The Trade and Industry Committee has agreed to the following Report:—

14. With the increasing globalisation of the world economy, there has been a growing tendency for companies to want to operate in more than one country. Up to now protection to foreign investors from discriminatory policies of the host government has been provided, if at all, by means of a web of international investment agreements and understandings, usually signed between developed and developing countries.[1] Since the 1970s there have been efforts to protect foreign investment from discriminatory actions and policies by host governments by means of a multilateral investment agreement.[2] The Organisation for Economic Co-operation and Development (OECD) commenced its study of the issue in 1991; negotiation of the Multilateral Agreement on Investment (MAI), referred to throughout this Report as the draft MAI, began in May 1995.[3] It was initially hoped that the negotiations would be concluded by May 1997.[4] That deadline was extended first to the April 1998 OECD Ministerial meeting and then, following a period of "reflection and further consultation" from April to October 1998, it was expected that the May 1999 Ministerial meeting would be the final deadline.[5] Negotiators were due to meet on 20 October 1998 for the first time since April, but, on 14 October, and without formal notice being given to other OECD members, the French Government announced its withdrawal from the negotiations.[6] The UK Government's reaction was to describe the successful completion of the negotiations as "most unlikely".[7]

15. The profile of the negotiations of the draft MAI, low at first, increased considerably during the second half of 1997 and in 1998. This change came about largely through the efforts of non-governmental organisations (NGOs) throughout the world who, rightly or wrongly, were alarmed at various aspects of the draft Agreement and complained that it was being negotiated in secret.[8] In this country, the MAI Coalition, formed during 1998, brought together leading NGOs, trade unions, representatives of local authorities, churches and others to express their concerns, particularly to parliamentarians.[9] Numerous parliamentary questions, Early Day Motions and adjournment debates have reflected these concerns.[10] The European Commission shares competency for the negotiation of the draft MAI with EU member states and, consequently, the European Legislation Committee heard evidence from Barabara Roche MP, Under-Secretary of State, DTI on the proposed agreement on 8 July 1998.[11]

16. We decided in July 1998 to undertake an inquiry into ethical trade policies, considering separately strategic export controls (upon which we reported on 2 December),[12] ethical trading and the draft MAI. The latter strand of our inquiry has proceeded simultaneously with that undertaken by the Environmental Audit Committee. While it has inquired into the process by which the draft MAI has been negotiated, particularly relating to environmental concerns, we have considered the reasons why OECD members have failed to conclude the negotiations of the draft Agreement and the lessons which can be learnt from the present initiative if negotiations of a multilateral investment agreement commence in an alternative forum in future. We have not attempted to comment on every proposed clause of the draft MAI, nor have we set out to discover and analyse the positions of each negotiating partner on every aspect of the draft text.[13]

17. We heard oral evidence from Consumers International; the International Chamber of Commerce (UK) (ICC(UK)); the Local Government Association's International Bureau (LGA); and Brian Wilson MP, Minister for Trade, DTI, on November 17. We have received written memoranda from a range of business, labour and academic groups as well as from several NGOs, for which we are grateful. We have also been able to draw upon a remarkable archive of information relating to the draft MAI posted on the internet by the OECD, many NGOs and other organisations, as well as the Report and associated Minutes of Evidence of the International Trade, Trade Disputes and Investment sub-committee of the Standing Committee on Foreign Affairs and International Trade of the Canadian House of Commons.[14]

2  Ev, p37 paragraph 8, p60 paragraph 10 Back

3  Ev, p25 paragraph 1, p76 paragraph 1.12; World Wildlife Fund briefing paper, Oct 96 Back

4  Paper by J Huner to Chatham House Conference on Trade, Industry and the Environment, Oct 98 Back

5  Ev, p25 paragraph 2 Back

6  Ev, p35 paragraph 2, p37 question 6; The Guardian, 15 Oct 98, p20 Back

7  Ev, p35 paragraph 4; Brian Wilson Voices Support for New Rules on Investment, DTI Press Notice P/98/799, 21 Oct 98 Back

8  Q2; Ev, p55 paragraph 5.5, p76 paragraph 1.12; for an alternative view on secrecy, see Q72 Back

9  Ev, p68 footnote 13, pp75-6 paragraphs 1.1-1.6  Back

10  Ev, p27 paragraph 22 Back

11  Ibid Back

12  Trade and Industry Committee, Second Report, Session 1998-99, Strategic Export Controls, HC 65 Back

13  The April 1998 draft text (DAFFE/NM/(98)2/REV1) (hereafter Draft MAI), and a commentary to it

(DAFFE/MAI/NM(98)4/REV1) (hereafter Commentary), are available on the internet at

www.oecd.org/daf/cmis/mai/negtext.htm Back

14  See Paper by J. Huner to Chatham House conference on Trade, Investment and the Environment, Oct 98; for the Canadian Report see www.parl.gc.ca; useful links can be found at www.rtk.net:80/preamble/mai/interweb.html Back