Image by Nattanan Kanchanaprat from Pixabay
Alicia Nicholls: The majority of World Trade Organization (WTO) Members have, this month, commenced negotiations to conclude a binding multilateral agreement on investment facilitation for development. The negotiations, which have received the support of the global business community, seek to facilitate investment flows between economies in a sustainable and pro-development manner. To date, one hundred WTO Members, including four CARICOM Member States, have endorsed the Joint Statement Initiative on Investment Facilitation for Development. Essentially, Member States will be negotiating the investment equivalent of the Trade Facilitation Agreement (TFA).
Caribbean countries are largely net foreign direct investment (FDI) importers, that is, countries where FDI inflows exceed outflows. According to ECLAC’s Foreign Direct Investment in Latin America and the Caribbean Report of 2019, “FDI flows to the Caribbean totaled US$ 5.623 billion in 2018”. The 11.4% dip compared to 2017 levels was mainly attributed to reduced inflows to the Dominican Republic, which, despite the drop, accounted for a 44% share of FDI inflows to the Caribbean sub-region. The Dominican Republic’s share of regional inflows was distantly followed by the Bahamas (18%), Jamaica (14%) and Guyana (9%).
Caribbean countries, to varying extents, have been implementing reforms at the national and regional levels to improve their business environments and the functioning of their investment promotion agencies (IPAs). The ultimate goal of these reform initiatives is to attract FDI that foments economic growth and development, foreign exchange inflows, job creation, and access to markets, skills, know-how and technologies.
With regional governments already undertaking reforms, would a WTO Multilateral Investment Facilitation for Development Agreement add value for the Caribbean or would the legal burdens of signing a multilateral agreement outweigh any potential benefits? Should the Caribbean seize this opportunity to be among the rule-makers in an area of development-interest to the region or should we sit this one out? Read more here.