WORLD TRADE
ORGANIZATIONWT/WGTI/5/Add.1
22 October 2001
(01-5185)
REPORT (2001) OF THE WORKING GR OUP ON THE RELATIONSHIP BETWEEN
TRADE AND INVESTMENT TO THE GENERAL COUNCIL
Addendum
Note by the Secretariat
TABLE OF CONTENTS
Paragraph
A. INTRODUCTION 1-2
B. PROCEDURAL INFORMATION ON THE GROUP'S 3-5
ACTIVITIES
(a) Sources and materials used in the Group's work 3
(b) Meetings held in 2001 4
(c) Cooperation with other intergovernmental organizations 5
C. SUBSTANTIVE WORK DONE IN THE GROUP IN 2001 6-50
I. IMPLICATIONS OF THE RELATIONSHIP BETWEEN TRADE 7-20
AND INVESTMNET FOR DEVELOPMENT AND ECONOMICGROWTH
(a) Comments on India's written contribution 8-13
(b) The relationship between FDI and the balance-of-payments 14-20
II. THE ECONOMIC RELATIONSHIP BETWEEN TRADE AND 21-29
INVESTMENT(a) Comments on Canada's written contributions 22
(b) Comments on India's written contribution 23-25
(c) Investment incentives 26-29
III. STOCKTAKING AND ANALYSIS OF EXISTING INTERNTIONAL 30-33
INSTRUMENTS AND ACTIVITIES REGARDING TRADE ANDINVESTMENT
(a) Bilateral, regional, plurilateral and multilateral agreements 31-33
and initiatives;  implications for trade and investment flows
of existing international instruments
IV. ITEM IV OF THE CHECKLIST OF ISSUES SUGGESTED FOR STUY 34-50
(a) Comments on Korea's written contribution 35-37
(b) Comments on the European Communities' written contribution 38-39
(c) Comments on Japan's written contribution 40-50WT/WGTI/5/Add.1
Page 2
A. INTRODUCTION
1. At its meeting on 5 October, when the Working Group on the Relationship between Trade
and Investment adopted its annual report (2001) to the General Council, several delegations regretted
that the Secretariat's draft report had not followed the pattern of previous years by summarizing theGroup's discussions.  This Addendum is intended to rectify that.  It has been prepared by the
Secretariat on its own responsibility, at the request of the Chairman, and it supplements the
information contained in WT/WGTI/5.
2. At its meeting held on 9-11 and 18 December 1998, the General Council took the following
decision with respect to the continuation of the work of the Working Group:
"The General Council decides that the Working Group on the Relationship between
Trade and Investment shall continue the educational work that it has been
undertaking on the basis of the mandate contained in paragraph 20 of the Singapore
Ministerial Declaration. The work of the Working Group, which shall be reviewed by
the General Council, shall continue to be based on issues raised by Members with
respect to the subjects identified in the Checklist of Issues Suggested for Study.  It is
understood that this decision is without prejudice to any future decision that might betaken by the General Council, including in the context of its existing work
programme."
1
B. PROCEDURAL INFORMATION ON THE GROUP'S ACTIVITIES
(a) Sources and materials used in the Group's work
3. The work of the Working Group in 2001 has been based on written contributions, and on oral
statements, questions and answers by Members in the Group.  This material has been supplemented
by information received from observer intergovernmental organizations.  A tabular summary of
written contributions provided to the Group in 2001 is attached as Annex 3 to WT/WGTI/5.
(b) Meetings held in 2001
4. The Working Group held three formal meetings under the Chairmanship of
Ambassador Demiralp (Turkey) in 2001, on 7 and 8 March, 13 and 14 June, and 5 October. Minutes
of the meetings are contained in documents WT/WGTI/M/14, 15, and 16, respectively.2  The dates of
these meetings were determined in the light of the instruction in paragraph 22 of the Singapore
Ministerial Declaration that careful attention be given to coordinating meetings of the Working
Groups established under paragraphs 20 and 21 wi th those of relevant UNCTAD bodies.  At its
meetings in March and June, the Working Group considered all Items of the Checklist of IssuesSuggested for Study.  At its meeting in October, the Working Group adopted its report to the General
Council.
3 
(c) Cooperation with other intergovernmental organizations
5. The Singapore Ministerial Declaration (paragraph 20) encouraged the Working Group to
undertake its work in cooperation with UNCTAD and other appropriate intergovernmental fora in
                                                     
1 WT/GC/M/32, p. 52.  The text of paragraph 20 of the Singapore Ministerial Declaration is reproduced
in Annex 1. The Checklist of Issues Suggested for Study is reproduced in Annex 2 of WT/WGTI/5.
