WORLD TRADE WT/WGTI/1/Rev.1
9December 1997
ORGANIZATION(97-5399)
Working Group ontheRelationship
between Trade andInvestment
REPORT (1997) TOTHE GENERAL COUNCIL
Revision
1. TheWorking Group ontheRelationship between Trade andInvestment wasestablished by
adecision taken attheWTO Ministerial Conference heldinDecember 1996. Therelevant paragraph of
theMinisterial Declaration (WT/MIN(96)/DEC) isreproduced inAnnex 1tothisreport.
2. Following theagreement bytheGeneral Council atitsmeeting of24April 1997 tothe
appointment ofAmbassador Krirk-Krai Jirapaet (Thailand) asChairman oftheWorking Group onthe
Relationship between Trade andInvestment1,theWorking Group heldformal meetings on2and3June,
6and7October and8December 1997. Thedates ofthese meetings weredetermined inlightofthe
instruction inparagraph 22oftheSingapore Ministerial Declaration thatcareful attention begiven
tocoordinating meetings withthose ofrelevant UNCTAD bodies. Reports onthefirsttwomeetings
havebeencirculated indocuments WT/WGTI/M/1 and2.Areport onthethird meeting willbe
circulated shortly asdocument WT/WGTI/M/3.
3. Atthemeeting of2and3June, Members made general statements onthenature ofthework
tobepursuedunderthemandatecontainedintheSingaporeMinisterialDeclarationandidentifiedspecific
issues forstudy intheWorking Group. Written submissions weremade bytheEuropean Community
anditsmember States, India andSwitzerland (WT/WGTI/W/1-3). TheWorking Group tooknote
ofaChecklist ofIssues Suggested forStudy prepared bytheChairman inthelightofthesuggestions
made bydelegations asabasisfortheconsideration oftheorganization ofthefuture work oftheGroup.
ThisChecklist isreproduced inAnnex 2tothisreport. TheWorking Group alsodiscussed WTO
provisions onmatters related toinvestment, based onaninformal Secretariat note(No.2988). With
respect tothecooperation encouraged intheSingapore Ministerial Declaration withUNCTAD and
otherappropriate international fora,representatives ofUNCTAD, theOECD andtheWorld Bankmade
statements atthefirstmeeting ontheiractivities relevant totheWorking Group (WT/WGTI/W/4-6).
Inaddition, theWorking Group considered aninformal Secretariat notecontaining factual information
onrelevant activities andinitiatives inother fora(No.2843). TheWorking Group noted thattheIMF
andtheWorld Bank hadobserver status intheWorking Group pursuant tothecooperation agreements
concluded between theWTO andtheseorganizations andagreed toinvite UNCTAD toattend itsfuture
meetings.
4. Atthemeeting of6and7October, theWorking Group started itssubstantive discussion on
thefirstthree main areas identified intheChecklist ofIssues Suggested forStudy: (I)implications
oftherelationship between trade andinvestment fordevelopment andeconomic growth; (II)the
economic relationship between trade andinvestment; and(III)stocktaking andanalysis ofexisting
international instruments andactivities regarding tradeandinvestment. Written submissions onsome
oftheseissues werereceived fromtheEuropean Community anditsmember States, Hong Kong China,
1Seedocument WT/L/215WT/WGTI/1/Rev.1
Page2
Japan andPoland (WT/WGTI/W/10-13). Onthefirstissue, theWorking Group hadbefore it
contributions byfiveinternational organizations (OECD, UNCTAD, World Bank, IMFandUNIDO),
which hadbeenrequested attheJunemeeting toprovide asummary ofwork doneintheseorganizations
onthismatter (WT/WGTI/W/8 andAddenda 1-4). Discussion ofthesecond issue wasbased ona
WTO Secretariat noteontherelationship between tradeandforeign direct investment (WT/WGTI/W/7
andCorr.1). Onthethird issue oftheChecklist, theWorking Group continued itsexamination of
WTO provisions onmatters related toinvestment andtooknoteofasupplementary notebytheWTO
Secretariat ondevelopments regarding activities andinitiatives inother fora(No.5279). Inthis
connection, theWorking Group alsoreceived awritten contribution fromtheAPEC Investment Experts
Group onongoing work oninvestment inthecontext ofAPEC (WT/WGTI/W/9).
5. Atitsmeeting of8December, theWorking Group continued itswork onitems I-IIIofthe
Checklist ofIssues Suggested forStudy. Inaddition tothesubmissions andbackground documents
which hadbeencirculated inconnection withtheprevious meeting, newwritten submissions were
presented bytheUnited States, Colombia, Korea, Cuba, Japan andCanada (WT/WGTI/W/14-19).
TheWorking Group agreed tocontinue itsconsideration ofthese items atitsnextmeeting. Italso
decided ontheorganization ofitswork under itemIVoftheChecklist. Regarding pending requests
forobserver status byanumber ofinternational intergovernmental organizations2,theWorking Group
agreed torevert tothismatter atitsnextmeeting inthelightoftheongoing process ofconsultations
intheframework oftheGeneral Council andtorenew itsinvitation totheOECD andUNIDO toattend
itsnextmeeting onthesame basis asthemeetings inOctober andDecember. TheWorking Group
agreed toholdmeetings in1998 on30-31 March, 16-17 June, 1-2October and23-24 November.
