RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTI/M/3
10 February 1998
(98-0472)
Working Group on the Relationship
between Trade and Investment
REPORT ON THE MEETING OF 8 DECEMBER 1997
1. The Working Group on the Relationship between Trade and Investment held its third meeting on
8 December 1997 under the chairmanship of Ambassador Krirk-Krai Jirapaet.
2. The substantive agenda for this meeting comprised item I and most of the issues under items II
and III of the Checklist of Issues Suggested fo r Study (WT/WGTI/M/1, Annex 1). In addition, the
Working Group discussed the issue of how to start work under item IV of the Checklist in 1998 and
reverted to the requests for observer status by a number of international intergovernmental organizations.Under "other business", the Working Group adopted a revised annual report to the General Council and
agreed on the dates of meetings in 1998.
A. IMPLICATIONS OF THE RELATIONSHIP BETWEEN TRADE AND INVESTMENT FOR
DEVELOPMENT AND ECONOMIC GROWTH (item I of the Checklist of Issues Suggested
for Study)
3. In addition to the contributions by international organizations which had been presented at the
previous meeting (WT/WGTI/W/8 and Addenda 1-4), the Working Group had before it for its
consideration of this item a Chairman's note (document No. 6004) listing specific areas which had been
identified at the previous meeting as requiring further study.  During the course of the meeting, the
Working Group received a letter from the UNCTAD secreteriat informing the Working Group that workundertaken by UNCTAD in relation to item I of the list in No. 6004 was reflected in the World
Investment Reports series and in a separate publication on the Determinants of Foreign Direct
Investment.  On the question of the effect of variou s trade measures on FDI (item III.1 of the Checklist),
the World Investment Report 1992 addressed the questi on of investment-related trade measures in its
chapter XI.
4. Several delegations presented new submissions.  The representative of Korea introduced a
submission (WT/WGTI/W/16) on Korea's past experien ce with foreign direct investment ("FDI") and its
implications for economic development and trade by highlighting evidence presented in section II of the
submission on the effects of FDI on employment, technology advancement, economic growth and
competition which showed that FDI had contributed significantly to Korea's economic development.
The representative of Japan introduced a submission (WT/WGTI/W/18) by pointing to the evolution of
Japan's FDI policies since World War II, in which connection he observed that in a globalizing economy
restrictive policies such as those implemented by Japan in the immediate post-World War II period were
likely to have negative effects on economic growth and trade.  The representative of the United States
introduced a submission (WT/WGTI/W/14) which examined  the general role of FDI in the United States
and the linkages between trade and investment in the bilateral relationship between the United States and
Europe.  She also drew attention to the positive relationship between open trade policies, FDI and
economic growth as demonstrated by several recent studies.
5. Commenting on these submissions, the representatives of the European Community and Canada
underlined the significance of the conclusions drawn in the submissions by Korea and Japan on theWT/WGTI/M/3
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positive effects of FDI, given that both countries had in the past adopted rather restrictive policies toward
FDI. Since the present economic environment was radically different from that at the time in which those
restrictive policies were pursued,  the experiences with those policies were of limited relevance to the
present reality.
6. A number of delegations made statements on the role of FDI in their economies.  The
representative of Hong Kong, China, referring to paragraphs 16-18 of his delegation's submission in
WT/WGTI/W/10, stated that the experience of Hong Kong, China with FDI echoed the positive
experience of Korea and Japan in terms of the effects of FDI on economic development.  The success of
Hong Kong, China as an international trading, financial and manufacturing centre could largely be
ascribed to the presence of multinational enterprises which played a vital role in improving its
competitive edge through transfer  of technology, service standards, more advanced skills and
management expertise to local companies.  Hong Kong, China had attracted average annual FDI inflows
of about US$2 billion in the 1990s.  The representative of Canada stated that the contributions from the
international organizations in WT/WGTI/W/8 and Addenda all arrived at similar conclusions that global
FDI flows had grown at record levels in recent years,  faster than merchandise trade and that these flows
often represented the most important source of capital for developing countries.  The studies also pointed
out that FDI flows were driven by push factors (for example, enterprise strategy to rationalize production
and enter new and growing markets) and pull factors, such as trade and investment liberalization indeveloping countries, adoption of policies amenable to private sector growth and regional trade
agreements.  Inward FDI was an important supplement to domestic savings, for both developed and
developing countries.  In some instances, FDI helped to overcome the absence of domestic savings.  The
share of the stock of FDI as a proportion of Ca nada's GDP was about 22.6 per cent in 1996.  In 1995-96,
the share of annual FDI flows as a proportion of fi xed capital formation had averaged nearly 11 per cent.
