By blocking Investment Facilitation Agreement, India has Safeguarded Sovereignty and Global Peace

IFDA was needed to be blocked at any cost, in the interest of global peace; which India could do, effectively. With this India has been able to safeguard sovereignty and global peace. — Dr. Ashwani Mahajan 

 

13th Ministerial Conference of WTO has just concluded, in which we saw a huge anxiety over whether WTO will have yet another Plurilateral Agreement in its fold, namely Investment Facilitation for Development Agreement (IFDA), which was supported by more than 120 nations, comprising more than 70 percent of WTO membership. It may be important to note that WTO being a multilateral organisation, most of its agreements have been multilateral in nature; however there is also a precedence of having plurilateral agreements in the fold of GATT, even prior to the formation of WTO. But we must also note that though plurilateral agreements are permissible under WTO rules, but in WTO, multilateral agreements is rule; while plurilateral is exception. Drama on IFDA ended abruptly when India and South Africa submitted a paper in 13th Ministerial Conference in WTO, about inadmissibility of this plurilateral agreement in WTO’s fold.

What is IFDA

IFDA is a trade agreement proposed by the World Trade Organization. Its aim is to create legally binding provisions for facilitating investment flows. It requires states to augment regulatory transparency and predictability of investment measures. It must be noted that though every international agreement limits scope for domestic regulations; in case of IFA this is more the case, and sovereign rights of the member countries compromised in the name of investment facilitation.

Why India was concerned about IFDA

Normally agreement, whether multilateral or plurilateral, are made when a group of countries get together to agree over a set of rules, which would be followed over a matter; and the same is of mutual benefit to each other. However, the speciality of IFDA is that this proposed IFDA had been pushed by a single country (China), for its own benefit, and other members have been made to sign on dotted lines, by exerting pressure by a dominant military and economic power, which is in the neighbourhood of our country, namely China. Sole aim of China is to promote its economic interests by forcing IFDA member countries to facilitate its investment in their respective countries. Proposed agreement mandates member countries to facilitate investments by any foreign entity by streamlining its procedures, introducing standard practices and avoiding bureaucratic hurdles.

It’s understandable that in the past one decade, China has been advancing its expansionist agenda of pushing developing and even some developed ones into a debt trap, by luring them of liberal financing of infrastructure projects which are being built by China itself. It’s notable that these infrastructure projects which are being built by using Chinese investments, are being deliberately chosen to be ones which were unviable and uneconomic, so that host country is unable to service the debt, and goes into further deep debt. This is what is called ‘debt trap diplomacy’ of China.

At present many countries are already reeling under debt due to debt trap diplomacy of China, in the garb of Belt Road Initiative. Sri Lanka, Pakistan, Bangladesh and host of African countries have already been ruined by China with this debt trap diplomacy. While Pakistan is already under debt trap, Srilanka was forced to handover its Hambantota Port to China under 99 years of lease and strategic assets of many other countries have either been snatched away or at the verge of the same.

The proposed agreement will further facilitate China to get new pasture grounds for loot, plunder and subjugation. With BRI, China is being looked upon as a new expansionist power. In the present world it’s no longer possible to subjugate sovereign countries militarily. But through such like acts, country are being indebted and in a way being subjugated. The proposed agreement is designed to serve the interests of China in its expansionist designs.

How was IFDA blocked?

This unholy attempt of China with the help of WTO secretariat to bring IFDA under WTO’s fold, at the behest of certain global powers, including China, was actually, completely illegal. There are several legal issues involved in the process of adding IFDA as a plurilateral agreement to Annex 4.

First, the proposed IFDA didn’t qualify as a ‘trade agreement’ under Article X.9 of the Marrakesh Agreement. The IFDA does not include any substantive provision related to trade; and therefore was liable to be rejected, as a “trade agreement”.

Second, the request to add the IFDA into the WTO could come only from members that have fulfilled their domestic procedures to sign and ratify the IFDA, and for which the agreement has entered into force. As the IFDA had not yet entered into force for even a single party, the request to add it into the WTO was ultra-virus. Such a request could be made only after the IFDA enters into force, and not before that.

Third, negotiations on the IFDA were initiated without a multilateral mandate. This was contrary to the long-held practice of the WTO to take decisions by consensus, and prevented members from examining whether issues related to investment facilitation were trade-related or not. Attempts at adding the IFDA to the WTO ignored the reality of illegality of initiation of the underlying negotiations.

In light of these legal infirmities mentioned above, the celebrated proposal of integrating IFDA into WTO fold was demolished abruptly. A rules-based WTO couldn’t ignore its own rules, when going ahead with this China-led initiative.

We further note that there was nothing in IFDA that could help developing countries to attract foreign investment. In reality, it was a charter for protecting the interests of foreign investors (say China). It strengthens multinational corporations to lobby against new laws that they oppose, giving them rights that we don’t have as citizens.

Further, it needs to be emphasised that inviting foreign direct investment is the prerogative of a sovereign, which cannot be and should not be diluted or tempered with, by any international agreement, as it would be encroaching upon the rights of the legislature or in other words, people of the sovereign nation.

There seems to be sinister designs behind the intent, content and structure of the proposed agreement. This is also apparent from the fact that in the garb of creating global standards for investment facilitation measures, they wanted to deprive the sovereigns from the rights of regulating and monitoring FDI in their respective territories.

Though, the promoters of the agreement are claiming that agreement will not restrict the parties to regulate FDI in the public interest within their territories but it is self contradictory, because the agreement includes provisions, such as, ‘Most Favoured Nation’ (MFN) treatment and impartial administrative procedure for investment from all member countries.

This can be explained by an example that post Doklam, India has put certain restrictions on FDI from all the countries which share border with India, mandating permission of investment through ‘approval route’, in place of ‘automatic route’. With this measure, India could restrict investment from a country which was at war with India. if we allow this agreement, parties will be deprived of any such freedom to safeguard their respective interests.

It is being observed that the IFDA had been pushed by China and more and more signatures consenting the proposal have been obtained by arm twisting of the small nations, participating in Belt Road Initiative (BRI). If we see, even South Africa, which opposed IFA initially, was later arm twisted to withdraw from their joint statement with India. It is no secret that through BRI, China is giving effect to its evil ‘Debt trap’ diplomacy with its expantionist strategy. Through its debt trap diplomacy, China has been able to snatch away key strategic assets and locations from BRI participating countries and is increasingly becoming threat to global security and peace. Therefore IFDA was needed to be blocked at any cost, in the interest of global peace; which India could do, effectively. With this India has been able to safeguard sovereignty and global peace. 

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