If the China-led Investment Facilitation for Development (IFD) agreement is approved at the World Trade Organization, it could enable China and other supporting members to bring investment-related issues formally under the WTO’s purview. Experts warn that, if adopted, the proposal may be incorporated under Annex 4, allowing participating countries to amend it without requiring consensus from the broader WTO membership.
India, along with 39 other countries, has opposed the IFD proposal, arguing that investment is not fundamentally a trade issue and that the WTO’s mandate should remain focused on trade. The opposition is driven by concerns that countries could lose policy flexibility in regulating foreign investment.
According to Rajan Sudesh Ratna, former deputy head and senior economic affairs officer at the United Nations ESCAP, India’s concerns are twofold. First, there is a systemic issue -- countries could decide on such a framework without a mandate from the ministerial conference.
“Investment was earlier dropped from the WTO agenda by consensus, so India questions how a group of 70–80 countries can now revive it through a plurilateral route and seek to incorporate it under Annex 4. In India’s view, any such move must first have a clear ministerial mandate. Without such a mandate, the principles of the WTO will be undermined,” Ratna said.
He added that India has also questioned the inclusion of investment under the trade agenda, noting that TRIMS Agreement (Trade-Related Investment Measures) already addresses key aspects of the trade-investment linkage.
Concerns also extend to broader implications. Several countries — particularly participants in the Belt and Road Initiative and members of the European Union — are backing the proposal, while the US has adopted a wait-and-watch approach, said Jayant Dasgupta.
India fears the move could set a precedent, allowing smaller groups of countries to push similar plurilateral agreements into the WTO framework in the future.
“In the case of the IFD, it will be a closed plurilateral, and China is seeking to bring it into the WTO framework under Annex 4. This raises concerns because once an agreement is placed under Annex 4, the participating members can amend it without requiring broader WTO consensus. While WTO agreements are typically consensus-driven, Annex 4 plurilaterals allow changes to be made internally by signatories,” Dasgupta explained.
Unlike agreements in the first three annexes—which are binding on all WTO members—plurilateral agreements apply only to those members that choose to adopt them. However, despite this limited applicability, Dasgupta cautioned that provisions such as investor-state dispute settlement (ISDS) could be introduced later, allowing foreign investors to sue host governments for treaty violations.
There are also geopolitical sensitivities. While not explicitly stated, experts note that initiatives such as the China-Pakistan Economic Corridor under the BRI could potentially fall within the ambit of such a framework—an issue that may be particularly contentious for India given its claims over Pakistan-occupied Kashmir.