It was estimated that a $1 billion increase in inward FDI translated into 45,000 jobs over a period of five
years and $4.5 billion GDP within the Canadian economy.  While Canada had long been a host to inward
FDI, Canadian enterprises had dramatically increased their investments abroad, particularly over the last
decade.  Canadian outward FDI provided access to markets as well as increasing productive capacity of
Canadian enterprises.  This had enhanced Canada's competitive position in international markets and hadpositively impacted economic growth and employment.  The representative of Brazil stated that Brazil
had for many decades pursued an open policy towards FDI.  During the 1970s, when Brazil was a majorhost country for FDI, it had experienced  rates of ec onomic growth of 8-11 per cent annually.  In the
1980s, economic growth had slowed as a result of the debt crisis and macroeconomic difficulties but
Brazil had maintained its position among the top ten recipients of FDI in the developing world due  inter
alia to debt equity conversion schemes and reinvestments by established foreign investors.  Since 1994,
debt rescheduling and the implementation of an inflation control programme had led to a significant
increase of FDI.  The prospects for the next two to three years were that over 40 per cent of FDI inflows
would be related to privatization, especially in telecommunications and electricity.
7. The representative of Indonesia, speaking on behalf of the ASEAN WTO Members stressed the
non-exhaustive character of the list of points circulated in document No. 6004.  In pursuing the issues
under the list, the focus should be on the way the issues related to trade and investment and  full accountshould be taken of the development dimension.  The first item of the list was particularly relevant to this
item of the agenda.  In this regard, he  proposed that the Secretariat undertake a historical study of the
relationship between investment policy and economic development by examining the various
experiences of Members, particularly the developed countries, at different stages of economic
development, and the relationship between different  kinds of FDI and its role in the development
process.  Other issues which could be considered for study were the role of FDI in the transfer of
technology and human resource development.  He reiterated the point made at the previous meeting that
FDI had both positive and negative effects and urged the need for a balanced approach to the Group's
work.WT/WGTI/M/3
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8. The representative of the European Community expressed scepticism about the usefulness of  a
historical study for the reasons outlined in paragraph 5 above.  He suggested that individual Members
might wish to make contributions on their experiences and that the Working Group could perhaps
request UNCTAD to prepare a submission on this matter.
9. The representative of UNIDO introduced a recent UNIDO publication "Industrial Development
Global Report 1997" and indicated that summaries of this publication would be made available to the
Working Group.  The representative of the OECD  informed the Working Group of an upcoming
workshop with dynamic non-member countries on the role of FDI in globalization and economic
development and suggested that documents relating to this workshop be circulated to the Working
Group. The Working Group agreed that the documentation referred to by the representatives of UNIDO
and the OECD would be circulated to Members.
10. The Working Group took note of the statements made and agreed  to revert to item I of the
Checklist at its next meeting.  The discussion would focus on the specific areas listed in document
No. 6004.  The Working Group also agreed that the Secretariat would prepare a synthesis paper based on
the information received so far from Members and international organizations on the links between FDI
and development, both historically and in the present situation.  The paper should not be regarded as
exhaustive, but should be capable of further evolution as the work progressed.
B. THE ECONOMIC RELATIONSHIP BETWEEN TRADE AND INVESTMENT (indents 1-7 of
item II of the Checklist of Issues Suggested for Study)
11. For its consideration of this agenda item, the Working Group had before it in document
WT/WGTI/W/7 and Corr.1 a note by the Secretariat on "The Relationship between Trade and Foreign
Direct Investment" which dealt with four of the indents of item II of the Checklist and which had been
introduced at the previous meeting. In addition to these four indents, this agenda item comprised thethree indents of item II on the impact of business strategies, practices and decision-making on trade and
investment;  the relationship between the mobility of  capital and the mobility of labour;  and country
experiences regarding national investment policies, including investment incentives and disincentives.
