RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/WGTI/M/17 
31 May 2002 
 (02-3001) 
Working Group on the Relationship 
between Trade and Investment  
 
 
  
REPORT ON THE MEETING HELD ON 18 AND 19 APRIL 2002 
 
Note by the Secretariat
 
  
1. The Working Group on the Relationship betw een Trade and Investment met on 18 and 
19 April 2002 under the Chairmanship of Ambassa dor de Seixas Corrêa (Brazil).  The Working 
Group adopted the agenda contained in WTO/AIR/1736 and WTO/AIR/1736/Add.1. 
2. The Chairman
 stated that the purpose of the present meeting was four-fold, namely, (i) to 
receive an update from the Secretariat and other agencies on technical assistance, and to give delegations an opportunity to make any comments they might wish on the subject;  (ii) to begin 
consideration of the issues of "scope and de finition" and "transparency, as identified under 
paragraph 22 of the Doha Declarati on;  (iii) to give the Working Group – if it wished – an opportunity 
to continue discussion of issues that had been raised  in the course of the Group's work so far;  and 
(iv) to discuss his draft reply to a letter from the Chairman of the Committee on Trade and 
Development asking that he be kept informed of  any discussion in the Working Group related to 
special and differential treatment.  
A. P
ARAGRAPH 21 OF THE DOHA MINISTERIAL DECLARATION  
(i) Technical assistance and capacity building 
3. The Secretariat  recalled that its planned technical a ssistance and capacity-building activities 
on trade and investment for the year were listed in WT/COMTD/W/95/Rev.3.  He emphasized the Secretariat's full commitment to implementing this programme.  The Secretariat continued to receive 
requests from developing-country Members for na tional seminars and workshops on trade and 
investment, over and above those shown in W/95/Re v.3.  An effort would be made to accommodate 
these requests in this year's programme, but if that  proved impossible the Secretariat would give these 
Members priority when designing the programme of activities for 2003, and respond to their requests 
as early as possible next year. 
4. Regarding the Geneva workshops for Geneva-based delegates and visiting officials, the first 
would take place on 2 July, before the next meeti ng of the Working Group.  The plan was for a 
one-day event.  From past experience, these events worked best with a maximum of 30 participants.  
In selecting participants, account w ould be taken of factors such as the working language of the 
workshop, as well as the special needs of developing  and least-developed countries.  The Secretariat 
would be in contact with delegations in the near futu re to invite them to nominate a participant.  The 
Secretariat planned to hold workshops in conj unction with each of the Working Group's future 
meetings, so that all delegations would have the opportunity to participate in at least one workshop 
over the course of the next twelve months. 
5. On the subject of financing for the technical assistance programme, he noted that, thanks to 
the generosity of Members, the WTO Secretariat' s planned technical assistance and capacity-building WT/WGTI/M/17 
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activities on trade and investment for 2002 were on a firm footing.  The programme of activities was 
drawn up jointly with UNCTAD, and as Members were aware from the discussion that had taken place in the Committee on Trade and Development ear lier this year, the working assumption was that 
the joint activities would be financed on a cost-sha ring basis.  However, a letter had been received 
recently from UNCTAD alerting the Secretariat to the fact that UNCTAD had not received the new 
and additional resources it needed to help finance an d participate in the join t activities that had been 
planned.  As a result, UNCTAD's contribution w as in jeopardy.  The Working Group would shortly 
have the opportunity of hearing directly from the observer representative of UNCTAD - but he wished 
to emphasize that this was a worrying situation,  since the WTO valued its collaboration with 
UNCTAD in the area of investment.  He hoped that it  would be possible to find a solution that would 
permit the programme to continue as planned. 
6. Since the last meeting of the Working Group,  considerable progress had been made in 
implementing the technical assistance plan, as presen ted to Members in January and as incorporated 
in WT/COMTD/W/95/rev.3.  The Secretariat was pl acing the highest priority on regional events, in 
particular on training courses for negotiators a nd regional policy seminars, so that the maximum 
number of Members and observers could be include d.  Four regional trai ning courses, and five 
regional seminars had been scheduled  for 2002.  Five out of those ni ne events would have taken place 
by June, including:  one training course for angloph one Africa (in March in Pretoria);  one regional 
seminar for Asia (on 6-8 May, organized in part nership with, and hosted by, the Government of 
Singapore);  one training course for francophone Afri ca (end-may/early June in Alexandria, Egypt);  
one regional seminar for francophone  Africa (19-21 June in Libr eville, Gabon);  and one policy 
seminar comprising a number of top officials from developing countries (in late June, provisionally in 
Bangkok).  Regional activities for Latin America were scheduled to take place in the autumn, and a 
training course for Asia was scheduled to take place in November. 
7. To the extent possible, the Secretariat would also satisfy requests for national seminars.  
Fifteen requests had been received by the time of the release of WT/COMTD/W/95/rev.3.  Taking 
into account the new requests received by the UNCT AD and WTO secretariats since then, the total 
number of requests was twenty-four.  As indicated ear lier, these events were resource-intensive.  For 
the time being, the WTO Secretariat was doing its b est to organize them back-to-back with regional 
seminars.  For example, two national seminars – one in China and another in Indonesia - would be 
held after the Singapore regional event, while nationa l seminars were also scheduled for Thailand and 
Egypt to follow on from the regional seminars in  both countries.  The WTO was putting in place 
appropriate mechanisms to ensure that joint WT O-UNCTAD cooperation ran as smoothly as possible, 
to the benefit of all members.  Basic operational pa rameters of that coopera tion were being formally 
established in a Memorandum of Understanding, wh ich was currently being discussed by the two 
secretariats.  
8. The observer representative of UNCTAD
 described UNCTAD's current investment-related 
technical assistance work.  He noted that UNCTAD had already begun implementing its post-Doha 
technical assistance programme, especially those project s that were to be organized jointly with the 
WTO.  He drew attention to the forthcoming UNCTAD Expert Group Meeting in Geneva on 12 to 
14 June, the subject of which was "experiences with  bilateral and regional approaches to multilateral 
cooperation in the area of long-term cross-border invest ment, particularly foreign direct investment".  
The agenda for this meeting was of direct releva nce to the Working Group, and he encouraged all 
delegations to participate. 
9. He alerted the Working Group to the fact that UNCTAD would be in a difficult position to 
participate in much of the Doha-related technical  assistance work on investment unless sufficient 
resources were made available.  Specifically, UNC TAD lacked adequate fu nds at present for the 
intensive training courses, the institution buildin g activities, as well as for the costs of UNCTAD’s 
participation in the regional and national semina rs, and the Geneva workshops.  UNCTAD would be 
grateful if countries in a position to do so would, on an urgent basis, consider providing the needed  WT/WGTI/M/17 
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extra-budgetary resources so that the planning and implementation of these joint activities could proceed.  In addition, the UNCTAD Secretariat, in consultation with  delegations and WTO staff, had 
suggested additional activities related to the implemen tation of paragraph 21 of the Doha Declaration, 
especially work related to policy analysis and policy development.  UNCTAD would appreciate if 
financial support for these activities would be forthcoming as well. 
10. The observer representative of OECD
 described the OECD's tech nical assistance and capacity 
building work related to investment (WT/WGTI/W116). 
11. The representative of th e European Communities  said that this Working Group was of no less 
importance than the WTO negotiating groups.  Th e Working Group now had a clear mandate and a 
focused work programme, as well as instructions to enhance tec hnical assistance and capacity 
building.  His delegation felt that the best way to m ove forward was to tackle one issue at a time, on 
the basis of written contributions from delegations.  He encouraged developing countries in particular 
to outline their priorities, concerns and experien ces, so as to ensure that  the Working Group had an 
opportunity to usefully debate all of the issues that were of key importance to them.  What was 
important at this stage was to arrive not so much at common positions, but at a common 
understanding of the different issues.  The Eur opean Communities placed the utmost importance on 
the technical assistance and capacity building programme .  It was now important to ensure that the 
plan was fully implemented and enforceable.  From the point of view of efficiency, the more that 
could be done in regional seminars - back-to-back possibly with national seminars - the better.  He 
was concerned by the remarks made both by the WTO and the UNCTAD secretariats as regards the 
lack of adequate financing for UNCTAD's share of th e joint work programme.  This was an issue, not 
just for the secretariats, but for the donors to resolve, as it was obviously unhelpful to have a Sword of 
Damocles hanging above the technical assistance manda te.  By the end of this year, WTO Members 
needed to be able to state that considerable  progress had been made on technical assistance and 
capacity building, so he hoped constructive thinki ng could take place in the weeks ahead regarding 
these financial issues.   
12. The representative of Argentina  stated that the task ahead of the Working Group had already 
been clearly spelled out by Ministers in Doha.  Paragraph 22 of the Doha Declaration identified the 
specific points and issues that had to be examined , as well as the conditionality for carrying out this 
review.  Written contributions from delegations would be extremely important for this process, and 
his delegation wished to emphasize the need to di stribute documents as soon as possible to allow the 
Working Group to proceed in an effective and efficien t way at its meetings.  With regard to technical 
assistance, Argentina believed that UNCTAD had an indispensable contribution to make, especially 
on investment and development issues, and that it w as important to ensure that adequate financial 
resources were found to support its collaboration with the WTO. 
13. The representative of South Africa  reported back on the first joint WTO-UNCTAD Intensive 
Training Session for Negotiators of International Investment Agreements which had been held in 
Pretoria on 18-29 March, and which had been co-hoste d by the University of Pretoria, the University 
of Dar-es-Salaam, and the University of Ghana.  Altogether twenty-nine participants from nineteen 
countries in anglophone Africa - eleven of them fro m least-developed countries – had taken part in the 
programme.  These participants were comprise d of academics, trade negotiators, and senior 
government officials.  The presenters were acad emics and practitioners, both from developed and 
developing countries.  By all accounts, the course had been helpful and useful for the participants.  
Indeed, the participants themselves had set up a joint network to cooperate and coordinate their 
activities in preparation for future investment ne gotiations, including in the WTO.  His delegation 
would like to suggest that this joint WTO-UNCTAD model be usefully extende d to other regions, and 
indeed to other aspects of current WTO negotiations.  South Africa was willing to make its contribution to assist in strengthening the joint e fforts of UNCTAD and the WTO, and hoped that the 
financial problems would soon be resolved. WT/WGTI/M/17 
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14. The representative of Brazil
 requested the Secretariat to prepare a detailed technical study on 
the contribution of foreign investors to the transf er of technology in developing countries - a subject 
which he believed had already been raised in sev eral previous discussions in the Working Group.  
This study should examine the relationship between fo reign direct investment (FDI) and the transfer 
of technology requirements, drawing from the expe rience of existing regional arrangements (e.g., the 
NAFTA), while also looking at the role of government policy in the development of local research 
and technical expertise.  This proposed study tied in with the recommendations included in paragraph 
21 of the Doha Declaration which spoke of the ne eds of developing and least-developed countries for 
enhanced support, including in the area of policy an alysis, so that they could better evaluate the 
implications of closer multilateral cooperation fo r their development policies and objectives.  This 
proposal was also a response to the European Communities, which had encouraged developing 
countries to spell out their priorities regardi ng technical assistance.  Given the harmonious 
cooperation that existed between the WTO and UNCTAD, the latter also had a useful role to play in 
this study. In reference to the financial cons traints currently facing UNCTAD, his delegation hoped 
that resources would soon be found so that UNCTAD could resume its work in the spirit of helping 
developing countries prepare for the important discussions ahead. 
15. The representative of India  said that the relationship between trade and investment was 
complex, going well beyond the domain and experti se of trade negotiators, and his delegation’s 
knowledge of the subject was still inadequate.  Alt hough investment essentially involved the flow of 
money, it was often difficult to distinguish between i nvestments that led to the expansion of trade and 
development on the one hand, and those that were me rely speculative on the other.  This was because 
money could change hands many times before it became a concrete investment leading to the 
expansion of trade and development.  The original  lender or owner of the money might not be the 
source from which funds were obtained for a br icks–and–mortar investment.  Even after the 
investment was made, money could be drawn out th rough derivatives and other financial instruments.  
In these initial stages of its work, considerable em phasis needed to be placed  in the Working Group 
on understanding the concept of investment, and how  to introduce greater transparency to the 
movement of capital from the original lender to the ultimate destination, as well as on the manner in 
which investment could be spun off in the form of  derivatives, or recovered through such devices as 
payment for transfer of technology and committed purchases of equipment and machinery from home 
countries or other third countries at higher prices.  In  short, Members needed to be able to define with 
a certain degree of precision the manner in whic h funds flow, as well as the extent to which 
investment actually leads to increased trade and development. 
16. As regards technical assistance, it was important to address in the joint WTO-UNCTAD 
programme the subject of home-country and third- country responsibilities, as well as the issue of 
transparency in the flow of funds.  The pitfalls that  could arise needed to be clearly identified.  The 
programme would need to look at different forms of  investment in terms of their potential to expand 
trade and the effect on development.  It was important  to note that not all forms of investment led to 
development per se,  particularly when it had a crowding-out effect on domestic investment.  The 
technical assistance programme in each country and region should be drawn up in close consultation 
with the governments involved, to ensure that it was as comprehensive and balanced as possible.  At 
present, developing countries had little understanding of the technical aspects related to the flow of 
capital.  An iterative exercise of training in these various issues was unavoidable.  As technical 
knowledge improved, the need to tackle add itional issues would correspondingly increase and it 
would be necessary to provide even more training.  In this context, his delegation agreed with the 
comment made by the European Communities about the need to work together constructively to 
enhance common understanding of the subject, rather  than common ground.  The more developing 
countries understood about the issue of investment, th e more they could regard it in a constructive 
manner. 
17. India believed that sustained capacity building w as much more useful to developing countries 
than one-off training programmes.  It would be necessary to identify institutions in each country,  WT/WGTI/M/17 
 Page 5 
 
 
jointly with the governments concerned, that c ould develop the necessary capacity relating to all 
aspects of investment and capital flows.  Thus, consid erable spade work needed to be done before an 
informed decision could be taken on whether to proceed with negotiations, as mentioned in the 
Chairman’s statement at Doha.  This was wit hout prejudice to India's continued doubts about the 
WTO being the right forum for a discussion of an issue whose relationship with trade was only 
tenuous.  His delegation also wanted to lend support to Brazil's proposal for a Secretariat Note on FDI 
and the transfer of technology, which was an impor tant issue that required careful examination. 
18. The representative of Senegal  shared the view that investment was extremely important to 
developing countries - especially least-developed co untries - because it represented the newest phase 
in the development process.  As regards technical assistance, he expressed concern about the financial 
difficulties currently facing UNCTAD.  Looking at the architecture of paragraphs 20-22 of the Doha 
Declaration, there were three inter-related ideas:  the importance of negotiations;  the importance of 
recognizing the needs of developing and least-developed countries;  and the importance of inter-agency cooperation and technical assistance.  UNCTAD was explicitly singled out in the Doha 
Declaration because of its undeniable comparative adva ntage in the investment field.  No organization 
was better placed than UNCTAD to enhance unde rstanding of the development dimension of 
investment, or to study the various Special and Diffe rential treatment provisions that would need to be 
built into any multilateral framework of rules.  A fail ure to ensure the full and active participation of 
UNCTAD would represent a major loss for developi ng countries and would exacerbate the existing 
imbalances in the system.  His delegation app ealed directly to donor countries to address 
expeditiously the financial problems facing UNC TAD.  Finally, Senegal expressed support for 
Brazil's proposal regarding the link between the transfer of technology and FDI. 
19. The representative of Japan
 noted that international investment flows were key to a sound and 
well-balanced world economy, with great potential to  contribute to the development process.  On the 
subject of technical assistance, Japan was encourag ed by the fact that total pledges to the WTO's 
Global Trust Fund had exceeded expectations.  This  was a reflection of the shared recognition among 
donor countries regarding the importance of capacity building.  The next step was to direct money 
towards ensuring that developing countries were e quipped to participate fully in the negotiations, and 
to implement all of the rules of the WTO.  His delegation made four points regarding the implementation of the Doha capacity-building agenda :  First, capacity building carried out by the 
WTO should focus on WTO activities - i.e., prepara tions for negotiations and implementation of 
WTO rules.  Second, capacity building should be "d emand driven".  Developing countries themselves 
were best placed to identify and clarify their needs,  and to help to design specific programmes.  Third, 
capacity building should be carried out in part nership with UNCTAD and other international 
organizations.  Japan took note of the problems outlined by UNCTAD, and wished to reiterate the importance of securing the cooperation of the organi zations that had the greatest expertise in the 
investment area.  Fourth, capacity-building partners hips should be extended, where possible, to other 
regional and multilateral organizations, such as the OE CD and APEC.  In addition to its work in the 
WTO, Japan was actively involved in regional arrangements (e.g., APEC) and was a significant 
contributor to technical assistance in these fora.  
20. The representative of Mexico
 joined other delegations in reminding the Working Group of the 
need to be realistic and practical in its objectives  in the investment area.  Mexico believed that 
technical assistance and capacity building were funda mental to the success of this stage of the 
investment discussion.  Only thro ugh these exercises could the needs of developing countries be 
understood and reflected in the Working Group's di scussions.  In this regard, Mexico had already 
offered to host a joint WTO-UNCTAD seminar on inv estment for the Latin American and Caribbean 
region.  In addition, an investment-related semina r was being organized in the context of APEC.  
These seminars, in which the WTO Secretariat was participating, would address investment issues in 
a multilateral context, focussing specifically on the relationship between existing bilateral and 
regional arrangements within the multilateral system.  Finally, he felt that Brazil's interesting proposal WT/WGTI/M/17 
Page 6  
 
