Topic of the 2018 Model WTO:

Trade & Investment


In the Model WTO 2018 edition, participants will have to discuss and negotiate the creation and development of new or existing regulations, to adapt current international trade rules regarding international investments. This shall be done within one of the 6 committees which have been set up on the basis of the most relevant issues for international investment law currently discussed by scholars and WTO experts.

As a result of globalization, trade and investment are more linked than ever. In particular, in light of global value chains and development, investment has become ever more inextricable from trade and services (WTO, 2017a, p. 1). Countries and their economies predominately profit greatly from investment, thus this should be encouraged and eased. Not only is this topic more relevant than ever, individual countries are also realizing the need for discussion of investments in the context of trade. This is evident from the creation of the Friends of Investment Facilitation for Development, which includes 11 WTO members, as well as the discussion of investment at the Ministerial Conference 2017 in Buenos Aires and the E15 Initiative on Investment Policy.

In order to be able to discuss investment in this context, the term must be defined briefly. In this simulation, the focus of investment lies on foreign direct investment (FDI). FDI refers to direct investment equity flows and is the aggregate of reinvested earnings, equity capital, and other forms of capital (World Bank, 2017). In 2016 alone, there have been FDI net outflows worth over $1.8 trillion (World Bank, 2017a) and net inflows of over $2.2 trillion (World Bank, 2017).

This direct investment can take different forms. One possibility is a cross-border investment made by a resident of the firm of one country “with the objective of establishing a lasting interest in an enterprise” resident in another country (OECD, 2008, p. 17). Another possibility of foreign direct investment is for a firm to hold a direct investment enterprise, that is holding a subsidiary with over 50% of voting power or an associate company with 10-50% voting power (OECD, 2008, p. 17). Both possibilities of FDI have the characteristic of the investor wanting a long-lasting relationship with the direct investment enterprise (OECD, 2008, p. 17). However, it is to be noted that this explicitly excludes the purchase and sale of temporary assets such as shares.

The reason for this exclusion is due to the temporary nature of this financing. Whilst the FDI in question is not easily reversible (e.g. building a new plant in another country), the purchase and sale of temporary assets are. Therefore, this must be regulated separately and, in this context, will not be touched upon.

Finally, the role of the WTO must be discussed in the scope of investment. Investment, as such, is often seen as subject to the World Bank and the IMF. Whilst the World Bank has the official goal set to reduce poverty, within its Articles of Agreement it also states that its goal is the promotion of foreign investment ( The IMF intends to “foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth” ( The WTO traditionally only regulates the trade in goods and services. However, due to the intertwined nature of trade and investments nowadays, they must be discussed together (WTO, 2017a). Rather as one facilitating the other and vice versa. Therefore, as trade grows as a result of the investment, it is of global interest to discuss investment and trade on a larger scale, namely the WTO forum.


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).[1]

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.


Find out more about the structure of the negotiations, the different committees and countries.