The recent “Time for Take-Off: The WTO and the Investment Facilitation for Development Agreement” interactive workshop, held at the Hamburg Sustainability Conference on June 2, 2025, convened decision-makers and thought leaders to explore how the Investment Facilitation for Development Agreement (IFDA) can significantly benefit developing countries. Moderated by Axel Berger, Deputy Director of the German Institute of Development and Sustainability (IDOS), the session featured key speakers including Pamela Coke-Hamilton, Executive Director of the International Trade Centre, Jorge Vitorino, Head of Investment and Intellectual Property Unit at EU DG Trade, and Claudia Locatelli, Senior Counsellor at the World Trade Organization. The discussions underscored the critical need for improved frameworks to help investments flow, especially foreign direct investment (FDI), to middle-income countries, noting that FDI brings not only capital but also technology transfer and managerial know-how.
In a global landscape marked by the scarcity of public funds, the IFDA emerges as a crucial tool for enhancing development and sustainability. This international agreement, still in the making but concluded in February 2024, is designed to improve frame conditions to enhance the efficiency, transparency, and predictability of national and domestic investment frameworks for development. What particularly excites proponents about the IFDA is its substantive and comprehensive development dimension, which research suggests can yield substantial benefits, with global welfare gains potentially reaching up to 1.73% and particular advantages for low-income countries. Even non-member countries are projected to experience positive spillovers, though they would benefit more by becoming signatories.
What sets the IFDA apart as a “very practical tool of multilateral cooperation” is its unique focus. It is the first-ever global agreement specifically on investment facilitation, prioritizing practical obstacles that investors face. This includes improving the transparency and predictability of investment policies, as well as simplifying, speeding up, and digitalizing investment authorization and administrative procedures. Crucially, the agreement also aims to strengthen institutions, especially investment promotion agencies (IPAs) of developing countries, to better choose and attract sustainable investments, emphasizing good governance and robust institutions. This initiative is notably launched and largely shaped by developing countries themselves, with the goal of attracting not just more FDI, but better and more sustainable investment.
It is important to understand what the IFDA covers and, equally, what it does not. The agreement provides comprehensive global benchmarks for investment facilitation, focusing on foreign direct investment—specifically, long-term investments—and adopting a life-cycle approach from establishment to operation and disposal. However, it is crucial to note that the IFDA does not cover market access or liberalization commitments, nor does it include provisions on investment protection or investor-state dispute settlement. Members retain full freedom to regulate investment in their public interest within their territories and to accept or reject investments in line with their own legislation. Instead, the agreement focuses on making existing policies more transparent and streamlining administrative procedures.
The IFDA promotes highly practical measures to foster a more predictable and efficient investment environment. For instance, it encourages parties to establish online single information portals, offering free and comprehensive access to relevant laws, regulations, procedures, and requirements for investors. Such portals save time and cost for both investors (domestic and foreign, including SMEs) and public authorities, while also reducing the risk of corruption. Furthermore, the agreement promotes administrative simplification by encouraging single entry points for submitting investment applications, including online payment of fees, thereby strengthening predictability and integrity. Another key feature is the inclusion of provisions for focal points, often IPAs, which serve to reduce information gaps, help investors navigate complex national legislation, provide “handholding” services, and importantly, prevent costly disputes from arising. The agreement also considers linking local domestic suppliers with foreign investors to upgrade their sourcing requirements.
The broader context for the IFDA’s emergence is a multilateral system in flux, where recent events have “laid waste to decades worth of progress on sustainable development,” including a dramatic slowing of investment flows. FDI flows into developing economies dropped by 2% last year, and even more alarmingly, FDI to SDG-related sectors like infrastructure and agriculture decreased by 11%. Amidst sweeping overseas aid cuts, tariff escalations, and climate-induced disasters, the IFDA is positioned as a collective effort to “get it right,” enabling countries to attract investments that power vital infrastructure, build resilience to climate change, and empower women and youth in the global economy. It aims to shift from a traditional “aid for trade” model to “investment for trade,” creating a paradigm of mutually shared outcomes.
Jorge Vitorino highlighted three key “triggers” that the IFDA provides for participating members. Firstly, it offers a very important signaling effect, demonstrating that a country is a reliable and predictable partner interested in attracting investment. This goes beyond individual investment promotion entities, signifying a “whole-of-government approach”. Secondly, for countries already undertaking reforms, the agreement acts as a commitment that helps ensure policy and regulatory coherence across different government agencies. This addresses common issues where different authorities may require contradictory certificates or procedures. Lastly, the IFDA serves as a significant trigger for capacity building, supporting the digitalization of procedures, establishment of one-stop shops, and effective publication of information. The EU, as the world’s biggest foreign investor, is actively financing needs assessments for countries to identify how to best implement the agreement’s commitments.
The implementation process for the IFDA is designed with flexibility and support in mind. The agreement features substantive special and differential treatment provisions, which essentially function as technical assistance and capacity development mechanisms for developing countries. These provisions allow developing and Least Developed Countries (LDCs) to categorize agreement provisions into three tiers: Category A (implemented upon entry into force), Category B (implemented after a self-determined transition period), and Category C (requiring both a transition period and capacity building/technical assistance). To benefit from a needs assessment or join the agreement, countries simply need to notify the WTO Secretariat or send a letter to the co-coordinators (Ambassadors of Chile and Korea). The International Trade Centre (ITC) and the WTO Secretariat are actively engaged in providing technical assistance, including supporting self-diagnostics to assess compliance and identify implementation needs, and building expertise in relevant authorities for choosing sustainable investments and preparing feasibility studies.
For the IFDA to fully “take off” and realize its potential, a crucial step is its integration into the WTO rule book by MC14 (the 14th Ministerial Conference) next year. This requires consensus among all WTO members, essentially an amendment to the existing WTO agreement. While 126 members (including 90 developing countries and 27 LDCs) have requested its incorporation, three members—India, South Africa, and Turkey—have currently raised concerns. The agreement is designed to be MFN-based and non-discriminatory, meaning its commitments to transparent and streamlined procedures would benefit all WTO members, whether or not they are signatories. Engaging with these concerned members is a key focus for the co-coordinators and facilitators ahead of the next Ministerial Conference.
In conclusion, the IFDA represents a pivotal step towards fostering a more predictable and transparent global investment environment. It is a “very practical tool” for multilateral cooperation that highlights the WTO’s continued relevance as a platform for progress. As Pamela Coke-Hamilton asserted, it’s about “how we can still get it right” and prevent “2025 become yet another year where crises and chaos run on the table”. The collective effort of participating developing countries, development partners, and international agencies, backed by the agreement’s flexible and support-oriented framework, is essential to make the IFDA a success and unlock the sorely needed investment for sustainable development and shared prosperity across the globe.