MAI Statement - October, 1997
JOINT NGO STATEMENT ON THE MULTILATERAL
AGREEMENT ON INVESTMENT (MAI)
NGO/ OECD Consultation on the MAI Paris: 27 October, 1997
INTRODUCTION
As a coalition of development, environment and consumer groups from
around the world, with representation in over 70 countries, we
consider the draft Multilateral Agreement on Investment (MAI) to be a
damaging agreement which should not proceed in its current form, if at
all.
There is an obvious need for multilateral regulation of investments in
view of the scale of social and environmental disruption created by
the increasing mobility of capital. However, the intention of the MAI
is not to regulate investments but to regulate governments. As such,
the MAI is unacceptable.
MAI negotiations began in the OECD in the Spring of 1995, more than
two years ago, and are claimed to be substantially complete by the
OECD. Such negotiations have been conducted without the benefit of
participation from non-OECD countries and civil society, including
non-governmental organizations representing the interests of workers,
consumers, farmers or organizations concerned with the environment,
development and human rights.
As a result, the draft MAI is completely unbalanced. It elevates the
rights of investors far above those of governments, local communities,
citizens, workers and the environment. The MAI will severely undermine
even the meagre progress made towards sustainable development since
the Rio Earth Summit in 1992.
The MAI is not only flawed in the eyes of NGOs, but conflicts with
international commitments already made by OECD member countries:
The MAI fails to incorporate any of the several relevant international
agreements such as the Rio Declaration; Agenda 21; UN Guidelines for
Consumer Protection (1985); the UNCTAD Set of Multilaterally Agreed
Principles for the Control of Restrictive Business Practices (1981);
and the HABITAT Global Plan of Action.
The MAI fails to comply with OECD commitments to integrate economic,
environmental and social policies (1).
The MAI removes responsibilities on transnational enterprises which
were previously agreed by the OECD under the OECD Guidelines for
Multilateral Enterprises 1976 (2).
The exclusion of developing countries and countries in transition from
the negotiations is inconsistent with OECD policy on development
partnerships (3).
Problems with the MAI stem both from the broad restrictions it places
on national democratic action, and from its failure to include
sufficient new systems of international regulation and accountability.
As the MAI stands, it does not deserve to gain democratic approval in
any country. All the groups signing this statement will campaign
against its adoption unless changes, including those cited below, are
incorporated into the body of the MAI.
SUBSTANTIVE CONCERNS
As drafted, the MAI does not respect the rights of countries - in
particular countries in transition and developing countries -
including their need to democratically control investment into their
economies.
The level of liberalisation contained in the MAI has already been
opposed as inappropriate by many developing countries. However,
non-OECD countries are under increasing pressure to join.
There are differing investment and development needs of OECD and
non-OECD countries. In particular, the potential for economic
diversification and development of the developing countries -
especially the least developed countries - and countries in transition
would be severely undermined by the provisions of the MAI. The
standstill principle would cause particular problems for countries in
transition, many of which have not yet developed adequate business
regulation.
The MAI's withdrawal provision would effectively bind nations to one
particular economic development model for fifteen years; prevent
future governments from revising investment policy to reflect their
own assessment of the wisest economic course; and force countries to
continue to abide by the agreement even if there is strong evidence
that its impact has been destructive.
The MAI contains no binding, enforceable obligations for corporate
conduct concerning the environment, labour standards and
anti-competitive behaviour. The MAI gives foreign investors exclusive
standing under a legally binding agreement to attack legitimate
regulations designed to protect the environment, safeguard public
health, uphold the rights of employees, and promote fair competition.
Further, citizens, indigenous peoples, local governments and NGOs do
not have access to the dispute resolution system, and subsequently can
neither hold multinational investors accountable to the communities
which host them, nor comment in cases where an investor sues a
government.
The MAI will be in conflict with many existing and future
international, national and sub-national, laws and regulations
protecting the environment, natural resources, public health, culture,
social welfare and employment laws; will cause many to be repealed;
and will deter the adoption of new legislation, or the strengthening
of existing ones.
The MAI is explicitly designed to make it easier for investors to move
capital, including production facilities, from one country to another;
despite evidence that increased capital mobility disproportionately
benefits multinational corporations at the expense of most of the
world's peoples.
WE CALL ON THE OECD AND NATIONAL GOVERNMENTS TO:
With regard to substantive concerns:
1) Undertake an independent and comprehensive assessment of the
social, environmental, and development impact of the MAI with full
public participation. The negotiations should be uspended during this
assessment.
2) Require multinational investors to observe binding agreements
incorporating environment, labour, health, safety and human rights
standards to ensure that they do not use the MAI to exploit weak
regulatory regimes. Ensure that an enforceable agreement on investor
responsibilities takes precedence over any agreement on investor
rights.
3) Eliminate the investor state dispute resolution mechanism and put
>into place democratic and transparent mechanisms which ensure that
civil society, including local and indigenous peoples, gain new powers
to hold investors to account.
4) While none of the undersigned NGOs object to the rights of
investors to be compensated for expropriation by a nation state, there
are adequate principles of national law and jurisprudence to protect
investors in circumstances such as these. The current MAI exceeds
these well accepted concepts of direct expropriation, and ventures
into areas undermining national sovereignty. We therefore request that
OECD members eliminate the MAI's expropriation provision so that
investors are not granted an absolute right to compensation for
expropriation. Governments must ensure that they do not have to pay
for the right to set environmental, labour, health and safety
standards even if compliance with such regulations imposes significant
financial obligations on investors.
With regard to process concerns:
1) Suspend the MAI negotiations and extend the 1998 deadline to allow
sufficient time for meaningful public input and participation in all,
countries.
2) Increase transparency in the negotiations by publicly releasing the
draft texts and individual reservations and by scheduling a series of
on going public meetings and hearings in both member and non member
countries, open to the media, parliamentarians and the general public.
3) Broaden the active participation of government departments in the
official negotiations beyond state, commerce and finance to a broader
range of government agencies, ministries and parliamentary committees.
4) Renegotiate the terms of withdrawal to enable countries to more
easily and rapidly withdraw from the agreement when they deem it in
the interest of their citizens. Developing countries and countries in
transitions which have not been a party to the negotiations must not
be pressurised to join the MAI.
CONCLUSION
The current MAI text is inconsistent with international agreements
signed by OECD countries, with existing OECD policies, and with
national laws to promote sustainable development. It also fails to
take into account important work carried out by investment experts and
official bodies such as the UNCTAD "development
friendliness" criteria for investment agreements (4) and other
work on investor responsibility.
If the OECD policy statements are to have any meaning, the above
provisions must be fully integrated in the MAI with the same legal
force as those on economic liberalisation.
Given our grave concerns about the MAI and the unrealistically short
time frame within which the MAI is being concluded, we look to the
OECD and its member governments to fundamentally reconsider both the
process and substance of the draft agreement. We call on the OECD to
make a specific and detailed written response to our concerns. We also
call on the OECD to avoid talking publicly about its consultations
with NGOs without also talking about the serious concerns raised at
those consultations.
Finally, we will continue our opposition to the MAI unless these
demands are met in full.
Notes:
(1) OECD Ministerial Communique May 1997 (2) OECD Code of Conduct for
Multinational Enterprises, Paris 1992 (3) "Shaping the 21st
Century: The Contribution of Development Cooperation", OECD 1997.
(4) UNCTAD, World Investment Report 1997; UNCTAD Expert Meeting,"
Development Friendliness Criteria for Investment Frameworks",
1997.
*****
/s/ Mike Dolan, Field Director, Global Trade Watch, Public Citizen
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