12. In introducing a submission subsequently circulated in WT/WGTI/W/17, the representative of
Cuba highlighted the role of joint ventures in various sectors of the Cuban economy, presented certain
considerations relevant to a possible multilateral agreement on investment, and expressed concerns
regarding recent developments in negotiations between the United States and the European Community
on the Helms-Burton Act.
13. The representative of Colombia presented a submission  (WT/WGTI/W/15) which described the
significant recent increase of FDI flows to Colombia and the beneficial effects of FDI on the Colombian
economy, the influence of trade policy on the amount and types of FDI and the evolution of the legal
framework for FDI in Colombia.
14. The representatives of Korea and the United States  pointed to sections of their submissions
introduced under the previous agenda item which were relevant to this agenda item.  In referring to
section III of his delegation's submission in WT/W GTI/W/16, the representative of Korea summarized
the results of empirical studies on the effects of outward and inward FDI on Korea's trade balance which
showed that FDI had been trade creating rather than trade replacing.  The representative of the United
States drew attention to the analysis in her delegation's submission in WT/WGTI/W/14 of the
relationship of FDI to trade in the bilateral relationship between the United States and the European
Community.  This analysis, which covered both services and goods, came to conclusions similar to those
in the studies mentioned in the Korean submission regarding the complementarity of FDI and trade.WT/WGTI/M/3
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15. The representative of the Secretariat responded to points made and questions raised on document
WT/WGTI/W/7 and Corr.1 at the meeting in Octobe r.  These responses have been circulated in
document No. 7172.
16. The representative of Egypt made several comments of a general nature on the Secretariat note
in document WT/WGTI/W/7 and Corr.1.  First, while the note seemed to suggest that increased trade as
a result of FDI was beneficial per se, it was important not to use trade as the sole parameter forevaluating the impact of FDI but to look also at the effects of FDI on efficiency, employment and
economic development.  Second, he supported the idea of an examination of the relationship of
investment liberalization and economic development through historical analysis of the evolution of
investment policies in individual countries.  Third, noting that various submissions had acknowledged
the existence of possible negative effects of FDI, he expressed interest in learning more about how
different countries had dealt with such negative effects and what particular policy tools had been
successful in that regard.  Finally, he would be interested in a study of the experience of developingcountries as sources of FDI and whether in this respect there was a difference in approach adoptedbetween developing and developed countries.
17. The representative of Egypt then raised more specific issues on the Secretariat note.  Regarding
the statement in paragraph 11 of the note that on average countries with an open trade regime seemed to
attract more FDI than countries with a closed trade regime, he  underlined the need for more detailedanalysis to develop a better understanding of this important point.  Referring to paragraph 27, he stated
that the points made about the existence of high transaction costs in certain industries which tended to be
dominated by multinational firms raised issues which had to be examined in terms of their relationship
with competition policy and their implications for ec onomic development.  With respect to the statement
in paragraph 41 that an initial complementary rela tionship between trade and FDI could eventually turn
into a net substitutive one, he observed that there was a tendency to place too much emphasis on the
complementarity between trade and FDI and that this statement demonstrated that the issues were more
complex.  With respect to paragraph 48, in which reference was made to a study which had found  a
complementary relationship between United States e xports and FDI flows to various parts of the world,
with the notable exception of Latin America, he wonde red how this difference could be explained by the
import substitution policies pursued by Latin American countries in the 1970s and the early 1980s, as
suggested in the study, given that such policies were widely used by developing countries at that time.
Referring to the statement at the end of paragraph 52 that the effects of outward FDI on exports might
vary significantly among individual firms and industries and the comments in paragraph 59 on the
effects of FDI in specific sectors, he emphasized the need for more disaggregated analysis of therelationship between trade and investment in specific industries and services.  With respect to the
statement in paragraph 57 that few host countries provide trade statistics that distinguish between trade
by foreign multinationals and trade by domestic firms, and the statement in paragraph 67 that, for many
developing countries, data only exist on aggregate inflows of FDI as reported in the balance-of-payments
account, he suggested that the Group consider how it could address this problem of lack of certain
statistics, possibly in cooperation with other international organizations.  Finally, with reference to
paragraph 74, he noted that different types of FDI had different impacts in terms of productivity andproposed further analysis of experiences of different countries in attracting productive FDI.