2 Annex 3 of WT/WGTI/5 contains a tabular summary of contributions received in the Working Group
on the Relationship between Trade and Investment in 2001.
3 Reports for previous years are contained in WT/WTGI/1/Rev.1 (1997), WT/WTGI/2 (1998),
WT/WTGI/3 (1999) and WT/WTGI/4 (2000).WT/WGTI/5/Add.1
Page 3
order to make the best use of available resources and to ensure that the development dimension is
taken fully into account.  In this regard, the IMF and the World Bank attended the Working Group's
meetings in an observer capacity, pursuant to the cooperation agreements concluded between the
WTO and these organizations.  UNCTAD, OECD and UNIDO also attended the meetings as
observers, on the basis of an invitation from the Working Group.  In the course of the Group'smeetings, these organizations have kept the Group updated on their relevant activities and contributed
to the debate.  The Working Group is highly appreciative of the valuable contributions to its work
made by the observers.
C. SUBSTANTIVE WORK DONE  IN THE GROUP IN 2001
6. This part of the report provides an overview  of the substantive work done in the Working
Group, pursuant to the mandate given in paragraph 20 of the Singapore Ministerial Declaration and to
the General Council's decision adopted in December 1998.  By its very nature, such an overviewcannot reflect everything that was said and capture all nuances, such as can be found in the detailed
records of the meetings of the Working Group and in Members' written contributions.
I. IMPLICATIONS OF THE RELATIONSHIP BETWEEN TRADE AND INVESTMENT
FOR DEVELOPMENT AND ECONOMIC GROWTH
7. The Group continued its discussion of a written contribution by India (W/86)
4, which
provided an assessment of the work carried out to date in the Working Group and identified subjects
requiring further attention.  It also discussed two Notes by the Secretariat (W/95 and W/103) on the
relationship between foreign direct investment (FDI) and the balance-of-payments.  Statements were
made by Japan, Hungary, Mexico, Brazil, Canada, India, Korea, the United States, the European
Communities, Switzerland, Egypt, Norway, Argentina, Costa Rica, Malaysia, Chile, and Kenya.
(a) Comments on India's written contribution (W/86)
8. Discussion focused on some of the perceived pros and cons of bilateral investment treaties
and of possible multilateral rules on investment, particularly the extent to which they allowed host
countries to exercise flexibility in applying certa in conditions to FDI, and the extent to which they
might be expected to lead to increased FDI flows.
9. One view expressed was that bilateral investment treaties provided adequate transparency,
stability and predictability of host countries' investment regimes.  They permitted host countries to
liberalize their investment regimes autonomously, and while doing so to maintain flexibility in the
policies they adopted towards FDI.  It was acknow ledged that FDI played an important role in
economic development, but it was felt that the benefits of FDI could be augmented by attaching to it
conditions, such as export performance and technology transfer requirements.  Bilateral investment
treaties allowed this to be done.  In contrast to the extensive experience that had been gained withbilateral investment treaties, there was no experience of multilateral investment rules but there was
concern that they would limit the policy flexibility of host countries.  In this context, one question
raised was whether it was envisaged that permanent carve-outs from multilateral investment rules
would be available for particular sectors or policy disciplines, such as national treatment;  permanent
carve-outs were to be distinguished from the kind of exceptions provided for under the GATS, whichover time were likely to be diluted.  Furthermore, there was no basis to believe that multilateral
investment rules would lead to an increase in  FDI flows to developing countries, since a host
country's attractiveness to foreign investors was related to many factors other than its investment
                                                     
4 Documents issued in the series WT/WGTI/W/- are referred to in this report as "W/-".  Documents
issued in the series WT/WGTI/M/- are referred to  as "M/-".WT/WGTI/5/Add.1
Page 4
regime.  In sum, it was stated that the arguments advanced in favour of multilateral investment rules
were not compelling.5
10. Another view expressed was that the value-added of multilateral investment rules in the WTO
should be seen primarily in light of the role they could play in increasing the attractiveness of the
investment climate in host countries by providing legal certainty for foreign investors.  In this regardit was felt that they could contribute to increasing flows of FDI, but it was acknowledged there could
be no guarantee of this given that FDI flows were  dependent on such a wide range of economic and
other factors.  It was felt that multilateral in vestment rules were not incompatible with the
maintenance of domestic flexibility to regulate and pursue development policies, and they could
usefully act as a counterweight to pressure for unsuitable policy change from special interest groups.
