Select Committee on Trade and Industry Annxes to the Report

Follow-up Questions


A general note on progress made since March 1999 with a multilateral agreement on investment would be helpful, together with a report on progress on review of the OECD Guidelines for Multinational Enterprises and measures taken to increase awareness of the Guidelines

  Following the demise of the OECD Multilateral Agreement on Investment negotiations in 1998 the UK and our EU partners have discussed our approach to an international agreement in investment. The EU position on any future multilateral investment negotiations was agreed at the EU Council in October 1999. It states that:

    "The WTO should begin negotiations aiming at establishing a multilateral framework of rules governing international investment, with the objective of securing a stable and predictable climate for foreign direct investment world-wide. Such a framework should focus on foreign direct investment to the exclusion of short-term capital movements, and has to ensure the right conditions for international investment to be conducive to sustainable development, and preserve the ability of host countries to regulate the activity of investors on their respective territories, in accordance with basic WTO principles, also taking into account the concerns expressed by civil society, including those regarding investors' responsibilities. Negotiations should address the issues of access to investment opportunities and non-discrimination, protection of investment, and stable and transparent business climate."

  The EU position reflects our experience from the MAI negotiations, for example by conducting negotiations in the WTO negotiations developing countries would be involved; the MAI used a "top down" approach (every sector was included unless it was explicitly made an exception), but the EU proposes that a WTO negotiation take a "bottom up" approach (participants would make specific negotiated commitments regarding access to sectors for investment). In addition, unlike the MAI, the WTO would have only state to state dispute settlement procedures.

  The Government continues to believe that there is much to gain for all WTO members from the inclusion of investment in any future WTO new Round. Following the WTO Ministerial in Seattle the EU recognised that it needed to further explain its position on investment. We have therefore been discussing the EU and other countries' views informally with other WTO members, particularly developing countries. The WTO Working Group on Trade and Investment is also proving to be a useful forum for a discussion of investment issues and the merits of multilateral rules.

  OECD Ministers agreed the revised Guidelines for Multinational Enterprises at the end of June 2000. The UK was an active participant in the negotiations and will continue to be so in their implementation. The revised Guidelines contain significant improvements to the previous text including references to all internationally recognised core labour standards; more comprehensive references to companies' environmental performance; a recommendation on human rights; and clearer guidance for OECD National Contact Points (NCPs) setting out their roles and responsibilities in promoting the Guidelines. Since the conclusion of the negotiations the UK NCP has been consulting widely, including with business, trade unions and non-governmental organisations, on how best to promote the Guidelines in the UK. As part of this work the NCP will be launching a website and publishing a booklet on the Guidelines to promote awareness and also explain how guidelines-related concerns about business behaviour can be raised with the NCP. All OECD NCPs met in September 2000 to exchange views and experiences on implementation and will continue to do so on a regular basis.

Ethical Trading, Sixth Report of 1998-99, HC 235: Government Response, Seventh Special Report, HC 528

  1.  The Committee heard oral evidence in February 1999 from a number of those involved in ethical trading issues, including the Government-sponsored Ethical Trading Initiative, as the third part of a general programme of inquiry into ethical trade, following Reports on Strategic Export Controls and the Multilateral Agreement on Investment.

  2.  It reported in March 1999, commenting on a range of issues including the level of Government support for ethical trading, the EU's preferential tariff scheme and labelling. The Government's Reply, received in May 1999, was broadly supportive, although cautious on issues such as social labelling or products and linkage between trade policy and labour standards.

  3.  In advance of the Liaison Committee Report, the Committee sought in February 2000 an update from the DTI on progress generally and in relation to specified areas of concern. This was provided in March 2000 and is printed below.

  4.  In March 2000 the European Scrutiny Committee formally requested an opinion from the Committee on a November 1999 Commission Communication on fair trade. The Committee forwarded an opinion in December 2000.

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