MULTILATERAL AGREEMENT ON INVESTMENT
- + Add to Faves
- + Translate
- + Share
العربية
ä¸å›½
Français
Deutsch
Ελληνική
हिनà¥à¤¦à¥€
Italiano
日本語
Português
РуÑÑкий
Español
The 'Multilateral Agreement on Investment' (MAI) was negotiated between members of the Organisation for Economic Co-operation and Development (OECD) between 1995 and 1998. Negotiated behind closed doors and away from the eyes of the public, its purpose was to develop multilateral rules that would ensure international investment was governed in a more systematic and uniform way between states. When it was leaked to the public it met with intense scepticism, as the rules in the agreement looked to undermine the sovereign power of the nations that were in negotiation. A senior treasury officer, cited in a 1999 Australian parliamentary report, stated that ''"any future work on the matter known as the MAI needed to address the OECD Ministers’ requirement to protect the sovereign right to regulate and to ensure citizens were not harmed by efforts to liberalise foreign investment. There was also a need to continue to engage ‘civil society’, and to expand participation in the process by countries that were not members of the OECD".''[1] However, governments around the world belatedly addressed such issues only after being deluged by persistent criticism from civil society between 1997 and the scrapping of the negotiations in November 1998, when host nation France withdrew.
International investment has been taking place in various forms and to different degrees for over a century. There have always been rules in place, most typically through the development of bilateral investment treaties (BITs), which are signed between two countries and which state the desired conditions under which investment can take place between them. The first BIT was signed in 1960 and their numbers have grown steadily since then.
However, with the collapse of the Soviet Union in 1989 and the onset of apparent globalisation, the number of BITs exploded during the 1990s as countries and investors sought more regulation for security, certitude and mobility for their investments. Arguing a need for more secure and stable investment conditions, the then 29-member OECD drafted a copy of the MAI for negotiation between its member states, which planned to regulate investment between themselves and eventually between themselves and poorer non-members in a more uniform, "transparent" and enforceable manner.
It was recognised early by critics that the OECD was more susceptible to direct influence by transnational corporate forces than more representative alternative fora such as UNCTAD and the WTO. This weakness was finally accepted by governments and turned out to be a crucial factor in the MAI's defeat.
In May 1995, the OECD began negotiations on a Multilateral Agreement on Investment (MAI). The negotiations took place in secrecy from outsiders from 1995 until 1997 when an OECD source leaked a copy of the draft agreement to a Canadian citizen group. The leaked material prompted criticism that the MAI appeared to establish a new body of universal investment laws to guarantee corporations excessive powers to buy, sell and undertake financial operations all over the world, severely diluting national laws, e.g., on environmental protection, regulation of labour standards and human rights established in developed countries. The draft proposed a NAFTA-style offshore dispute-resolution tribunal in which corporations could sue governments if legislation, e.g., for national health, labor or environment, threatened their interests or were considered to "expropriate" actual or potential assets and/or profits.
However, the negotiations failed in 1998 when first France and then other countries successively withdrew after pressure from a global movement of NGOs, citizens' groups and governments of poor countries. MAI opponents pointed to a perceived threat to national sovereignty and democracy and argued that it would involve participating nations in a "race to the bottom" in environmental and labor standards. The unified global campaign relied heavily on internet communications--the first time that the new technology had been deployed on a large scale both to coordinate information and to channel protest communications to devastating effect.
France's withdrawal followed consideration of a report on the negotiations drawn up by a French MEP, Catherine Lalumière. After receiving this report, prime minister Lionel Jospin addressed the Assemblée Nationale on 10 October 1998 and announced his decision to withdraw. He said the Lalumière Report had identified a number of fundamental problems with the agreement, particularly relating to matters of national sovereignty. Madame Lalumière had also concluded that so many reservations were being incorporated into the agreement that any value for French investors would be limited. M. Jospin noted that, in February 1998, the French government had identified respect for cultural differences as a requirement for French support for the agreement[2].
Of equal or greater significance was the importance accorded by Mme. Lalumière to the global protest movement which at that time she attributed to the work and influence of NGOs: ''"For the first time, one is seeing the emergence of a 'global civil society' represented by NGOs which are often based in several states and communicate beyond their frontiers. This evolution is doubtless irreversible. On one hand, organisations representing civil society have become aware of the consequences of international economic negotiations. They are determined to leave their mark on them.
