Thursday Debate: WTO - Dangers and Disputes: Protection of Foreign Direct Investments
MUN Meets WTO
Special Joint Venture Debate: different committee, different possibilites
Date: 21.02.2018, 6:15pm
Please select your delegation here.
Participants from the Monday Security Council Debate are welcome to join this debate as well, as the topics will be different! The doodle mainly contains developing countries, as the debate concerns investment in foreign economies.
We are honored and pleased to introduce you to out newest venture, the collaboration between SGMUN and the Model WTO Bachelor’s course! For the next three weeks, you will have the opportunity of debating in the World Trade Organization (WTO), together with members of the Model WTO bachelor’s course. This joint venture will be held like a usual MUN debate, however we will discuss a slightly more technical subject (little additional research is required however, beyond the usual), with the possibility of introducing a revolutionary trade agreement!
Don’t therefore be put off by the technical title, we guarantee that you will be in for an amazing time!
Foreign Direct Investments
With increasing globalization, trade and investments are more linked than ever. The importance of investments is widely acknowledged as a determining factor for the economic prosperity of a country.
Foreign Direct Investments (FDI) are referred to, when a resident entity in one economy obtains a long-term interest in another country’s enterprise, namely through obtaining control or significant voting power in a foreign company. Short-term interests, such as the purchase of company shares are not considered as FDI.
Globalization leads to ever increasing investments into foreign economies, with debates around facilitating such transactions, as comprehensive regulation of the topic is currently missing. Major concerns are centered around transparency, non-discrimination, efficiency, investment facilitation and corporate social responsibility. Central to this debate however is the protection of FDI and the settlement of disputes between WTO member states with regards to FDI.
Risks Through Expropriations
A major criteria for FDI, especially with regards to developing countries, is the safety of the investment; this most importantly concerns expropriation, as this can constitute a risk for investments, which might otherwise be advantageous.
Of notable importance for this committee is the distinction between direct and indirect expropriation. While in the first case, property is physically seized or its titles transferred to the State, the second case leads to complete or almost complete “deprivation of an investment,” however without the formality of a transfer of title or the direct seizure of property (more information regarding this can be found in the Study Guide, p. 22).
The committee will have to address risks of expropriations, define their modalities and their consequences, in order to guarantee investment safety.
Dispute Settlement Systems
Violation of WTO rules can be settled through various ways, one of which – the predominant mechanism – is the Investor-State-Dispute-Settlement (ISDS), which is hailed as being cheap, fast and flexible; it is however often considered as nontransparent, illegitimate and lacking accountability.
Another way, and the one which should be considered in more detailed fashion by this committee is the State-to-State Dispute-Settlement System (SSDS), which is called for, when government actions affect cross-border economic activities.
To some degree, SSDS is possible through the Dispute Settlement Understanding (DSU) as valid of the WTO; the efficiency of this system might however be questionable. The DSU has been highly destabilized in recent years, most notably through the failed consistent renewal of the Appellate Body, charged with receiving appeals, and making final, binding decisions on dispute settlement. As of 2020, there will be no members to the Appellate Body, should nothing change until then, or no reforms be undertaken.
The committee might therefore reflect on a means of efficiently, peacefully and transparently settling disputes between countries in the wake of potential reforms pertaining to the DSU of WTO.
As usual, do not hesitate to browse through these links to gain more background information on the topic.
https://drive.google.com/file/d/1lMQHFk_XRnLpATkk-0uxpj9Pn3puKu0K/view?usp=sharing (This is the link to the study guide regarding the topic. You will find additional information here. Pages 13 to 21 are not of primordial importance to the debate.)
https://en.wikipedia.org/wiki/Dispute_settlement_in_the_World_Trade_Organization (An outline of the dispute settlement mechanism of the WTO)
https://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm (The Dispute Settlement Understanding of the WTO)