To provide the Applicants with the best possible and most relevant experience, the Model WTO has decided to adapt this years topic. By narrowing the topic to Trade & Investment: the framework of a potential Investment Facilitation Agreement, the Model WTO intends to create an even more relevant experience for its Participants as this topic has become even more relevant in recent weeks. We apologise for any inconveniences due to the delayed publication.
Committee on Investment Promotion and Market Access for Investment
Investment Promotion and Facilitation
Investment promotion “aims to encourage foreign investment through additional means beyond investment protection provisions in IIAs” (UNCTAD, 2015, p.91) as well as promoting a nation or region as a destination for investment (Zhan, 2017, p. 5). Investment promotion intends to make an investment destination more attractive.
Of national investment policies, approximately 40% account for investment promotion policies (Zhan, 2017, p. 3). However, just because such a high percentage of policy seeks to incentivize investment, it does not ensure that these incentives are effective. For investment promotion to be effective as well as efficient, a country must highlight profitable opportunities for investment, create a more positive image of the country and its investment landscape as well as aid in finding local partnerships (OECD, 2011, p. 3). A promotion campaign has also proved to be more effective if it is specific to regions or industries, rather than a broad international campaign promoting the entire country (OECD, 2015, p. 40).
This is to be differentiated from investment facilitation. The role of investment facilitation is to ease the investment process.
Within this committee, it is to be discussed the difference between investment promotion and market access to investment. Further, it is to be discussed what investment promotion measures are even feasible. Furthermore, it must be ensured that these investment promotion measures to not encroach on the main principles of the WTO (most favored nation and national treatment). Additionally, once investment promotion measures have been established, countries are to discuss how investment promotion can be developed, implemented, coordinated, and monitored. Given these facts, it is also to discuss if WTO should and if so, could assist countries in the development, implementation, coordination, and monitoring of investment promotion activities.
All of these points of discussion shall be brought together either as a separate, new agreement or possibly within an existing agreement.
Market access for Investment and Investment Liberalization
Market access generally describes the right of states to control which foreign entities are admissible and can establish themselves in the host country. Market access for investment refers to the control by states of admission and establishment of foreign investors. (UNCTAD, 2002, p.3)
According to the UNCTAD (2002), there are five prevalent models of market access for investment:
- “the ‘investment control’ model, which preserves full State control over entry and establishment;
- the ‘selective liberalization’ model, which offers limited rights of entry and establishment, i.e. only in industries that are included in a “positive list” by the agreement of the contracting States;
- the ‘regional industrialization programme’ model, which offers full rights of entry and establishment based on national treatment for investors from member countries of a regional economic integration organization only for the purposes of furthering such a programme;
- the ‘mutual national treatment’ model, which offers full rights of entry and establishment based on national treatment for all natural and legal persons engaged in cross-border business activity from member countries of a regional economic integration organization;
- the ‘combined national treatment/most-favoured-nation treatment’ (NT/MFN) model, which offers full rights of entry and establishment based on the better of NT or MFN, subject only to reserved ‘negative’ lists of industries to which such rights do not apply.” (pp.3-4)
The Committee shall discuss the difference between market access for investment and Investment Facilitation. The Head Delegate of this Committee shall discuss with the Head Delegate of the Committee on Investment Facilitation 1 the Committee’s definition of Investment Facilitation. Further, the Committee shall discuss, the different models for market access for investment and see which models are analogously used in existing agreements such as GATS. Finally, the Committee shall formulate market access as either as a separate, new agreement or possibly within an existing agreement.
Author of the Committees 2018:
Marisa Menzel (firstname.lastname@example.org)
Model WTO Head of Simulation Design
This year’s Model WTO focuses on trade and investment, and notably investment facilitation. The Model WTO organizers are fully cognizant that the ‘Joint Ministerial Statement on Investment Facilitation for Development‘ – co-sponsored by 70 WTO Members at the WTO’s Eleventh Ministerial Conference held in Buenos Aires in December 2017 (document WT/MIN(17)/59) – explicitly specifies that the “structured discussions with the aim of developing a multilateral framework on investment facilitation” […] “shall not address market access, investment protection, and investor-State Dispute Settlement” (emphasis added).
This is why the 2018 Model WTO focuses on investment facilitation. Nevertheless, it was considered interesting for participating students – merely for educational purposes – to consider also investment promotion and market access (in Committee 5), as well as investment protection (Committee 6). It is hoped that this will lead to a better understanding of the scope of investment facilitation and how it differs from these other areas.
We thank you for your understanding.