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(en) Joint NGO statement on the agreement of investment (MAI)

From Ilan Shalif <gshalif@netvision.net.il>
Date Wed, 25 Feb 1998 19:46:52 +0200

     A - I N F O S  N E W S  S E R V I C E

From: aut-op-sy@jefferson.village.Virginia.EDU
NGO/ OECD Consultation on the MAI Paris: 27 October, 1997
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

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

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.


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


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 suspended during this

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

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

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.


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.


(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.

List of 65 Non-governmental organisations supporting this statement
not included with this message.

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