GDAE Working Paper No. 09-01 Resources, Rules and International Political Economy
agreement, i.e. governments that are “neoliberal” in orientation and unilaterally removing
the sorts of provisions that would be prohibited by such an agreement, had ample reasons
to oppose the inclusion of a broad-based investment provision in the WTO. Many
countries complained of negotiation and implementation “overload” and, critically,
asymmetric risks of exposure to dispute settlement. Beginning negotiations on investment
means yet another issue where countries need to find the resources to participate, and any
subsequent agreement would lead to yet one more WTO standing body where countries
would need to be represented. Moreover, since the subsequent rules would be binding on
governments in capital-importing countries, what developing countries would be
consenting to would be a legal framework in which they would find themselves more
likely than not in the position of defendant.36
When the Doha Round was formally launched in November 2001, investment was
included on the agenda (paragraphs 20-22 of the Ministerial Declaration). The declaration
recognized countries’ fundamental right to regulate investors and declared that were any
negotiations to occur they would proceed on the basis of a “positive list” (like the
GATS), meaning that countries put forward the sectors where they are prepared to
negotiate. Yet, notwithstanding these substantive concessions, developing countries (for
reasons alluded to in the previous paragraph) were not prepared to negotiate. Indeed, as a
result of the strong resistance of a coalition of developing countries led by India and
Malaysia (the “Like-Minded Group”), the Ministerial Declaration also stipulated that
negotiations on investment would proceed only on the basis of “explicit consensus.” That
is, in contrast to ordinary WTO rules of implicit consensus, which requires a country to
actively dissent to block consensus (and thus encourages negotiations in closed “green
room” sessions), the explicit consensus rule for investment required all WTO members to
actively consent to taking negotiations forward.
By the time of the WTO’s Fifth Ministerial Meeting in Cancun in 2003, the
WGTI had received nearly fifty submissions,37 but the precise mandate of Ministers
remained unclear. Many developed countries (especially the EU) interpreted the Doha
Ministerial Declaration such that the requirement was for explicit consensus on the
“modalities” (i.e. the basic terms of agreement). To that end, the Canadian facilitator for
negotiations on investment (and all the “Singapore Issues”), attempted to push forward,
on the basis of the submissions received by the WGTI, and reach agreement on
modalities. Developing countries resisted both this interpretation of the Doha Ministerial
Declaration and the efforts of the Canadian chair, insisting that without explicit
consensus negotiations could not even proceed. Indeed, a coalition of sixty developing
countries formally opposed negotiations in the absence of the “explicit consensus,” and,
ultimately, refused to negotiate. This refusal, which is what Smythe refers to as “just
saying no,” contributed to the end of the Cancun Ministerial and meant that investment
was effectively removed from the Doha Round agenda.38 While, at the time of writing
(July 2008), the future of the Doha round as a whole is uncertain, whatever comes out of
the negotiations will almost certainly not include investment. TRIMS, for better or worse,
is and will remain the WTO status quo for the foreseeable future.
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