India and South Africa Derail China-Backed Investment Deal at WTO
In a surprising turn of events at the World Trade Organization (WTO) conference in Abu Dhabi, India and South Africa have put a roadblock in the passage of a significant investment agreement, potentially impacting investments worth hundreds of billions of dollars, particularly in China.
India and South Africa formally objected to the Investment Facilitation for Development Agreement (IFD), supported by China and introduced by Chile and South Korea. The deal, estimated to cover projects ranging from $200 billion to $800 billion, faced resistance from the two nations, raising questions about the fate of these investments, often earmarked for developing nations in the “Global South.”
Exercising their right to file formal objections, India and South Africa expressed concerns that the IFD would compromise the multilateral essence of the WTO by imposing binding regulations on all member nations.
India suggested that negotiations for the IFD should take place outside the WTO, emphasizing that interested nations could reach an agreement independently. This stance aligns with a specific set of WTO procedures, necessitating unanimous agreement from all members for such agreements.
While not explicitly stated, India’s reservations hint at concerns that the IFD, often dubbed “China’s IFD” by Indian media, might serve as a strategic move by China and its allies in the Belt and Road Initiative (BRI). There are apprehensions about the potential favoritism towards countries heavily reliant on Chinese investments and those with substantial sovereign wealth funds. Efforts are underway by WTO leaders to persuade India and South Africa to withdraw their objections.
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