''"Furthermore, the development of the internet has shaken up the environment of the negotiations. It allows the instant diffusion of the texts under discussion, whose confidentiality becomes more and more theoretical. It permits, beyond national boundaries, the sharing of knowledge and expertise. On a subject which is highly technical, the representatives of civil society seemed to us perfectly well informed, and their criticisms well argued on a legal level."''
Mme. Lalumière argued, however, that France should continue to pursue further liberalisation of investment régimes though ''not'' in the OECD. ''"On the one hand, under these conditions it would be impossible to achieve the balancing of the concessions demanded by the firms and, on the other, the objections of the opponents would be just as fierce."''[3]
Withdrawal of the host nation was a devastating blow. However, France was followed by a succession of other nations including Canada and Australia whose governments had been under relentless pressure from civil society to abandon or radically revamp the MAI.
Before the end of 1998, the UK trade minister Brian Wilson began to announce that investment negotiations could be shifted to the WTO.
The failure of the MAI negotiations proved a success for the global movement against the MAI. However, rich governments continue to push for similar investment provisions through regional trade agreements and the World Trade Organization (WTO). At the WTO Ministerial in Cancún in September, 2003, the richer WTO members tried to introduce a Multilateral Investment Agreement (MIA) through the "Singapore" issues. These efforts failed again, however, as a group of more than twenty poor countries united in demanding a fairer trade deal.
★ To minimise diverse state regulations in governing the conditions under which investments by foreign corporations could take place. (In this connection, the agreement embodied acceptance of a compliance régime under which 'liberalization' must proceed forward with no ability to be wound back — the so-called ''ratchet effect''. This would be enforced by so-called ''roll-back'' and ''standstill'' provisions, to ensure that transnational investors would have unhindered access to new markets as they emerged. These provisions required nations to eliminate laws that violated MAI rules — either immediately or over a set period of time — and to refrain from passing any such laws in the future.)
★ To compensate corporations for unfair or discriminatory investment conditions.
★ To allow states and corporations to sue states in international tribunals for unfair investment conditions.
Here is a contemporary breakdown of perceived undesirable parts of the agreement:
"The MAI as currently drafted is built on the principle that international corporate investors should be able to compete with local companies for all the world’s resources, labor, and consumer markets. Translated into international law, this means a standard of national treatment, where governments have to treat foreign investors no less favorably than domestic investors. The MAI will give foreign corporations a right to invest in almost all sectors of nations’ economies, with the exception of national security industries. Countries are also negotiating specific reservations that will allow them to maintain restrictions that would otherwise violate the agreement’s rules.
"In general, however, the MAI will mean that countries cannot prevent large foreign companies from overwhelming smaller local industries. This could cause particular harm in socially and environmentally significant sectors. For example, the Philippines currently bans foreign investment in rural banking, and Honduras limits foreign investors in forestry to a minority stake. Such protective measures would not be allowed under the MAI as it is currently written.
"Once established in a country, foreign investors would be guaranteed equal treatment in the way they are regulated. Other MAI provisions go further than equal treatment. The MAI bars many types of performance requirements, or conditions, even if those conditions are imposed on local companies. Examples of forbidden conditions include requiring investors to form a partnership with a local company and requiring a minimum number of local employees — the types of policies governments use to help ensure that local people benefit from foreign investment. The MAI also lets foreign investors repatriate their assets and profits unrestricted by government controls aimed at cooling down destabilizing investment flows, such as those that contributed to the Mexican peso crash in late 1994.
"The MAI matters because its rules can be enforced. If a foreign investor thinks a country where it has invested is violating the MAI, the investor has a choice: to complain to its own government, which can take the host country to binding international arbitration, or to directly challenge the host country. In either case, the arbitration process is closed — citizens cannot participate — and one-sided, as neither governments nor affected communities can challenge the behavior of investors. This imbalance points out the MAI’s fundamental flaw: despite the need for corporate accountability in the international economy, current versions of the MAI contain no binding obligations on corporate investors." [4]
However after three years of intense negotiations, members of the OECD refused to sign an agreement they felt was too radical a change in the governance of international investment. Despite similar developments in the area of trade, states were unwilling to make their governance of investment more uniform. Public protests against the agreement, including a campaign led by Lori Wallach of Public Citizen's Global Trade Watch, also were influential upon the member states' reluctance to sign and' by the end of 1998, the OECD decided to cease pursuing negotiation of the MAI. Instead, on the initiative of industry advisers to Sir Leon Brittan, the outgoing European Commission vice-president, an attempt would be made to insert the investment agenda into a new "Millennium Round" of trade liberalisation talks to be hosted by the World Trade Organization(WTO)[5]. This change in strategy was to lead to the historic 'Battle of Seattle' protest actions in November 1999 and the controversial Doha Development Round.
