Committee on Investment & Development

The WTO has taken on several of the UN’s Sustainable Development Goals (SDGs). All the goals taken on by the WTO reflect the importance of trade for promoting sustainable development (WTO, 2018). This role of trade is particularly evident in SDGs 2, 3, 8, 10, 14 and 17 (WTO, 2018). To fulfill these goals, ranging from ending hunger and creating food security (SDG 2) to economic growth (SDG 8) and an open, non-discriminatory multilateral trading system under the WTO (SDG 17), investment is needed. As stated by Director-General Roberto Azevêdo: “trade,.., and investment are necessary and complementary, elements in promoting sustainable development” (WTO, 2017b).

 

Investment is seen as one of the greatest drivers of growth, particularly for developing countries. In 2016 over $646bn in FDI flowed into developing countries (UNCTAD, 2017b, p.X). In developing countries, FDI creates a lot of positive benefits. Besides improving social and economic conditions through corporate social responsibility (see Committee for Corporate Social Responsibility), FDI also creates technology spillovers, induces human capital formation, helps towards integration of international trade, as well as creating a more competitive business environment (OECD, 2008, p. 14). Examples of these benefits may include the transferal of “clean” technologies (OECD, 2002, p. 5). On the other hand, FDI can also cause crowding out of local businesses or create concerns about labor or environmental deterioration (“Investment Policy”, E15 Initiative). The benefits and threats of FDI to developing countries are clear, thus the WTO should contribute to and guide investment in countries that are affected by it most.

 

Before discussing the work of the Committee for Investment and Development, it must first be defined what “Investment and Development” include by differentiating it from “Investment Development.” In this simulation, Investment Development is a further investment, similarly to investment facilitation and promotion. Investment and Development, on the other hand, discusses investment in developing and least-developed countries.

 

Although FDI flows to developing countries were $646bn in 2016, this is a sharp decline by 14% from the previous year (UNCTAD, 2017, p. X). Therefore, the Committee on Investment and Development shall discuss what drivers of investment into developing countries could be and how these drivers can be used to further investment in developing countries. Additionally, the Committee shall discuss what requirements need to be fulfilled by developing countries to receive investments and what the hindrances to investment in developing nations are. It shall also discuss how to prevent leakages of investments out of the host country from occurring. The Committee shall discuss if developing, particularly least developed, countries should have different obligations or standards regarding investments in their respective countries. For example, the applicability of special preferential treatment clauses. Finally, the Committee shall bring all of these points of discussion together in either as part of a new regulatory agreement or within an existing agreement.

 

 

Author of the Committees 2018:
Marisa Menzel (marisa.menzel@model-wto.org)
Model WTO Head of Simulation Design