Both the GATT and the GATS demonstrated that policy flexibility could be accommodated in
multilateral rules, inter alia  through the negotiation of exceptions, consistently with the maintenance
of important basic principles such as non-discrimination.
6
11. In this context, reference was made to an earlier written contribution which set out reasons
why multilateral investment rules need not be incomp atible with the achievement of domestic policy
objectives.7
12. While there was general agreement in the Group that bilateral investment treaties could serve
valuable purposes, some felt that when numerous and not mutually compatible, they could become
costly to administer, create untransparent and discri minatory treatment of investors, and fail to create
a legally consistent and integrated international in vestment environment, particularly between the pre-
establishment and post-establishment phases of investment.  Some others contested this view of the
weaknesses of bilateral investment treaties. 8
13. With regard to the relationship between FDI and the transfer of technology to host countries,
one view expressed was that this, and the role performance requirements could play in this regard,
required further analysis.  Another view was that the relationship in question was complex and
dependent on many factors, including the ability of host countries to absorb and use imported
technology and the degree of competition in the domestic industry, but experience had demonstratedthat the imposition of technology transfer requirements was not an effective policy instrument.
9
(b) The relationship between FDI and the balance-of-payments (W/95 and W/103)
14. There was support for the view expressed in the Secretariat Note that it was difficult to draw
general conclusions on the impact of FDI on the balance-of-payments.  One reason was that many
factors could affect a host country's balance-of-p ayments situation, and FDI would not necessarily be
the most important.  Another was that it was felt important to take into account all of the direct and
indirect, and static and dynamic, effects of FDI on the balance-of-payments, and this made it difficultto draw firm conclusions on the overall impact.  Many factors and policies, including regional trade
and investment affiliations, affected a host economy's ability to benefit from FDI.  In this regard,
attention was drawn to several written contributions that had described national experiences.
10
15. There was support for the view that the existence of a competitive trade and investment
environment in the host country was a key determinant of the effects of FDI on the balance-of-
                                                     
5 M/14, paras. 22, 29 and 32.
6 M/14, paras. 23, 27-28, 30, 31, 33-34 and 37.
7 M/14, para. 76, and W/84.
8 M/14, paras. 27-29, 32, 34, 36-38.  See also M/15, para. 61.
9 M/14, paras. 24-25 and 36.
10 M/14, paras. 3-4, 7-9, 11 and 15, and M/15, para. 8.WT/WGTI/5/Add.1
Page 5
payments, and attention was drawn in this regard to the shift that had taken place in the trade and
investment policies of many host countries from an emphasis on import-substitution in the 1960s and
1970s to a more export-oriented stance recently.11
16. One view was that notwithstanding whether the overall effect was positive or negative,
important policy implications stemmed from the balance-of-payments effects of various aspects ofFDI.  For example, if it was accepted that increased exports were a key aspect of the positive
contribution that FDI could make to a host country's balance-of-payments, it should be appropriate to
apply export performance requirements to enhance that contribution.  Equally, policies to channel FDI
into specific sectors or industries could enhance its positive balance-of-payments effects.  One
reaction to this was that it was important to view the balance-of-payments effects of FDI holistically,
not partially, and that national experience and empirical studies suggested certain policies, such as
local content requirements, could have perverse, secondary balance-of-payments effects.  Anotherreaction was that it was difficult a priori  to draw conclusions on which sectors or industries might be
more or less import-intensive or export-oriented than others.
12
17. With regard to merger and acquisition (M&A) ac tivity, there was support for the view that its
effects on the balance-of-payments of a host country involved much the same considerations as
greenfield investment.  However, one view was that M&A activity in developing countries was likelyto produce quantitatively and qualitatively different results from greenfield investment, in respect of
its balance-of-payments and other effects, and this needed to be studied further.
13
18. There was general agreement that FDI usually provided a more stable, less volatile source of
foreign financing than other forms of foreign capital inflows, and reference was made in this regard to
a number of national experiences.  Nonetheless, concern was expressed about the heavy concentrationof FDI in relatively few host countries worldwide.
14
19. The Secretariat Note was felt to be useful in helping clarify differences between FDI and
portfolio investment, and between various forms of portfolio investment.  One view was that foreign
portfolio investment had no place in WTO work on the subject of trade and investment, in part
because of its inherently more volatile nature than FDI and its potentially destabilizing effects on ahost country's balance-of-payments and macro economic management.  Another view was that
bilateral investment treaties typically covered portfolio investment as well as FDI, and that it could
not be claimed that certain categories of portfolio investment were inherently more unstable than FDI.