"The most effective opposition to the MAI was launched by a wide-ranging coalition of civil society NGOs. These NGOs argued that the MAI would threaten protection of human rights, labor and environmental standards, and Least Developed Countries. A particular concern was that the MAI would result in a race to the bottom among countries willing to lower their labor and environmental standards to attract foreign investment. A crucial turning point occurred when' in February 1997' Ralph Nader's Public Citizen acquired a copy of a OECD draft MAI agreement and put it on the internet. Using a variety of websites, NGOs mobilized a strong and diverse opposition composed of human rights groups, labor and environmental groups, and consumer advocates." Global Political Economy Theory and Practice, , Theodore H., Cohn, , 2005, p. 350 Making profit the world's highest law; the Organization for Economic Cooperation and Development's 1998 draft of the Multilateral Agreement on Investment National, , Joe, Taglieri, Catholic Reporter, 1998
Some countries were disappointed with this failure and have sought to introduce a similar agreement for discussion at the World Trade Organisation (WTO), to be incorporated into the General Agreement on Trade in Services (GATS), but these efforts, too, have met significant protest. One basis of such opposition is outlined in a critical analysis prepared for Canadian universities[6].
1. Parliament of Australia, Joint Standing Committee on Treaties, Report 18 (MAI)[1] page 3, para 1.12
2. UK Parliament Select Committee on European Scrutiny [2]
3. English translation of Lalumière Report, available online [3]
4.
Mark Vallianatos (Friends of the Earth), July, 1997. From the IRC (International Relations Center) [4]
5. C de Brie, ''Watch Out for MAI Mark Two'', Le Monde diplomatique, May 1999 [5]
6. Clift, R. ''Background Paper on the General Agreement on Trade in Services (GATS) and Post-Secondary Education in Canada'' (Nov. 1999)[6]
★ Multilateral Agreement on Investment: Draft Texts and Commentary Official drafts at various stages of the final year's negotiations
★ Official OECD MAI document database In February 2002, the OECD released a large quantity of documents relating to the negotiations
★ Multilateral Agreement on Investment Nine media articles on the MAI.
★ The Lalumière Report in English Non-official online translation of the report which advised the withdrawal of France from the OECD negotiations it was hosting in Paris
★ A civil-society perspective from UK independent journal Red Pepper
★ MAI–The Quiet Debate Australian Broadcasting Corporation's excellent 1997 introductory radio presentation
| Contents |
| Background |
| Secret negotiations |
| How the MAI failed |
| WTO seen as alternative venue for negotiations |
| Main purposes of the agreement |
| The protests |
| Notes |
| External links |
Background
International investment has been taking place in various forms and to different degrees for over a century. There have always been rules in place, most typically through the development of bilateral investment treaties (BITs), which are signed between two countries and which state the desired conditions under which investment can take place between them. The first BIT was signed in 1960 and their numbers have grown steadily since then.
However, with the collapse of the Soviet Union in 1989 and the onset of apparent globalisation, the number of BITs exploded during the 1990s as countries and investors sought more regulation for security, certitude and mobility for their investments. Arguing a need for more secure and stable investment conditions, the then 29-member OECD drafted a copy of the MAI for negotiation between its member states, which planned to regulate investment between themselves and eventually between themselves and poorer non-members in a more uniform, "transparent" and enforceable manner.
It was recognised early by critics that the OECD was more susceptible to direct influence by transnational corporate forces than more representative alternative fora such as UNCTAD and the WTO. This weakness was finally accepted by governments and turned out to be a crucial factor in the MAI's defeat.
Secret negotiations
In May 1995, the OECD began negotiations on a Multilateral Agreement on Investment (MAI). The negotiations took place in secrecy from outsiders from 1995 until 1997 when an OECD source leaked a copy of the draft agreement to a Canadian citizen group. The leaked material prompted criticism that the MAI appeared to establish a new body of universal investment laws to guarantee corporations excessive powers to buy, sell and undertake financial operations all over the world, severely diluting national laws, e.g., on environmental protection, regulation of labour standards and human rights established in developed countries. The draft proposed a NAFTA-style offshore dispute-resolution tribunal in which corporations could sue governments if legislation, e.g., for national health, labor or environment, threatened their interests or were considered to "expropriate" actual or potential assets and/or profits.