for a Secretariat study on the relationship between  FDI and technology transfer warranted further 
examination.  
21. The representative of Korea
 recognized - and attached much importance to – technical 
assistance and capacity building as key to the success of the Doha negotiations as a whole, and to progress in the Working Group in particular.  His de legation took seriously the financial difficulties 
currently being faced by UNCTAD, and believed that Members should explore the possibility of 
providing additional funding.  He also announced hi s delegation's plan to organize a national seminar 
on investment issues in the first half of 2002;  Ko rea would cooperate closely with the Secretariat on 
the exact timing and venue.  His delegation suppor ted the Chairman's proposal that the Working 
Group be free, at future meetings, to revisit, as a ppropriate, each of the 7 issues identified for further 
clarification in paragraph 22 of the Doha Declaration.   Since all of these issues were inter-related, it 
was important that discussions remained flexible and constructive. 
22. The representative of Paraguay
 shared the view that the Working Group now had a clear 
mandate arising out of the Doha Declaration.  With re gard to technical assistance, he affirmed that the 
issue was extremely important for Paraguay, since it would enable developing countries to participate 
more fully and effectively in the work.  It was important to be able to count on UNCTAD’s proven 
experience in technical assistance and capacity building, especially as UNCTAD had already contributed extensively to the study of global invest ment issues from the perspective of development.  
Paraguay supported Brazil's proposal for a detailed study of FDI and the transfer of technology - 
which should be coordinated with the Working Group on Trade and Transfer of Technology. 
23. The representative of Canada
 said that the WTO could only make progress towards a 
multilateral framework for investment if all Members were given adequate means to participate in the 
discussions, to exercise their rights of membership , and to implement whatever agreements were 
reached.  In this respect, his delegation was concer ned about the financial stability of the joint WTO-
UNCTAD technical assistance programme.  Canada would discuss with other Members how this situation could be satisfactorily addressed.  His delegation noted with satisfaction the OECD's work 
currently underway to complement technical assistan ce.  In designing the programme of technical 
assistance and capacity building, Canada believed that  developing and least-developed countries were 
best placed to identify their speci fic needs.  As Japan had observed, the process should be demand-
driven, and Canada looked forward to hearing fro m developing-country delegations on the degree to 
which the technical assistance that was being offered was satisfactory, and whether there were gaps or 
other problems that needed to be addressed.  Cana da also noted the proposal from Brazil - supported 
by others - for a paper on the link between technol ogy transfer and FDI.  This was an important 
suggestion that could help prepare the groundwork fo r discussions on this topic at future meetings.  
24. The representative of China
 recalled that paragraph 21 of the Doha Declaration correctly 
recognized the need for enhanced support for t echnical cooperation and capacity building for 
developing and least-developed countries so that they  could better assess the implications of closer 
multilateral cooperation for their deve lopment.  In carrying out this  mandate, his delegation believed 
that two areas warranted particular attention in order to arrive at a balanced assessment of the issues:  
first, the Secretariat - perhaps with the help of UNCTAD and other international organizations - 
should examine the policies, laws and regulations of developing countries, and identify the main 
barriers that exist to the absorptio n of foreign direct investment.  Without that capacity, developing 
countries could not be expected to be fully and e ffectively involved in the investment work of the 
WTO, particularly as it entered the negotiation ph ase.  Second, the WTO – and other international 
organizations – should analyse the policies, laws and regulations of home countries with regard to 
outward investment, including policies related to sect oral restrictions on outward flows, as well as 
transfers of technology – as proposed by Brazil and supported by India and Mexico.  In this way, the 
Working Group could arrive at an overall picture of both sides of investment issues.  WT/WGTI/M/17 
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25. Regarding implementation of the technical  assistance programme, his delegation urged 
Members to make full use of the comparative advantages of each international organization - including UNCTAD, the OECD, and the World Bank, as well as the WTO - in providing technical assistance, and to avoid duplication and overlap in thei r activities.  He drew attention to the fact that, 
in May, China was hosting a national seminar on th e relationship between trade and investment to 
facilitate further understanding of the issues, and to  prepare for new negotiations - in which both the 
WTO and UNCTAD secretariats were participating.   His delegation also believed that, at this 
moment, the Working Group should concentrate its effo rts first of all on FDI - a point which he would 
make in greater depth under the second agenda ite m on scope and definition - and then expand its 
focus gradually and progressively into other investment areas. 
26. The representative of Venezuela
 recalled that the Doha mandate directed the Working Group 
to focus on issues of importance to developing countr ies, and to examine the implications of closer 
multilateral cooperation in that context.  His de legation believed that UNC TAD had unique expertise 
in this area, and was concerned about that Orga nization's current financial difficulties and their 
implication for the investment-related technical a ssistance programme.  He hoped that the situation 
would soon be resolved and that UNCTAD’s activ e participation would continue.  Finally, he 
expressed his delegation's support for Brazil's proposal that the Secretariat undertake a detailed study of FDI and its relationship to technology transfer. 
27. The representative of the Czech Republic
 noted that the Doha Declaration represented the 
first time that Ministers had acknowledged that inve stment was a subject for WTO negotiations.  That 
provided the Working Group a new mandate to in crease its activities, and Members were now 
embarked on the same boat sailing towards the sa me port.  The new work programme was both 
encouraging and demanding.  In order to complete it successfully, delegations  could benefit from the 
many ideas, views, and submissions that had alread y been expressed in the Working Group, as well as 
in other fora.  His delegation was prepared to look at inputs from a variety of sources to ensure that 
work progressed rapidly and the duplication of effo rt was avoided.  Regarding technical assistance, 
his delegation was convinced that the joint WTO-UNCTAD programme would help developing 
countries to better understand the issues at hand, and to  participate fully in future negotiations, which 
remained his delegation's objective in this area.  
28. The representative of Morocco  made three observations on the subject of technical assistance 
and capacity building.  First, the objective was to ensure that developing countries could make 
informed decisions regarding investment negotiations by the time of the 5th Ministerial Conference.  
This meant that there was an implicit timeframe to  respect.  Second, technical assistance and capacity 
building also needed a longer-term horizon and more stable and predictable sources of financing.  In 
light of the concerns expressed about UNCTAD’s fina ncial situation, and th e undeniable contribution 
of UNCTAD to development issues, his delegation hoped that a solution to its current difficulties 
would soon be found.  Third, given the complexity  of the issues facing developing countries, focussed 
and "targeted" content was indispensable to an  effective programme of technical assistance and 
capacity building.  Morocco had therefore submitt ed a request to the Secretariat focusing on its 
specific needs in that regard.   
29. The representative of Australia  drew attention to the active programme of technical 
cooperation and policy dialogue in which Australia was currently engaged in its region.  This 
programme aimed to strengthen the capacity of de veloping countries to participate in global and 
regional trading arrangements and in investment de velopment.  Over the past year, for example, 
Australia had been particularly active in investme nt policy development in the Asia Pacific region, 
including projects in Indonesia, Thailand, and Cam bodia.  Regarding other organizations, Australia 
was collaborating closely with the World Bank’s fore ign investment advisory service, providing core 
funding for its Asia Pacific regional office, and u tilising its expertise in investment policy review 
projects.  Expanding on what other delegations had mentioned, she drew particular attention to two 
OECD projects.  One was a comprehensive study on the benefits and costs of FDI for development, WT/WGTI/M/17 
Page 8  
 
which would be published in the second half of 200 2.  The second was a report dealing with policy 
competition for FDI, a subject which was of interest  to developed as well as developing countries.  
This study would outline a "check-list" of guiding pr inciples and criteria to be considered by policy 
makers when deciding on the desirability and form ulation of measures for implementing investment 
incentives.  As Mexico had already noted, the A PEC investment experts group was holding a seminar 
in Mexico in May on the Doha Development Agenda as  it related to trade and investment.  This year 
APEC had also started an enhanced peer review process which included assessments of member economies progress and future plans for investment li beralization.  Finally, Au stralia appreciated the 
Secretariat’s ongoing work in this area, in conjunctio n with UNCTAD.  Her dele gation wished to hear 
more from other Members about their priorities and needs for technical assistance and capacity 
building.  
30. The representative of Cuba
 shared the concerns about UNCT AD’s financial difficulties, and 
hoped that the problem would soon be solved.  Li ke India, Cuba felt that its knowledge in the 
investment area was insuffi cient, and believed that the conti nued support of UNCTAD was crucial.  
Cuba wanted to associate itself with the Chairman’s  proposal that the Working Group be free to return 
to any issues at any point in the process.  Finall y, Cuba supported Brazil's proposal for a Secretariat 
study on FDI and the transfer of technology. 
31. The representative of Turkey  expressed concern regarding UNCTAD’s financial problems 
and the risk this posed to the joint WTO-UNCTAD programme of technical assistance.  He hoped that 
the donor countries would continue to support UNCTAD’ s work, as they had done in the past.  His 
delegation believed that UNCTAD had a unique mi ssion in the development area, especially as 
regards trade and investment issues.  Specifica lly, he felt that UNCTAD could provide useful 
analytical contributions on subjects such as scope and definition, transfer of technology, the relationship between bilateral, re gional and multilateral investment regimes, and the architecture of a 
possible multilateral framework on investment.  His delegation urged even mo re cooperation between 
the WTO and UNCTAD in carrying out this  analytical work in the future. 
32. The representative of Switzerland
 pointed out that while some of the subjects identified in 
paragraph 22 of the Doha Declaration had been di scussed very little in the Working Group, others had 
been examined more extensively.  Given the limited time remaining before the 5th Ministerial 
Conference, the Working Group would need to be mo re focused in its discussions, and would need to 
draw on existing bodies of knowledge, in particular  the contributions to the Working Group since 
1996.  Options for - and various key components of  - a multilateral framework would need to be 
identified as early as possible.  Switzerland fully supported technical assistance, particularly 
programmes aimed at building negotiating capacity. 
33. The representative of Indonesia  shared the view that technical assistance and capacity 
building were crucial to improving Members' unders tanding of the key elements in paragraph 22 of 
the Doha Declaration.  For Indonesia, technical as sistance was not simply a training exercise, but a 
deeper process of analysis aimed at explaining th e major implications of foreign investment for 
economic development.  In addition to providing technical assistance seminars, it was necessary to undertake policy analysis of the development aspects  of foreign investment.  In this light, his 
delegation supported Brazil’s proposal to study the relationship between FDI and the transfer of 
technology.  Regarding UNCTAD’s current funding di fficulties, Indonesia hoped that this was only a 
temporary problem that would be resolved in the near future.  Finally, he thanked the WTO 
Secretariat for helping to convene a national seminar in Indonesia on trade and investment in May.   
34. The representative of Colombia
 said that her delegation attached great importance to technical 
assistance, especially to its role in helping deve loping countries to evaluate the impact of a 
multilateral framework on investment within the WTO.  In that connection, she welcomed the 
regional seminar to be held in Costa Rica, and s uggested that one subject for discussion should be the 
impact of government incentives on investment deci sions in different countries.  Columbia was  WT/WGTI/M/17 
 Page 9 
 
 
concerned about investment incentives, and believed th at it was important to analyze their impact in 
order to evaluate the benefits of multilateral investment rules. 
35. The representative of Norway  agreed with India that the relationship between trade and 
investment was a complex one.  In this respect, the educational process within the Working Group on 
trade and investment issues, initiated in Singapor e in 1996, had contributed greatly to Member's 
understanding of this complex issue.  His delegation al so agree with Canada that it was crucial that all 
Members were equipped to participate fully in the Working Group, and to exercise their rights in 
negotiations - which was why Norway was one of th e contributors to the Doha Development Agenda 
Technical Assistance Fund.  Norway  also agreed that technical assi stance should be "demand-driven", 
and that the focus should be on preparations for WTO negotiations and  implementation of 
multilateral rules.  His delegation had noted the concerns expressed regarding UNCTAD's funding, 
and he would convey these concerns to capital to ensu re that they were reflected in Norway's position 
at UNCTAD meetings. 
36. The representative of Egypt  noted that the Doha Declaration had clearly recognized the 
importance of technical assistance and capacity bui lding for developing countries, especially in the 
area of investment.  Technical assistance for deve loping countries should be tailored to each country's 
specific economic situation.  It should help indi vidual countries to understand the various issues and 
subjects related to investment.  It should also enha nce the analytical capabilit ies of the officials in 
charge of investment matters in host countries.  The focus should be on raising the capacity of 
investment institutions to promote FDI and to create meaningful linkages between transnational 
corporations and domestic small- and medium-sized enterprises.  Finally, it was important to 
understand the responsibilities of both ho me and host countries in the investment field.  It was Egypt's 
view that an assessment should be carried out to determine whether the technical assistance 
programme was producing useful outcomes and fu lfilling its main objective - namely enhancing 
developing countries’ knowledge of investment issu es.  Egypt also supported Brazil's proposal for the 
Secretariat to conduct a detailed study on the relatio nship between FDI and the transfer of technology. 
37. The representative of Uruguay  agreed on the importance of technical assistance and capacity 
building for the future progress of  the Working Group.  His delegation welcomed confirmation of the 
regional seminar for Latin America to be held in Costa Rica.   He highlighted the key role that 
UNCTAD played in the i nvestment area, and hoped that its cu rrent financial difficulties should be 
resolved as soon as possible so that Members could continue to benefit from UNCTAD’s expertise.  
38. The representative of the United States  also applauded UNCTAD's investment work.  As 
regards Brazil's proposal concerning a Secretaria t Note on the relationshi p between FDI and the 
transfer of technology, she asked whether a Secr etariat study of the subject already existed. 
39. In light of the growing number of seminars on technical assistance and capacity building that 
were planned, the representative of Korea , like Japan, believed that emphasis should be placed on 
seminars which were "needs-based".  Developing an d least-developed countries were best placed to 
identify their technical assistance and capacity-bui lding needs, and seminars should be designed 
accordingly.  Also, seminars should be interactive. Instead of a platform for one-way teaching, they 
should provide a forum for two-way dialogue and the exchange of views.  
40. The representative of Malaysia  expressed concern about UNCTAD's lack of adequate 
resources to carry out its share of joint technical assistance activities.   His delegation hoped that these 
problems would be short-lived.  Regarding the point  made by Japan and others about the importance 
of "demand-driven" technical assistance, he noted that for many delegations – including Malaysia - 
the problem was that they did not know what to as k for in the first place, given that the subject of 
trade and investment was so complex, with so  many unforeseeable ramifications for developing 
countries.  This was not to say that Malaysia doub ted the positive role of FDI, which had played a 
tremendously important part in Ma laysia’s economic development.  But because of the novelty of the WT/WGTI/M/17 
Page 10  
 
subject, it was impossible, at this point in time, for Malaysia to outline exactly what it needed in terms 
of technical assistance and capacity building except in  the most general terms.  Therefore, as the 
technical assistance agenda progressed, it would be im portant to have the flexibility to return to 
specific subjects, and to ask for further refinement s in specific areas.  His delegation also supported 
Brazil’s proposal for a study on the relationship be tween FDI and the transfer of technology.  
Although the Secretariat had prepared a Note on this  subject several years ago (WT/WGTI/W/65), it 
would be worthwhile to examine whether discussi ons had progressed since then, and whether new 
areas of interest should be included.  This was not to suggest that Malaysia doubted the positive role 
of FDI in technology transfer.  Nevertheless, to th e extent that technology had been transferred to 
domestic economic actors through foreign investment , it was often because certain domestic policy 
instruments (such as technology licensing agreements ) had channelled it in this way, not because 
markets had been left free to operate on their own. 
41. The Working Group took note
 of the statements.   
B. PARAGRAPH 22 OF THE DOHA MINISTERIAL DECLARATION  
42. The Chairman  recalled that at the Working Group's last meeting it had been agreed to focus 
discussions on "scope and definition" and "transpare ncy" which were the first two items listed for 
clarification in paragraph 22 of the Doha Declaration  
(i) Scope and definition 
43. The Chairman  drew Members' attention to the background Note prepared by the Secretariat 
on "scope and definition" (WT/WGTI/W/108), as well as to written contributions on this subject that 
had been received from Japan (WT/WGTI/W/111), Canada (WT/WGTI/W/113), Korea 
(WT/WGTI/W/114), and the European Communities (WT/WGTI/W/115).  He reminded delegations 
that written contributions should be submitted at leas t 10 days in advance of meetings of the Working 
Group in order to give Members time to prepare for discussions. 
44. The representative of Japan  introduced its submission (WT/WGTI/W111).  Clarification of 
"scope" and "definition" in a possible multilatera l agreement on investment was an important 
exercise, inextricably related to the overall framew ork of such an agreement and the substance and 
coverage of its individual clauses. Japan believe d that it was important for the Working Group to 
discuss and understand the basic characteristics of va rious kinds of investment activities.  On the 
subject of scope, Japan's paper dealt with th e relationship between a multilateral investment 
agreement and the rules and commitments of exis ting investment-related agreements in the WTO, 
particularly the GATS.  In that context, Japan ma de three points.  First, while the GATS provided 
investment rules for the services sector, there were no comprehensive WTO rules for direct 
investment in the non-service sector, particularly for manufacturing.  Annex 2 of the Japanese paper demonstrated that investment in the manufacturing sector was not only large, but comparable to investment in the services sector.   Indeed, for de veloping countries, the highest percentage of FDI 
(roughly 70 per cent) was in the manufacturing sector.  Second, if Members chose to adopt new WTO 
rules for direct investment in the non-service sect or, it may not always prove practical or easy to 
classify whether individual investment activities be longed to the manufacturing or the service sector.  
He suggested that delegations might wish to study the issue of the relationship between the 
applicability of two sets of rules - for services and for non-services - and determine whether an eventual agreement should include a preference or  subordination clause.  Third, the paper addressed 
the question of the methodology of industrial classification.  Given that a possible multilateral 
agreement on investment could adopt a "positive list"  approach, the issue of industrial classification 
was unavoidable.  One option was to make the classi fication table for the non-service sector the basis 
for the schedule of commitments, as was the case fo r GATS.  The services sectoral classification list 
had been developed by the Secretariat, drawi ng on the existing United Nation CPC - or Central 
Product Classification - system.  In that list, the services sector was classified into 155 sub-sectors,  WT/WGTI/M/17 
 Page 11 
 
 
from which Members identified the service sub-sect ors where they were prepared to undertake 
specific commitments and obligations.  It might be worthwhile to also study the option of using the so-called HS classification - Harmonized Commodity  Description and Coding - which was used in 
merchandise trade. 
45. As regards definitions, Japan believed that  the Working Group should begin with an 
enterprise-based concept for two reasons.  First, l ong-term investments, which were captured by an 
enterprise-based definition, contributed more to  trade growth and economic development in host 
countries.  Japan did not think it appropriate that short-term, speculative inv estment should be covered 
by the legal framework of the WT O.  Second, an enterprise-based definition could be more easily 
classified, from a methodological and statistical point of view, in a future multilateral agreement.  
Having said this, Japan was aware that there were exce ptions to these generalizations.  Some portfolio 
investment could clearly be longer-term in nature; just as some foreign investment amounting to less 
than 10 per cent ownership could still exercise a cont rolling interest in firms.  The question was still 
open as to whether such investment should be exclude d from an eventual agreement, and perhaps, in 
the end, the Working Group would need to be mo re flexible in its approach to definitions. 
46. The representative of Canada
 introduced its submission (WT/WGTI/W113).  He noted that 
the "scope" and “definition” of key terms was fundamentally important to the underlying architecture of any prospective multilateral agre ement on investment in the WTO.   In considering them, Canada 
had been governed by paragraph 22 of the Doha Decl aration, in particular its requirement that any 
framework balances the interests of home and host countries, takes due account of the development 
policies and objectives of host governments, and r espects governments’ right s to regulate their 
economies in the public interest.  Canada belie ved that the Working Group would benefit from 
agreeing on a general approach, or what had been characterized by the European Communities, India 
and others as a “common understanding” with respect to  scope and definition.  In Canada's view, this 
would provide a solid basis on which to continue clar ifying specific concepts with a view to providing 
a basis for a decision on the modalities of negotiatio ns, without prejudging outcomes.  In so doing, 
Canada was keeping its options open; rather than negotiating, Canada sought to preserve options and 
to assist Ministers in their consideration of po ssible modalities for negotiations when they met in 
Mexico next year. 
47. Canada believed that adopting a broad, asset-b ased definition could be the best means of 
facilitating this.  In this vein, part of Canada's  submission sought to assuage concerns about what a 
broad asset-based definition of investment did – and did not – encompass.  As indicated in 
paragraph 5 of the Secretariat Note, the scope and coverage of many investment treaties was defined 
and delineated in three ways:  through definitions of key terms in the treaty; through the substantive 
provisions themselves, including exceptions; and through the way in which commitments to the provisions were made.  Definitions could also be complemented by an article or provision on “scope” 
itself, wherein the coverage of the agreement as a whole was addressed.  This could help set out the 
framework for an agreement and set the stage for the rest of the provisions. 
48. Any prospective framework on investment in th e WTO would clearly be anchored within, and 
interact with, the network of other agreements  and understandings affec ting foreign investment 
already embodied in the WTO, such as the TRIMs, TRIPS, SCM, and particularly the GATS agreements.  Thus any definitions associated with i nvestor or investment, and indeed the scope of any 
agreement, would be effectively circumscribed by virt ue of the fact that it would exist in the WTO.  
This was a factor that did not arise in bilateral i nvestment treaties (BITs).  Canada's experience with 
the NAFTA approach could be of interest in this  respect since it provided an example of how an 
investment agreement may be drafted to co-exist with other relevant provisions, both within and 
outside the investment chapter, on such issues as in tellectual property, cross-border trade in services, 
and financial services, among others. WT/WGTI/M/17 
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49. With respect to the definition of investment , it was debatable whether a narrow FDI-based 
definition would adequately embrace the way in wh ich international investment takes place in the 
contemporary globalized economy.  Relying on tests of  ownership and control of an investment could 
be arbitrary.  For example, controlling interests in  foreign enterprises represented considerably less 
than 50 per cent of the investments held by Cana dian investors abroad, as well as those held by 
Canadian investors in Canada.  Furthermore, any a ttempt at defining “control” at a fixed level (10 per 
cent, for example), raised its own problems in a dynamic economy:  For example, was it necessary to 
maintain this threshold at the time of an investme nt?  Throughout its existence?  At specified time 
periods?  On the other hand, a broad definition of in vestment could include other kinds of investment 
associated with enterprises – for example equity pa rticipation, debt securities or other kinds of 
interests that entitled the investor to have access to the profits of an enterprise, or to some part of the 
liquidation of an enterprise. 
50. Canada also would support definitions that were  clear with respect to any prospective dispute 
settlement facilities.  To this end two points were im portant:  first, not incl uding short-term capital 
flows with no connection to an investment with in the scope of any treaty (the Working Group on 
Trade, Debt and Finance, as well as financial service s experts could assist with this);  second, aiming 
for an exhaustive (ie., closed) list of what constitu tes an investment.  Nonetheless, recalling that a 
broad definition of investment could be effectively circumscribed thanks to the way it interacted with 
other provisions and agreements in the WTO, a nd could accommodate develo pment, prudential, and 
other goals, Canada maintain that a broad-based approach could respond to the Doha Declaration’s 
affirmation of the right of states to regulate in the public interest.  It also more closely approximated 
to the way in which investors considered their assets when making investment decisions.  Canada 
fully endorsed the notion of “flexibility” in inv estment agreements, whether for developmental 
purposes or other reasons, and saw no a priori  reason why the definition of investment in any 
prospective investment agreement within the WTO sy stem could not be circumscribed in a number of 
ways, including with respect to pre-establishment market access, particularly in some sectors. 
51. The representative of Korea
 introduced its submission (WT/WGTI/W114).  In defining 
investment, Korea thought it important to emphasi ze the basic purpose of a multilateral investment 
framework.  Korea turned to th e specific mandate of the Worki ng Group as set out in the Doha 
Declaration, from which it was able to identify several key purposes of a multilateral investment 
framework.  First, like other WTO agreements,  it sh ould be binding in nature in order to secure the 
objective of "transparent, stable and predictable c onditions" for investment.  Moreover, this objective 
could be achieved only if investment liberalization w as backed up by measures to protect investments.   
Second, a multilateral framework should contribute to  “long-term” investment and the "expansion of 
trade".  This led Korea to assume a limited definitio n of investment, with the focus primarily on FDI 
and excluding speculative, short-term flows.  Third, a multilateral framework should encompass the 
overriding objective of the Doha Declaration - namely, the high priority that mu st be attached to the 
needs of developing countries. This consideration,  for instance, led Korea to exclude short-term 
financial transactions in the definition of investme nt, because developing countries tended to be more 
vulnerable to such speculative financia l transactions than developed countries. 
52. With these objectives in mind, Korea wished to make several suggestions.  The first was the 
need for flexibility in the definition of investme nt. As the Chairman had noted, the Working Group 
could revisit the issue of definitions after it had discussed other substantial subjects, which could 
provide delegations with a clearer direction on the overall framework.  For example, if necessary, 
Members might decide to look at a broader, asset-b ased approach, and then narrow down or limit its 
scope to exclude short-term, speculative investme nt, and to focus on FDI with a trade expansion 
effect.  The second point was the need to begin th inking about which benchmarks should be used to 
determine a controlling interest in an enterprise. Korea suggested using existing norms.  For example, 
a 10 per cent equity investment level, as used by the IMF, might be appropriate when attempting to 
distinguish between FDI and portfolio equity inv estment.  While certain delegations may have a 
compelling reason for not using this number, this did not alter the fact that some benchmark was  WT/WGTI/M/17 
 Page 13 
 
