India has expressed serious concern over the attempts to bring foreign direct investment within the ambit of the World Trade Organisation.
India has asserted that the FDI policies must be constantly reviewed with a view to protecting interests of the small-scale and cottage industries which employ millions of people.
The Indian stand was made amply clear by India's Ambassador to WTO K M Chandrasekhar at a seminar on investment organised by Actionaid TVC in London.
Commerce and Industry Minister Arun Jaitley is likely to air similar views later this month at the informal meeting of key trade ministers in Montreal, in the run-up to the Cancun Ministerial Meeting of WTO in September.
Chandrasekhar said most developing countries, including India, would not be in a position to enter into negotiations without a clear picture of the structure and content of each issue.
Similar views were expressed by the Ministers of Trade of the African Union in the Mauritius Declaration adopted on June 28; the Least Developed Countries Trade Ministers in the Dhaka Declaration on 26 June; the Trade Ministers from Eastern and Southern African in the Nairobi Declaration on 28 May.
''There is no serious attempt to address concerns. At this stage, it is obviously inopportune to press for a multilateral agreement on investment, when there are other more important issues for consideration of the WTO, such as the development issues and the market access issues,'' he said.
He said there was no government in the world that did not place its foreign investment policy under constant review and make changes that are necessary to promote FDI.
''This is particularly significant in respect of developing countries like India, which have developed appropriate technologies that could sustain production at low capital cost."
"Small-scale and cottage industries in India provide employment to millions of people at relatively low capital cost and it is important to ensure that these sectors are sufficiently protected as the social cost otherwise would be very high,'' he was quoted as saying.
Some of the advantages that could accrue from FDI would be available to host countries only as a result of affirmative regulatory control.
Performance requirement stipulations in certain areas have an advantage for investment has resulted in growth of ancillary industry and consequent multiplier effects which have contributed to overall growth.
Stipulations relating to sharing of technology, employment of local labour and joint ventures with domestic entrepreneurs have had a beneficial and positive impact on various sections of the economy and society in developing countries.
China has successfully enforced an export obligation on foreign investors that has given its economy enormous strength and resilience, Chandrasekhar said.
Predictability and certainty are no doubt important objectives but this can be built into a domestic policy framework along with other investment goals, he added.
After the Doha Ministerial meeting, developing countries have been engaging actively in the process of clarification of issues initiated by the ministers.
''We have placed our concerns and views clearly on the table and endeavour to engage in a serious clarification exercise. We must say, however, that the situation continues to be as unclear as it was at Doha. There is no convergence of opinion on most issues discussed in the Working Group, including such basic issues as scope and definition,'' he said.
While the ministers spoke of long-term cross-border investment, particularly FDI that will contribute to the expansion of trade and while the European Community and Japan have been talking about FDI, the United States has argued strongly in favour of including portfolio investment.
Many other issues remain the subject of complete divergence of views, including the principle of non-discrimination, performance requirement and dispute settlement.
On the issue of investors' and home governments' obligations, a paper had been presented by China, Cuba, India, Kenya, Pakistan and Zimbabwe at the Working Group on Trade and Investment in the WTO.
UNI
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