18. In response to the comment made by the representative of Egypt that the analysis of the effects
of FDI needed to go beyond an assessment of the im pact of FDI on trade, the representative of the
Secretariat agreed that it should not always be assumed that increased trade was beneficial per se;
increased trade was not always welfare enhancing, although, to the extent that it resulted from a
reduction in governmental obstacles, it usually would be.  The mandate pursuant to which the Secretariat
note had been prepared was to examine aspects of the relationship between trade and FDI and did not
extend to an assessment of the benefits for welfare and efficiency.  These were aspects which had ofWT/WGTI/M/3
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course also been explored under item A of the Group' s agenda which provided for the link with growth
and development to be studied.  With respect to the question of whether the analysis in the Secretariat
note would be the same if outflows of FDI from developing countries were to be analysed, the
Secretariat would be ready, if the Group so wished, to see what studies existed on this aspect and, if so,
to provide a supplement to its note.  In regard to the comments by the representative of Egypt on
paragraph 27, he recalled that a similar point had been made at the previous meeting and emphasizedthat the internalization aspect of the theory of FDI presented here, the so-called OLI theory, did not
depend on high transaction costs being due to anti-competitive practices.  Rather, the theory was
predicated on the notion that in some industries the transaction costs associated with doing business with
unrelated parties were particularly high because of the nature of the industry itself, the examples given
being vertically integrated process industries, high technology industries and quality or reputation
sensitive industries.  In regard to paragraph 48, he said that he had no alternative explanation that would
respond to the criticism made of the explanation given by the author, namely the prevalence of importsubstitution policies in the 1970s and early 1980s in Latin America.  The Secretariat would ask the
author for his reaction on this point.  In regard to the point made in connection with paragraph 52 on the
desirability of a more disaggregated approach to the analysis of the links between trade and investment,
he drew the attention of Members to the informati on provided by the OECD in its contribution to the
first agenda item (WT/WGTI/W/8/Add.1), in particular the synoptic table provided on page 13 and theindustry studies summarized in Annex 1.  In relation to paragraphs 57 and 67, he noted that the WTO
statistical experts were involved in international discussions on these points and, if the Group would so
wish, might be able to provide information on the availability of data and on any international initiativesto seek to remedy any gaps.
19. On the issue of the relationship between trad e policies and FDI, the representative of the
United States stated that her delegation was preparing  an additional submission providing evidence that
more open economies enjoyed higher rates of private investment which was a major determinant ofeconomic growth.  On the point made by the representative of Egypt on the emphasis on the
complementarity  between trade and investment, she considered that this was a logical result of achanged economic environment in which import substitution policies were no longer as prevalent as in
the past.  This underlined the need for caution with regard to the idea of embarking on historical
analysis.  The representative of the European Community considered that the question of the different
effects of  open  and protective trade policies on FDI was becoming less relevant as most countries wereliberalizing their trade policies.  In addition, account had to be taken of the specific characteristics of theservices sector in which investment was often the only means of gaining effective market access because
of the nature of impediments to trade in services.
20. In response to the comment by the representative of Egypt that a number of submissions by
Members acknowledged the existence of negative effects of FDI, the representatives of the
United States, Korea
, the European Community  and Japan  observed that these submissions concluded
that, on the whole, the effects of FDI were beneficial .  The representative of Egypt explained that he had
not wished to suggest that FDI overall had negative effects;  rather, while agreeing that the effects of FDI
were on the whole beneficial, there were also certain negative effects which had to be addressed, such as
those described on page 5 of the Japanese submission in  WT/WGTI/W/11.  The representatives of the
United States, the European Community  and Canada  stated that, if there were such negative effects of
FDI, they needed to be identified with more pr ecision than had been the case so far in the Group's
discussions.  The representative of Korea indicated that his delegation might submit a paper on this
matter.
21. The representative of Australia, in commenting on the submission of Japan in WT/WGTI/W/11
and the submission of Korea in WT/WGTI/W/16, expressed caution against an undue focus on the trade
balance when discussing the relationship between trade and FDI.  The representatives of the European
Community and the United States  echoed this comment.  The representative of Korea  explained that hisWT/WGTI/M/3
Page 6
delegation's submission was not intended to suggest that the trade balance was important per se but
simply to make the point that empirical evidence showed that FDI had no negative effects on the trade
balance.