 
necessary in order to make the multila teral framework predictable and tr ansparent.  Lastly, there was a 
need to examine the relationship between existing BITs and the proposed multilateral framework.  It 
was Korea's preliminary view that the multilateral framework should incorporate at least the least 
common denominator of BITs for the protection of investment.   
53. The representative of the European Communities,  in introducing its paper 
(WT/WGTI/W114), made three observations.  The first was the growing relevance of FDI to 
international trade.  According to UNCTAD, 50 pe r cent of world trade was now intra-firm trade, 
underscoring the extent to which FDI had become a ma in generator of trade flows.  The second point 
was the extent to which WTO rules already addressed  investment issues in the context of existing 
agreements, in particular the services agreemen t.  Again according to UNCTAD, roughly half FDI 
took place in the services sector.  To the extent that GATS mode 3 was actually an investment 
agreement, then a relatively large share of foreign investment was already covered by the multilateral 
trading system.  The third point was that FDI involved both a static and a dynamic element.  In order 
to arrive at an asset, a transaction must first take place.  Thus, by definition, FDI had an asset-based as 
well as transaction-based dimension.  The comm on definitions of investment – "asset-based", 
"enterprise-based", "transaction-based", etc. – we re more accurately understood, not as entirely 
separate concepts, but as aspects of, and perspectives on, the same phenomenon. 
54. The EC's paper focused on one option, FDI.  FD I was defined according to two basic criteria:  
first, a long-term relationship betw een the investor and the investment; and second, the exercising of a 
significant degree of influence or control over an in vestment.  Neither concept was  entirely new to 
the WTO.  The definition of legal entities in the GATS implied a degree of long-term ownership or 
control.  The paper then explained what was not in cluded in the notion of FDI - namely, those forms 
of short-term portfolio transactions that were ne ither long-term, nor conveyed a significant degree of 
influence.  He noted that the question of whet her an agreement should contain a narrow or wide 
definition of investment was often thought to determ ine the flexibility of the agreement, and its ability 
to respond to development concerns.  But this wa s not necessarily the case.  The scope of an 
investment agreement could be narrowed through vari ous provisions - i.e., its general obligations, the 
substantive commitments and reservations, as well as its  definitions.  In order to create a sufficiently 
flexible agreement, it was neces sary to examine how each of these elements fitted together and 
interacted. 
55. There were a variety of methodologies for iden tifying a controlling interest, and the paper 
suggested that employing the 10 per cent rule to de fine foreign ownership a nd hence FDI – which was 
the threshold used by the IMF – may not be al ways useful.  There were numerous cases where 
effective influence or control over the manageme nt of a company could be exercized by having a 
share of equity capital of less than 10 per cent.  The paper also acknowledged – as did the Secretariat 
Note – that there may be a utility in employing different definitions of investment depending on 
whether it applied to the pre-establishment or pos t-establishment phase of the investment cycle.  
Finally, as regards the definition of “investors”, the paper suggested that this should include all natural 
and legal entities from WTO Members, incorporated or unincorporated. 
56. The representative of the Secretariat  introduced its background No te on scope and definition 
(WT/WGTI/W108), which, he explained, served a dua l purpose.  First, it took stock of the Working 
Group's deliberations on the issue so far, in order to serve as a basis for further discussions.  There 
had been eleven written submissions on the issue of definitions in international investment 
agreements, either by Members or observers orga nizations (such as the UNCTAD and the IMF).  In 
addition, there had been a large number of oral  interventions, as reported in the minutes of the 
Working Group.  All of these inputs had been factor ed into the Secretariat Note, which also drew on 
an examination of relevant provisions in existing b ilateral, regional and multilateral instruments.  The 
second purpose of the paper was to provide relevant ma terial for the Secretariat to use in its on-going 
technical assistance and capacity-building activities.  An effort was made to ensure that these papers 
contained basic descriptive facts and concepts that  Members would need in order to be able to WT/WGTI/M/17 
Page 14  
 
evaluate for themselves different approaches to the issue of scope and definition in light of their 
development policies and objectives. 
57. The paper made the point that definitions we re important because, along with the treaty's 
substantive obligations and specific commitments, th ey set the scope and coverage of international 
agreements and treaties.  This was particularly true for investment, as definitions contributed to 
determining the type of investment  to be covered, the policies subject to the treaty's obligations and 
the kind of investors who enjoyed rights and oblig ations under the treaty.  Definitions generally 
focussed on the terms "investment" and "investor", an d the relationship between the two. These issues 
needed to be taken up at an early stage of the d esign of a treaty, although, once again, definitions 
could only been seen in light of the substantive provisions of the treaty.  The paper went through the 
main categories of definitions found in internati onal agreements. These were essentially, on the one 
hand, broad, asset-based definitions, with different options to narrow it down,  and, on the other hand, 
intrinsically narrower definitions such as the en terprise-based definition and the transactions-based 
definition.  However, when it came to finding a c oncept close to that of FDI, these definitions tended 
to converge: an asset-based definition limited to st ocks and other participa tion in companies was not 
far from the enterprise-based definition, which was itself relatively close to the transaction-based 
concept of direct investment.  The paper attemp ted to summarize the Memb ers' initial discussions 
regarding the merits and demerits of each of th ese definitions, which to a large extent raised the 
question of the merits and demerits of including portf olio investment in the definition of investment 
and the ways to treat differently and separately specu lative, short-term capital flows.  Efforts were 
made in the paper to examine the outstanding questions  left by each category of investment definition, 
and the link between these definitions and the GATS concepts. 
58. The representative of Costa Rica
 suggested that Canada's paper was extremely useful in 
approaching the question of definition.  As noted  in paragraph 3, any multilateral framework should 
be sufficiently flexible to reflect the evolving na ture of financial flows, the changing relationship 
between states and investors, and the specific needs of developing countries.  As noted in the papers 
by the Secretariat and Canada, the scope of any treaty on investment depended not only on its 
definition of investment, but on its general obliga tions and the specific commitments undertaken by 
Members.  In the last stage of the Working Group’s work before the 4th Ministerial Conference, Costa 
Rica had submitted a document (WT/WGTI/W/60) in whic h it laid out its views with regard to the 
issue of definition.  In that paper, Costa Rica was in favour of a broad, asset-based definition of investment, and saw a number of advantages to that a pproach.  First, many of the bilateral agreements 
that were in force contained definitions which were  asset-based, because this  was part of the legal 
framework of the partner countries.  Second, a br oad definition tended to better reflect the complex 
and fast-changing reality of global investment flows.   Third, an asset-based definition could provide a 
certain flexibility in an eventual  agreement which would allow Memb ers to adapt to the changing 
needs and demands in the future. 
59. As other delegations had already noted, it was im portant to reiterate that the focus of the Doha 
mandate was first of all on long-term investment , and not on purely speculative investment.  The 
European Communities' document made some in teresting observations on the differences between 
long-term investment and other types of investme nt.  These observations could contribute to drawing 
the line between the kind of investment that delega tions were mandated to examine in this exercise, 
and other kinds of investment.  Nevertheless, as the European Community also recognized in 
paragraph 15 of its paper, this  criteria had to be applied carefully, because important types of 
investment could inadvertently be excluded.  Cost a Rica agreed with Japan, in paragraph 14 of its 
paper, that international investme nt had diversified in recent years,  and that the distinction between 
FDI and portfolio investment was no longer clear-cut.  Costa Rica also agreed with the point made in paragraphs 23 and 24 of Japan’s document, that mu ch portfolio investment now involved a degree of 
active participation in management from a long-term perspective. The fact w as that not all portfolio 
investment was speculative in nature, and this rea lity should be accommodated in a definition of FDI.  
In summary, Costa Rica believed that a definition of investment must comply with the following  WT/WGTI/M/17 
 Page 15 
 
 
criteria:  First, it must be comprehensive – that is  to say, the definition should encompass everything 
that could be considered a long-term investment.  Second, the definition should be precise, so as to 
avoid giving legal protection to capital movements that were simply speculative and short-term.  
Third, the definition should be based on realistic cr iteria, and should recognize the different forms that 
foreign investment could now take.  Fourth, the definition should take into account the existing 
investment provisions in WTO agreements, such as the GATS.  As Japan's paper pointed out, it was 
increasingly difficult to separate services from goods in  the real economy, so Members should aim for 
a uniform or harmonized framework which embraced both.  This point about the needs for architectural complimentarily was also raised in th e Canadian paper in respect to the NAFTA.  Costa 
Rica agreed that it was important to take into account how a WTO framework on investment would 
relate to substantive commitments in other international agreements.    
60. The representative of New Zealand
  agreed with India about the complexity of the issues 
facing the Working Group, as well as the need to keep open the possibility of discussing at each 
meeting some or all of the 7 issues.  What became  clear, in analysing the background papers, was that 
these issues were closely tied together, and that it was difficult to discuss one in isolation from the 
others.  Using the seven issues as basic building blocks, Members could create a wide variety of 
different investment agreements; and that was in  fact what was found when reviewing the many 
hundreds of bilateral, regional and mu ltilateral investment agreements in  existence today.   The task 
facing the Working Group was to determine how the seven issues listed in paragraph 22 - and perhaps 
others as well - fitted together in order to r each a common understanding about the agreement's 
architecture.  This was the essence of what was stated  in paragraphs 23-25 of the Secretariat Note.  It 
noted that the scope of an international invest ment agreement (IIA) - or its architecture - was 
determined by three main elements:  its defin itions, its substantive provisions, and its specific 
commitments.  In a final agreement, the three el ements were inseparable.  Yet in starting out to 
construct an investment agreement, each of the thr ee basic building blocks could be used separately in 
different ways, depending upon what kind of eventual architecture was intended. 
61. For example, several delegations had suggested that the starting-point for the Working Group 
should be a focus on FDI.  From the point of view  of definitions alone, that might argue for limiting 
the scope of an investment agreement using an  "enterprise-based" definition. However, other 
delegations had argued that, rather than trying to  limit an investment agreement's scope through its 
definitions, this could be better done through varying the agreement's substantive provisions.  Even if 
Member's were to choose a broad, asset-based defin ition of investment as the starting-point, the scope 
of the agreement could be narrowed down to FDI - or perhaps to long-term, cross-border investment 
that would capture some elements of portfolio inv estment too - by applying substantive obligations 
only to those assets.  Three examples of this kind were given in paragraph 23 of the Secretariat Note.  Paragraph 24 illustrated yet anothe r way of limiting the scope of an investment agreement, again not 
through its definitions or general obligations, but through its specific commitments.  Starting out 
again from a broad, asset-based definition of investment, it might be decided to exclude the coverage 
of services from an investment agreement.  This could be done by excluding services from the agreement through the provisions on its scope or its definition; or it could be done by limiting the 
specific commitments to non-service sectors of the economy.  There was an important difference between the two, that hinged on the difference between an agreement that aimed to provide 
investment protection and an agreement that aime d to provide market access - broadly speaking, the 
difference between pre-establishment and post-est ablishment treatment of investment.  Excluding 
services from the scope of the agreement altogeth er would mean that any investment protection 
provisions that it included would not apply to the services sector.  Excluding services only from the specific commitments, on the other hand, would allow the investment protection provisions to apply to services as well.  Other ways of limiting an ag reement's scope, other than  through its definitions, 
also existed.  Some of these were listed in para graph 25.  The basic point was that Member's needed 
to look at the issue of definition more broadly, and consider how it interacted with the general 
obligations and specific commitments in determini ng the overall scope of an eventual agreement. WT/WGTI/M/17 
Page 16  
 
62. The representative of India
 emphasized that discussions in the Working Group needed to 
proceed in accordance with the manda te outlined in paragraphs 20-22 of the Doha Declaration, read in 
conjunction with the Chairman’s Statement at the Mi nisterial Conference.   Members should not read 
more into the wordings in these paragraphs than what the Ministers themselves intended, nor attempt 
to anticipate the Ministers’ decision at the 5th Mini sterial Conference.  It was perhaps too early to 
come to any a priori  conclusion on scope and definition.  In the process of studying the issues 
identified in paragraph 22 of the D oha Declaration, the contours of the subject “trade and investment” 
would become more clearly defined.  Besides, th e amount of information delegates had on this issue 
was scanty, and would need to be enhanced thr ough technical assistance and capacity building.  Any 
remarks his delegation now made on this subject were  thus preliminary, and he reserved the right to 
revert to this subject as and when the informati on base expanded, and as his delegation acquired more 
knowledge about the subject. 
63. It was important to look carefully at paragra ph 20 of the Doha Declaration when examining 
scope and definition issues.  Paragraph 20 rec ognized the case for a multilateral framework to secure 
transparent, stable and predictable conditions.  Th is essentially meant that Ministers decided to look 
more carefully at the case made by protagonists of  a multilateral framework in a focused manner, as 
indicated in paragraph 22, in order to determine at the next Ministerial Conference whether Members 
should proceed with negotiations of modalities.  Para graph 20 also seemed to indicate the nature of 
the investments that could be looked at.  The wo rds used were: “long term cross border investment, 
particularly foreign direct investment, that will contribute to the expansion of trade.”  Seen from the perspective of paragraph 20, the asset-based definition appeared to be much too broad.  When looking 
at long-term investment that contributed to the expansion of trade, obviously an enterprise-based 
definition appeared to be a more a ppropriate starting point for analysis. 
64. India believed that it would be useful to iden tify different types of long-term, cross-border 
investment, and study their implications for the expa nsion of trade.  For instance, certain types of 
enterprise-base FDI contributed to the expansion of tr ade more than other kinds of investment.  While 
the bulk of FDI flows continued to seek existing domestic markets in host countries – in the process, 
displacing domestic trade – export-platform inv estment undertaken by multinational enterprises as 
part of a process of restructuring of production accord ing to international differences in factor costs 
had contributed to the expansion of trade.  Export- oriented FDI had evidently helped East and South-
East Asian countries to rapidly build their manufact uring and export capabilities.   Literature published 
in professional journals suggested that export-orient ed FDI was a special category and was shaped by 
different factors.  Therefore, it was important to examine the conditions and factors that promoted 
export platforms or export-oriented FDI. 
65. The point made by China regarding the need to study the factors underlying the absorptive 
capacity of countries at different levels of devel opment for FDI was extremely relevant.  Reviews of 
literature and further studies on determinants of export-oriented FDI would help the Working Group 
to clarify the issue of scope and definition, keep ing in mind the focus on long-term investments that 
contributed to the expansion of trade.  It was stat ed in paragraph 22 that any framework should reflect, 
in a balanced manner, the interests of home and host countries, and ta ke due account of the 
development policies and objectives of host governme nts as well as their right to regulate in the 
public interest.  In addition, it w as noted that the trade and financia l needs of developing and least-
developed countries needed to be taken into account .  It was not enough that delegations examined 
investment in terms of its long-term nature and its  contribution to expansion of trade.  The kind of 
investment Members looked at also needed a strong development dimension, to balance the interests 
of home and host countries, and to be  subject to regulatory policies in the public interest.  Thus, a host 
of other issues also needed to be taken into account  such as the extent of value added locally, vertical 
inter-firm linkages, R&D intensity and sectoral co mposition.  Necessary flexibility in government 
policy would be essential to regulate the quality of FDI inflows in tune with developmental priorities.  
To accommodate the development aspects of invest ment, it would be necessary to determine whether 
foreign investment added to the production base or merely crowded out domestic investment.   WT/WGTI/M/17 
 Page 17 
 