FDI and portfolio investment flows were largel y complementary and both could be economically
beneficial for host countries.
15
20. It was noted that only a very small proportion of bilateral and regional investment treaties
incorporated balance-of-payments safeguard provis ions.  One view was that some nonetheless did
incorporate such provisions, showing that balance-of-payments concerns could be accommodated in
international investment agreements.  Another view was that bilateral investment treaties did not need
to incorporate balance-of-payments provisions because they did not impose restrictions on the right to
regulate the inflow of FDI, so that balance-of-payments concerns of host countries were minimal.16
                                                     
11 M/14, para. 6.
12 M/14, paras. 5, 10 and 13.
13 M/15, paras. 4-7 and 9.
14 M/14, para. 16.
15 M/15, paras. 11-13.
16 M/15, para. 14.WT/WGTI/5/Add.1
Page 6
II. THE ECONOMIC RELATIONSHIP BETWEEN TRADE AND INVESTMENT
21. New written contributions were made by Cana da (W/97 and W/98) and India (W/105).  The
Group also exchanged views on the issue of investment incentives.  Statements were made by Canada,
Korea, Switzerland, Singapore, India, the European Communities, Argentina, Australia, Hong Kong
China, the United States, Mexico, Japan, Hungary, Poland, Brazil, Norway, and Malaysia.
(a) Comments on Canada's written contributions (W/97 and W/98)
22. The results of the industry survey on the impediments facing Canadian investors abroad, and
the research findings on the nature and effects of FDI, both outward and inward, for Canada, were
noted with appreciation.17
(b) Comments on India's written contribution (W/105)
23. India's contribution highlighted the need to differentiate between different kinds of foreign
investment as regards their contribution to economic development, and in particular the transfer oftechnology to developing countries.  It concluded that effective transfer of technology could not be
achieved only through reliance on market forces, and that developing countries had to preserve the
right to regulate FDI.
18
24. One view, drawing also from the Group's early discussion on technology transfer, was that
although FDI was not a sufficient condition to ensure technology transfer to developing countries, itwas an important vehicle for making such transfers.  Many factors and policies prevailing in the host
country could affect the willingness of investors to transfer technology, and the nature of the
technology transferred.  However, applying performance requirements on foreign investors was not
considered to be an optimal approach, and it was felt that they could prove counterproductive in
certain circumstances.
19
25. Another view was that the potential usefulne ss of performance requirements could not be
dismissed out of hand.  Case-by-case-study was necessary to consider their potential costs and
benefits.20
(c) Investment incentives
26. The Group continued the discussion of investment incentives that had begun during its
meetings in 2000.
27. A statement was made on the perceived benefits of investment incentives.21  One reaction was
that recent studies suggested investment incentives ha d rather more positive than negative effects, and
did not seriously distort investment flows betw een regions.  Another reaction was that while
competition among host countries to attract FDI could induce governments to strengthen economic
fundamentals, improve infrastructure and reduce the restrictive and discriminatory elements of their
investment regimes, such competition could also have unforeseen and negative effects.  It wassuggested that rather than using investment incentives to correct for poor economic fundamentals, a
better policy response would to correct problems at their source.  It was suggested also that the use of
investment incentives by richer nations could disadvantage poorer countries' ability to attract FDI, that
they could have a distortionary impact on the allocation of capital, that they could discriminate against
                                                     
17 M/14, paras. 41-44, and M/15, paras.  24-27.
18 M/15, para. 16.
19 M/15, paras. 19-22 .
20 M/15, paras. 19 and 23.
21 Circulated subsequently in W/99.WT/WGTI/5/Add.1
Page 7
small firms and domestic investors, that they could distort competition generally, and that they could
encourage rent-seeking behaviour.22
28. It was stated that further examination was needed of the conditions under which investment
incentives could have undesirable effects, and a proposal was reiterated for a Secretariat study on the
applicability of the Agreement on Subsidies and Countervailing Measures (ASCM) to investmentincentives.  There was some support for this proposal, as part of a exercise by the Group to identify
whether and how investment incentives might cause trade and investment-distorting effects and what
kind of multilateral disciplines might address them.  There was also some resistance.