22. With regard to the submission of the European Community and its member States in
WT/WGTI/W/12,  the representative of Australia  stated that it was interesting that the study of outward
investment by firms from the United Kingdom had found that firms sometimes invested abroad withoutexporting first because of the existence of legislation which prevented market access through exports.
This underscored the general point made by his delegation on previous occasions that, in examining the
relationship between trade and investment, it was necessary to take into account the effects of restrictive
trade policy measures.  Related to this was the point made in paragraph 18 of this submission that costfactors were less important in explaining FDI decisions than considerations relating to market access.
23. In commenting on the submission by Japan in WT/WGTI/W/11, the representative of Egypt
stated that it was perhaps too easily assumed that there was a similarity between trade liberalization and
investment liberalization.  Investment liberalization raised more complex issues than trade liberalization.This matter required further examination especially in light of the multifaceted nature of the effects of
investment on economic development.  Referring to the discussion in WT/WGTI/W/11 of studies of
determinants of FDI and problems affecting foreign in vestors in developing countries,  he requested the
Japanese delegation to make these studies available to the Working Group and expressed doubts as to
how the actual findings of these studies supported the conclusion drawn in the submission that amultilateral legal framework was needed.  The studie s did not indicate that the firms surveyed had
identified the absence of such a framework as a problem.  While they did point to the problem of lack of
transparency of  host country legislation, this could be addressed in many ways and was therefore
insufficient as an explanation of the need for a multilateral framework.  The representative of Japan said
that the issue of how to achieve transparency and predictability was an issue for consideration by
governments  and that it was the view of the Japanese Government that a multilateral framework was a
suitable means to ensure such transparency and pred ictability.  The representative of the United States
stated that United States firms attached great importance to international investment agreements, whether
bilateral, regional or multilateral, as a means of securing transparent and predictable investment climates
in host countries.  The representative of the European Community said that, if firms indicated that lack
of transparency and predictability were a major factor affecting investment decisions, this pointed to theimportance of international rule making.
24. With reference to the point made in the submission by Japan in WT/WGTI/W/11 that one of the
limitations of bilateral investment treaties was the lack of provisions on investment promotion, the
representative of Egypt asked  the Japanese delegation to explain whether and how a multilateral
agreement would contribute to the promotion of inve stment flows to developing countries.  He also
asked the Japanese delegation to explain the statement that the dispute settlement procedures of  bilateral
investment treaties were affected by the political and economic relations between the countries
concerned.  The representative of Japan stated that bilateral investment treaties concentrated on
protection of investment and that a multilateral fr amework could promote investment by contributing to
greater transparency and predictability.  On the issue of whether a multilateral framework was warrantedbecause of limitations of bilateral investment treaties, the representative of Malaysia stated that Malaysia
had been successful in attracting FDI through the conclusion of some 57 bilateral investment treaties.  Ofprime importance to foreign investors, as shown by many surveys, were political stability, transparency
and prudent macroeconomic policies.  For Malaysia, bilateral investment treaties were adequate both
with respect to protection and promotion of investment.  He therefore disagreed with the idea that amultilateral framework was necessary.  While it was true that bilateral investment treaties did not really
address investment promotion, this matter was inherently difficult to address in any international
agreement.  The representative of Morocco proposed that the impact of bilateral investment treaties beWT/WGTI/M/3
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studied through a comparison of FDI flows between count ries with bilateral investment treaties and FDI
flows between countries without such treaties.
25. With respect to the issue of country experi ences regarding investment policies, including
investment incentives and disincentives, the representa tive of the European Community stated that it was
the experience of the European Community that the implementation of a policy on investment through
removal of barriers to right of establishment and free movement of capital inevitably lead to the need for
a policy to avoid distortions of investment decisions by incentives and disincentives.  To this end, the
European Community used its state aid policy which also allowed it to take into account regional
development objectives.
26. In response to a comment by the representative of Egypt on the need to study the
interrelationship between investment and competi tion, the Chairman suggested that this issue be
considered by this Working Group at a later stage in light of the discussion scheduled for the third
meeting in 1998 of  the Working Group on the Interaction between Trade and Competition Policy.
