The rapid expansion of support for the China-backed Investment Facilitation for Development (IFD) Agreement at the World Trade Organisation (WTO) has left India at risk of political isolation ahead of a key global meeting next week.Set to be held in the Central African nation of Cameroon, the 14th Ministerial Conference begins on March 26. It will include a request to incorporate the IFD Agreement into the Marrakesh Agreement, which led to the WTO’s formation in 1995.Since it was first discussed in 2017, support for the agreement has grown from 70 countries to 128 (out of 166 WTO members) as of last year. India and South Africa are among its few opponents, even drawing criticism from smaller countries facing an investment crunch. It also comes at a time when the widespread tariffs imposed under the Trump administration have raised questions about the WTO’s purpose.What is the IFD agreement?On the face of it, the agreement aims to improve the investment climate and promote international cooperation to facilitate the flow of foreign direct investment among WTO members. In particular, it focuses on developing and Least-Developed Countries (LDCs) and fostering sustainable development. It focuses on Foreign Direct Investment (FDI).A WTO factsheet says that in today’s integrated economy, expanding investment flows, like trade flows, depend on “simplifying, speeding up and coordinating processes, not primarily on liberalising policies.” By aligning facilitation policies with global benchmarks, investment facilitation measures can help economies attract and expand investment, helping to diversify and expand their production capacities and exports, it added.Explained archives | The WTO’s dispute settlements mechanism is all but dead. This is why India should worryWTO Director-General Ngozi Okonjo-Iweala has backed the IFD, stating that it could enhance the transparency of investment frameworks, cut red tape, and promote responsible business conduct. “By lowering costs associated with investment flows, the IFD Agreement can help developing and LDC members attract and retain more investment… to access new technologies, diversify their economies, and create better jobs,” she said during a high-level dialogue on September 16.The WTO has been fighting to maintain its relevance amid pressure from the United States, including during Donald Trump’s first presidential term (2017-21). The US had claimed that the WTO was biased against it and blocked appointments to a dispute settlement body, bringing the mechanism to a halt.Story continues below this adCrucially, the IFD is formulated as a plurilateral agreement, “welcoming all Members to join, and binding only on those participating Members,” according to the factsheet. Countries backing it have said that it has a dedicated section on “Special and Differential Treatment,” which provides that the extent and timing of implementation of the provisions shall be related to the capacities of developing and LDC members.“Where a Member continues to lack the necessary capacity, implementation of the provisions concerned will not be required until implementation capacity has been acquired,” the factsheet said. Proponents also note that the agreement is limited in its scope and explicitly excludes issues of market access, investment protection, investor-State dispute settlement (ISDS), government procurement and certain subsidies.And what is India’s opposition to IFD?India has argued that incorporating the IFD through a plurilateral route raises broader questions about the WTO’s future, which is traditionally based on multilateralism and consensus.The foundational rule of the WTO is that all major decisions are taken by the entire membership, with each member having an equal voice, and a consensus is reached when no member present at the meeting formally objects to a proposed decision.Story continues below this adUnlike traditional WTO agreements, plurilateral deals only apply to participating countries, allowing smaller groups to move ahead. New Delhi has argued that such deals will defeat the purpose of the WTO, as some members will target domains affecting developing countries and LDCs without requiring their say in it.Ajay Srivastava, former trade officer and founder of think tank Global Trade Research Initiative (GTRI), said, “India and South Africa blocked attempts to include IFD in the WTO framework at the 2024 ministerial. That coalition may weaken, with African Union members likely to pressure South Africa to shift position.This could leave India isolated as the main opponent of plurilateral expansion. India argues that plurilaterals undermine the balance of interests in WTO negotiations between developed and developing countries. It warns such deals could sideline issues like farm subsidies and create a two-tier WTO dominated by major economies.”What is the China angle here?The New Delhi-based think tank Research and Information System for Developing Countries (RIS) released a report on Saturday (March 21), stating that the IFD has additional strategic considerations for India. The World Trade and Development report said that its significant feature is its overlap with Chinese connectivity and infrastructure initiatives.Story continues below this adOf the 128 IFD participants, 98 are also members of China’s flagship Belt and Road Initiative (BRI). Though correlation does not imply formal linkage, this convergence highlights how multilateral facilitation disciplines may complement geo-economic strategies. By standardising regulatory procedures across participating economies, the IFD could indirectly strengthen the operational environment for large-scale cross-border infrastructure and investment networks, the report said.“…China’s expanding overseas investment footprint under the BRI… intersects significantly with over 75 per cent of IFD-participating countries, including several in India’s neighbourhood. Incorporation of the IFD within the WTO framework could enhance regulatory coordination among participating members and potentially amplify China’s economic influence in regions of strategic interest to India,” the RIS said.What is India’s position? International trade experts have said that India’s position could also be tactical, in relation to its demand for a permanent solution to the issue of its public stockholding of food grains.Essentially, some countries (including the US and Thailand) argue that the heavily subsidised foodgrains India provides to around 80 crore Indians under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) distort global trade.Story continues below this adUnder WTO norms, agricultural subsidies should not exceed 10% of the value of agricultural production, but developing nations receive certain protections. India’s rice subsidies still exceeded the threshold on multiple occasions, forcing it to invoke the ‘peace clause’ agreed to in the 2013 Bali ministerial, which allows developing countries to breach the ceiling without invoking legal action.Indian officials have said this is the longest-pending issue at the WTO, and a permanent solution would give India and a coalition of developing countries the flexibility to give higher farm support to their people. It could negotiate for a solution on the public stockholding issue in exchange for a softening of its position on the IFD agreement.