 
UNCTAD studies had reported mixed findings.  A recen t study had indicated that FDI had crowded 
out domestic investment in twenty-nine developi ng countries while it had added to the production 
base in another twenty three.  It was important to  examine in more detail the factors that explained 
greater success of some countries in experiencing the more favourable effects of FDI. 
66. A related issue was the question of green-field investments versus the acquisition of existing 
enterprises.  UNCTAD studies suggested that “the poten tial of an adverse effect is greater in the case 
of mergers and acquisition than in the case of green field investment.”  It was important also to point out that there was a basic difference between co mmercial presence under GATS and the concept of 
investment.  While commercial presence was a mode of service delivery, investment involved 
production in a foreign market for sale in that market or export to other markets.  One of the major 
characteristics of service delivery was the need for th e supplier and the receiver of a service to be in 
contact.  Thus mode 3, or a commercial presence, was an essential pre-requisite for the delivery of 
certain types of services, such as banking and insura nce.  However, there were no goods for which a 
commercial presence was inevitably required for deliv ery.  Thus, commercial presence was not quite 
the same as investment in the production of goods. 
67. The question of the flow of funds also need ed to be addressed.  Investment essentially 
involved the movement of capital, and capital tende d to move in various ways from home countries, 
through third countries, and then to host countries.  There could be many channels of such movement, 
and the ultimate investor in the host country may not be the original lender or investor.  Likewise, the 
investor’s genuine interest in the investment al so needed to be established.  Through the use of 
derivatives and other financial instruments, the inte rest of the investor could actually be much less 
than was immediately apparent.  There was a whole minefield which needed to be crossed with great 
caution.  In this connection, he referred to a pape r by J.A. Kregel, Professor of Economics, University 
of Bologna, in which he pointed out that traditi onal definitions of investment emphasized the degree 
of management control exercized by the foreign i nvestor, and had nothing to do with the permanence 
or physical mobility of an investment or its vol atility.  He pointed to the increasing ease with which 
investors could obtain and discharge control of co mpanies through mergers and acquisitions: “Even if 
FDI were redefined so as to include only investments in immobile bricks and mortar, deemed to be of 
a quasi-permanent  nature, it is not evident that th is would mean that FDI w ould have a substantially 
different impact on capital flows and exchange rate management than on other types of flows.  The 
basic reason for this is that recent innovations in  financial markets have  gone a long way towards 
eliminating the concept of a permanent investment in  plant and equipment in much the same way that 
they have eliminated the concept of the maturity of  a financial investment”.  Professor Kregel refered 
to the possibility of converting long-term bonds in to short-term “zero coupon” bonds, the use of 
futures and options contracts to reduce the permanen ce of investment and exposure to market risks, 
and the sale and repurchase transactions that a llowed substantial investment positions to be 
maintained with minimal commitment of owned funds .  The same conditions could prevail for foreign 
portfolio investments and also for FDI.  As prof essor Krugel noted, “an investor can continue to own 
the bricks and mortar without retaining the fore ign country risks, foreign exchange risks etc., 
associated with their perman ent or immobile nature”. 
68. In short, investments of the kind indicated by Ministers at Doha seemed to have the following 
elements:  First, they were long-term in nature, contributing to expansion of trade, and serving the 
development, trade and financial needs of developing  countries.  Second, they took into account the 
interests of home and host countries in a balanced ma nner, including the issue of the flow of funds.  
Third, they were subject to regulation in the public interest.  It was important that further studies were 
undertaken that could bring out the development polic y implications in relation to these parameters.  
The Working Group also must not lose sight of th e measures adopted by developed countries in the 
initial stages of development, as they provided signifi cant pointers to the role played by investment-
related measures in the growth of countries.  The representative of India concluded by reiterating that 
these were only preliminary thoughts, and that his delegation's thinking on this subject would be 
further refined, as more study took place in th e Working Group, and as the technical assistance WT/WGTI/M/17 
Page 18  
 
programme gathered momentum.  However, one point w as clear even at this early stage.  The issue of 
investment had a larger monetary and economic di mension, and it was not immediately obvious how 
this could be straitjacketed within the confin es of trade, which was the remit of the WTO. 
69. The representative of Hungary
 said that, among the issues set out for further clarification in 
paragraph 22 of the Doha Declarati on, scope and definition was of special importance.  In examining 
definitions of investment, FDI clearly met the criteria set out by the Doha Declaration;  the same 
could not be said for other forms of investment, in particular short-term capital transactions.  Even in 
an increasingly globalized economy, the distinction could - and should - be made between investment 
contributing to the physical generation of trad e and production, and investment which was purely 
speculative.  His delegation agreed with the point ma de in the Secretariat Note that the scope of an 
international agreement was shaped by the interplay of three things:  the definition of investment, the 
substantive provisions of the agreement, and th e specific commitments undertaken by individual 
signatories.  This meant that, theoretically, the d esired scope of an eventual agreement could be 
achieved through different approaches.  One could start from a broad definition of investment, and 
then limit the agreement's scope through different substantive provisions; or one could start from a 
definition that in itself closely approximated the de sired scope, and did not n eed to be substantially 
narrowed through the agreement's operative provisi ons.  When it came to choosing among these 
approaches, the Working Group would need to exam ine which was the most effective and clear, as 
well as the least controversial. 
70. Starting from paragraph 20 of the Doha D eclaration and taking into account the MAI 
experience, his delegation tended to favour a narrow definition of investment, which should be spelled 
out clearly in the modalities to be adopted at the 5th Ministerial Conference.  If, as paragraph 20 of the 
Doha Declaration set out, the aim was to c oncentrate on long-term, cr oss-border investment 
contributing to the expansion of trade, there did not seem to be a compelling reason to start from a 
broad definition.  By limiting the definition, Members would save time and effort later when 
discussing the agreement's substantive provisions.  He  recalled that in the MAI negotiations, in which 
Hungary was a participant, much of the problem st emmed from the fact that Parties had adopted too 
broad a definition of investment, making it almost impossible to understand the implications of the 
substantive provisions proposed.  The WTO could l earn from that experience.  Moreover, since the 
decision, expressed in paragraph 20, to negotiate  a multilateral investment framework placed this 
issue in the context of the single undertaking,  the time available for establishing a multilateral 
investment framework and negotiating specifi c commitments clearly fell between the 5th Ministerial 
Conference and 1 January 2005.  The time factor ma de the argument for adopting a simpler and less 
controversial definition of investment even more compelling. 
71. Hungary agreed with the point raised in the Canadian paper that the investment agreement 
should be properly anchored in the WTO.  Particular attention needed to be paid to its possible impact 
on the coherence and operation of other WTO agreem ents, in particular the GATS.  In Hungary's 
view, this was yet another reason to start from a narrow definition of inv estment.  One reason why 
Hungary had advocated the establishment of a mu ltilateral framework for FDI was to redress the 
current imbalance in the WTO system whereby inv estors in the services sector enjoyed benefits under 
GATS, while no similar benefits were available fo r investors in the non-services sector.  Given the 
definition of commercial presence under the GATS, whic h was usefully analyzed in Part V of the 
Secretariat Note, there was no need to start from a broad definition to redress this imbalance.  
Accordingly, his delegation  found the basic a pproach outlined in the EC and Japanese papers 
attractive. 
72. The representative of Hong Kong, China  shared the view that the scope and definition of 
investment and investor were paramount elemen ts, as they would determine the coverage of a 
multilateral framework on investment, which in turn  would have a significant bearing on future 
discussions on other elements of the agreement.   Although it was unlikely that a common position 
could be reached at an early stage, his delega tion hoped that some common understanding of the  WT/WGTI/M/17 
 Page 19 
 
 
issues could be achieved.  As a matter of princi ple, Hong Kong, China supported the view that the 
specific mandate provided for by the Doha Declar ation should guide discussions and work in the 
Working Group.  As far as scope and definition w as concerned, apart from the objective of securing 
transparent, stable and predictable conditions fo r long-term cross-border investment (particularly 
FDI), the development needs of developing and least -developed countries should also be taken into 
account.  Also, any framework to be developed s hould provide flexibility for Members to undertake 
obligations and commitments co mmensurate with their individual needs and circumstances. 
73. He noted from the papers submitted by the Eu ropean Communities, Japan, Korea and Canada 
that there were differences in views as to whether the narrow, enterprise-based approach or the broad, 
asset-based approach would be the more appropriate  starting-point for discussion.  On the one hand, 
Canada preferred a broad approach because limiting the agreement to an en terprise-based definition 
could prove arbitrary and would not capture the way in which businesses curren tly operate.  On the 
other hand, Japan's paper advocated the use of th e enterprise-based approach, limited to FDI as the 
most appropriate starting-point of discussion on de finition, although more detailed considerations 
would be needed on the concept of long-term portfolio  investment.  The EC's paper also proposed that 
several elements be included in the definition of FDI as a starting-point for discussions.  He recalled 
that some Members (mainly developing Members)  had suggested before the Doha Ministerial 
Conference that the definition of investment should be confined to FDI, if only because the linkages 
between trade and direct investme nt were well established, whereas such links were less obvious - or 
even non existent - with respect to short-term flows.   It appeared that adopting a narrow approach, as 
a starting-point, would command greater support among the wider membership. 
74. That said, Hong Kong, China shared Korea's vi ew in paragraph 14 of its paper on the 
importance of maintaining flexibility in incorporatin g the interests of all Members, while giving room 
for the future development of investment rules.  The question was how flexibility could be achieved in 
a possible framework?  Paragraphs 62-63 of the Secr etariat Note suggested, for example, that there 
could be merit in distinguishing between narrow and broad definitions of investment on the basis of 
the nature of the substantive obligations to which they were applied.  The idea was to combine the 
enterprise-based definition and the asset-based definition of investment , while applying the latter for 
the purpose of investment protection at the post-estab lishment stage.  He noted that the EC's paper 
raised similar concerns regarding investment pr otection.  While his delegation understood that a 
mixed approach was not commonly used in existing international investment agreements, Hong Kong, 
China would keep an open mind, if other delegations wished to study this option in greater depth.  
Another possible way to preserve flexibility was to allow for exceptions or reservations to enable 
Members to undertake obligations and commitment s commensurate with their individual needs and 
circumstances.  He noted that the European Communities also sugg ested the possibility of including 
substantive provisions that allow all countries, and in  particular developing countries, to pursue their 
development policies.  Further work in this ar ea would be helpful, as it had a bearing on future 
discussions, not only on scope and definition, but on all other elements to be examined by the 
Working Group. 
75. The representative of Mexico  claimed that the fact that the Working Group was debating the 
differences between direct investment and portfolio investment was important.  There were significant 
reasons why a number of countries preferred a limite d definition of investment – i.e., one focused on 
FDI.  Many countries, especially developing coun tries, were concerned about the destabilizing 
macroeconomic and balance-of-payments effects of so me types of portfolio investment, whereas they 
viewed FDI as more predictable and controlla ble.  He acknowledged that companies with 
multinational structures were increasingly dependen t on the distribution of funds and resources among 
their different branches in ways that sometimes blurred the distinction between traditional FDI and 
portfolio investment.  Nevertheless his delegation supported a liberalization agreement for long-term 
FDI for three reasons:  First, the liberalization of FDI would result in clear benefits; the same could 
not be said for the liberalization of short-term or speculative capital.  Second, Mexico felt that this 
was the type of investment mandated in the Doha D eclaration.  Third, given the short time before the WT/WGTI/M/17 
Page 20  
 
5
th Ministerial Conference, Mexico felt that the Working Group's efforts should not be spread too thin 
– and that the focus should be on the liberalization, ra ther than the protection, of investment.  In this 
respect, Mexico agreed with the option iden tified in paragraph 17 of Korea's paper. 
76. The representative of Brazil  noted that the issue of scope and definition was of fundamental 
importance to the Working Group's discussion.  Its clarification was closely related to the clarification 
of all the other elements contained in paragraph 22 of the Doha Declaration.  Brazil was of the view 
that any further consideration of investment with in the framework of the WTO should apply only to 
FDI.  His delegation recognized the overall pos itive effects brought about by FDI flows to host-
country economies.  However, the problems associat ed with the volatility of capital flows, and their 
adverse impact in situations of crisis, advised agai nst the incorporation of portfolio investment in a 
framework of multilateral rules in the WTO.  Furtherm ore, Brazil noted that the treatment of this issue 
was the object of ongoing work in the competent inte rnational organizations, such as the IMF, in the 
context of discussions on wider matters concerning the international financial architecture.  Moreover, 
the reference contained in paragraph 20 of the Doha Declaration to long-term, cross-border 
investment, particularly FDI, oriented the Workin g Group towards a limited focus on FDI.  In Brazil's 
view, the temporal criterion (that is, long-term as opposed to short-term investment) must be 
complemented by the criteria of ownership and contro l,  In that regard, an enterprise-based definition 
of investment would better achieve the objective of limiting the scope of any further consideration of 
investment in the WTO to FDI. 
77. His delegation wished to make an additional observation concerning the issue of scope, and 
the question of whether any further consideration of  investment in the frame work of the WTO would 
encompass investment both in goods and services.  This was an issue that had not received detailed 
attention in previous debates of the Working Group, but it was of fundamental importance, in Brazil's 
view, not least as regards its implications for the cu rrent architecture of WTO rules, particularly the 
GATS.  The GATS, as Members knew, already covered,  to a great extent, investment in services, and 
addressed a number of aspects that were not limited only to market access and national treatment.  In 
this connection, his delegation was of the view that  any further consideration of investment in the 
framework of the WTO should address only FDI in manufacturing activities. 
78. The representative of the Czech Republic  noted that the definition of investment was a 
complex topic, and that the task before delegati ons was to find a common understanding of the issues.  
Foreign investment per se  covered an extremely large area of cross-border financial transactions, 
which had been classified in a number of different ways by various international institutions, such as 
the IMF and the OECD.  In the view of the Czech  Republic, the expansion of investment flows in 
recent years, mainly in the form of FDI, had prove n its value, and indeed had outstripped the growth 
in world trade.  It was important to note that even  the majority of developing countries recognized that 
FDI had made positive and substantia l contributions to their economic development.  As far as the 
definition of investment was concerned, his dele gation preferred to focus on long-term, cross-border 
investment flows, and to exclude short-term, sp eculative capital movements.  Like the European 
Communities, the Czech Republic believed the emph asis should be placed on long-term relationships 
between the investor and investments, as well as on the effective control of these investments by the 
investor.  In his delegation's view, it was main ly FDI and “greenfield” investments that brought 
growth, know-how, technology, and the expansi on of complementary businesses.  During the 
exercise, the Working Group should also keep in mi nd the existence of the large number of bilateral 
investment treaties, with their own definitions of investment and investors. 
79. The representative of Norway  noted that, in principle, Norway had a clear preference for a 
broad, asset-based approach to the definition of i nvestments.  The arguments in favour of a broad 
definition, to which Norway subscribed, were spelle d out in paragraphs 56-59 of the Secretariat Note.  
Norway believed that such an approach was n ecessary to provide adequate protection to foreign 
investment, and to avoid the difficulties of distingui shing between direct and indirect investment.  
Problems associated with short-term capital movements, that could arise by including portfolio  WT/WGTI/M/17 
 Page 21 
 
 
investment in the definition, could be addressed by exceptions to the obligations of an agreement or 
through safeguard mechanisms.  The flexibility of this approach should also take into account the 
development needs of all Members, as the UN CTAD study on scope and definition indicated.  
Norway also thought that a broad, asset-based defin ition of investment, in an agreement based upon a 
GATS-type approach to specific commitments, would meet the concerns of most countries.  This 
approach would also allow flexibility for host gove rnments to regulate in the national interest.  
However, his delegation was also pr epared to consider a hybrid approach concerning the definition of 
investment, as put forward in paragraph 23 of the Secr etariat Note - i.e., one that limited the scope of 
the definition in the pre-establishment/cross-border investment phase to cover FDI only, while using 
the broader approach in the post-establishment ph ase, for the purpose of protecting investments.  
Regarding the definition of investor, it should be broa d, so as to capture all th ose that actually invest 
in a country.  Therefore, "natural persons" should cover both national citizens and permanent 
residents.  Concerning juridical persons, they shoul d be included in the definition of investor when 
they are established under the law of the party regardl ess of the ultimate nationality of the enterprise.  
Norway thanked Canada for its contribution, and for suggesting an article or provision on scope.  This 
was an idea that his delegation found interesting, a nd believed that it could be useful to include an 
article where scope and coverage was defined. 
80. The representative of Chile  noted that there was a consensu s, made explicit in the Doha 
Declaration, that the objective of a multilateral i nvestment framework was to secure transparent, 
stable, and predicable conditions for long-term cros s-border investment, particularly for FDI.  The 
task before the Working Group was to determine the al ternatives that existed to define long-term FDI.  
A key point, highlighted in the Secretariat Note, as well as in the submissions by Canada and the 
European Communities, was that the scope of wh atever multilateral framework was set up would 
depend on three elements:  the definition of key terms, the substantive provisions, and specific 
commitments.  Today's analysis and exchange of opinions would have to be  revisited, and perhaps 
revised in the future, once the Working Group had provided some clarity on all three elements, and 
their relationship to one another. 
81. The Secretariat Note – as well as the documents  from Korea, Japan, Canada and the European 
Communities – mentioned different ways to define i nvestment. Chile, in its free trade agreements and 
bilateral investment agreements, had opted for an  assets-based definition, as this allowed greater 
flexibility in the definition of i nvestment and enabled Chile to decide which assets were to be 
included.  One interesting point, mentioned in the Canadian paper, was that any multilateral 
framework in the WTO would have to co-exist with the other WTO agreements, many of which 
contained provisions related to investment.  Altho ugh this issue of co-existence would need to be 
analysed in greater depth at future meetings, it see med useful to briefly mention the implications for 
the GATS.  In this context, the Japanese paper provide d food for thought.  Chile shared the view that 
there was a lack of balance in the WTO agreements, because of the inclusion of investment provisions 
related to commercial presence in the services sector, but not in the manufacturing sector.  This made 
little economic sense.  It was instructive to note that national provisions which regulate investment regimes generally made no distinction between invest ments related to services or manufacturing.  In 
order to avoid duplication and overlap with the GA TS, it would be necessary to keep in mind the 
relationship between a multilateral investment fra mework and the services agreement, especially 
regarding liberalization through specific commitments.   In the end, the Working Group might come to 
the realization that two agreements were not needed , and that the aim should instead be to develop an 
investment and transborder trade and services agreement. 
82. The representative of Cuba
 said his delegation could not make specific comments on the issue 
of scope and definition.  On first reading, there appeared to be no common conceptual approach to 
investment.   He noted that further analytical wo rk was necessary, taking into account, in particular, 
the development dimension of each approach.  It wa s important to recognize that the liberalization of 
capital flows was an extremely delicate matter for deve loping countries.  This was why the concept of 
investment, envisaged in any multilateral framewo rk, had to be in accordance with national WT/WGTI/M/17 
Page 22  
 
development policies.  At present there was too little  analysis of the various options before the 
Working Group for Cuba to make an informed judge ment.  However, Cuba believed, as recognized in 
the Secretariat Note, that short-term capital fl ows were not beneficial  for developing countries 
because of their volatile nature and th eir potentially destabilising effects. 
83.  The representative of the United States
 noted that her delegation would avail itself of the 
Chairman’s suggestion that topics addressed at the pr esent meeting could be revisited at a future date.  
She also emphasized that the issue of “scope and definition” was an extremely important one for the 
United States, and that the ability to show flexibility in this area with respect to the concerns of her 
delegation would help the United States to move forward.  While acknowledging that the Doha 
Declaration highlighted long-term, cross-border inve stment as the main subject of the Group’s work, 
she suggested that this language did not preclude the examination of other types of investment when 
discussing the scope of a possible multilateral framework.  The United States’s experience in negotiating over 40 bilateral treaties - primarily with  developing countries - illustrated that a broad 
definition of investment could adequately take in to account the development needs of all members.  
Her delegation understood that some countries we re concerned about the destabilizing effects of 
international capital flows on macr oeconomic management.  The Unite d States believed that there 
were better ways to deal with this problem than  through balance-of-payments restrictions, and that 
restricting transfers was likely to prove a self-defea ting strategy.  Although such measures could offer 
a short-term improvement in the balance-of-payment s, over the longer term restrictions discouraged 
investors from new investment and re-investment .  Sound macroeconomic policies and a strong, 
consistent regulatory environment we re more likely to help countries av ert financial crisis and recover 
promptly when turbulence occurred. 
84. Additionally, concerns regarding a broad defi nition of investment could be addressed through 
specific reservations – such as, for example, non-conforming measures.  Her delegation did not 
believe that there was an adequate methodology that could identify, define and exclude capital 
transactions that were not investments but which we re financial transactions of a speculative nature.  
For instance, a venture capitalist might loan a fo reign start-up company a large amount of money, 
underwriting a large share of the start-up's assets.  The venture capitalist might not hold any evidence 
of ownership because no shares had been issued, only debt, and he may not have measurable control 
over the start-up.  Yet it was hard to argue that such  a lender should not have the rights of an investor 
under an investment agreement.  Financial system s that operated under good  prudential supervision 
were less vulnerable to dangerous accumulations of  short-term debt than systems with looser 
regulations.  Branches and other unincorporated  forms of enterprises should be covered as 
investments.  Indeed, all types of entities should be included that were recognized by applicable law.  
The United States believed strongly that this was the correct approach. 
85. Where concerns existed about particular forms of investment, sectoral exceptions might 
adequately address such concerns.  In the case of de veloping countries, reservations were also useful 
to tailor a package for particular countries based on their specific development needs.  WTO Members 
had found in the past that many concerns raised by various groups of developing countries could be 
addressed in this way.  There was no “one-size- fits-all” approach, and he r delegation felt that a 
narrow definition of investment could actually hamp er the ability of developing countries to address 
certain of their development needs.  The United Stat es recognized that some fo rms of loans, such as 
long-term bonds or debentures, were clearly to be considered investments, and that some other forms, 
such as a claims to payments th at were due immediately and that resulted from the sale of goods or 
services, were generally not to be considered an investment.  Nonetheless, the United States did not 
feel that Members could articulate with any precision the difference between these forms of debt.  Rather, the focus should be on whether the asset met the test that was generally found in the chapeau 
to the asset-based definition (e.g., the issue of cont rol, and whether it had the characteristics of an 
investment).  WT/WGTI/M/17 
 Page 23 
 