27. The Working Group took note of the statements made and agreed  to revert to the first seven
indents of item II of the Checklist at its next meeting.  It requested the Secretariat to provide the
information it had offered to prepare (see paragraph 18) and to complete its analysis of the indent
pertaining to the impact of investment policies on trade.  The Chairman encouraged Members to make
contributions on the three indents pertaining to the impact of business strategies, practices and decision-
making on trade and investment, including through ca se studies;  the relationship between the mobility
of capital and the mobility of labour;  and  country experiences regarding national investment policies,
including investment incentives and disincentives.
C. STOCKTAKING AND ANALYSIS OF EXISTING INTERNATIONAL INSTRUMENTS
AND ACTIVITIES REGARDING TRADE AND INVESTMENT (item III of the Checklist ofIssues Suggested for Study)
(i) WTO provisions on matters related to investment
28. In addition to the informal Secretariat note  No. 2988, which had been discussed at the two
previous meetings, the Working Group had before it a note from the Chair, document No. 6004,
containing a list of specific points which had been  identified at the meeting in October for further
consideration by the Working Group.
29. The representative of Japan made a statement drawing on the points made in the second section
of his delegation's submission in WT/WGTI/W/18.  Th e representative of Australia made a statement
which was subsequently circulated in WT/WGTI/W/23.
30. Regarding the difference between the treatment of goods and services, the representative of the
European Community pointed to the 1994 Agreemen t on Government Procurement as an example of
trade disciplines which had initially focused on cross-border trade in goods but which now also  dealt
with services and the treatment of foreign affiliates in domestic markets.  The representative of theUnited States pointed out that, whereas WTO provisions related to investment differentiated between
goods and services, national investment policies did not make such a distinction.  This demonstrated theimportance of examining the issues under this part of the agenda not in a vacuum but against the
background of actual experiences and policies of countries.
31. The representatives of Japan, Australia
, Switzerland , the European Community  and the
United States observed that many performance requirements were not covered by WTO disciplines and
suggested that the Working Group undertake a more comprehensive identification and analysis ofWT/WGTI/M/3
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performance requirements and their effects.  It was suggested that as a basis for this work the Working
Group could review provisions on performance requirements found in investment agreements and draw
on  the analysis contained in the UNCTAD World Investment Report 1996 .
32. The representative of Japan pointed to the absence of provisions on investment protection in the
WTO agreements and proposed that the Secretariat categorize investment protection provisions in
existing bilateral and regional agreements.  The representative of the European Community pointed to
the TRIPS Agreement as being relevant to protection of investment.
33. The representative of Australia considered that both negative list and positive list approaches
had their advantages in certain circumstances.  While a negative list approach promoted transparency
and permitted the identification of measures that might be amenable to gradual liberalization, positive
lists had their use when confidence-building measures were required.  A generalized judgement as to the
superiority of either approach was not possible.  The representative of the European Community noted
that the GATS combined the two approaches.  The representative of the United States stated that this
issue should not be considered only in relation to the GATS but in the context of the WTO agreements as
a whole in order to take account of instruments, for example in the field of intellectual property and tariff
bindings, which had a different structure from that of the GATS.
34. The representative of Japan, referring to differences in the definition of the term "investment"
used in international investment agreements, notabl y as regards the inclusion of portfolio investment,
suggested that the Working Group undertake an examination of the definitions found in various
agreements.  The representative of Australia considered that portfolio investment was less related to
trade than direct investment and that there was ther efore no need to examine in detail in the Working
Group how different agreements dealt with portfolio investment.  The representative of the
European Community stated that it would be useful to clarify to what extent portfolio investments were
already covered by the GATS as a consequence of footnote 8 to Article XVI of GATS.
35. The representatives of Australia and Switzerland  pointed to the need for further analysis of the
effects on trade of investment incentives.36. The representative of Japan proposed that the Working Group examine which trade measures
had a particular effect on FDI.  In this connection, he referred to the discussion of the effect of trade
measures on FDI in his delegation's earlier submission in WT/WGTI/W/11.  The representative of
Australia proposed that the Working Group examine the effects on investment decisions of high tariff
barriers and tariff escalation and of regional trade agreements.
37. The Working Group took note of the points made and issues raised and agreed  to revert to this
indent of item III of the Checklist at its next meeting on the basis of a revision of the list of specific areas
identified in document No. 6004.