2Energy Charter Secretariat, Latin American Economic System, Organization ofAfrican Unity, Organization
ofAmerican States, Organisation forEconomic Cooperation andDevelopment, Organisation oftheIslamic
Conference, United Nations Industrial Development Organization.WT/WGTI/1/Rev.1
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ANNEX 1
Singapore Ministerial Declaration, Paragraph 20
"20. Having regard totheexisting WTO provisions onmatters related toinvestment andcompetition
policy andthebuilt-in agenda inthese areas, including under theTRIMs Agreement, andonthe
understanding thatthework undertaken shallnotprejudge whether negotiations willbeinitiated in
thefuture, wealsoagree to:
establish aworking group toexamine therelationship between trade andinvestment;
and
establish aworking group tostudy issues raised byMembers relating totheinteraction
between trade andcompetition policy, including anti-competitive practices, inorder
toidentify anyareas thatmaymerit further consideration intheWTO framework.
These groups shall draw upon eachother'swork ifnecessary andalsodraw upon andbewithout
prejudicetotheworkinUNCTADandotherappropriateintergovernmentalfora.AsregardsUNCTAD,
wewelcome thework under wayasprovided forintheMidrand Declaration andthecontribution it
canmake totheunderstanding ofissues. Intheconduct ofthework oftheworking groups, we
encourage cooperation withtheabove organizations tomake thebestuseofavailable resources and
toensure thatthedevelopment dimension istaken fullyintoaccount. TheGeneral Council willkeep
thework ofeachbody under review, andwilldetermine aftertwoyears howthework ofeachbody
should proceed. Itisclearly understood thatfuture negotiations, ifany,regarding multilateral disciplines
inthese areas, willtakeplace onlyafteranexplicit consensus decision istaken among WTO Members
regarding suchnegotiations."WT/WGTI/1/Rev.1
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ANNEX 2
3093
Working Group ontheRelationship 4June1997
between Trade andInvestment
CHECKLIST OFISSUES SUGGESTED FOR STUDY
Non-Paper bytheChair
Revision
Itwaswidely recognized thattheWorking Group 'swork programme should beopen, non-
prejudicial andcapable ofevolution asthework proceeds. Itwasalsoemphasized thatallelements,
notonlycategory I,should bepermeated bythedevelopment dimension. Particular attention should
bepaidtothesituation ofleast-developed countries. Inpursuing theitems ofitswork programme,
theWorking Group should avoid unnecessary duplication ofwork done inUNCTAD andother
organizations.
_______________
I. Implications oftherelationship between trade andinvestment fordevelopment andeconomic
growth, including:
- economic parameters relating tomacroeconomic stability, suchasdomestic savings,
fiscal position andthebalance ofpayments;
- industrialization, privatization, employment, income andwealth distribution,
competitiveness, transfer oftechnology andmanagerial skills;
- domestic conditions ofcompetition andmarket structures.
Inthiswork, theWorking Group should seektobenefit from theexperience ofMembers at
different stages ofdevelopment andtakeaccount ofrecent trends inforeign investment flows
andoftherelationship between different kinds offoreign investment.
II. Theeconomic relationship between trade andinvestment:
- thedegree ofcorrelation between trade andinvestment flows;
- thedeterminants oftherelationship between trade andinvestment;
- theimpactofbusinessstrategies,practicesanddecision-makingontradeandinvestment,
including through casestudies;
- therelationship between themobility ofcapital andthemobility oflabour;WT/WGTI/1/Rev.1
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- theimpact oftrade policies andmeasures oninvestment flows, including theeffect
ofthegrowing number ofbilateral andregional arrangements;
- theimpact ofinvestment policies andmeasures ontrade;
- country experiences regarding national investment policies, including investment
incentives anddisincentives;
- therelationship between foreign investment andcompetition policy.
III. Stocktaking andanalysis ofexisting international instruments andactivities regarding trade
andinvestment:
- existing WTO provisions;
- bilateral, regional, plurilateral andmultilateral agreements andinitiatives;
- implications fortrade andinvestment flows ofexisting international instruments.
IV. Onthebasis ofthework above:1
- identification ofcommon features anddifferences, including overlaps andpossible
conflicts, aswellaspossible gapsinexisting international instruments;
- advantages anddisadvantages ofentering intobilateral, regional andmultilateral rules
oninvestment, including from adevelopment perspective;
- therightsandobligationsofhomeandhostcountriesandofinvestorsandhostcountries;
- therelationship between existing andpossible future international cooperation on
investment policy andexisting andpossible future international cooperation on
competition policy.
1Thequestion ofthetiming ofwork under section IVwasthesubject ofadecision taken bytheWorking
Group atitsmeeting of2-3June 1997.