Select Committee on Environmental Audit First Report


The main features of the draft Multilateral Agreement on Investment were:

Non-discrimination: parties to the agreement, at a national and sub-national level, would not discriminate between foreign and domestic investors (national treatment) nor between foreign investors from different countries (most favoured nation treatment). Foreign investors would be offered the better of these treatments. Both de facto as well as de jure discrimination would be banned.

Performance requirements: the draft agreement prohibited the attachment of conditions (such as technology transfers, local sourcing, specified export levels or mandatory joint venture formation with local participation) to any foreign investment except voluntary ones offered in return for an 'advantage' provided by the host state.

Expropriation: Parties to the agreement would provide prompt and fair compensation for the expropriation, or measures tantamount to the expropriation, of foreign investment.

Dispute settlement: the agreement made provision for state Parties to the agreement, and investors (located in Parties), to initiate claims against other Parties and for these to be referred to international arbitration, under terms set out in the agreement, in the event of failure to resolve the matter by other means.

Scope: Both the making of investments ('pre-establishment' or 'market access') and the investment itself were covered in the draft text. Additionally a broad definition of investment was used covering, for example, both intellectual property and portfolio investment as well as more traditional assets. The agreement was designed to cover Parties' whole economies (a 'top-down' approach) subject to (a) general exceptions (such as for national security) and (b) negotiated country-specific exceptions (ranging from Austria's chimney sweeps to all the USA's non-conforming measures at State level).

Continuous effort: Parties to the agreement would commit not to reintroduce restrictions into those sectors subject to liberalisation - 'standstill'; and there was a presumption, rather than an obligation, that Parties would aim towards phasing out restrictions with regard to those sectors for which exemptions had initially been agreed - 'roll-back'.

Transparency: Parties would be obliged to publish promptly any relevant laws, regulations, procedures or judicial decisions as well as relevant policies.

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Prepared 8 February 1999