WORLD TRADE
ORGANIZATIONWT/WGTI/W/162
5 June 2003
(03-2904)
Working Group on the Relationship
between Trade and InvestmentOriginal:  English
COMMUNICATION FROM CANADA, COSTA RICA AND KOREA
The following communication, dated 4 June 2003, has been received from the Permanent
Mission of Canada, on behalf of Canada, Costa Rica and the Republic of Korea.
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NEGOTIATING A MULTILATERAL FRAMEWORK ON INVESTMENT IN THE WTO
I. SYNOPSIS
1. In December, 1996, WTO Ministers set up a Working Group on Trade and Investment
(WGTI) to examine the relationship between trade and investment.1
2. Five years later, at Doha in November 2001, WTO Ministers addressed investment more
comprehensively.  In particular, they recognized the case for a multilateral framework for investment
that will contribute to the expansion of trade, and the need for enhanced technical assistance and
capacity building in this area.  Ministers also agreed  that negotiations would take place after the Fifth
Session of the Ministerial Conference on the basis of a decision to be taken at that Session on
modalities of negotiations.2
3. In paragraph 21 of Doha, Ministers went on to expand upon their reference to technical
assistance and capacity-building, stating that work with other organisations, including UNCTAD,
would be undertaken to respond to the needs of developing and least-developed countries.
4. In paragraph 22, Ministers turned their attention to the work of the WGTI.  They identified
several issues for clarification, and with respect to a multilateral framework as a whole reminded the
Group of the importance of balancing the interests of home and host countries, and the particularneeds of developing and least-developed countries, including with respect to the right to regulate in
the public interest.  They also noted the broader context of WTO, bilateral and regional arrangements
in which the work of the WGTI on an investment framework takes place.
5. After almost seven years, and particularly since Doha, the preparatory work of the WTO’s
WGTI is complete.  Thanks to a more structured mandate under paragraph 22 of the DohaDeclaration, the work of the WGTI has been particularly fruitful, as an examination of the
comprehensive WGTI meeting reports reveals.  At the Group’s five meetings since Doha, the scale
and quality of engagement on the mandated work of the Group has been considerable.  The WGTI has
considered and discussed well over fifty submissions from Members, other international
                                                     
1 WT/MIN(96)/DEC, para. 20.
2 WT/MIN(01)/DEC/1, para. 20.WT/WGTI/W/162
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organizations, and the Secretariat (including re ports to Council), amounting to many hundreds of
pages of documentation covering not only all the issues that the Group had been asked to cover, but
additional issues as well.  We now find ourselves ready to proceed to the next phase of work referred
to by Ministers for years:  negotiations on a multilateral framework for investment within the WTO.
6. This is of course not to say that there is agreement on all issues by all delegations to the
WGTI, since such a situation would obviate the need for negotiations.  What has been witnessed,
however, is very real progress in clearing the underbrush for a greater understanding of issues to be
taken into account during negotiations, as well as a better appreciation of other considerations relevant
to the design of an investment agreement within the superstructure of the WTO family.
II. PURPOSE OF A WTO INVESTMENT FRAMEWORK
7. Why should we negotiate comprehensive investment rules in the WTO?  After all, there is
already a network of bilateral and regional investment agreements, not to mention rules affectinginvestment to a greater or lesser degree in the WTO already.  In addition, as a few delegations have
observed, the relationship between investment ag reements and investment flows, or investment
agreements and trade flows, is arguably more complex than that of trade rules and trade flows.
8. But this is not to deny that these relationships exist, nor that they would not benefit from clear
rules at the multilateral level.  Furthermore, as countries seek to diversify their sources of, and
destinations for, international investment, a multilat eral framework is best suited to complement the
large but less than universal network of bilateral and regional agreements that already exists.  (The
scope and coverage among agreements in this network is also highly variable.)
9. It is difficult to gauge the effects of a failure to agree to negotiate rules in the WTO on the
international economy.  In addressing the issue of developing country participation in the WTO as awhole, Peter Sutherland, a former Director-General of the WTO noted in a speech last month:  "We
must start from the observation that the GATT and WTO systems do not guarantee anybody  a greater
slice of world trade.  What they strive for is some equality of opportunity through open, competitive
and predictable markets".
3
10. Similarly, a multilateral framework for investment in the WTO would not guarantee  greater
investment flows.  Cancún simply represents an opp ortunity – an opportunity not only to tidy up loose
ends within the WTO family of agreements, but more importantly to help lay the groundwork for
meaningful rules that both respond to and shape the framework under which international investment
takes place.
11. We believe that in failing to take the opportunity  presented to us in the Doha Declaration to
negotiate in investment agreement in the WTO we would miss an opportunity to shape the multilateral
environment in which international investment can contribute to the development prospects of all ourcitizens.  Today, multilaterally agreed rules – on investment and indeed other issues – are more
important than ever to the international economy.
12. In the absence of investment rules, investment will continue to take place.  But well crafted
rules at the multilateral level can contribute to a framework not only where investment can take place
and flows enhanced, but which can facilitate transparency and predictability, and thereby enhanceeconomic efficiencies – as well as defer to sustainable development priorities.  Members are indeed
already familiar with negotiating rules governing non-discrimination, transparency and other relevant
issues bilaterally and regionally.  The ability to do so multilaterally among virtually all major trading
                                                     