23
29. There was a discussion of whether international disciplines might be needed to correct the
trade and investment-distorting effects of investment incentives.24
III. STOCKTAKING AND ANALYSIS OF EXISTING INTERNATIONAL INSTRUMENTS 
AND ACTIVITIES REGARDING TRADE AND INVESTMENT
30. Statements were made by the European Communities, Japan, Malaysia, Pakistan, Norway,
Switzerland, Mexico, India and Hong Kong  China, and by UNCTAD and the OECD.
(a) Bilateral, regional, plurilateral and multilateral agreements and initiatives; 
implications for trade and investment flows of existing international instruments
31. The Group was informed of recent regional seminars covering trade and investment that had
taken place, in the Philippines (November 2000), Chile (November 2000), South Africa (January
2001), and Malaysia (March 2001).25
32. There was discussion of a presentation by the OECD at an earlier meeting of the Group of its
study on Policy Competition for FDI, which provided a critical assessment of the use of investment
incentives.26  One view was that the OECD study demonstrated the negative effects that investment
incentives could have, and there were suggestions that ways should be found to enhance the
transparency of the use of investment incentives, at national and regional levels.  Another view was
that the study did not take sufficient account of the particular needs and concerns of developing
countries.27
33. Statements were made by UNCTAD and the OECD on their recent work on investment.28
IV. ITEM IV OF THE CHECKLIST OF ISSUES SUGGESTED FOR STUDY
34. New written contributions were made by Korea (W/96), the European Communities (W/102),
and Japan (W/104).  Statements were made by Korea, Switzerland, Hungary, the European
Communities, India, Brazil, Chile, the United States, Japan, Malaysia, Hong Kong China, Canada,
Egypt, Australia, Norway, Indonesia, Costa Rica, Cuba, and Ecuador.
                                                     
22 M/14, paras. 47-50, 53, 55-56.
23 M/14, paras. 45, 51, 53 and 55.
24 M/14, paras. 46, 48, 50, and 54.
25 M/14, paras. 59-60, and M/15, paras. 30-31.
26 W/100.
27 M/15, paras. 32, 34 and 35.
28 Circulated in W/100, W/101, and W/106.WT/WGTI/5/Add.1
Page 8
(a) Comments on Korea's written contribution (W/96)
35. Korea's contribution to the study process in the Group suggested that the GATS could serve
as a benchmark in formulating multilateral rules on investment in the WTO, in view of its flexibility,
the importance it gave to development considerations, and its coverage of many of the main elements
of investment rules.  However, it would be necessary to address certain issues that were not covered inthe GATS, such as expropriation and compensation, and performance requirements.  It would be
necessary also to consider a  number of more technical issues, such as whether services should be
covered by new investment rules or whether the rules should apply only to non-service sectors, how
the concept of "commercial presence " in the GATS related to broader definitions of investment, how
market-access commitments might best be framed, and how many of the GATS provisions might be
applied in a multilateral investment framework.
29
36.  One view was that the GATS was a useful and realistic model for thinking through the design
of multilateral investment rules, particularly its "bottom-up" approach to pre-establishment
commitments, the flexible way national treatment commitments were dealt with, and its in-built
flexibility for regulatory and development policies.  However, one feeling was that it would be
necessary to go beyond the GATS in respect of certain subjects, such as investment incentives and
performance requirements.  Another was that further consideration was needed of whether theprinciples applicable to trade in services could be applied to investment.
30
37. Another view was that while the advantages of the GATS were to be acknowledged, it was
both premature to think of the GATS as a starting-point for negotiating multilateral rules on
investment in the WTO, and worrying if the implication was that the GATS represented the lowest
level of ambition of the proponents of negotiations.  These worries were compounded by commentsabout the need to go beyond the GATS in respect of issues such as performance requirements and
investment incentives.
31
(b) Comments on the European Communities' written contribution (W/102)
38. The European Communities' contribution aimed to encourage discussion of the possible role
of the WTO in providing technical assistance in the field of FDI, taking into account the activities ofother relevant organisations such as the World Bank and the UN, to assist developing countries to
improve their capacity to attract, absorb and benefit from FDI and to participate in negotiations on
international investment rules and to transpose the results into domestic laws and regulations.
32
39. There was support for the view that technical assistance could play a useful role in assisting
developing countries to improve their ability to attract, absorb and benefit from FDI, although some
thought its potential was limited.  Some said it was premature to speak about assistance for
negotiations.  Emphasis was placed on the importance of technical assistance being demand-driven,and on the need for the WTO to coordinate its technical assistance activities with those of other
organisations so as to avoid duplication and overlap.