However, the negotiations failed in 1998 when first France and then other countries successively withdrew after pressure from a global movement of NGOs, citizens' groups and governments of poor countries. MAI opponents pointed to a perceived threat to national sovereignty and democracy and argued that it would involve participating nations in a "race to the bottom" in environmental and labor standards. The unified global campaign relied heavily on internet communications--the first time that the new technology had been deployed on a large scale both to coordinate information and to channel protest communications to devastating effect.
How the MAI failed
France's withdrawal followed consideration of a report on the negotiations drawn up by a French MEP, Catherine Lalumière. After receiving this report, prime minister Lionel Jospin addressed the Assemblée Nationale on 10 October 1998 and announced his decision to withdraw. He said the Lalumière Report had identified a number of fundamental problems with the agreement, particularly relating to matters of national sovereignty. Madame Lalumière had also concluded that so many reservations were being incorporated into the agreement that any value for French investors would be limited. M. Jospin noted that, in February 1998, the French government had identified respect for cultural differences as a requirement for French support for the agreement[2].
Of equal or greater significance was the importance accorded by Mme. Lalumière to the global protest movement which at that time she attributed to the work and influence of NGOs: ''"For the first time, one is seeing the emergence of a 'global civil society' represented by NGOs which are often based in several states and communicate beyond their frontiers. This evolution is doubtless irreversible. On one hand, organisations representing civil society have become aware of the consequences of international economic negotiations. They are determined to leave their mark on them.
''"Furthermore, the development of the internet has shaken up the environment of the negotiations. It allows the instant diffusion of the texts under discussion, whose confidentiality becomes more and more theoretical. It permits, beyond national boundaries, the sharing of knowledge and expertise. On a subject which is highly technical, the representatives of civil society seemed to us perfectly well informed, and their criticisms well argued on a legal level."''
Mme. Lalumière argued, however, that France should continue to pursue further liberalisation of investment régimes though ''not'' in the OECD. ''"On the one hand, under these conditions it would be impossible to achieve the balancing of the concessions demanded by the firms and, on the other, the objections of the opponents would be just as fierce."''[3]
Withdrawal of the host nation was a devastating blow. However, France was followed by a succession of other nations including Canada and Australia whose governments had been under relentless pressure from civil society to abandon or radically revamp the MAI.
Before the end of 1998, the UK trade minister Brian Wilson began to announce that investment negotiations could be shifted to the WTO.
WTO seen as alternative venue for negotiations
The failure of the MAI negotiations proved a success for the global movement against the MAI. However, rich governments continue to push for similar investment provisions through regional trade agreements and the World Trade Organization (WTO). At the WTO Ministerial in Cancún in September, 2003, the richer WTO members tried to introduce a Multilateral Investment Agreement (MIA) through the "Singapore" issues. These efforts failed again, however, as a group of more than twenty poor countries united in demanding a fairer trade deal.
Main purposes of the agreement
★ To minimise diverse state regulations in governing the conditions under which investments by foreign corporations could take place. (In this connection, the agreement embodied acceptance of a compliance régime under which 'liberalization' must proceed forward with no ability to be wound back — the so-called ''ratchet effect''. This would be enforced by so-called ''roll-back'' and ''standstill'' provisions, to ensure that transnational investors would have unhindered access to new markets as they emerged. These provisions required nations to eliminate laws that violated MAI rules — either immediately or over a set period of time — and to refrain from passing any such laws in the future.)
★ To compensate corporations for unfair or discriminatory investment conditions.
★ To allow states and corporations to sue states in international tribunals for unfair investment conditions.
Here is a contemporary breakdown of perceived undesirable parts of the agreement:
"The MAI as currently drafted is built on the principle that international corporate investors should be able to compete with local companies for all the world’s resources, labor, and consumer markets. Translated into international law, this means a standard of national treatment, where governments have to treat foreign investors no less favorably than domestic investors. The MAI will give foreign corporations a right to invest in almost all sectors of nations’ economies, with the exception of national security industries. Countries are also negotiating specific reservations that will allow them to maintain restrictions that would otherwise violate the agreement’s rules.
"In general, however, the MAI will mean that countries cannot prevent large foreign companies from overwhelming smaller local industries. This could cause particular harm in socially and environmentally significant sectors. For example, the Philippines currently bans foreign investment in rural banking, and Honduras limits foreign investors in forestry to a minority stake. Such protective measures would not be allowed under the MAI as it is currently written.
