EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

On 13 December 2017, at the Eleventh Ministerial Conference of the World Trade Organisation (WTO), 70 WTO Members adopted a Joint Statement on Investment Facilitation for Development that called for ‘structured discussions with the aim of developing a multilateral framework on investment facilitation.’ These discussions seek to identify and develop the elements of a framework for facilitating foreign direct investment (FDI). The European Union (EU) and its Member States strongly supported and joined the initiative.

The EU actively participated in the structured discussions that took place during 2018 in the WTO. The discussions were transparent and open to all WTO Members, and resulted in a ‘Checklist of Issues Raised by Members’ containing possible elements of a framework for facilitating FDI identified by WTO members. This ‘Checklist’ was endorsed at a stock-taking meeting on 6 December 2018.

In 2019, a new phase of discussions has started. WTO members agreed on a schedule of meetings for the first half of the year, which will be devoted to the development of the elements included in the Checklist. This exploratory work on the development of such elements remains transparent and open to all WTO Members. The discussion will cover all the elements of the ‘Checklist’ on the basis of examples of existing provisions in bilateral or multilateral agreements that are relevant to investment facilitation. These examples are collected in a “Compendium of text-based examples”. A stock-taking meeting will be held in July 2019. In autumn 2019, members are likely to start proposing specific texts for a multilateral framework on investment facilitation. This means that the first phase of negotiations is likely to start as from September-October 2019.

The negotiations should take place within the WTO framework, and remain transparent and open to any WTO Member that decides to join. During the negotiations, the participating Members may put on the table any negotiating proposal in the realm of facilitating FDI, at the beginning or at a later stage of the negotiating process in the WTO.

The Commission obtained authorisation from the Council under the Doha Development Agenda (DDA), for negotiations in the WTO inter alia on trade and investment. Given that FDI is a major vehicle for international trade, and investment facilitation is a way to foster cross-border investment by helping to secure a stable and predictable climate for FDI worldwide, the new WTO negotiations on investment facilitation are covered by the existing authorisation, as they belong to the field of trade and investment. Therefore, a new Council decision authorising the opening of negotiations pursuant to Article 218(3) of the Treaty on the Functioning of the European Union (TFEU) is not required.

Nonetheless, while trade and investment is not a new issue on the agenda of the WTO, the negotiations on investment faciliation could potentially be novel in some aspects and may address some topics on which the EU has specific priorities. Consequently, in order to frame more accurately the negotiations, the Commission recommends to the Council the adoption of supplementary negotiating directives specific to the WTO negotiations on investment facilitation.

The proposed negotiating directives aim to ensure that the EU is in a position to engage in the negotiation of any investment facilitation element proposed by the participating WTO Members in the course of negotiations, in full respect of the acquis and the EU’s policy choices in trade and investment negotiations.

For the EU, the objectives of the negotiations are to facilitate FDI by investors and businesses, including micro, small and medium enterprises, and create new opportunities to promote inclusive growth and sustainable development. A multilateral investment facilitation framework could facilitate global investment in the same way that the WTO is helping to facilitate global trade with the Trade Facilitation Agreement. In order to achieve a high-standard outcome with the participation of the largest possible number of WTO Members, the rules and commitments should provide for appropriate flexibility for Members.