 
86. The United States did not see the need to clarif y the treatment of rights arising under contracts 
as investments, in particular, the need to make a distinction between contracts related to the sale of goods or services and contracts that involved the co mmitment of financial and/or human resources by 
an investor.  As already noted, the focus should be  on whether the asset met tests that were generally 
found in the chapeau to the asset-b ased definition.  The capital or other resources committed by an 
investor should be located in the host country in or der to be covered by multilateral rules.  However, 
the United States would prefer that this point be  addressed in a definition of "covered investment" 
rather than in the definition of "investment".  In standard investment agreements it was important to 
treat intellectual property rights as investment assets.  However, the need to clarify the relationship between any WTO investment agreement and the TR IPS Agreement was vital.  On the need to 
examine the conditions under which real estate shou ld be considered as a form of investment, she 
drew attention to her delegation's previous point regarding contracts.  While some real estate should 
not be covered by an agreement (such as a home pur chase), other forms of real estate (such as housing 
for workers) may be key components of an investme nt.  The asset-based approach was the best way to 
ensure flexibility and comprehensiv eness so as to include new forms of investments that developed 
over time. 
87. With regard to the narrow, ente rprise-based definition of "invest ment", it was not possible to 
adequately differentiate FDI and por tfolio foreign investment, because direct investors would engage 
in portfolio investment as they managed their cash flows.  For example, the treasurer of a US 
manufacturer in Europe would be in and out of local  financial markets in order to manage the cash 
and other financial assets involved in the business.  Or a wholly-owned US subsidiary in Germany 
may decide to make a portfolio investment by ac quiring shares in another firm in Germany.  The 
notion of "lasting interest" in an enterprise and a 10 per cent threshold was not relevant or practical.  
These two benchmarks set up an arbitrary divi sion between "good" a nd "bad" investment.  
Differentiating greenfield FDI from other forms of FD I was also not a sensible approach.  Investment, 
whether greenfield or not, could be of great benefit to an economy. Only the circumstances of a 
particular investment decision should determine whet her acquisition or a wholly new project was best.  
The United States did not believe that permanen t residents should be included among the natural 
persons considered to be investors.  It had con cerns with allowing any enterprise formed under the 
law of a party to be considered as an investor of th at party, regardless of the nationality of the ultimate 
ownership or control of the enterprise.  In this regard, the United States would seek an equivalent to 
GATS Article XXVII in any investment agreement.  Her delegation strongly supported a denial of 
benefits clause to prevent non-party nationals from establishing "mail-box" companies solely to gain 
benefits under an agreement. The treatment pr ovided by the agreement should be extended to 
investors of all types of businesses recognized by applicable law including those requiring formal 
registration.  Governmental and non-profit organi zations should be included as investors.  This 
approach would ensure a broad coverage of investment. 
88. The representative of Malaysia
 noted that one major cause of the failure of the OECD’s MAI 
was disagreements among Members over whether it should encompass a broad-based or a narrow-
based definition of investment.  Malaysia was not  discounting a broad-based approach, but at this 
point in time his delegation's preference was for a narrow, enterprise-based definition of investment, 
limited to FDI.  Moreover it was clear, from read ing paragraph 22 of the Doha Declaration, that 
Ministers were referring to a more limited concept of FDI, and specifically long-term capital flows, 
which took into account the specific requirements of developing countries.  Having said this, 
Malaysia acknowledged the fact that many bilateral investment treaties (BITs) – including Malaysia’s 
own treaties – included all assets.  Malaysia was w illing to engage in an open discussion, and wanted 
a more thorough analysis of the implications of a br oad, asset-based definition of investment.  Finally, 
Malaysia had some difficulties followi ng the IMF’s definition of investment - ownership of more than 
10 per cent of assets.  There was no need to aim for a harmonized definition of FDI – it should be left 
to sovereign governments to make that determination. WT/WGTI/M/17 
Page 24  
 
89. The representative of Colombia
 agreed with the European Communities that the issue of 
definitions would need to be revisited once the gene ral obligations of the agreement were clearer.  For 
example, dispute settlement would have a fundamental impact on the question of coverage.  Colombia 
also agreed with Japan and Korea about the va lue of adopting a pragmatic approach by initially 
focussing on long-term investment.  The task of de fining FDI was already a difficult one, so there was 
an argument for not being too ambitious.  As far as other methods of limiting the coverage of an 
eventual agreement were concerned, paragraph 25 of the Secretariat Note provided important 
clarification.  In this respect, she emphasized that  her delegation attached the greatest importance to 
excluding protection for any type of investment that  originated in illicit activities.  This provision had 
been included in many bilateral treaties, and from Colombia's perspective, it might be a partial 
response to the non-existence of general exceptions .  In conclusion, Colombia asked the following 
questions of Canada:  What flexibility for developi ng countries did Canada envisage in its concept of 
a multilateral framework?  Would this flexibility be em bodied in the coverage of the agreement or its 
disciplines, and what relationship would this have  to provisions in other WTO agreements?  Was 
Canada talking about sectoral exemptions, or differe nt levels of substantive commitments, or both? 
90. The representative of Indonesia  considered the issue of scope and definition to be an 
important first step in the Working Group's effort s to analyse the complex issues surrounding greater 
multilateral cooperation in investment.  In this light, Indonesia wished to make a preliminary 
comment, without prejudice to its future position.  Discussion on each element in paragraph 22 of the 
Doha Declaration should be guided by  parameters articulated in that paragraph - namely the need to 
balance the interests of home and host countries a like; to consider the development policies and 
objectives of host governments, including the right to regulate in the public interest; and to focus on 
the special development, trade and financial needs of developing and least-developed countries.  He 
drew attention in particular to the reference in pa ragraph 22 to the "public interest", which was a clear 
recognition of the fact that closer multilateral coope ration in investment had implications that went 
beyond economics. 
91. As mentioned in the Secretariat Note, the a dvantage of a broad-based approach was its 
flexibility and its compatibility with existing BITs.  However, while a broader definition might be 
more flexible in its coverage, it might also prove l ess flexible in term of its development aspects and 
policy options.  Given its open-ended nature, a br oad-based approach could create problems in the 
long run that were unforeseen when the agreement w as reached.  In short, Indonesia believed that the 
element of certainty was missing in the broad-based  approach.  Although it could be argued that a 
broad-based definition had been widely applied in BITs, the nature of a multilateral agreement was 
different.  Multilateral agreements could result in en ormous obligations that could prove burdensome, 
particularly for developing counties. 
92. What concerned Indonesia in particular were the implications of including short-term or 
speculative capital flows in a definition of investme nt - flows which were volatile in nature and often 
imperviousness to effective monitoring.  While, as no ted in the Secretariat Note, portfolio investment 
could play an important role in providing foreig n exchange and financing capital, Indonesia's past 
experience made it cautious about acc epting an arrangement that could have undesirable effects in the 
future.  However, given that discussions were still  at the early stage, Indonesia was open to further 
analysis of all types of investment, with a focus on trying to maximize the positive effects of portfolio 
investment and on eliminating  its negative impact.  Therefore, at this preliminary stage, Indonesia 
would study carefully both definitions of investme nt in order to reach a better understanding of its 
implications.  Finally, his delega tion would be interested to know more about the implications of a 
broad or narrow definition of investment for host coun tries' efforts to attract foreign investment.  His 
delegation would also be interested to know whethe r home countries had an interest in the application 
of either of these definitions. 
93. The representative of Turkey  made five points regarding scope  and definition.  First, his 
delegation favoured a broad, asset-based definition of investment.  Given the way TNCs actually  WT/WGTI/M/17 
 Page 25 
 
 
operated within a dynamic and globalized economy,  the distinction between FDI and portfolio 
investment did not make any practical or economic sense.  Bearing in mind that financial and trade-
related transactions were increasingly varied and in ter-linked, it was also difficult to separate out 
speculative financial transactions from trade-related financial transactions.  Second, the architectural 
design had to be consistent with - and complementary to - the existing rules of the WTO, especially 
the GATS.  His delegation believe d these coverage issues should be clarified in focussed discussions 
in the Working Group.  In this exercise, Turkey proposed close coordination and collaboration between the WTO and UNCTAD, as mentioned in para graph 22 of the Doha Declaration.  Third, the 
investment protection aspect of a multilateral agre ement was important.  As UNCTAD had noted, the 
recent practice in international investment agreem ents was to seek both to liberalize investment 
regulations and to protect foreign investment.  This  trend seemed to reinforce the logic of adopting a 
broad, asset-based definition of investment in a WTO framework.  Within a broad definition, 
comprehensive approaches to investment protecti on were possible.  Fourth, the definition of 
"investments" and "investors" should be flexible, re flecting the different interests of developed and 
developing countries, and home and host countries.   Fifth, this rule-making exercise should be 
multilateral, not plurilateral, with the goal of crafti ng an instrument which ensured a strict balance of 
rights and obligations.  
94. The representative of Chinese Taipei
 noted that the definition of FDI in a multilateral 
framework determined the scope a nd applicability of a dom estic legal instrument, and for this reason 
the following two issues should be carefully reviewed when deciding whether to adopt a broad or a narrow approach. The first issue was the relationshi p between general FDI law and the legal system 
governing specific economic sectors.  For example,  telecommunications and energy were frequently 
state-run industries in host countries, and were subjec t to a high degree of control;  their jurisdictional 
laws and the general legal systems governing FDI, therefore, contained numerous differences.  The 
second issue was that multinational enterprises frequent ly carried out investment in different countries 
at the same time, and differences in legal system s often increased legal costs.  In addition, the 
determination of the nationality of an investor i nvolved the practical operati on of international law, 
such as the recognition of dual nationality and the question of whether the nationality of a company 
was determined by the place of its establishment, the place where its headquarters was located, or the 
nationality of its major sharehol ders.  Chinese Taipei would like to see more written contributions 
before the next Working Group meeting.  All of these issues required further elaboration. 
95. The representative of Switzerland
 said the Secretariat Note and the papers submitted by 
Japan, Canada, Korea, and the European Communities provided a good overview of the issue of 
definition and scope.  New studies requested by various Members should be welcomed, without 
slowing down the progress of the Working Group or duplicating existing work.  A new detailed study 
with empirical research took at least 18 months to be realized, and the meaning of its results could 
only be understood within the limitations of its me thodology - i.e., what applied for Asia may not 
necessarily apply for Africa, Central or South America due to the very different economic policy 
frameworks and structures in place.  Switzerland reco gnized that asset, transaction or enterprise-based 
definitions covered similar substance, but they were viewed from a different standpoint, and with 
different emphasis.  As mentioned by the European  Communities, an asset was a static concept while 
transactions were dynamic.  The definitions of asset and transaction referred to different points in time 
and were not mutually exclusive;  to get an asset, you needed first a transaction.  The Secretariat Note 
could usefully add a short section emphasising th e common points, as well as the differences, among 
the various definitions. 
96. It had emerged clearly from the papers be fore the Working Group that the relationship 
between a multilateral framework for investment and other WTO Agreements would require close 
scrutiny.  Issues such as the type of nomenclature clas sification of industries or the percentage level of 
ownership for an investment to be considered FDI were useful to discuss, but could be settled at a 
later stage - i.e., after the 5th Ministerial Meeting.  At this stage, it would be useful if a consensus 
could emerge from the Working Group on the following three points:  first, the key criteria to be WT/WGTI/M/17 
Page 26  
 
fulfilled by FDI, with lasting interest and signifi cant degree of influence implying thereby that short-
term, volatile flows (an issue raised by Mexico in pa rticular) and ownership (an issue raised by Brazil) 
would be taken care of;  second, the definition could be  general, that is broad,  but fulfilling the criteria 
of lasting interest and degree of influence – wh ich may mean a narrow definition for some – and 
leaving the issue of scope for the modalities of pre-establishment commitments based on the GATS 
positive approach.  Finally, commenting on a ques tion from Colombia to Canada, as in GATS, 
disciplines should apply to all Members;  howev er, pre-establishment commitments should enable 
countries to keep fully in their hands their FDI po licy thereby answering some concerns raised by 
Malaysia and India. 
97. The representative of Australia
 agreed with numerous delegations that the Working Group 
should avoid repeating discussions that have already take place (e.g. on benefits of different types of 
investment).  There was a lot of ground to cove r before the 5th Ministerial Conference, and as 
Hungary pointed out, a focused approach was need ed.  The Secretariat Note pointed the Working 
Group in this direction, with its summary of the pros  and cons of the various approaches, and its list of 
outstanding issues.  There were good arguments  for both the broad-based and narrow-based 
approaches, and her delegation would be interested in further exploring the idea of having a narrower 
definition for pre-establishment treatment, and a br oader definition for post-establishment treatment, 
in part for consistency with bilateral treaties.  Australia would also echo New Zealand's request that 
the Secretariat expand on the thinking underlying pa ragraphs 23-25, in the context of a possible WTO 
agreement.  As the Working Group reflected on defi nitions and on the concerns surrounding a broad-
based definition, it might be useful to examine the definition of portfolio investment, and to secure a 
common understanding on what was normal business practice and what was speculation.  Her 
delegation was also interested in further explori ng the importance of a "whole-of-WTO" approach to 
an investment framework, to ensure maximum coheren ce and consistency.  This would be relevant to 
the discussions on scope, and would influence any definition that might eventually be adopted. 
98. The representative of the Slovak Republic  underlined the importance that his delegation 
attached to the subject of scope and definition, wh ich would be a key determinant of the architecture 
of a future multilateral framework.  There were ma ny different approaches to defining investment 
reflected in various bilateral, plur ilateral and multilateral investment tr eaties.  Some of them adopted a 
broad, asset-based approach, while others were limite d to a more narrow, enterprise-based approach.  
His delegation favoured a narrow approach for the fo llowing reasons:  in part because it reflected the 
spirit of paragraph 20 of the Doha Declaration wh ich recognized the case for a multilateral framework 
to secure transparent, stable and predictable conditions for long-term cross-border investment, 
particularly FDI.  The Slovak Republic  was also of the opinion that adopting a narrow approach as a 
starting-point was a more pragmatic and realistic stra tegy at this stage, which could lead to a positive 
result.  The WTO should take a lesson from the OE CD's ill-fated MAI negotiations which failed in 
part because of its broad scope. 
99. The representative of Egypt  agreed with the point made in the Secretariat Note, as well as in 
the UNCTAD studies, that the scope of any agreement on investment was determined primarily by its 
definitions, which in conjunction with its operative provisions, played a significant role in identifying 
the assets to which the agreement would apply, as well as the nature of the obligation a Member 
country undertook within the agreemen t.  Paragraph 20 of the Doha De claration made it clear that the 
multilateral framework was to cover FDI which had a long-term relati onship with the host country.  
According to this mandate, speculative, short- term portfolio investment should be excluded.  
However, it was Egypt's conviction that flexibility w ould need to be maintained, in order to allow 
developing and least-developed country Members to liberalize and regulate investment flows in a manner consistent with their deve lopment policy objectives. Egypt agreed with Malaysia that each 
country should be free to identify the threshold by  which FDI was approved.  As a corollary, Egypt 
believed that it was important to study the implicatio ns of scope and definition in relation to other key 
concepts in a multilateral agreement, such as  admission and establishment, incentives, national 
treatment, most-favoured-nation treatment, and investment protection.  WT/WGTI/M/17 
 Page 27 
 
 
100. The representative of Morocco  agreed that, in order to make progress, the Working Group 
needed to focus on the terms of the Doha Declaration which set out two objectives.  First, there was 
an underlying assumption, agreed by Members, that any multilateral agreement would focus on 
foreign investment that was long-te rm and related to trade. Second, that the Working Group had to 
respond to the needs of developing countries in term s of technical assistance and capacity building.  
The Working Group needed to keep these two require ments in mind, in order to avoid complicating 
and fragmenting multilateral discussions, and risking a nother failure like the OECD's MAI.  Due to 
the complexity of the question, the most practical  way forward was to adopt a narrow definition of 
investment. 
101. The representative of Thailand  said that, listening to other speakers only confirmed Thailand's 
view that the Working Group was facing a very comp lex issue.  Different approaches to scope and 
definition offered different advantages and di sadvantages.  The Working Group seemed to be 
struggling with the challenge of striking the right balance among various objectives - namely 
flexibility, practicability and focus.  Unfortunate ly, these objectives could conflict, thus making it 
difficult to achieve all of them at once.  Obviously, the Working Group needed more discussion and 
reflection before it could come to a common unders tanding.  At this juncture, Thailand emphasized 
that the Working Group must not depart from the direction given by the Doha Declaration, which refered to long-term, cross-border i nvestment – particularly FDI – that contributed to the expansion of 
trade.  Given the existence of other WTO agreemen ts related to investment, delegations needed to 
give serious thought from the outset to the objectiv es of a multilateral investment agreement and its 
implications for the wider WTO framework of rules. 
102. The representative of China
 noted that, given the mandate ou tlined in paragraph 20 of the 
Doha Declaration, the Working Group should focus its attention on long-term, cross-border 
investment, particularly FDI, that contributed to the expansion of trade.  Though foreign investment 
could encompass many different types of assets, in  most developing countries foreign investment 
came mainly in the form of FDI.  Taking this into account, his delegation doubted that, if a broad 
definition of investment was used, the Working Group's  focus could still be limited to investment that 
contributed to the expansion of trade.  Moreover,  as mentioned by Hungary, even the OECD failed to 
reach a multilateral agreement on investment based on broad definitions.  With many more Members, 
at widely different levels of development, the WT O needed to be even more careful.  China believed 
that the Working Group should use its limited resourc es, and even more limited time, to focus on what 
was realistic and achievable - which meant using the enterprise-based definition of investment.  It was 
true, as the Secretariat Note pointed out, that in China's BITs, a broader, asset-based definition was 
used.  But these agreements reflected the investment relationship of China and its investment partners.  
In the multilateral system, the investment situation of all Members needed to be taken into account.  
Finally, his delegation reminded de legations that the mandate of th e Working Group was to continue 
its discussion on the relationship between trad e and investment, not to begin negotiations. 
Negotiations would take place after the 5th Ministerial Conference only on the basis of  an explicit 
consensus on modalities. 
103. The representative of Poland  said that, according to Paragraph 20 of the Doha Declaration, 
WTO Ministers had recognized the case for a multilateral  framework to secure tr ansparent, stable and 
predictable conditions for long-term cross-border inv estment, particularly FDI, that would contribute 
to the expansion of trade and ec onomic development.  This placed clear limits on the frame of 
reference for discussions of scope and definition.  His delegation believed that the focus should be on 
long-term investment, excluding short-term capital m ovements (particularly financial transactions of a 
speculative nature).  Attempts to employ a broa d definition, which included FDI and portfolio 
investment, but tried to exclude transactions of a speculative nature, would prove conceptually and 
technically difficult to achieve.  By adopting a na rrow definition, the rule-making process would be 
easier and negotiations could be completed more quickly.  He recalled that the OECD’s MAI 
negotiations failed mainly because Members had a dopted too broad a definition of investment.  
Whereas most portfolio investments had a speculativ e character, and led to financial volatility, FDI WT/WGTI/M/17 
Page 28  
 
