Investment Facilitation for Development Agreement (IFDA)

Investment Facilitation for Development Agreement (IFDA)

Context: Here we discuss India’s opposition to the Investment Facilitation for Development (IFD) Agreement at the WTO’s 13th Ministerial Conference in Abu Dhabi.

Background:
 India is concerned about including investment in WTO agreements and the process of making IFD a part of WTO rules.

What is Investment Facilitation for Development (IFDA)?
 The Investment Facilitation for Development Agreement (IFDA) is a significant initiative within the World Trade Organization (WTO).
 The IFDA is an agreement between approximately 120 WTO Members. Its primary goal is to enhance theinternational business climate and simplify investment procedures.
 By promoting transparency, predictability, and investor-friendly practices, the IFDA aims to facilitate foreign direct investment (FDI) across various sectors.
 It particularly focuses on developing and least-developed countries, aiming to boost their participation in global investment flows and foster sustainable economic development.
 The agreement was to be included as a plurilateral agreement (PA) within Annex 4 of the WTO Agreement, as allowed by Article II.3 of the WTO Agreement. PAs are binding for WTO members that accept them and do not impose obligations on others.
 The IFD agreement, finalized in November 2023, was launched under the Joint Statement Initiative in 2017, indicating a shift in how WTO handles investment-related discussions.

Why does India oppose the investment facilitation for development agreement?
India’s opposition to the Investment Facilitation for Development Agreement (IFDA) at the World Trade Organization (WTO) stems from two principal concerns:
Non trade issue
 India asserts that the IFDA is a non-trade issue and falls outside the mandate of the global trade body.
 The agreement focuses on investment facilitation, which India believes should not be part of the formal WTO negotiations.
 While the WTO primarily deals with trade-related matters, the IFDA introduces investment-related provisions that India considers beyond the organization’s scope
Rushed process
 India argues that the IFDA is being rushed through without addressing critical subjects that have been pending for over a decade. These unresolved issues include matters related to public stock holding of grains for food security and the protection of fishermen’s interests.
 Given these pressing concerns, India believes that the focus should remain on existing WTO mandates rather than expanding into new areas like investment facilitation.

What is significance of IFDA?
 Simplification: The IFDA streamlines investment processes, making it easier for investors to conduct business.
 Transparency: It promotes openness and clarity in investment-related regulations.
 Benefits: The agreement contributes to economic growth, poverty reduction, and achievement of the UN 2030 Sustainable Development Goals.
 Excluding Certain Provisions: The focus of the IFDA towards the facilitation of investment rather than addressing these broader investment-related issues, like market access, investment protection, and investor-state dispute settlement (ISDS).