Talks aim to bridge deep divisions on WTO deal

Talks resume today in Geneva aimed at bridging the deep divide between rich and poor nations on whether to authorise ministerial negotiations at Cancun, Mexico, in September on a World Trade Organisation (WTO) investment agreement.

More than 50 development and campaign groups have launched a lobbying campaign against an agreement which they claim would give rapacious multinational corporations a free hand in the developing world.

The backers of a WTO investment accord, led by the European Union and Japan, say developing countries would benefit from consistent international rules on treatment of foreign investors, now covered by a patchwork of more than 2,100 regional and bilateral treaties.

But poorer WTO members fear a WTO accord would reduce their flexibility to channel investment to development targets.

A report, published today by ActionAid, the British charity, says abuses by multinationals in countries such as Haiti, Uganda, India and Brazil showed that increased liberalisation of investment carried "huge risks for the world's poorest people".

Campaigners mounted similar lobbying against a much more ambitious multilateral agreement on investment in the Organisation for Economic Co-operation and Development (OECD).

These collapsed in 1998 after fierce disagreements over sectoral exemptions.

The OECD accord would have required signatories to throw open all sectors except those specifically exempted, and to treat overseas investors in the same way as domestic ones.

Any WTO agreement is likely to adopt a "positive list" approach similar to that already used for its services accord, under which countries can choose which sectors to open to foreign competition and on what terms.

However, many developing countries, led by India, say they are simply not ready to embark on complex negotiations of dubious benefit which would further crowd the agenda for the Doha global trade round.

The developing countries' position has been reinforced by the WTO's failure to deliver results on issues important to them, including agriculture where talks on guidelines for the negotiations have stalled, and access to cheap medicines where an agreement was blocked by the United States.

Ministers agreed in Doha in November 2001, under pressure from Brussels, that WTO members would begin investment negotiations based on guidelines to be established in Cancun "by explicit consensus", a phrase insisted upon by India.

Similar pledges were made for three other sets of negotiations, on competition rules, transparency in government procurement and trade facilitation, where talks on guidelines are also deadlocked.

Unlimited companies: The developmental impacts of an investment agreement at the WTO at www.actionaid.org