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India, China join up on investment

Sidhartha in New Delhi | September01, 2003 09:03 IST
Last Updated: September01, 2003 09:18 IST


A 16-member group including India and China has sought a host of clarifications on Singapore issues including the coverage of investment, definition of cartels in competition policy and their reference to the dispute settlement body of the World Trade Organisation.

The group has also favoured continuation of the study process on Singapore issues, comprising investment, competition policy, trade facilitation and transparency in government procurement.

Senior commerce ministry officials said the joint paper noted that the scope and coverage of the subjects being pushed by a group of developed countries such as the European Union, Japan and South Korea were not clear.

India has sought a deferment of negotiations at Cancun.

Investment

The group has sought clarifications as to whether the coverage will be restricted to foreign direct investment with focus on green-field and export-oriented ventures that would lead to expansion of trade.

The group also wants to know if the coverage will include portfolio investment, mergers and acquisitions, short-term investments and foreign debt.

"It remains unclear how a multilateral framework stands to benefit trade," said an official.

The lack of clarity on balance of payments safeguards and the rights of WTO members to regulate transfer of funds along with special provisions for developing countries had emerged during the study process.

Officials further said there were wide differences on the need for binding investors' obligations and domestic governments' measures for enforcing these obligations.

Questions regarding transparency in coverage have also been raised. Officials said there was no clarity if notifications on relevant laws and procedures would suffice or the proposal would extend to administration of domestic laws and procedures and prior notification and comments on investment provisions.

Transparency in government procurement

The group has said the scope of discussions should not cover market access and restrict the scope of members to provide preferences for domestic supplies.

Officials said the joint paper had sought clarification on the coverage that whether it would be restricted to goods and central government procurement only. The countries have also desired to know if a common procurement policy for all WTO members will be prescribed.

Competition Policy

Officials said basic issues such as the scope and application of non-discrimination principles and the implication of competition policy on national treatment for pushing the industrial and social needs were yet to be clarified.

Notifications for transparency and the definition of hardcore cartels, including whether there would be rule-based approach for their prevention and exemptions remained unclear, they added.

Trade Facilitation

The group has said there are no available estimates of the cost to developing and least developed countries for undertaking the obligations under the proposed framework.

Even issues such as extension of timeframes for meeting the obligations and the non-recognition of the fact that countries are at different stages of development needed to be factored in, officials said.

State of affairs: Singapore issues

The issues consist of four elements: investment, competition policy, trade facilitation and transparency in government procurement.

  • India, Bangladesh, Botswana, China, Cuba, Egypt, Indonesia, Kenya, Malaysia, Nigeria, Philippines, Tanzania, Uganda, Venezuela, Zambia and Zimbabwe form the 16-member group.
  • They say the study process should continue as issues remain unclear. 
  • At the Singapore ministerial meeting of WTO members in 1996, developed countries such as the European Union and Japan pushed for the inclusion of the issues in the multilateral framework.
  • Four separate study groups were constituted for the process.
  • At the WTO's Doha ministerial meeting in November 2001, the EU, Japan and South Korea once made a pitch for commencing negotiations on the four issues.
  • The Doha ministerial declaration factored in the concerns of developing countries led by India and said the forthcoming ministerial meeting in Cancun would decide on commencement of negotiations if there was "explicit consensus" among member countries.
  • The EU has interpreted "explicit consensus" to mean that a mandate to commence negotiations at Cancun is available but the ministers have to decide on the modalities through explicit consensus.
  • India has opposed the Singapore issues and maintained that they do not belong to the WTO since the issues are not linked to trade and restricting the policy space of sovereign governments.
  • India and other developing and least developed countries such as the African and the Caribbean group, Indonesia and Bangladesh maintain that the clarification process should continue since they are unclear about the coverage and scope of the subjects.
  • Others such as Brazil and China are not opposed to negotiations on some of the issues.
  • Recent reports of the study groups point to divergent opinions on commencement of negotiations.
  • The WTO's draft ministerial declaration for Cancun has provided options to commence negotiations at Cancun.

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