promoted economic growth, the transfer of technology and job creation.  This was why the Working Group should concentrate its attention on the defin ition outlined in the Doha Declaration – namely an 
enterprise-based definition. 
104. The representative of Honduras
 noted that the subject of invest ment was of major relevance to 
developing countries because of its deep impact on growth and poverty alle viation.  Honduras had 
carried out a series of domestic reforms to create a more investment-friendly economic environment.  
It had also negotiated a number of bilateral agreem ents to promote and protect foreign investments.  
Moreover, investment provisions had become a norma l and almost mandatory part of the free trade 
agreements to which Honduras was a party.  The WTO itself also contained important investment-
related provisions – most notably in the GATS, but also in TRIPs, TRIMs, the Subsidies Agreement 
and so forth.  In principle, his delegation believe d that the focus of the Working Group’s discussions 
should be on FDI that had a long- term horizon and a clea r relationship to trade, as mandated in the 
Doha Declaration.  In practice, however, the Wo rking Group would need to examine how this narrow 
definition related to existing bila teral treaties – the bulk of which employed a broad, asset-based 
definition of investment – as well as to the invest ment-related provisions already embedded in the 
WTO, especially the GATS. In the final analysis, a new set of standards on investment in the WTO 
would have substantive implications for the GATS and other existing agreements, and this must be 
seriously examined in light of the current debate  over a broad-based versus a narrow-based definition 
of investment.  In conclusion, his delegation supporte d Brazil's request that the Secretariat carry out a 
study on the relationship between investment and tec hnology transfer.  His delegation also hoped that 
Members could resolve the resource constraints th at risked undermining the technical assistance and 
capacity-building mandate of the Doha Declaration.  These were his delegation's preliminary 
observations, and Honduras reserved th e right to return to these issues at a later date without prejudice 
to its final position.  
105. The representative of Argentina  suggested that the options before the Working Group were 
already clearly laid out.  With regard to the deba te over a narrow or broad definition of investment, it 
was important to note – as pointed out by the Secretariat Note - that many Members had already 
agreed to a broad-based definition of investment in the context of their bilateral investment treaties.  
While this did not mean that the Working Group w as prevented from choosing a limited approach to 
the issue of definition, Members would have to build flexibility into a multilateral agreement, 
including an escape clause with r espect to MFN or national treatment , to avoid incompatibility with 
existing treaties.  Discussions on the options should start from an awareness of the existing 
international investment architecture - and certainly  Argentina would have no difficulty using this as 
the basis from which the Working Group could begin its  work.  Finally, Argentina agreed with other 
delegations that there was a larger framework which surrounded this discussion – namely paragraph 
22 of the Doha Declaration, with its emphasis on de velopment, freedom to regulate, and so forth. 
106. The representative of Korea  said that, regarding Canada’s  paper, his delegation found 
Canada’s experience and knowledge of NAFTA particularly useful.  Korea was reminded that a 
multilateral investment framework would have to coexist and interact with a number of other 
agreements both inside and outside the WTO system, a nd that this issue of co -existence needed to be 
addressed in the Working Group.  Nevertheless, Korea felt that in light of the multilateral and global 
nature of the proposed agreement on investment, ther e could be difficulties in simply duplicating the 
practices of NAFTA.  If his delega tion understood correctly, Canada ’s preferred approach was to 
adopt the broadest definition of investment, th at would then be circumscribed by other WTO 
agreements.  His delegation w ondered whether it was possible to have a clear and unequivocal 
definition of investment with only those circumscri ptions in other WTO agreements.  Likewise, Korea 
foresaw problems with the approach suggested in paragraph 16 of Canada ’s paper, whereby two 
exhaustive lists of assets would be drawn up: one wh ich would set out the assets to be included in the 
coverage, and one which listed those assets to be ex cluded.  Korea wondered how such lists could be 
created in practice without overlap - and without om itting the elements that would delineate the scope 
of investment.  Finally, Korea welcomed Canada ’s emphasis on flexibility, but was uncomfortable  WT/WGTI/M/17 
 Page 29 
 
 
with the idea expressed in paragraph 21.  Korea belie ved that a clear cut exclusion of short-term and 
speculative financial transactions in the area of inv estment liberalization was the better way to ensure 
that these transactions did not enjoy the same legal protection as FDI. 
107. Regarding the Japanese paper, Korea agreed w ith Japan that it was anomalous to have WTO 
investment rules for the services sector – as embodi ed in GATS – but not for the non-services sector.  
Furthermore, there needed to be careful considera tion of the extent to which a multilateral investment 
framework could overlap with the investment obligations and commitments in the GATS itself. If, for 
example, an American auto-maker purchased a Ko rean auto-maker, and, in doing so, acquired not 
only the manufacturing assets but also its sales and the after-service business, the question would arise 
as to which agreement would prevail – GATS (mode 3)  or the new investment framework?  In order 
to resolve this problem, it might be tempting for this Working Group to suggested that mode 3 be 
removed from the services Agreement.  As that was unlikely to happen, the Working Group should 
consider how the relationship between the i nvestment framework and the GATS could be 
harmonized.  Introducing a preference or subordination clause might be an idea.  With regard to 
industry classification, Korea recognized its importa nce as regards preparing a positive list in future 
negotiations.  As pointed out by Japan, GATS had its own classification system based on the United 
Nations’ CPC system. In considering the three opti ons suggested by Japan, Ko rea wished to ask the 
Secretariat to provide analytical work on whether it would be preferable to use the HS code, the UN 
CPC System, or a new and unique system that would need to be developed.  His delegation was not 
trying to create additional burdens, and Korea agre ed with Switzerland that it was not an urgent 
matter.  Nonetheless, Korea would be grateful if  the Secretariat could look into this matter. 
108. Regarding the European Communities’ concep t paper, Korea believed that it provided a 
number of clues and answers to the questions that ha d been raised in Korea’s own paper.  Korea was 
particularly pleased with the delineations in pa ragraphs 17 and 18.  The EC’s suggestion was 
consistent with Korea’s emphasis on the objective of the multilateral framework in defining investment.  As regards the Secretariat Note, Korea, like Australia, valued the compilation of 
outstanding issues in paragraphs 64 and 65. For th e sake of efficiency, Korea urged that Members 
submit answers to these questions in written form, in  order to clarify their views and to allow the 
Secretariat to take stock of the different  positions at this point in the process.  
109. The representative of the United States
 wished to clarify, with respect to paragraph 57 in the 
Secretariat Note, that US bilateral investment tr eaties did cover pre-establishment treatment - although 
there were also a number of existing bilateral invest ment treaties that did not.  She repeated that, due 
to the late distribution of some of the docum ents, her delegation was unable to make thorough 
comments, and would take up the Chairman's invitation to return to these issues at a later date.  With 
respect to the request to look into the implicati on of a multilateral investment framework for other 
agreements, the United States subm itted that such an analysis should be a factual one without 
necessarily identifying where and how the gaps should be filled. 
110. The representative of th e European Communities  said that the debate had given the Working 
Group a better idea of what could be accomplishe d in a multilateral framework on investment.  
Delegations were exploring the options, without prejudging fina l positions.  Nevertheless, his 
delegation believed that the Working Group could begin to identify the kind of assets that everyone agreed should be covered by the definition of invest ment in an eventual agreement, and those that 
should not be covered.  Not include d in any delegation's definition, he  believed, was first of all those 
assets covered by existing agreements – e.g., the TRIPS Agreement or the GATS.  Also excluded 
were certain commercial contracts, money-market instruments, or financial derivatives, which were 
purely speculative in nature, and not aimed at establi shing a lasting relationship with the host country 
or in an enterprise.  At the same time, the Wo rking Group already had a short list of what was 
definitely included in everybody's definition – name ly enterprises, equity and long-term loans, and 
intra-firm transactions that were part of the concep t of FDI.  It would be extremely useful if the 
Secretariat, from a factual point of view, could start to identify those areas of agreement and WT/WGTI/M/17 
Page 30  
 
divergence.  Although delegations were starting fro m different positions on the question of definitions 
of investment, when certain concepts that all de legations agreed should not  be addressed were taken 
away, the remaining areas of difference would be the subject of negotiation. The other important 
point, which Japan had already mentioned, was th e need to examine the interaction between a 
potential multilateral framework on investment a nd existing agreements, both within the WTO and 
outside it.  His delegation would be  addressing this question - and possibl e options - in a future paper. 
111. The representative of Japan
 said that his country's paper only represented preliminary 
thoughts on the subject of scope and definition, and that Japan wanted to be as flexible as possible in 
the future deliberations of the Working Group.  In terms of definitions, Japan took note of the various 
interventions in favour of a broad, asset-based a pproach, and his delegation understood the rationale 
behind these positions.  Nevertheless, Japan was more  sympathetic to the argument that the Working 
Group should focus on trade-related FDI.  Japan agreed with the concern expressed by Korea and 
other delegations regarding the potential negative effects on host countries of free-flowing capital, 
especially speculative, short-term portfolio invest ment.  That was why Japan suggested that FDI 
should be the starting-point for discussions of defini tions, although his delegation also proposed that 
further work should be carried out on whether or not  Members should - or could - include longer-term 
portfolio investment in the definition. 
112. The representative of Canada  wished to respond to several of the comments and questions 
that had been raised.  First, with respect to Ko rea’s comments regarding the relationship between the 
definition of investment in NAFTA and other agreem ents, Canada considered that it was important - 
and indeed possible - to clearly delineate what s hould and should not be included in a definition of 
investment.  In fact, Canada believed that it woul d help to avoid disputes arising from any lack of 
clarity or misunderstanding in the future, if Members used a "closed list" rather than an "illustrative 
list".  That was the approach taken in the NAFTA and it specifically excluded from coverage some of 
the short-term flows about which several delegations  had raised concerns.  Canada agreed that the 
issue of short-term capital movement was not pr imarily one with which the Working Group should 
deal.  Regarding the comments by the European Co mmunities, Canada would certainly want to think 
further about his list of what was - and what was not - included in everyone’s definition of investment.  
As Canada had indicated in its intervention, hi s delegation thought that it was important for the 
Working Group to begin looking at the relationshi p with other agreements in the WTO, such as 
TRIPS, TRIMs, and GATS. 
113. Regarding the question posed by Colombia, an important theme in Canada’s contribution was 
the need for flexibility.  Canada thought that the ob jective in the Working Group should be to arrive at 
a definition of investment that was realistic, practi cal and flexible enough to provide sufficient policy 
space for all WTO members to pursue regulatory, development, prudential and other development 
goals in the public interest.  Canada fully endorsed  the notion of flexibility in investment agreements, 
whether for developmental purposes or other reasons.  This could be achieved in several ways.  For 
example, as noted in paragraph 22 of Canada’s contribution, this could be done through the language 
of a definition; it could be circumscribed with regard to pre-establishment market access, particularly in certain sectors; and it could also be acco mmodated through the wording of commitments, 
reservations or exceptions.  Canada wished to  elaborate further on these points in a written 
contribution in order to clarify and amplify some of the points which it had made in its contribution.   
114. In concluding this part of the agenda, the Chairman
 noted that all of the items set out in 
paragraph 22 were inter-related, and could be re-visited at any ti me in the process of the Working 
Group's discussions.  In the course of the interv entions, a number of suggestions had been made 
regarding further work on the part of the Secretariat. 
115. The Secretariat  said that careful note had been take of the various requests for additional 
Secretariat notes.  The Secretariat was continuing, fo r the time being, to put priority on producing the 
background, stocktaking papers that the Workin g Group had asked for on the seven issues identified  WT/WGTI/M/17 
 Page 31 
 
 
in paragraph 22 of the Doha Declara tion.  Delegations had received tw o of those papers already:  on 
scope and definition and on transparency.  The Secr etariat was preparing three more papers for the 
July meeting on non-discrimination, pre-establis hment commitments, and development provisions, 
and it would then address itself to the additional pa pers that had been asked for, such as Brazil's 
proposal that further research be conducted on th e relationship between foreign investment and the 
transfer of technology.  A background paper on this subject had been prepared several years ago 
(WT/WGTI/W/65); moreover there was scope, as sever al delegates had suggested, to examine what 
UNCTAD had produced on this subject, as well as to follow the work of the Working Group on Trade 
and Transfer of Technology. 
116. In response to requests from the delegations of  New Zealand and Australia to elaborate on 
paragraphs 23-25 of WT/WGTI/W/108, the representativ e of the Secretariat said that this section of 
its Note touched on the fact that the seven topics lis ted in Paragraph 22 of th e Doha Declaration were 
inseparable when it came to designing an internati onal investment agreement.  None of the seven 
could be dealt with satisfactorily in isolation from the others, a point that had been made by many 
delegations in their references to the need to consid er the "architecture" of any eventual investment 
agreement.  The Note suggested that architecture would be affected by three main elements:  
definitions, substantive provisions, and specific commitments.   
117. For example, several delegations had suggested  that the starting-point of the Group's work 
should be a focus on FDI.  From the point of view just of definitions, that might suggest limiting the scope of an investment agreement using an enterp rise-based definition.  However, an asset-based or 
even transactions-based definition could equally be used as the starting-point, with the possibility of 
limiting some or all substantive obligations or sp ecific commitments to FDI only for those Members 
that wished to do so, while leaving open the po ssibility for others to undertake obligations or 
commitments more broadly, to cover for example ce rtain forms of long-term portfolio investment.  
Three examples of this kind were given in paragr aph 23 of the Note:  differentiating between pre-
establishment and post-establishment treatment;  focusing on long-term investment only;  and 
excluding short-term investment.  Paragraph 24 illustrated a way of limiting the scope of an 
investment agreement, again not through its defi nitions, but through its specific commitments.  
Starting out again from a broad, asset-based definition of investment, for example, it might be decided 
to exclude the coverage of services.  This c ould be done by excluding services from the agreement 
through the provisions on its scope and definition;   or by limiting the specific commitments to non-
service sectors of the economy.  An important difference between the two hinged on whether an 
agreement aimed to provide investment protection or market access, or both.  Excluding services from 
the scope of the agreement altogether would mean th at any investment protection provisions that it 
included would not apply to the services sector.  Excluding services only from the application of specific commitments, on the other hand, would allow the investment protection provisions to apply to services as well. 
(ii) Transparency 
118. The Chairman
 drew attention to a Note by the Secretariat on "transparency" 
(WT/WGTI/W/109), as well as to written contributio ns on the same subject received from the 
European Communities (WT/WGTI/W/110) and from Japan (WT/WGTI/W/112). 
119. The representative of the European Communities , in introducing its submission 
(WT/WGTI/W/110), underlined three points.  First, he  shared the view that greater transparency in 
investment regimes would be one of the main bene fits of a multilateral framework on investment, and 
cited a survey undertaken by the European Commun ities in which 70 per cent of the largest European 
companies responded that a lack of transparency in laws and regulations was the most serious obstacle 
to investment in many foreign markets.  Even th e exercise of bringing domestic policies and rules into 
conformity with transparency obligations in a mu ltilateral agreement could prove a useful exercise by 
underlining inconsistencies or  ambiguities in regimes that might dete r or diminish foreign investment.  WT/WGTI/M/17 
Page 32  
 
Transparency requirements should be viewed, not simply as an obligation for host countries, but as an opportunity.  Second, the paper listed existing transp arency provisions in international agreements, 
particularly in the WTO (e.g., publication requireme nts, notification requirements, prior notifications, 
the creation of enquiry points, and so forth). It made the point that transparency obligations should apply not only to the rules that regulate FDI, but al so to the application of these rules.  Procedural 
transparency was just as important as transparency of  information.  Third, the paper suggested that the 
goal should be to enhance transparency through a multilateral framework, but in ways that did not 
create unnecessary administrative burdens for host count ries and investors.   The EC representative 
made the case that since over 90 per cent of chang es to domestic investment legislation had been 
liberalizing in intent,  transparency obligations could actually help developing countries advertise and 
promote their investment-friendly policies and reforms. 
120. The representative of Japan
 introduced its submission (WT/WGTI/W/112).  His delegation 
shared the EC's view that transparency was one of  the most important elements of the prospective 
multilateral framework on investment.  The Japanese pa per was divided into three sections:  The first 
highlighted the importance of transparency to improving the environment for investment, both 
nationally and internationally.  A nnex 1 presented the results of a su rvey of 400 Japanese companies, 
conducted by the Japanese External Trade Organiza tion, in which over 60 per cent of respondents 
indicated that the most serious issue affecting FDI was a lack of transparency in host countries.  
Among their major transparency concerns were a lack of information about the investment 
environment, as well as sudden changes to the rules and regulations.  Japan believed that improving 
domestic transparency would bring lasting economic benefits to host countries by reducing the risks 
facing investors, by improving the quality or va lue-added of investments, and by improving the 
efficiency and competitiveness of domestic markets.   The second section of Japan's paper dealt with 
the two aspects of transparency - namely the scope of  rules and the level of obligations.  In terms of 
the scope of rules, Japan pointed ou t that the laws and regulations rela ted to investment were far more 
extensive that the laws and regulations related to trade.  For example, industrial, employment, and 
environmental legislation - both at the national and local level -  could be considered relevant to 
investment.  In that regard, one option could be to attach an illustrative list of laws and regulations to 
clarify the scope of the rules to wh ich transparency provisions would apply.  In terms of the level of 
obligations, there were a number of provisions in ex isting international agreements that could provide 
guidance for the Working Group, including requirements  related to publication, notification, requests 
for information, enquiry points, domest ic administrative and judicial pr ocedures.   The third section of 
Japan's paper addressed several issues related to the implementation of these transparency obligations.  
For the reference of other delegations, Japan's paper discussed various administrative arrangements 
adopted by Japan to enhance transp arency.  Last but not least, Japan drew attention to the resource 
and technical constraints faced by many develo ping countries in attempting to comply with 
transparency obligations.  One option would be to place special emphasis on transparency when 
mobilizing funds for technical assistance and capacity  building in work in the WTO, as well as in 
other regional and bilateral fora. 
121. The representative of the Secretariat  noted that its aim in preparing its Note 
(WT/WGTI/W/109) was two-fold:  first, to draw out the main points and issues that had been raised 
on the subject of "transparency" in the Worki ng Group so far.  The paper drew on four written 
submissions from delegations, as well as on th e Working Group's substantive discussions on 
transparency between 1998 and 2000.  Second, to produce a paper that could be used in the 
Secretariat’s technical a ssistance activities to he lp clarify the issues surrounding "transparency" for 
officials and policy-makers, especially in developing countries.  As with "scope and definition", the 
Secretariat's research in this area was very much a work in progress, and delegations were encouraged 
to offer comments and suggestions on how the paper could be improved. 
122. The objective of transparency was almost self-evide nt, but four points in the paper were worth 
underlining.  The first was that the scope for tr ansparency in international commercial treaties – 
including the WTO agreements – largely depended  on the scope of the agreement's substantive  WT/WGTI/M/17 
 Page 33 
 
 
obligations.  In short, the more limited the covera ge of a potential investment agreement, the more 
limited were the obligations to make its rules a nd procedures transparent.  The second point was that 
there were conceptual difference s in the way that transparency was treated in the WTO on the one 
hand, and in most international investment treaties,  on the other.  Transparency provisions in BITs 
typically relied on rules of general application – such as "fair and equitable treatment" – which had 
been interpreted as requiring parties to adhere to ba sic norms of transparency.  In contrast, the WTO 
combined general transparency obligations with  a range of detailed and prescriptive publication, 
notification and procedural requirements that vari ed across agreements.  The third point was that 
transparency obligations in the WTO were generally  more important – and mo re detailed – in areas 
where the rules of general application were weak est, and the scope for discretionary government 
action was greatest.  Examples included government procurement, import licensing, and technical 
barriers to trade, where WTO agreements laid out detailed procedural obligations to ensure that 
Members conformed to accepted norms of transparency .  This led to a final point – which was that a 
number of developing countries were already facing technical and capacity constraints in complying with existing WTO transparency obligations.  Th e question arose as to how to strike a balance 
between the need for transparency and the n eed to avoid unrealistic administrative burdens. 
123. The observer representative of UNCTAD
 said that transparency was a key issue in 
international investment agreements, especially fo r investors and also to a certain extent for the 
countries wishing to attract FDI.  Two sets of key is sues were particularly relevant to transparency: 
first, there was the scope of the issue - i.e. th e degree of depth, detail and intrusiveness of any 
transparency provision in international investment  agreements.  This addressed the "what" of the 
issue.  Second, there was the addressees of any tran sparency provisions in international investment 
agreements.  This dealt with the "who" of the issue.  On the question of scope, international 
investment agreements suggested that transparen cy as regards policies, laws and regulations and 
perhaps even administrative practices was a fairly acc epted notion.  But, transparency could go further 
to include, for example, notification of chang es (which was fairly common in WTO instruments), 
legal decisions, provision of information and, indeed , prior consultation.  The key question was where 
to draw the line and to find the right balance be tween, on the one hand, the need of investors for 
transparency and the interests of countries to a ttract FDI, and, on the other hand, the legitimate 
interest of countries to have policy autonomy when it came to the formulation and implementation of 
regulatory frameworks in the area of FDI.  This al so involved the question of simply being able to 
deliver transparency on the part of developing co untries, especially the least-developed countries.  
This was a question of burden, an issue to which the WTO paper and the submission by the European 
Commission referred. 
124. The question of the addressees of any transp arency provision was an interesting and 
intriguing issue, upon which it may be useful to reflect.  Traditionally, the addressees of IIA 
transparency provisions were host countries. But, the investment relationship involved three parties: 
host countries, home countries and transnational cor porations (TNCs for short).  One could hence ask 
the question to what extent tran sparency provisions could also address home countries and TNCs.  As 
far as home countries were concerned, a number of measures existed that directly affected FDI in 
developing countries, ranging from information pr ovision to investment insurance to direct and 
indirect financial assistance to outward invest ors, among others.  As for TNCs, it was common 
knowledge that they also directly affected host c ountries.  This issue was not as novel as it may sound. 
After all, disclosure was an established concept.  In fact, the OECD Guidelines for Multinational 
Enterprises had elaborate disclosure provisions, incl uding for example on such issues as the policies 
followed in respect of transfer pricing and th e accounting practices observed by TNCs.  The 
UNCTAD representative concluded by noting that this was an interesting and intriguing area, and that 
his comments were preliminary ones. 
125. The representative of Colombia  noted that her country placed the greatest importance on 
achieving the highest level of transparency in orde r to create a favourable in vestment climate.  She 
shared with delegations her country's decision to a dopted models of American law in order to improve WT/WGTI/M/17 
Page 34  
 
