INVESTMENT
46. The issue of multilateral rules on foreign direct
investment is back on the agenda as was indicated by the Government
during our inquiry into the OECD MAI. We noted that both Trade
and Environment Ministers now disavowed the OECD process with
Mr Caborn saying it "was wrong and we drew a line under it".[88]
We retain the impression that the line had been drawn by the withdrawal
of the French Government from the negotiations and that the UK
Government had been sanguine about the prospects for eventual
success.[89]
47. The key differences between the OECD proposals
and what seems likely to be the basis for WTO negotiations (if
agreed at all) appear to be:
- the unlikelihood of an investor-state dispute mechanism
being negotiable;
- the introduction of differentiation based on legitimate
policy criteria of the host government (as distinct from discrimination
on the grounds of foreign ownership)[90]
- the reversal of the implementation process from
top-down (whereby all economic sectors are covered unless specifically
excluded);[91] and
- an emphasis, in the conclusions of the General
Affairs Council at least, on investor responsibilities.[92]
These changes do reflect the thrust of our conclusions
on the OECD MAI of last Session.[93]
48. The WWF told us that they remained convinced
that the WTO was the wrong place for negotiations on investment
rules because regulation (of investment and regulatory incentives,
of transfer pricing, restrictive business practices and the environmental
behaviour of multinational corporations) and the specific promotion
of investment flows to developing countries was at least as important
to improving foreign direct investment as liberalisation. And
regulation was no part of the mandate or culture of WTO negotiators.
NGO witnesses concluded that although the OECD MAI experience
had brought about some changes in language, stated aims and process,
there was no concrete evidence that the overall focus of UK policy
had changed.[94]
49. We remain unconvinced of the need for multilateral
rules for investment and wary of the same risks that were identified
for us during our inquiry into the OECD MAI. Witnesses from NGOs
pointed to the existing network of bilateral treaties and also
to UNCTAD's conclusion that there was no discernible link between
levels of liberalisation and investor protection and levels of
investment flows.
88 Q10 Back
89 See
Appendix to the Report Back
90 Ev
p. 22 Back
91 Commission
communication, p 10 Back
92 Ev
p. 107 (c) Back
93 See
Appendix to the Report Back
94 Ev
p. 23 Back
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