3 "The Tacitus Lecture", given by Peter D. Sutherland to The Worshipful Company of World Traders,
London, 15 April 2003, at:  http://www.world-traders.orgWT/WGTI/W/162
Page 3
partners also represents an opportunity to undertake negotiations with a wider variety of home and
host countries than would be represented in bilateral or regional agreements often characterized by
highly asymmetrical relations among partners.
13. Notably, at the birth of the WTO at Marrakesh in 1994, Ministers expressed their
"determination to resist protectionist pressures of all kinds."4  A WTO investment agreement would
also represent an opportunity to consolidate gains made in this vein at the domestic as well as
multilateral level.
III. DEVELOPING AND LEAST-DEVELOPED CONTRIES IN A WTO INVESTMENT
AGREEMENT
14. It has been encouraging to note the level of interest in investment issues as reflected in
technical assistance activities on WTO issues organized by the Secretariat at the request of developing
and least-developed members.5  We maintain that these activities would enjoy even greater prospects
for positive impacts once the focus inherent in in vestment negotiations is underway.  What WGTI
discussions and TA/CB activities on investment associated with Doha have also revealed is that it is
least developed members in particular who will require special attention in order to maximize their
influence during negotiations, as well as any benefits they could expect to enjoy as a result.
15. The sophistication of the discussion in the WGTI reflects well on all delegations, including
developing and least-developed countries.  Nevertheless, we would like to emphasise our recognition
of the needs of developing and particularly LDCs in WTO investment negotiations.  Notwithstanding
the contribution investment flows can make to development, we recognize that the transition to more
open economic framework, including with respect to investment, can also entail costs that we should
also take into account.  Such a recognition would be  fully consistent with WTO rules, including the
Uruguay Round’s Decision on Measures in Favour of Least-Developed Countries.6
16. The WTO’s 1996 Annual Report  contained a section focusing on the special topic of Trade
and Foreign Direct Investment.  Apart from summarizing the considerable literature on FDI and trade,
it also argued that:  "Because the benefits which the WTO brings to the world economy come
primarily via the impact of the WTO on investment decisions, it is no exaggeration to say thatinvestment lies at the heart of the WTO."
7
17. It also concluded its discussion with a challenge to investment negotiators, many aspects of
which continue to remain relevant to our work, including with respect to developing and least-
developed countries.  Today, this may be summarized as follows:  A global framework can implicitly
recognize the close linkages between trade and investment, assure the compatibility of investment and
trade rules and, most of all, take into account in a balanced way the interests of all the Members of the
WTO – developed, developing and least-developed alike.  A multilateral negotiation in the WTO canprovide such a global and balanced framework.  This can contribute to an enhanced, more transparent
and sustainable system within which scarce supplies of capital and technology are allocated.  It can
also complement efforts to integrate all developi ng countries into the multilateral trading system.
8
                                                     
4 Marrakesh Declaration of 15 April 1994, para. 2 – as reproduced in The Results of the Uruguay
Round of Multilateral Trade Ne gotiations – The Legal Texts , WTO (Geneva: 1995), p. iv. Reaffirmed at Doha –
para. 1
5 See WT/COMTD/W/101/Add.4 (2002); on 2003 activities, see WT/COMTD/W/104/Add.1/Rev.2.
6 See WT/MIN(96)/14.
7 WTO 1996 Annual Report , pp. 76.
8 See WTO 1996 Annual Report , pp. 77-78.WT/WGTI/W/162
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IV. CONCLUSION
18. After almost seven years, and particularly since Doha, the preparatory work of the WTO’s
Working Group on Trade and Investment is complete.  The negotiation of comprehensive investment
rules in the WTO is overdue.  Such negotiations would ultimately be part of a single undertaking
associated with WTO agreements as a whole.
19. We can collectively commit to addressing the challenges and opportunities posed by the
growth in importance of FDI to the trading syst em – which is one of the challenges Ministers
recognized at Singapore in 19969 – or simply choose to observe this growth that will continue to
evolve without our input.  Further delay risks unde rmining prospects for investment rules in the WTO
system.  As we approach Cancún we believe that it is in our collective interest to take the opportunity
now afforded us to negotiate comprehensive investment rules within the WTO family of agreements.
20. Finally, consistent with the work mandated for the WGTI under paragraph 22 of the Doha
Declaration, we believe that such a WTO investment framework should reflect in a balanced manner
the interests of home and host countries, and take due account of the development policies and
objectives of host governments as well as their right to regulate in the public interest.  The special
development, trade and financial needs of developing and least-developed countries should be taken
into account as an integral part of any framework, which should enable Members to undertake anyobligations and commitments commensurate with  their individual needs and circumstances.
10
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9 WT/MIN(96)/DEC, para. 3.
10 Based on the work of the WGTI since Doha, we would note that the right to regulate in the public
interest is a right of all countries, and that the special development needs of least-developed countries warrantparticular attention.