the domestic regulatory environment.  Her country  had also adopted an American-designed cost-
benefit analysis when undertaking regulatory reform , to weigh in advance the necessity and efficiency 
of regulation.  Over and above transparency in regu lations, Colombia had looked at various models of 
legal stability – among these, investment contracts wh ich guaranteed the stability of regimes that were 
applied to certain taxes, as well as conventions, developed under French law, which outlined and 
developed the objectives of legal planning.  Fi nally, within the same framework of policies 
guaranteeing greater stability, Colombia’s constitutio nal court had applied the principle of legitimate 
trust, first developed under German  law and later adopted by the European court, whose aim was the 
protection of the interests of vulnerable groups.  Acco rding to this principle, the state was required to 
respect the principle of good faith in agreements or contract with individuals, including foreign 
investors.  The principle of legitimate trust also ex tended to respect for the legitimate expectations of 
individuals, especially when decisions or actions of the state were deemed prejudicial to them.  As a 
result of these domestic reforms, Colombia was prepared to support efforts to develop models, within 
the context of a multilateral agreement, which woul d increase transparency without prejudicing legal 
stability.  In developing this framework, Colo mbia also favoured making transparency an 
indispensable and integral part of a broader progra mme of technical assistance and capacity building.   
126. The representative of Costa Rica
 considered that improving transparency was one of the 
principle benefits of the multilateral framework.  Transparency was an area where Members could be 
fairly ambitious, although its scope would obviously also depend on the scope of other objectives in 
the agreement.   In particular, Costa Rica agreed w ith paragraph 22 of the EC’s paper that an eventual 
multilateral investment agreement should at a mini mum guarantee similar treatment to that found in 
GATS and other WTO agreements.  However, Cost a Rica recognized that the application of GATS 
measures in the area of transparency had not always  been satisfactory, so it was important to seek 
even more effective mechanisms to realize its obj ectives.  One point that his delegation wanted to 
stress was the difficulty some developing countri es might face in complying with transparency 
obligations, and the importance of technical assist ance in helping countries to obtain benefits from 
greater transparency in their investment regimes.  In this respect, his delegation concurred with the 
point made in paragraph 29 of th e EC’s paper about the role that new technologies could play in 
making the dissemination of investment information ch eaper and more effective.  Finally, he wished 
to acknowledge the relevant comments made by the observer representative of UNCTAD, and looked 
forward to the forthcoming "issues paper" on the subject.    
127. The representative of Hong Kong, China  stated that Hong Kong, China maintained a liberal 
investment regime that was founded on a free-mark et economy philosophy and noted that the degree 
of transparency was one of the key determinants of  the desirability of an economy as an investment 
destination.  In a past contribution (WT/WGTI/W/90), his delegation had shared with Members the steps Hong Kong, China had taken to enhance the transparency of its i nvestment environment.  It was 
noted that there was general agreement on the impor tance of the principle of transparency, which was 
one of the fundamental WTO principles underlying tr ade and investment liberalization.  Members 
considered that transparency was important for cr eating a predictable, stable and secure climate for 
foreign investment.  Nevertheless, there were di fferent views on whether it was necessary to have a 
set of transparency rules for a possible multilate ral framework on investment, and on what was the 
appropriate scope of the transparency rules.  H ong Kong, China understood the concerns of a number 
of developing-country Members on the possible burdens that could arise from transparency rules. As 
highlighted in the Doha Declaration, any frame work to be developed should allow Members to 
undertake obligations and commitments commensurate w ith their individual needs and circumstances.  
A wider scope of transparency rules would logi cally lead to a more transparent investment 
environment, but at the same time would po se a higher level of commitment on Members in 
complying with the obligations.  It was necessary to  strike a balance.  While Hong Kong, China in 
general favoured a more transparent global investme nt environment, his delegation was sympathetic 
to the constraints faced by developing-country Me mbers in fulfilling the obligations arising from the 
transparency provisions in a possible multilateral framew ork.  As stated in the Secretariat Note and in 
his delegation's previous submission, further wo rk was required on the balance between pursuing  WT/WGTI/M/17 
 Page 35 
 
 
more transparency and avoiding the imposition of  burdensome obligations.  Technical assistance and 
capacity building were helpful in this regard only if they could suitably meet the genuine needs of 
developing-county Members.  It would be helpfu l to look into what specific development needs 
should be taken into account and to cons ider how their needs could be met. 
128. The representative of Hungary  observed that there was a basic and broad convergence of 
views in the Working Group on the importance and underlying purpose of transparency, which was 
hardly surprising since transparency was one of  the fundamental principles of the WTO system. 
Hungary shared the view expressed in the written co ntributions that were before the Working Group 
that in the context of investment the ready availa bility of reliable and relevant up-to-date information 
(through transparency measures) had a key role to play in reducing the risks perceived by investors in 
relation to potential investments. Transparency therefore was an important - though not sole - 
determinant of an investment-friendly business environm ent.  Against this background, the impact of 
a multilateral framework for FDI that would co ntain provisions setting minimum standards for 
transparency vis-à-vis investors would be two-fold: it would no t only encourage higher levels of FDI-
flow, but, through improving the comparability of invest ment locations, it would also lead to a more 
optimal allocation of direct investment capital globa lly.  The Hungarian delegation also thought that 
adequate transparency vis-à-vis  other WTO members was necessary to facilitate the monitoring of 
compliance with international obligations, and that  regulatory transparency was conducive to more 
effective governance and improved public confidence in government.  Hungary was convinced that 
adequate transparency requirements relating to all three components identified for example in 
paragraph 15 of the Secretariat Note (that is  publication, notification and administration of 
regulations/measures) were essential elements  of a multilateral framework for FDI. 
129. As the Secretariat Note pointed out, transp arency disciplines in WTO instruments were 
tailored to the specific scope and purpose of indi vidual agreements as determined by Members. 
Hungary acknowledged the point in paragraph 6 of th e paper that transparency obligations generally 
became more important and detailed in areas where the role of WTO rules of general application was 
limited (that is to say, where the scope for discre tionary government measures was broader).   As 
Hungary had consistently mainta ined, the debate on investment was not new to the WTO.  The 
TRIMs Agreement, the ASCM and, above all, th e GATS dealt with differe nt aspects related to 
investment. All these agreements contained transparency  obligations that needed  to be looked at in 
this discussion.   In Hungary's view, the GATS, in particular, should serve as a source of inspiration 
for the Working Group, since, through mode 3, it w as the only WTO agreement that dealt with market 
access for - and post-establishment treatment of - FDI.  While Article III of the GATS contained 
obligations on publication, notification, enquiry  and counter notification, Article VI included 
requirements on procedural transparency. The transp arency obligations in the GATS, together with 
Members' experience with their implementation, could provide good pointers as to what might be 
thought desirable and realistic regarding transparen cy in the multilateral framework for FDI.  Among 
the two papers submitted by delegations, the EC pa per seemed to better reflect this approach, in 
particular in Part V.  Hungary agreed with the point made both in the EC and Japanese papers that 
there did not seem to be a logical reason why direct investment in the primary and secondary sectors should not benefit from at least the same level of tr ansparency that was already provided for investors 
in the services sector.  However, for the reasons Hu ngary had stated before, his delegation would take 
issue with paragraph 13 of Japan's paper that th e TBT Agreement was the ideal model in terms of 
level of obligations for the multilate ral framework for FDI.  He wished to reiterate that, for Hungary, 
the GATS looked to be a much more  adequate point of reference. 
130. Regarding transparency provisions in the GA TS, Hungary noted that the "positive list" 
approach to undertaking pre-establishment commit ments had a bearing on the scope of certain 
transparency obligations. This impact found its ex pression in the notion of conditionality, i.e. that 
certain obligations applied only if a Member unde rtook specific commitments in a sector. Examples 
included Article III:3 (on notification of new or  changed laws, regulations or administrative 
guidelines which significantly affect trade in services covered by specific commitments) and WT/WGTI/M/17 
Page 36  
 
Article VI:1 (setting out an obligation to administer  measures of general app lication  in a reasonable 
objective and impartial manner), and other provisions on procedural transparency in paragraphs 3, 5 
and 6. This was a notion that, in Hungary's view, should be seriously considered in the Working Group. 
131. His delegation also wished to note that, on the basis of a mandate in Article VI:4 of the 
GATS, the Working Party on Domestic Regula tion was currently discussing the possibility of 
elaborating further disciplines on, among other things , transparency.  As part of this exercise, the 
question was raised, on the basis of Members' coll ective experience, whether Article III of the GATS 
operated satisfactorily.  This work was directly re levant to the issue delegations were currently 
discussing, and it would seem to be useful that th e Working Group kept an eye on developments in 
the Working Party on Domestic Regulation. As an additional point, he noted that in the Working 
Party discussions it was becoming clear that an obliga tion on "prior comment and notification", at this 
stage, was felt to be far too ambitious and admini stratively burdensome by the huge majority of WTO 
Members.  Accordingly, Hungary also urged Members to  be equally realistic in their ambitions in this 
Working Group.  More generally, when setting up the multilateral framework for investment, 
Members should not lose sight of the fact that transparency was not an end in itself but a means to 
improve the investment environment with a view to maximising the benefits countries could obtain 
from increased FDI flows. When considering th e introduction of new transparency disciplines a 
careful cost-benefit analysis had to be made in or der to avoid the creation of too onerous obligations, 
in particular for Members at a relatively lower le vel of development.  In other words. Members 
needed be realistic and pragmatic.  Finally, he thanked the observer representative of UNCTAD for 
his comments.  His delegation found relevant the ques tion that was raised as to whether transparency 
provisions, in addition to addressing host countries, should also target home countries and companies, 
and believed that this question should be considered by the Working Group. 
132. The representative of India
 noted that the dictionary definition of "transparency" was: “easily 
understood"; "frank"; "open”.  The EC paper on tran sparency defined it as follows:  "Transparency 
means information.  Making available relevant inform ation for all interested operators is essential in 
order to enable them to make investment decisions .  Information on both the substance of the rules 
and on the process is equally important."  Howe ver, extending the concept of transparency to 
administration went far beyond that concept.  The Secretariat, in its paper, held the view that 
“standard provisions of transparency involve three core obligations: (1) to make information on laws, 
regulations and other policies relate d to trade publicly available; (2) to provide notice of (notify) the 
laws and regulations and changes to them; and (3) to ensure that laws and regulations are 
administered in a uniform, impartial and reasonable manner.”  India did not believe that the third element, relating to administration of laws and regulations, fell within  the purview of transparency at 
all.  The Secretariat had quoted three main pr ovisions in various Uruguay Round Agreements to 
justify its definition of transparency:  Article X of GATT, Article III of GATS and Article 63 of 
TRIPS.  It was significant that the latter two rela ted exclusively to “transparency”.  Article X was 
titled “publication and administration of trade regula tions.”  While the publication and notification 
aspects of Article X related to transparency, admini stration did not.  Thus, Article X:3 (a) was not a 
transparency-related provision.  Normally transpar ency refered to notification and publication of 
administrative procedures (without calling in qu estion their fairness and reasonableness, in 
implementation, review and appeal procedures).  Transparency provisions quoted in the Secretariat 
document also lent credence to India's understanding  of the issue.  The Secretariat document said, 
“Model bilateral investment treaties are largely sile nt on the question of transparency.”  Even the 
United States' prototype bilateral treaty merely stat ed that each party “shall ensure that its laws, 
regulations, administrative practices and procedures of general application and adjudicatory decisions 
that pertain to or affect covered investments are promptly published or otherwise made publicly 
available.”  The NAFTA requirements, even in resp ect of administrative procedures only provided for 
reasonable notice of the legal authority under which any proceeding w as initiated, a general 
description of issues and opportunity for the affected party to present facts and arguments – and, that 
too, “in accordance with domestic procedures”.  Indi a was uncomfortable with the notion of external  WT/WGTI/M/17 
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assessment of “consistency, impartiality and reasona bleness”, particularly the latter, being brought 
within the description of transparen cy.  Transparency should relate to publication and notification, and 
should not go as far as administration.  The transpar ency provision in the GATS appeared to be more 
in line with generally accepted notions of transparency. 
133. He agreed with UNCTAD that th e notion of transparency should  not be confined to host 
countries alone but also to foreign investors and to home countries. The question of ensuring 
transparency in the operations of transnational co rporations and foreign investors themselves was an 
extremely important issue that would need to be  considered in the Working Group's assessment of 
transparency.  Many cases had come to light rece ntly of fraudulent transactions involving some 
companies.  The use of derivatives to spin off dir ect investment and thus r ecover investments without 
making any significant impact on the economies of  the developing countries involved had become 
more common, as had the use of offshore compani es in tax havens to obfuscate the nature and 
ownership of capital flows.  Therefore, any transp arency exercise also called for an exchange of 
information, and for the creation of a data base  recording cases of fraud, bribery and corruption, 
transfer pricing manipulations, questionable deali ng and other cases of violation of national laws from 
different host countries in respect of foreign investors.   There also appeared to be a case for defining 
transparency requirements for home countries regardi ng outward investment flows, including general 
and sectoral restrictions, if any, transfer of technology provisions, banki ng and taxation provisions 
and the like.  India looked forward to the UNCTAD contribution on the subject of transparency.   
134. With regard to notification requirements, it w as generally the practice in India to publish and 
notify all investment-related policies and procedures .  However, it would be difficult to extend the 
principle of transparency to prior notificati on and comment.  His delegation agreed with the 
comments made by Hungary in this context.  Such provisions relating to prior notification were necessary in respect of TBT and SPS, which la id down essentially standards for different 
commodities.  An investment-related policy was, however, an entirely different matter requiring 
conformity to established domestic legislative and administrative procedures.  Bearing in mind the 
impact that capital flows could have on the economies of developing countries, governments had 
generally followed a cautious approach.  While tran sparency with respect to an FDI policy framework 
might be unexceptional, some of the procedures for processing and evaluating proposals might not be 
made transparent in the public interest. 
135. The representative of Cuba
 made several preliminary and general comments and said that his 
delegation would continue to study the issue.  Cuba recognized the principle of transparency as one of 
the main pillars of the multilateral trading system .  The issue was to determine how each Member 
conceived the principle of transparency, what form and scope it should take in a multilateral 
framework, and what the implications were for devel oping countries.  In particular, Cuba wanted to 
reiterate that transparency began at the moment th at laws and regulations en tered into force.  The 
development of laws and regulations was the re sponsibility of the institutional system of each 
individual country.  Cuba also believed that it w as important to highlight the capacity constraints 
facing developing countries.  Problems arose in th e WTO system when tran sparency requirements 
outstripped the ability of developing countries to meet  them.  For example, the requirement to publish 
laws when they came into force was often beyo nd the capacity of developing countries.  Technical 
assistance, although useful, was not a panacea.  Lack of infrastructural, financial and human resources 
were the main problems that developing countries fa ced when attempting to comply with transparency 
obligations.  Cuba believed that, in the present deba te, the Working Group needed to remain realistic, 
taking into account the various levels of development of all WTO Members. 
136. The representative of Mexico  agreed with the Secretariat Note  on the need to strike a balance 
between realizing the objective of greater tran sparency and avoiding undue resource demands on 
developing countries.  Mexico also agreed that existing transparency obligations in the WTO 
agreements were tailored to specific objectives,  and that these objectives could change from one 
agreement to another.  Therefore, Mexico belie ved that transparency provisions in a possible WT/WGTI/M/17 
Page 38  
 
multilateral investment framework should not lose si ght of specific objectives.  While transparency 
was crucial to achieving greater certainty, predicta bility, and stability in investment relations, the 
Working Group must avoid extremes, as well as the te mptation to try to resolve all of the issues that 
were related to transparency.  Mexico also agr eed with India that the “uniform, reasonable, and 
impartial” administration of laws  and regulations, while important to WTO rules, was not, as the 
Secretariat Note claimed, an issue of transparency .  Mexico did not share the view that “fair and 
equitable” treatment was part and parcel of transp arency, as cited in paragraph 8 of the Secretariat 
document.  Mexico believed that "fair and equ itable" treatment was something that came under 
customary law in each country.  Finally, Mexico agr eed with paragraph 22 of the Secretariat Note, in 
which it described the concept of prior notification, but wished to highlight that this requirement only 
became operational when measures had an  impact on international trade.  
137. The representative of Norway
 shared the view, expressed in the EC and Japan papers, that 
lack of transparency meant lost opportunities to attract investment, and that transparency was an 
essential element of good governance.  Norway also  agreed with previous speakers that it was 
important that all countries had the ability to im plement the necessary measures and procedures to 
ensure that investors had the information they needed when making decisions.  Norway therefore 
encouraged developing countries to identify th eir technical assistance needs in this area. 
138. The representative of Korea  believed that there was broa d consensus among Members about 
the importance of transparency.  The task befo re the Working Group was to begin to address the 
question of how transparency could be enhanced.  Technical assistance and capacity building were 
important elements in achieving this objective.  As  enumerated in each of the papers, Korea agreed 
that there were three basic "pillars" of transp arency: publication requirements, notification 
requirements and transparency in administrativ e procedures.  On the subject of publication 
requirements, Korea believed that it would be desira ble to publish all laws, re gulations and measures 
of public authorities that pertained to - or affect ed the operation of - the investment agreement. 
Moreover in Korea's view, publication should take place as soon as possible, but definitely before 
measures were enacted.  Korea also thought it was important to introduce other supporting measures 
to enhance transparency, such as contact or enquiry  points.  On prior notification, Korea looked to 
examples found in other WTO agreements, such as  TRIPS, TBT, SPS and GA TS.  Members already 
undertook prior notification in the TBT and SPS Agreements, so Korea was of the opinion that Members should do likewise in the framework agreem ent on investment.   Korea believed that the 
introduction of new laws and re gulation should be notified, as was the case under the TRIPS 
agreement.  With regard to the area of investme nt liberalization, Members would make notifications 
with respect to their commitment s, as was done under the GATS.  Finally, with regard to maintaining 
transparency in administrative procedures, Kor ea felt that the Working Group could take as its 
benchmark the level of transparency that was em bedded and required in Article VI of the GATS. 
139. The representative of the United States
 noted that a lack of transparency in certain markets 
was cited by US investors as the most prominent barrier they faced - echoing the concern expressed 
by the European business community,  as noted in pa ragraph 6 of the EC paper.  Additionally, the 
United States agreed with the comments made in pa ragraph 9 of the same paper, that a lack of 
transparency deterred investors from entering markets.   The United States also wished to reinforce the 
important point made in paragraph 22 of the EC paper that it was sen sible to extend the transparency 
provisions already provided to service providers through the GATS to manufacturing investment.  
Finally, her delegation welcomed some of the notions  in paragraph 29, on the role of new technology 
in enhancing transparency, and supported the approach  described in paragraph 36.  The United States 
remained interested in learning more about the cap acity-building needs of developing countries, and 
her delegation believed that the EC  paper had highlighted important issues for the Working Group to 
explore. 
140. The representative of the United States also wish ed to respond to some of the questions 
outlined in paragraph 56 of the Secretariat Note.  Regarding publication requirements, the United  WT/WGTI/M/17 
 Page 39 
 
