3.  With the objective of developing a balanced investment agreement TUAC tabled several demands to be met in the labour standards area. These should not be seen as minimum demands, that if met would have resulted in trade union acceptance of the MAI. Rather, these were "threshold" points that would have had to be dealt with satisfactorily, in order to discuss other areas of concern. The "threshold" labour proposals include: [86]

(a)  the inclusion of a binding clause in the MAI, subject to dispute settlement, such that governments would not seek to attract investment by suppressing domestic labour standards or by violating internationally recognised core workers' rights. Moreover, trade unions should have access to the dispute settlement mechanisms;

(b)  a forceful reference in the Preamble of the MAI in which governments affirm their support for both core labour standards, and the 1998 ILO Declaration on Fundamental Principles and Rights at Work, alongside the OECD Guidelines for Multinational Enterprises;

(c)  the annexing of the full OECD Guidelines to the MAI itself, and not the Final Act;

(d)  the establishment of National Contact Points to enforce the Guidelines, which should be a legally binding element of the Agreement for all Parties without exception;

(e)  the wording of the text so that non-Members acceding to the MAI would automatically adopt the Guidelines.

TUAC also made clear that implementation and enforcement mechanisms for the OECD Guidelines would have to be radically improved.

  4.  Turning to trade union concerns beyond the immediate labour issues, TUAC favoured the narrowing of the definition of investment to cover long-term investment, with a specific provision allowing the imposition by governments of controls over short-term capital movements. As a general rule open-ended national-level exceptions should be allowed, unbound by "standstill" and "rollback" mechanisms, including those for public and not for profit sectors, encompassing health and social services, education and public procurement. TUAC also had concerns around the investor to state dispute settlement mechanism and favoured a narrowing of that provision. The "expropriation" clause should be revised to exclude measures "tantamount to expropriation" from its provisions, while specifically excluding from its coverage strike action by workers. In tandem a clause emphasising governments' "right to regulate" should be inserted, and where this may lead to discriminatory measures in key areas, it should not be open to claims for expropriation. In addition, to help non-OECD countries to accede to the Agreement, all remaining "performance requirements" should be revised.

RECENT DEVELOPMENTS, MOVING BEYOND THE MAI?

  5.  Recent developments surrounding the MAI point to the fact that in the short-term at least the MAI as originally envisaged by negotiators is now dead. Notwithstanding the recent statements by some governments in favour of shifting negotiations to the WTO, this looks unlikely in the short-term at least. Furthermore, the failure of negotiations at the OECD means that early negotiations at the WTO are less likely not more likely.

  6.  There appeared to be a consensus among participants at the 20 October 1998 informal meeting of OECD governments on the MAI that informal talks, not negotiations, would continue at the OECD at least for the time being. Furthermore, it was agreed that a further informal meeting of governments (minus France) would be held sometime in December, that would include a consultative session with representatives of trade unions, business and NGO's.

  7.  Within this scenario, it appears that governments will continue working for some framework of investment rules. The language of the Chairman's statement following the 22-23 October OECD Executive Committee in Special Session: "There was a consensus among delegates on the need for and value of a multilateral framework for investment" points towards that. Presumably the idea is that this could then form the basis of future discussions on binding rules when the time is right in any chosen forum. As regards labour and environment standards, Donald Johnston, OECD General Secretary said, among other things, at the 20 October meeting: "It is also important to achieve a balance between investors' rights and responsibilities and to ensure that the framework is consistent with promoting labour and environmental standards and sustainable development."

  8.  The OECD, if it is to pursue work on a possible framework for investment will require a new mandate; in part explaining the proposal for a further informal meeting sometime in December. Discussions over the available options open to governments will be informed, in all likelihood by a paper prepared by the OECD Secretariat. It is thought that this will note those issues in the last consolidated text of the MAI where agreement has been reached, and that could form part of a new investment framework. It will then list those issues where controversy exists, and offer possible solutions for governments to explore.

A NEW MULTILATERAL FRAMEWORK FOR INVESTMENT AN OPPORTUNITY OR THREAT?

  9.  Following the debacle of the MAI, governments would be wise to see this moment as an opportunity to re-think, and then re-cast their work on investment into a vehicle that would be acceptable to trade unions and civil society, rather than just the business community. TUAC is therefore keenly awaiting the planned consultative meeting with representatives of trade unions, business and NGO's to judge governments against that yardstick.

  10.  In parallel the current Review of the OECD Guidelines for Multinational Enterprises offers a further opportunity to strengthen the Organisation's governance mechanisms for multinational enterprises, while helping to re-build its credibility. Concrete measures are required to substantially increase the enforceability by governments of the Guidelines alongside the adherence to their provisions by multinational enterprises. This includes meeting the existing TUAC demands for institutional reforms to the National Contact Points and the CIME itself, combined with required textual changes.

  11.  Opportunities do therefore exist to change the current climate for the better, and to move forward the debate around balanced rules for investment. The risk, however, is that governments will retreat behind the procedures and processes that gave rise to the original MAI. Such a move would be perceived as a threat by the wider world, and fan the flames of opposition to any multilateral investment rules as well as the organisations developing them.

29 October 1998