"Once established in a country, foreign investors would be guaranteed equal treatment in the way they are regulated. Other MAI provisions go further than equal treatment. The MAI bars many types of performance requirements, or conditions, even if those conditions are imposed on local companies. Examples of forbidden conditions include requiring investors to form a partnership with a local company and requiring a minimum number of local employees — the types of policies governments use to help ensure that local people benefit from foreign investment. The MAI also lets foreign investors repatriate their assets and profits unrestricted by government controls aimed at cooling down destabilizing investment flows, such as those that contributed to the Mexican peso crash in late 1994.
"The MAI matters because its rules can be enforced. If a foreign investor thinks a country where it has invested is violating the MAI, the investor has a choice: to complain to its own government, which can take the host country to binding international arbitration, or to directly challenge the host country. In either case, the arbitration process is closed — citizens cannot participate — and one-sided, as neither governments nor affected communities can challenge the behavior of investors. This imbalance points out the MAI’s fundamental flaw: despite the need for corporate accountability in the international economy, current versions of the MAI contain no binding obligations on corporate investors." [4]
The protests
However after three years of intense negotiations, members of the OECD refused to sign an agreement they felt was too radical a change in the governance of international investment. Despite similar developments in the area of trade, states were unwilling to make their governance of investment more uniform. Public protests against the agreement, including a campaign led by Lori Wallach of Public Citizen's Global Trade Watch, also were influential upon the member states' reluctance to sign and' by the end of 1998, the OECD decided to cease pursuing negotiation of the MAI. Instead, on the initiative of industry advisers to Sir Leon Brittan, the outgoing European Commission vice-president, an attempt would be made to insert the investment agenda into a new "Millennium Round" of trade liberalisation talks to be hosted by the World Trade Organization(WTO)[5]. This change in strategy was to lead to the historic 'Battle of Seattle' protest actions in November 1999 and the controversial Doha Development Round.
"The most effective opposition to the MAI was launched by a wide-ranging coalition of civil society NGOs. These NGOs argued that the MAI would threaten protection of human rights, labor and environmental standards, and Least Developed Countries. A particular concern was that the MAI would result in a race to the bottom among countries willing to lower their labor and environmental standards to attract foreign investment. A crucial turning point occurred when' in February 1997' Ralph Nader's Public Citizen acquired a copy of a OECD draft MAI agreement and put it on the internet. Using a variety of websites, NGOs mobilized a strong and diverse opposition composed of human rights groups, labor and environmental groups, and consumer advocates." Global Political Economy Theory and Practice, , Theodore H., Cohn, , 2005, p. 350 Making profit the world's highest law; the Organization for Economic Cooperation and Development's 1998 draft of the Multilateral Agreement on Investment National, , Joe, Taglieri, Catholic Reporter, 1998
Some countries were disappointed with this failure and have sought to introduce a similar agreement for discussion at the World Trade Organisation (WTO), to be incorporated into the General Agreement on Trade in Services (GATS), but these efforts, too, have met significant protest. One basis of such opposition is outlined in a critical analysis prepared for Canadian universities[6].
Notes
1. Parliament of Australia, Joint Standing Committee on Treaties, Report 18 (MAI)[1] page 3, para 1.12
2. UK Parliament Select Committee on European Scrutiny [2]
3. English translation of Lalumière Report, available online [3]
4.
Mark Vallianatos (Friends of the Earth), July, 1997. From the IRC (International Relations Center) [4]
5. C de Brie, ''Watch Out for MAI Mark Two'', Le Monde diplomatique, May 1999 [5]
6. Clift, R. ''Background Paper on the General Agreement on Trade in Services (GATS) and Post-Secondary Education in Canada'' (Nov. 1999)[6]
External links
★ Multilateral Agreement on Investment: Draft Texts and Commentary Official drafts at various stages of the final year's negotiations
★ Official OECD MAI document database In February 2002, the OECD released a large quantity of documents relating to the negotiations
★ Multilateral Agreement on Investment Nine media articles on the MAI.
★ The Lalumière Report in English Non-official online translation of the report which advised the withdrawal of France from the OECD negotiations it was hosting in Paris
★ A civil-society perspective from UK independent journal Red Pepper
★ MAI–The Quiet Debate Australian Broadcasting Corporation's excellent 1997 introductory radio presentation
This article provided by Wikipedia. To edit the contents of this article, click here for original source.
psst.. try this: add to faves
