Columbia Law Professor Urges WTO Members to Join Investment Facilitation Agreement Talks
All World Trade Organization members should join the negotiations over an Investment Facilitation for Development (IFD) Agreement, Columbia University's Karl Sauvant said in a Nov. 21 submission on the International Economic Law and Policy Blog. Sauvant laid out three reasons completing and adopting this agreement is important.
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The first says that an IFD Agreement would help countries retain and attract more and better FDI flows. International investors look to profit-enabling economic factors, the country's regulatory framework and investment facilitation when deciding where to invest. "It is precisely the objective of the IFD Agreement to facilitate FDI flows, with a view toward retaining FDI and increasing incoming FDI flows and benefiting from the tangible and intangible assets associated with such investment," Sauvant said. "... To this effect, the IFD Agreement identifies a number of concrete, practical measures that governments can take to facilitate FDI flows, primarily by reducing transaction costs for international investors and making the re-investment and investment climate more welcoming."
The second reason for countries to join the negotiations would be that the agreement stands as a "credible reform commitment device that sends a positive signal to international investors." The third reason would be that the deal provides for flexibility, technical assistance and capacity building to implement reforms.
Sauvant wrapped up the blog post by laying out three "positive externalities" that would be generated through the agreement. Those externalities would be: proof that multilateralism works, new standards for bilateral and regional stand-alone investment agreements, and evidence that developing countries can use the World Trade Organization to develop new rules. Savant is a senior fellow at the Columbia Center on Sustainable Investment, which is a joint center of Columbia Law School and the Earth Institute, Columbia University.