The big IF

For social movements and critical civil society, decades of the WTO have served to implement policies of neoliberal globalisation — of opening up the markets and Southern countries for resource extraction and the erosion of people’s rights, for the super-profits investment of corporations and rich countries.

Now, South Korea, the United Kingdom, the European Union (EU), but also the developing country China, together with the WTO Director-General, are all supporting the Investment Facilitation for Development (IFD). The US has not formally joined the initiative due to China, but also will not block it in line with US corporate interests. The eve of opening day, the WTO announced that three-quarters of its members have agreed on the IFD. Director-General Okonjo-Iweala lauded the IFD as an achievement.

All typical turns of phrase were used in packaging the IFD agenda. Attracting foreign investment into the global South, Southern integration into global value chains, are “catalysts” for sustainable development.

According to one state minister: “When some have questions on WTO’s response to the current poly-crisis, we, the 123 co-sponsors, answer with the IFD Agreement.” In the WTO Director-General’s words, this is about “re-globalisation” with diversification of supply chains.

However, civil society and critical academics are asserting that the basic narrative is just mistaken. Even the UN Conference on Trade and Development (UNCTAD) is critical of the overarching value chain narrative, amid global realities. According to the UNCTAD: “The success of [the GVC] model has been neither uniform nor certain…[with] immediate gains in output and employment are unlikely to translate into a dynamic move up the development ladder” unless Southern countries can capture surplus in GVCs for domestic reinvestment.

Instead, the corporate private sector has maximized the pandemic and crises for more profits – also as they have controlling roles in production networks. For the UNCTAD, the rise in corporate profits, “together with their growing concentration, is a driving force exacerbating income inequality.” If this is the case, then is the reliance on big foreign direct investment for development a rather weak case? Arguably this remains an “if and then” logic incoherently pushed under the IFD agreement.

WTO “reform” by strong-arming a corporate agenda

The Investment Facilitation Agreement was advanced as a joint statement initiative (JSI), a plurilateral agreement, meaning a separate discussion among certain groups of countries at the sidelines of WTO. This type of advancing negotiations is called by the WTO leadership as part of “reform[ing] by doing.”

But do what, exactly? Countries with the interest of extracting more profits use JSIs to create negotiation blocs on items they wish to advance. These countries use JSIs as means to strong-arm countries amid the supposedly consensus-based rules in the WTO. With JSIs, a pandora’s box is opened: rich countries can start discussions on any agenda item, then talk about trying to get “agreement” within the rest of WTO.

This is what happened in the investment facilitation. Historically, a mandate to talk about investment was rejected twice at the WTO. So-called joint discussions in Buenos Aires, which would later be known as the JSIs, opened up the talks on investment facilitation, with formal discussions beginning in 2020. Now, co-chaired by South Korea, the investment facilitation agreement is at risk of being incorporated through “consensus” at MC13, unless opposed by some developing countries. As it is, there is the carrot of the investment myth and the stick of powerful countries’ and the Director-General’s push.

Worse, JSIs are still being discussed in e-commerce and in the domestic regulation of services, towards a similar liberalization agenda. Through a JSI on trade and gender, the WTO even instrumentalises gender concerns to promote corporate interests, while completely disregarding the impacts of its policies on women’s rights, livelihoods and access to essential goods and services, especially in the global South.

No sustainability without structural transformation 

In short, rich countries’ priorities remain powerful in MC13. In contrast, civil society is conscious that past and present discussions on fisheries subsidies, agriculture, e-commerce are still undermining workers, small farmers, fisherfolk, and local communities. For instance, developing countries are still being prevented from fully accessing and using the tools used by the rich countries for their development, such as subsidies for strategic sectors, advancing industrial policy, and even taxing their own economies.

The Southern state development agenda, or the Doha development round of negotiations, remains in limbo, at best. Blanket integration into global value chains eroded people’s sovereignty over our own economies. Prospects of advancing national and sustainable industrialisation, genuine agrarian reform, public regulation over trade and investment, are increasingly impossible. Southern policy space to shift to sustainable production and consumption patterns, through democratically-owned development strategies, are increasingly barred as inconsistent with the WTO’s reduction of trade barriers. Southern countries have been made dependent on external markets, hollowing out domestic agriculture in the global South, and driving exports and extraction of natural resources.

These realities of political economy are missed in the organisation’s narrative on sustainability and climate. Northern countries have appropriated not only the carbon space but also the natural resources and labour of the global South, gaining at least USD 152 trillion across decades from cheapening prices of exports and lower wages. Sustainability and ecological development are inconsistent with a trade regime that sustains resource plunder (e.g., of critical materials) and dependence on commodity exports. For these reasons, among others, critics say the WTO is an illegitimate space to expand in climate and sustainability.