Participating World Trade Organization (WTO) members announced on July 6 that they had concluded text negotiations on the Investment Facilitation for Development (IFD), the world's first multilateral investment agreement. The IFD focuses on improving investment policy transparency and predictability, simplifying and accelerating investment approval procedures, and promoting international cooperation.
Negotiations on multilateral investment have always been a crux in the formulation of global trade and investment rules. The WTO and the Organization for Economic Cooperation and Development have failed several times in their attempts to establish multilateral investment rules. On the basis of the Group of 20 (G20) Guiding Principles for Global Investment Policymaking established at the 2016 G20 Hangzhou Summit, China and other WTO members launched discussions on investment facilitation at the 11th WTO Ministerial Conference in Buenos Aires, Argentina, in 2017.
China played a key role in successfully concluding negotiations on the IFD text. The IFD is the first negotiation topic set up and actively led by China in the WTO, with more than 110 WTO members participating in the negotiations.
According to the Ministry of Commerce, China, by referring to its experience in transforming government functions and furthering its own reforms, put forward 15 proposals during the negotiations, covering all areas related to investment facilitation rules.
The finalization of the text is a major milestone, but it does not mean the end of the process. Remaining issues include legal architecture, or looking for ways to incorporate the IFD within the WTO's existing treaty architecture.
Waves of populism and deglobalization in some developed countries are dealing a heavy blow to globalization by damaging multilateral trading mechanisms and erecting cross-border trade barriers. However, the conclusion of the IFD text negotiations shows that economic globalization remains the main trend around the world. The success also indicates that WTO members are able to cope with global challenges in solidarity and that multilateral trading rules are able to keep pace with the times.
The IFD aims to increase the stability and predictability of global investment regulatory policies. According to the World Investment Report 2023, issued by United Nations Conference on Trade and Development, global foreign direct investment (FDI) was valued at $1.3 trillion in 2022, down 12 percent year on year. Currently, geopolitical tensions, inflation and pessimistic sentiments in the financial market have coalesced to hold down global FDI. In this context, the IFD will help improve the global business environment, boost investor confidence and, as a result, promote global investment.
While attracting huge foreign investment, China is also a big outbound investor. The IFD will help China improve its own business rules and regulations to meet international standards and build a first-class domestic business environment that is based on the rule of law and market rules, thus attracting more FDI. The IFD will also lower Chinese enterprises' cross-border investment costs, and encourage more of them to make outward investments.
Recent years have seen Chinese outbound investment grow rapidly. Official data show that China's outward FDI stock had reached $2.7 trillion at the end of 2021, distributed in 190 countries and regions around the world. IFD participants include the European Union, Japan, Canada, Brazil, Indonesia and Nigeria, covering most European, South American, Asian and African countries where Chinese investment is high. The IFD will simplify investment approval procedures in the participating parties, improve the efficiency of investment approval, reduce the costs of enterprises and provide more protection for Chinese enterprises' outbound investment.
Copyedited by Elsbeth van Paridon
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