WORLD TRADE
ORGANIZATIONWT/WGTI/W/58
28 October 1998
(98-4202)
Working Group on the Relationship
between Trade and InvestmentOriginal:  English
COMMUNICATION FROM UNCTAD
Reproduced below are the agreed conclusions of the third session of the UNCTAD
Commission on Investment, Technology and Rela ted Financial Issues, which was held on 14-
18 September 1998.
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TRADE AND DEVELOPMENT BOARD
Commission on Investment, Technologyand Related Financial Issues
Third Session
Geneva, 14 September 1998
Agenda Items 3 and 4
RECENT DEVELOPMENTS IN FOREIGN DIRECT INVESTMENT
TRENDS AND POLICIES
EXAMINING AND REVIEWING EXISTING AGREEMENTS ON INVESTMENT
TO IDENTIFY THEIR IMPLICATIONS FOR DEVELOPMENT, AS CALLED
FOR IN PARAGRAPH 89(B) OF "A PARTNERSHIP FOR GROWTH AND
DEVELOPMENT"
Agreed Conclusions *
Item 3 Recent developments in foreign direct investment trends and policies
1. The Commission recognizes that investment policy today is a fundamental element of
national development strategies, and also recognizes the role that FDI plays in integrating countries
into the world economy. Against this background, the Commission stresses the importance of
technical assistance in national capacity-building fo r the design and implementation of such policies,
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*As agreed at its fourth (closing) plenary on Friday, 18 September 1998.WT/WGTI/W/58
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(UNCTAD document TD/B/COM.2/L.8)
as well as an exchange of experiences and policy reviews in this regard.  The Commission also
recognizes that nearly all countries are pursuing policies to attract FDI.  Efforts should be made to
help build capacities and create mechanisms in developing countries and especially LDCs so that they
can effectively realize their investment potentials, including through negotiating and promotion
techniques
2. The Commission recognizes that many countries in Africa have made considerable efforts to
attract FDI through improvements in their investment climate.  The Commission underlines that there
is potential on the African continent to attract additional FDI and that consistent policies in this
respect help, as would a change in the undifferentiated negative image of the continent.  In this
respect, the Commission requests that the fact sheet prepared by the secretariat, entitled "Foreign
direct investment in Africa: performance and potential", be updated and be made widely available,
including by posting it on the Internet and translating it into other languages. The Commission callson the international community to assist African countries in their efforts to create a sound investment
climate, including through continued technical assistance activities in this area and other appropriate
measures.
3. The Commission notes the resilience of FDI flows to Asia so far, in spite of the financial
instability in this region, in which the volatility of short-term capital flows played a role.  The
Commission also notes the increase in FDI flows during 1997 into Latin American and the Caribbean
countries. At the same time, the Commission notes that financial instability creates greater uncertainty
in the investment environment.  Therefore, it re quests UNCTAD to continue to pay regard to the
impact of financial instability on FDI flows, incl uding the factors affecting these flows.  It also
requests UNCTAD to prepare and disseminate fact sheets on FDI in Asian developing countries, aswell as Latin American and the Caribbean countries.
4. The Commission reaffirms the important role of FDI, recognizing the complex
interrelationship between various types of capital flows, especially between foreign portfolio flows
and FDI flows, and requests that further study be  made of their characteristics, similarities,
complementarities and differences, as well as of the development impact and policy implications
arising therefrom. The results should be made available in a comprehensive study covering all
regions.  In this context, it is important that  UNCTAD cooperate with international banking and
financial institutions and other appropriate organizations so as to benefit from greater synergy effects.
5. The Commission recognizes the need for stable and well-supervised financial markets and
institutions and financial transparency, including appropriate reporting and accounting rules, in the
context of broader appropriate macroeconomic policies to attract stable investment flows into
developing countries, and particularly into development-priority areas.  An effective mobilization of
domestic savings can play an important role in reducing the vulnerability to external movements ofcapital.
In this connection, the Commission invites UNCTAD to continue its technical assistance
activities geared towards capacity-building in developing countries in policies related to the area of
private capital flows.
6. The Commission examined the Report of the Expert Meeting on the Growth of Domestic
Capital Markets, particularly in Developing Countries, and its Relationship with Foreign Portfolio
Investments, and accepted those of its recommendations such as contained in these agreed
conclusions.
7. The Commission further requests that the materials, documents and summaries of
publications prepared by the secretariat, including materials prepared for the Commission and its
Expert Meetings, be made available on the Internet in a timely and effective manner, in accordance
with existing rules and regulations.WT/WGTI/W/58
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8. UNCTAD's technical assistance activities in this area should be undertaken within existing
resources and in accordance with the agreed plans on technical assistance. At the same time,
UNCTAD invites potential donor countries to provide contributions in order to further strengthen
these activities.
Item 4 Examining and reviewing existing agreements on investment to identify their
implications for development, as called for in paragraph 89(b) of "A Partnership for
Growth and Development"
9. The Commission recognizes the importance of the issues related to FDI and development, in
particular those related to international investment agreements at all levels, and the need to pay
attention to how these agreements can help to increase the FDI flows and further the objective of
development.
10. The Commission stresses the complexity of the issues involved in international investment
agreements, in particular as they relate to promotion of investment, economic growth and the
development dimension.
11. In this context, the Commission takes note of the Report of the Expert Meeting on Existing
Regional and Multilateral Investment Agreements and their Development Dimensions, commends the
work being carried out by the secretariat in identi fying and analysing implications for development of
issues relevant to a possible multilateral framework on investment, taking into account the interests of
developing countries and bearing in mind the work undertaken by other organizations, in pursuance of
the Midrand mandate, and expresses its gratitude for the voluntary contributions made by countries to
the trust fund on a possible MFI, which have made the implementation of this work programmepossible.
12. The Commission further recognizes that UNCTAD can contribute to a better understanding of
the development implications of international investment agreements and that this task requires
further analytical and capacity-building work. In  this context, the Commission looks forward to,
among other things, the series of issues papers being prepared by the secretariat in the framework ofits programme on a possible multilateral investment framework.WT/WGTI/W/58
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EXPERT MEETINGS FOR 1999
1. Intergovernmental Group of Experts on International Standards of Accounting and Reporting
2. Intergovernmental Group of Experts on Competition Law and Policy3. Expert Meeting on concepts - such as exceptions and other mechanisms - allowing for a
certain flexibility, including in the field of t echnological capacity-building, in the interest of
promoting growth and development - to allow countries in different stages of development tobenefit from international investment agreements
4. Expert Meeting on portfolio investment flow s and FDI:  characteristics, similarities,
complementarities and differences, policy implications and development impactWT/WGTI/W/58
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Item 6
PROVISIONAL AGENDA FOR THE FOURTH SESSION OF THE COMMISSION
Draft Provisional Agenda
1. Election of officers
2. Adoption of the agenda and organization of work
3. Trends in FDI and ways and means of e nhancing FDI flows to and among developing
countries, in particular LDCs and countries re ceiving relatively low FDI inflows, with a view
towards increasing the benefits they entail, and taking into account the factors which play apart in private sector firms’ choices of investment locations
4. Investment policy and science, technology a nd innovation policy reviews: methodology and
experiences
5. Report of the subsidiary bodies of the Commission
6. Progress report on the implementation of agreed conclusions and recommendations of the
Commission
7. Other business
8. Adoption of the report
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