 
States believed that there was value in expanding basic publication requirements (e.g., making publicly available all relevant rules) to more deta iled access to information obligations – such as 
provisions regarding the right to request informati on or a requirement to establish enquiry points.  
Both additions would greatly enhance transparency for investors.  Regarding notification, at this 
point, the United States believed that a simple ob ligation to notify the WTO and other Members of 
proposed changes to laws and regulations would be worthwhile.  Additional measures, such as 
allowing other Members the opportunity to comment on proposed regulatory changes, were also extremely valuable.  Her delegation agreed w ith the assumption that prior comment reduced 
uncertainty and discriminatory treatment in a given market, as all parties were better informed through 
the ability to participate in the development of regul ations.  As regards procedural transparency, the 
United States believed that it was desirable in any WTO investment agreement to incorporate a right 
to appeal and review regarding procedural actions.  On the subject of the development dimension of 
transparency, her delegation remained interested in learning what kind of technical assistance was 
needed to assist developing and least-developed coun tries to comply with information and notification 
requirements.  Once Members had a better idea of t hose needs, her delegation was fully prepared to 
explore how they might be addressed.  Regarding confidentiality exemption, these were vital to 
ensuring that transparency provisions did not underm ine other important goals.  For this reason, the 
United States would support the inclusion of such language in any investment text on transparency.  As regards binding versus non-bindi ng undertakings, the United States believed that WTO rules on 
transparency should be binding on Members and subj ect to dispute settlement.  Her delegation did not 
support the APEC approach for the WTO.  Howeve r, coupled with this approach, Members would 
need exceptions (e.g., essential security and law enforcement), which would provide governments 
with the ability to withhold certain information or derogate from general public notice in certain 
security and law enforcement situations.  Having sai d this, she did envisage that certain exceptions 
would be built into the obligations.  For example,  the obligation to publish could be abrogated in 
emergency situations, as was permitted in GATS Article III. 
141. The representative of Brazil
 shared the view that transparency provisions constituted an 
important element in any further consideration of th e issue of investment within the framework of the 
WTO to the extent that it would contribute to achievi ng greater predictability and stability in this area.  
However, his delegation wanted to introduce a note of caution regarding the consideration of specific 
obligations in this area that were unduly burdensom e, particularly for developing countries.  For 
example, as regards prior consultation on new legisl ation or regulations affecting investment, Brazil 
agreed with Hungary that discussions in the Workin g Party on Domestic Regula tion had revealed that 
the idea of across-the-board "prior comment" provis ions was not accepted by the vast majority of 
Members, not least because many of them, particular ly, but not exclusively, developing countries, had 
been unable to comply fully with the transpar ency obligations in existing WTO agreements. 
142. In addition, Brazil wanted to address an issue ra ised in paragraph 55 of the Secretariat Note, 
whereby the Secretariat rightly noted that the scope  of transparency in an investment agreement 
depended in large part on the scope of the agreem ent’s substantive obligations, including the specific 
commitments or reservations listed by Members in  their schedule of commitments.  However, the 
paper went on to conclude that, in principle, a "positive list" approach would result in a less 
transparent investment regime.  Brazil wished to di sagree in principle with this view, noting that a 
"positive list" approach could be more transparent as  to the regulatory regime of the sectors covered 
by commitments.  Of course this depended on the le vel of sectoral coverage in the schedule.  In cases 
where there were few sectors inscribed in a Memb er's schedule, there was no obligation to provide 
information on the other sectors that were left out, an d therefore unbound.  However, in principle, if a 
Member's schedule had comprehensive sectoral c overage, it would be more transparent than a 
"negative list", in which the investor could know littl e about the regulatory regime of the sectors that 
were open, or indeed what those sectors were.  Moreover, lists of reservations and exceptions in a 
"negative list" approach were often phrased in genera l and vague terms that resulted in lack of clarity, 
and therefore transparency, even with regard to the scope of the measures and/or sectors that were 
supposed to be excluded from the rules. WT/WGTI/M/17 
Page 40  
 
143. Brazil also wished to support the view, expressed  in paragraph 23 of the EC paper, which for 
Brazil was of particular relevance.  Informati on about the host-country environment for foreign 
investment was a crucial element in an investor's  decision-making process.  His delegation believed 
that the government of investment-exporting coun tries - as well as the relevant international 
institutions, such as the Multilateral Investment Guarantee Agency (M IGA) - should assist the efforts 
currently undertaken by host countries, particularly  developing countries, to disseminate information 
on the positive aspects of their domest ic investment regimes.  Brazil also thought that the comments 
made by UNCTAD, on the need to involve home c ountries and TNCs when considering the issue of 
transparency, were very relevant. 
144. The representative of Chile
 recalled that there were two basic principles that underpinned all 
WTO agreements:  transparency an d non-discrimination.  The question was not whether a multilateral 
agreement on investment should include transparen cy disciplines, but what kind of disciplines it 
should include, and how to ensure that these disci plines did not impose undue costs or administrative 
burdens on countries.  The transparency applica tions in the GATS, under Articles III and VI, seemed 
to be an interesting point of departure.  Moreover,  Chile believed that the current work of the Working 
Party on Domestic Regulation would be  relevant for transparency in an investment agreement.  In 
response to the questions that the Secretariat posed  at the end of its document, Chile offered the 
following responses.  Regarding publication requi rements, Chile could endorse the idea of going 
further than simply publicising laws and regulations , and required the establishment of contact points, 
which many countries had already undertaken either  as a requirement of the GATS or autonomously.  
A related question was to which level of governme nt should publication obligations apply, i.e., 
national, state, and/or local.  Regarding the devel opment dimension, the need to find an appropriate 
balance between transparency and administrative wo rkloads was not a minor point.   However, Chile 
believed that many developing countries were alrea dy well advanced in this work, as a result of their 
investment promotion activities, and their involveme nt in other investment and trade agreements.  
Moreover, domestic investment-relate d legislation was often horizontal in nature, and thus subject to 
the notification requirements of Article III of the GATS as well as other provisions on transparency in 
other WTO agreements.  It was important to note th at in other WTO committees and working parties, 
discussions were underway to improve and enhance transparency provisions, particularly in the 
Council for Trade in Goods in respect to GATT Article 10.  These deli berations could have 
implications for the work of this Working Group.      
145. The representative of Malaysia  considered transparency to be crucial part of any possible 
multilateral framework on investment.  Malaysia also agreed almost entirely with the views expressed 
by India.   In particular, Malaysia asserted that procedural issues had nothing to do with transparency, 
but were within the purview of the decision-maki ng process of national governments.  However, if 
Members were to create a multilateral framework on investment, this issue could be revisited, 
depending in part on the breadth or scope of such an agreement.  Malaysia also believed that the 
concept of prior notification was a useful one, as de monstrated in the TBT Agreement, and could be 
applied to a possible multilateral framework on invest ment.  Malaysia also took issue with paragraph 
3 of the Secretariat Note that seemed to sugg est that national treatment should be extended to 
transparency provisions.  His delegation believed th at there were circumstances in which countries 
would need to discriminate between foreign and dom estic investors, although these policies should be 
clearly published and understood.  Finally, Malaysia wished to see further study of the important 
concept raised by UNCTAD that transparency oblig ations should also be extended to home countries 
and TNCs. 
146. The representative of Switzerland  emphasized that transparency  rested on twin pillars: 
information and procedural transparency.  Switzerla nd believed that the uniform application of rules 
was part and parcel of transparent rules.  For transp arency to be operational, it was vital that rules and 
regulations be administered in an open and im partial way.  Switzerland also appreciated the 
interesting survey information prov ided in the Japanese paper, which clearly underlined the value of 
transparency provisions in a multilateral framework.  Regarding the scope of transparency provisions,  WT/WGTI/M/17 
 Page 41 
 
 
Switzerland conceded that, while it would be desirable to have a system of “one-stop shopping” for all 
domestic investment rules, the Working Group should  recognize that investment regulations were 
highly complex in practice.  Nevertheless, Switzer land agreed in principle with paragraph 16 of 
Japan’s paper.  Finally, Switzerland would await publication of UNCTAD’s paper on transparency 
before assessing the opportunity to incorporate some  of the ideas expressed by its representative, and 
supported, in particular, by India and Brazil.  Almost  every host country was also a home country so it 
should not be too difficult to find common ground, although the issue of transparency obligations for TNCs might be more delicate because of c oncerns about business confidentiality.    
147. The representative of Canada
 shared the view that all thr ee papers saw transparency as a 
means of ensuring clear rules of the game for inv estors.  Both the Europ ean Communities and Japan 
noted that the absence of transp arency in investment-related regulations was considered by 
prospective investors as the most serious obstacle to  investment. Hence, for countries hoping to attract 
FDI, initiatives to increase regulatory transparency  should be viewed as positive for both the host 
country and the foreign investor.  Canada’s thi nking on the subject of transparency was strongly 
guided by the terms of the Doha Declaration.  In  describing the purpose of  a prospective multilateral 
framework on investment, ministers began with tran sparency.  The reason for this was clear: without 
transparency, it was difficult to speak of - let alone  achieve - stable and predictable conditions for 
long-term cross-border investment.  Transparency mean t, first, that all relevant actors had access to 
information on relevant laws, regul ations and other policies; and, second, that these were administered 
(as the Secretariat Note on transparency pointed out)  in a "uniform, impartia l and reasonable manner".  
Investors could make more informed investment-rela ted decisions, which would, in turn, contribute to 
the economic and financial stability and predictability of the host country's investment environment.  
Canada was of the view that a commitment to tr ansparency should be a central tenet of any 
prospective framework.  What any prospective tr ansparency obligation would entail should be a 
matter for negotiations. 
148. With respect to the important question of technical assistance, his delegation noted that the 
European Communities, in their paper, pointed to  some of the kinds of assistance that might be 
required in order to increase transparency, including financing and training of human resources to help countries identify and publicize domestic laws a nd regulations.  Canada agreed with the need to 
provide developing and least-developed countries w ith the necessary technical  and capacity-building 
assistance to enable these countries to implement any prospective transparency obligations.  Canada 
looked forward to hearing how the Working Group c ould focus attention on the question of how this 
could be made operational.  It s hould also be noted, however, that the goal of transparency could be 
furthered through close attention to the way in wh ich other obligations, commitments, and exceptions 
were worded in an agreement.  This observation was made in the Secretariat Note as well, most 
succinctly in the fifth paragraph of the executive su mmary.  As was noted in Canada's contribution on 
scope and definitions, the way in which these archit ectural characteristics interacted also had a 
bearing on how the agreement as a whole worked - and indeed how it furthered the goal of 
transparency.  Canada would argue, for instan ce, that an agreement predicated on general 
applicability, with defined exceptions, was inherently  more transparent than an agreement predicated 
on commitments undertaken only with respect to sel ected obligations.  It tended to be the latter 
approach that necessitated an additional transparen cy obligation of general applicability, and perhaps 
other obligations as well.  For Canada, this was an  important point that hi s delegation believed should 
be taken into consideration as the Working Group examined how transparency could be furthered 
within the structure of any prospective investment  agreement.  Canada looked forward to discussing 
this issue in future meetings when the Working Group addressed other elements of a prospective 
agreement, such as non-discrimination.  At this stag e, Canada simply wished to state its view that 
there could be more than one approach to furthering the fundamentally important goal of 
transparency. 
149. The representative of Venezuela
 stated that her delegation believed that transparency 
provisions were extremely important to a multila teral agreement on investment.  Beyond their WT/WGTI/M/17 
Page 42  
 
intrinsic merits, transparency provisions gave concre te value to the substance of the agreement within 
the framework of the WTO.  Regarding the principl e of transparency, the fo cus of the Working Group 
should be on determining the scope of the agreement, for which there were two issues of particular 
importance:  first, the substantive provisions of th e agreement, as they related to transparency, would 
need to be carefully evaluated;  second, a balance would need to be struck between the benefits and 
costs of transparency provisions, and this balance would need to be incorporated in the agreement. 
With regard to publication and notification require ments, Venezuela believed that these requirements 
should pertain only to laws and regulations that exis t, or to modifications to these existing laws and 
regulations.  Prior notification requirements - and establishing the legal and administrative 
infrastructure that these requirements would involv e - might prove too costly for many developing 
countries.  Like other delegations, Venezuela be lieved that these types of obligations could be 
excessive.  Her delegation felt that the comments made by UNCTAD were extremely useful, and would help the Working Group to move forward in its work.  
150. The representative of China
 looked forward to UNCTAD's forthcoming paper on 
transparency, in light of the interesting comments of its representative that transparency obligations 
should also apply to home countries and transnationa l companies.  Transparen cy was one of the key 
WTO principles that contributed to a good environm ent for business and trade, and transparency in 
investment rules would surely make a similar contribution.  When the Working Group discussed 
transparency, however, it should remember the purpo se of foreign investment. In her delegation's 
opinion, foreign investment not only benefited in vestors, but also contributed to the economic 
development of host countries as well.  That was why developing countries now placed such a great 
emphasis on attracting and absorbing foreign investment. When the Working Group discussed 
transparency, it should be careful to avoid imposi ng additional burdens on de veloping countries which 
could have adverse affect on their economic devel opment.  The discussion should be focused only on 
those necessary elements that were in the capacity of developing countries to implement, and exclude 
those which were beyond their capacity. 
151. The representative of Indonesia  wished to make a preliminary comment on the issue of 
transparency without prejudice to its position in the future.  The element of transparency was 
important for both home and host countries in order to facilitate the flow of investment.  Home countries considered it important to the security of their investors, while host countries considered it 
important in their effort to attract investment.  Indone sia had made every effort to render all of its laws 
and regulations more transparent.  These efforts were currently being undertaken at Indonesia's own 
pace, and according to its ability and readiness.  This  was not to say that I ndonesia disagreed with a 
multilateral approach to transparency, but it would n eed to study further whether that approach would 
likely create more benefits or burdens.  From Indonesia's experience in implementing other WTO 
agreements, his delegation sometimes found it diff icult to conform even to the most basic WTO 
notification obligations. In this light, Indonesia be lieved that the main issue was not transparency 
itself, but how broad its coverage  would be, and to what extent it would create new economic and 
administrative costs for host countries.  Indonesia noted that certain Members had difficulty with 
respect to some elements of transp arency - for example, India's and Malaysia's objection to the idea of 
procedural and judicial review.   These were legiti mate concerns and relevant to discussions in the 
Working Group.  Furthermore, given the economic and administrative costs involved in implementing 
a possible multilateral agreement, Indonesia felt that th e preferred approach was to have an agreement 
with limited transparency coverage that would result in only limited transparency obligations.  
Indonesia believed that UNCTAD's remarks on the na ture of transparency - including the possibility 
of comprehensive transparency obligations for host countries, home countries and TNCs - was pertinent to the work of this Group.  
152. The representative of Argentina
 shared the view that all delegations recognized the 
importance of having transparency provisions in a multilateral investment instrument.  What seemed 
important - and novel - to Argentina was the idea th at transparency provisions should be extended to  WT/WGTI/M/17 
 Page 43 
 
 
home countries and TNCs, as was suggested by India a nd elaborated further by UNCTAD.  This idea 
was very useful, and worth looking into in more detail. 
153. The representative of Australia  agreed with other delegations that transparency was a key 
element in attracting quality investment, and that  it helped to ensure a common understanding of a 
country's policy objectives and parameters, not only at  home, but also overseas.  Australia felt it was 
interesting, given companies' views that transparen cy was a key element for market access, that it did 
not figure more prominently in most internationa l investment agreements, as pointed out in the 
Secretariat Note.  Her delegation w ondered whether this might be a ga p that could be filled by a WTO 
multilateral framework.  Members acknowledged that existing WTO ag reements reflected a fairly 
broad and common understanding regarding transparen cy objectives, and perhaps this could be taken 
into account as the Working Group continued its di scussion on this issue.  Regarding technical 
assistance, Australia believed that this was an area  where valuable and concrete results could be 
achieved, including examining the feasibility of such ideas as enquiry points.  Australia looked forward to reading UNCTAD's forthcoming pape r, and examining its ideas in more depth. 
154. The representative of Japan
 shared the view that there was a broad consensus among 
delegations regarding the importance of transparen cy.  As regards the EC's paper, his delegation 
found the results of the survey of European business very interesting, as they mirrored the results of 
Japan's own survey, and underscored the importance of  transparency to creating a favourable business 
environment in host countries.  His delegation al so supported the EC's observations regarding the 
valuable role that information technologies - e.g., we bsites, electronic data bases, e-mail and so forth - 
could play in enhancing transparency at lower cost s.  This was consistent with what the Japanese 
Government had been doing to ensure transparency . As Japan had suggested it its submission, the 
major issues that needed to be addressed in the future were the scope of rules and the level of 
obligations regarding transparency.  Regarding the scope of rules, there had been controversy over 
whether or not a possible multilateral framework s hould - or could - include provisions related to 
administrative or procedural transparency.   While  concerns about including such concepts may be 
valid from a legal perspective, he reminded dele gations that as a practical matter many businesses 
operating overseas believed that transparency of procedures and administration was as important as transparency of rules when creating a predictable a nd secure investment environment.  He also drew 
attention to the fact that the GATS's provisions for complaint procedures, as well as administrative 
procedures, were an integral part of that Agreem ent.  Japan felt that it would be unfortunate if 
investment opportunities were lost because of lack  of transparency in administrative procedures. 
155. The representative of the European Communities
 wished to address the point raise by Brazil, 
regarding the Secretariat Note's reference to the question of whether a "positive list" approach was 
more or less transparent.  His delegation agreed with Brazil that it all depended on the way the lists 
were drafted and constructed.  As regards the transparency di scussions in the Working Party on 
Domestic Regulation, he agreed that close attenti on should be paid to its work because of its cross-
cutting issues and concerns.  Finally, as regards the question of whether procedural or administrative 
issues were within the scope of transparency, his delegation believed that these were basic and 
important concepts that had already been acknowledged in many existing WTO agreements, 
regardless of whether they went under the heading of transparency.  Moreover, the fact that these 
concepts were already applied to investment-relate d issues in the context of the GATS suggested that 
they should apply equally to a multilateral investment framework. 
C. OTHER RELATED ISSUES  
156. The Chairman  recalled that this third item had been included on the agenda to allow 
delegations an opportunity to c ontinue its discussions, as necessary, of the various issues which had 
been raised in the course of the Working Group's wo rk so far.  No delegation, however, availed itself 
of this opportunity.  The Chairman noted that th is item would be kept on the agenda for future 
meetings. WT/WGTI/M/17 
Page 44  
 
D. S
PECIAL AND DIFFERENTIAL TREATMENT : DRAFT REPLY TO THE REQUEST FROM THE 
CHAIRMAN OF THE COMMITTEE ON TRADE AND DEVELOPMENT TO THE CHAIRMAN OF THE 
WORKING GROUP (JOB NO . 2394). 
157. The Chairman  recalled that he had received a letter from the Chairman of the Committee on 
Trade and Development, dated 10 December 2001, in whic h he said that "in order to ensure that the 
overall work programme [pursuant to paragraph 44 of the Doha Minister ial Declaration] relating to all 
special and differential treatment provisions is carri ed through in good order, I should be grateful if 
you would inform me concerning any discussions or  other developments relating to special and 
differential treatment taking place in the workin g group on the relationship between trade and 
investment between now and July 2002.  The CT D would also welcome any other contribution the 
Working Group on the Relationship between Trade and Investment might wish to make in this regard 
before July 2002."  The Chairman also recalled th at he had already circulated his draft reply for 
delegates' information and comment.  As there we re no comments from delegations on the draft, the 
Chairman took it that he was authorized to send it to the Chairman of the Committee of Trade and 
Development. 
158. It was so agreed . 
159. The representative of the United States  noted that, while her delegation was comfortable with 
the draft letter, she wished to make a note in this body that work on Special and Differential 
Treatment in the CTD's Special Session was the subj ect of its own work programme and a mandate in 
the Doha Decision, as well as in the Doha Declaration,  but that mandate also included reference to the 
fact that its work would be conducted without pr ejudice to work on implementation issues in other 
bodies. 
E. OTHER BUSINESS  
160. The representative of Malaysia  asked whether it would be possible for all documents or 
communications received by the Secretariat to be  e-mailed to delegations, in addition to being 
distributed as printed material through the normal channels. 
161. The Secretariat  noted that delegations already had access to documentation electronically 
through the DDF database on the WTO website.   A ll documents were placed on that database before 
being issued in "hard copy".  Therefore delegati ons could already download  documents and send them 
back to capital.  The main problem with the data base was that it indexed the documents by number, 
but not subject, making identification more difficult .  He would consult with the managers of the 
database on Malaysia's request. 
162. The representative of Malaysia  asked whether at least delegations could be alerted when 
documents were posted on the DDF. 
163. The Chairman  reminded delegations that the next fo rmal meeting of the Working Group was 
scheduled to take place on 3-5 July, where, among othe r things, he proposed that the next three issues 
for clarification in paragraph 22 of the Doha D eclaration – "non-discrimination", "modalities for pre-
establishment commitments based on a GATS-type , positive list approach", and "development 
provisions" – be discussed.  He also noted that the Secretariat would prepare three background notes 
on these issues, to be distributed to delegations well in advance of the meeting.  Lastly, he informed 
delegates that the Secretariat would hold its firs t Technical Workshop for Geneva-based delegations 
and officials on 2 July - immediately preceding the formal meeting of the Working Group.  Delegations would be informed of the exact  time and location closer to the date. 
 
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