of its regional framework forFDI.  UNCTAD also organised, in January 2000, he re in Geneva, a round of bilateral investment
treaty negotiations at the request of the Government of Thailand.
* * *
10. UNCTAD X provided a comprehensive stocktaking of  our activities, with the result that our
work programme in the area of investment has been deepened, and extended in some respects. Inrelation to the work of this Group, of particular relevance is a mandate for UNCTAD to strengthen
understanding of the relationship between trade a nd investment; and of the key concepts, including
the development dimension, in international investment agreements; and of the role of international
investment arrangements in the development process, and, how such arrangements could contribute to
development, including through the facilitation of technology and enterprise development.  Specificarrangements were identified for consideration, which included bilateral investment treaties (BITs)
between developing countries and regional agreements that address investment matters. In this
connection, I should note that, at the request of th e Government of Bolivia, we followed UNCTAD X
with a round of BITs negotiations in Lima, Peru, in March 2000. Similar rounds of negotiations are
planned for later this year, with the first one beginning on 19 June, in Sapporo, sponsored by theGovernment of Japan.
11. As was reflected in the Bangkok conference, development is a central concern of the
international community. In relation to investment , it was highlighted that although FDI flows to
developing countries have climbed significantly, they are heavily concentrated in a few  countries. It
was also reiterated that FDI represents a package that includes not only capital, but also technology,organizational and management practices, skills and access to international markets, and countries
that do not attract sufficient FDI flows also become deprived of these other important tangible and
intangible resources which are central to development. Thus the many dimensions inherent in
investment, and how each might contribute to national development objectives, require attention and
study.
12. With reference to the technology dimension, it  was acknowledged that technology flows tend
to be associated with investment in, and expansion of, technologically sophisticated industries.However, concerns were raised that a better understanding needs to be achieved of the various
channels for transfer of technology, such as FDI and trade, as technology does not always
automatically flow from developed countries to deve loping countries through FDI and trade. In this
connection, it should be noted that as investment bears a multifaceted bundle of issues and
opportunities, it might benefit from consideration in a number of international fora and throughdifferent international instruments. Yet, there woul d also need to be coordination between such fora
and instruments.
13. The Plan of Action that has resulted from UNCTAD X includes areas that might be of interest
to this Working Group:
(i) Improving the understanding of the role of FDI, technological capacity-building and
enterprise internationalization;WT/WGTI/W/85
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(ii) Strengthening developing countries' national ability to formulate and implement
policies to attract and benefit from FDI, strengthen technological capacities and foster
the development of enterprises; and,
(iii) Improving understanding of emerging issues, including the role of international
arrangements for the purpose of attracting and benefiting from FDI, enhancing
technological capacity and promoting enterprise development in a globalizing worldeconomy.
14. In closing, I would like to draw the attent ion of members of this Working Group to the
forthcoming UNCTAD Expert Meeting on mergers and acquisitions to be held on 19-21 June 2000.
The meeting will take a closer look at the characteristics, similarities and differences -- from a
development perspective -- between greenfield foreig n direct investment flows and flows associated
with mergers and acquisitions, and will thus address an issue that receives considerable attention in a
growing number of countries.
15. In addition, in November 2000, we are planning an Expert Meeting on Home Country
Measures, where national experts will consider ways and means in which home countries might
encourage investment and technology flows to developing countries.
16. As regards this present Working Group, Chairperson, let me emphasize that we welcome the
opportunity to continue to share our experiences and to make our expertise available, if it is sorequested.WT/WGTI/W/85
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ANNEX
Titles prepared for the Series on Issues in International Investment Agreements  include:
Foreign Direct Investment and Development
Scope and Definition
Admission and Establishment
Investment-related Trade Measures (IRTMs)
Most-favoured-nation Treatment
Transfer Pricing
National Treatment
Fair and Equitable TreatmentTrends in International Investment Agreements: An Overview
Lessons from the MAI
Taking of Property
International Investment Agreements: Flexibility for Development
TaxationEmployment
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