(ii) Bilateral, regional, plurilateral and multilateral agreements and initiatives (item III.2 of
the Checklist of Issues Suggested for Study)
38. With regard to document No. 5279, which provided information on activities of certain
international organizations, the representative of the Secretariat recalled that at the previous meeting a
number of factual questions had been posed by the representative of India.  The Secretariat had writtento the organizations in question to seek information on these points.  To date, a response had beenreceived from the EBRD.  When information was re ceived from the other organizations, that would be
circulated in an addendum to document No. 5279.WT/WGTI/M/3
Page 9
39. Referring to a proposal made at the previous meeting by his delegation  that the Working Group
undertake an analysis of existing international invest ment agreements as a means of identifying gaps in
the WTO coverage of investment matters, the representative of Canada made a statement, subsequently
circulated in WT/WGTI/W/19, on the main substantive investment provisions of bilateral and regionalagreements to which Canada was a party, the differences between these provisions and the TRIMs
Agreement and the GATS, the merits of agreements which integrated trade and investment as comparedwith bilateral investment treaties which focused only on the treatment of foreign investment, and the
importance of the work under item III as an essential foundation for the Group's future work under item
IV of the Checklist.
40. The representatives of the United States and the European Community
 emphasized the
importance of this agenda item in order to learn lessons from the experiences of countries with
international investment agreements.  In this regar d, and referring to the statement by the representative
of Malaysia on Malaysia's experience with bilateral investment treaties, they suggested that not onlydeveloped country Members but also developing country Members submit contributions on their
experiences with international investment agreements.  The representative of the United States also
expressed interest in learning more about recent developments regarding services and investment in the
framework of ASEAN. The representative of Malaysia said that he would consider this request for a
contribution on his country's experience with investment agreements.
41. The Working Group took  note of the statements made and agreed  to revert at its next meeting to
this indent of item III of the Checklist.  In this connection, the Working Group noted that the factual
overview it had requested the Secretariat to prepare of existing bilateral, regional, plurilateral and
multilateral agreements would be available shortly.1  In addition, the Working Group  agreed that at its
next meeting it would take up the third indent of item III ("implications for trade and investment flows of
existing international instruments") and revert to the proposal by Japan for a categorization by the
Secretariat of investment protection provisions of international investment agreements.  The Working
Group also agreed that reports made available by UNCTAD on meetings held in May and September-
October 1997 be circulated as documents of the Working Group.2
D. ITEM IV OF THE CHECKLIST OF ISSUES SUGGESTED FOR STUDY
42. As agreed at its first meeting, the Working Group considered how to take up item IV of the
Checklist at its first meeting in 1998.  Following discussion in an informal session, the Working Group
agreed that at its next meeting it would start its work under item IV of the Checklist by considering the
factual aspects of the first indent of that item ("identification of common features and differences,including overlaps and possible conflicts, as well as possible gaps in existing international instruments")and that it would take up other indents of that item at its second meeting in 1998.  The Chairman
encouraged Members to make contributions on this issue.
E. OBSERVER STATUS OF INTERNATIONAL INTERGOVERNMENTAL
ORGANIZATIONS
43. The Working Group heard a statement by the Chairman on informal consultations held on
29 October 1997 on the pending requests for observer status by a number of international
intergovernmental organizations (Energy Charter Secreteriat, Latin American Economic System,Organization of African Unity, Organization of  American States,  Organization for Economic
Cooperation and Development,  Organization of the Islamic Conference and United Nations Industrial
Development Organization) and agreed to revert to this matter at its next meeting in the light of the
                                                     
1See document WT/WGTI/W/22.
2See document WT/WGTI/W/21.WT/WGTI/M/3
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ongoing consultations in the framework of the General Council.  Organizations that had been invited to
attend this meeting would be invited to attend the next meeting on the same basis.
F. OTHER BUSINESS
Annual Report to the General Council
44. The Working Group made certain amendments to its annual report to the General Council to
reflect the work done at this meeting.  The revised report has been circulated in documentWT/WGTI/1/Rev.1
Next Meetings
45. The Working Group agreed to a proposal by the Chairman, which took into account the calendar
of relevant UNCTAD meetings, to hold meetings in 1998 on 30-31 March, 16-17 June, 1-2 October and
23-24 November.
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