33
                                                     
29 M/14, para. 64.  See also M/15, para. 62.
30 M/14, paras. 65-67, 69-70 and 72.  See also M/15, para. 63.
31 M/14, paras. 68 and 74, M/15, para. 60.
32 M/15, para. 39.
33 M/15, paras. 40-41.WT/WGTI/5/Add.1
Page 9
(c) Comments on Japan's written contribution (W/104)
40. Japan's contribution reviewed various ways in which international investment agreements
could provide flexibility for host countries to pursue their development objectives, and how rights and
obligations of investors might be addressed.
41. There was support for the need to provide for an appropriate balance in international
investment agreements between disciplines to ensu re predictability for foreign investors on the one
hand, and flexibility for host countries to pursue their development objectives on the other.34
42. One view was that while this balance might be struck through bilateral investment
agreements, developing countries could not contemplate the creation of multilateral investment rules
until it had been demonstrated how such a balance could be satisfactorily achieved.  In that regard,
preambular treaty language was ineffective.  Furthermore, time-limited exceptions for development
purposes were insufficient to meet developing countries' needs for policy flexibility;  considerationneeded to be given to permanent carve-outs from disciplines.  In addition, it was felt that while
multilateral investment rules would limit developing countries' flexibility to pursue their development
objectives, they would neither guarantee increased flows of FDI nor create commitments on the part
of foreign investors, in areas such as the transfer of technology.
35
43. Another view was that a GATS-type approach to designing multilateral investment rules
could provide considerable flexibility for development purposes, going beyond the instrument of
time-limited exceptions.  However, flexibility to accommodate development objectives should not be
interpreted so broadly as to allow for discrimination between foreign investors of different
nationalities. 36
44. On the question of the definition of investment, it was stated that short-term capital flows
often played a complementary role to FDI and these could also benefit from being made subject to
international rules.37  In this context, additional comments were also made on an earlier written
contribution.38
45. There was a brief exchange of views on the issue of transparency.39  In this context, additional
comments were also made on an earlier written contribution, in particular on the need to consider boththe benefits and the costs of introducing new internat ional initiatives to increase transparency in this
area and the need to consider carefully what kind of information it was most valuable to provide.
40
46. On the issue of non-discrimination, one view was that while it was inappropriate to allow for
discrimination at the pre-establishment phase, the principle of national treatment could be applied
more flexibly to take account of development concerns.  Flexibility could also be provided through a
GATS-type "positive list" approach to scheduling commitments, qualified where necessary by
conditions and restrictions on non-discrimination disciplines.  Another view was that bilateralinvestment treaties provided a more appropriate level of flexibility, since most did not contain
national treatment provisions and they did not affect a host country's ability to use policy instruments
such as screening, performance requirements, and investment incentives.
41
                                                     
34 M/15, paras. 45 and 49.
35 M/15, paras. 46, 48 and 50.
36 M/15, paras. 47 and 49.
37 M/15, para. 51.
38 M/14, para. 80, and W/92.
39 M/15, para. 52.
40 M/14, paras. 77-79, and W/90.
41 M/15, para. 53.WT/WGTI/5/Add.1
Page 10
47. On the issue of performance requirements, one view was that these were important policy
instruments for developing countries to pursue their development objectives and to promote domestic
industry.  The difficulties some Members had experienced in implementing the TRIMs Agreement
was cited as evidence of the value they attached to performance requirements in this regard.  Another
view doubted that performance requirements were effective policy instruments, but it was noted thatat least some existing international agreements did provide flexibility for their use, while ensuring that
they were applied in a transparent and predictable manner.  In this context, there was also some
discussion of the TRIMs Agreement.
 42
48. It was stated that it would not be appropriat e to include provisions in the WTO that would
allow for investor-state dispute settlement.  More generally, it was stated that dispute settlement under
WTO investment rules would benefit only home countries.43
49. Concerning the issue of flexible treatment of  developing countries in the implementation of
investment agreements, one view was that the GATS provided a range of means for achieving this, in
particular through its approach to scheduling commitments.  Another was that many WTO
Agreements provided flexibility through transition periods and technical assistance.  However, a point
made in this respect was that the effectiveness of these provisions needed to be reviewed.  Another
view was that in an international investment agreement permanent exemptions would need to be
extended broadly to cover screening, channelling of investment, and performance requirements.44
50. With regard to investor obligations, it was stated that these could most properly be addressed
through transparent and predictable legislation in host countries.45
__________
                                                     
42 M/15, paras. 54-56.
43 M/15, para. 57.
44 M/15, para. 58.
45 M/15, para. 59.