Date: Thu, 12 Feb 1998 14:16:18 -0500 (EST) From: Andrea Durbin Subject: 565 Groups say No to MAI JOINT NGO STATEMENT ON THE MULTILATERAL AGREEMENT ON INVESTMENT TO THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT ENDORSED BY 565 ORGANIZATIONS IN 68 COUNTRIES INTRODUCTION As a coalition of development, environment, human rights, labor, consumer and women's 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); the Beijing Declaration on Women 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 suspended 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 pressured 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.