A4-0392/97

Resolution on relocation and foreign direct investment in third countries

The European Parliament,

- having regard to the deliberations at the public hearing held on this subject on 26 and 27 May 1997 by the Committee on External Economic Relations,

- having regard to its resolution of 9 February 1994 on the introduction of a social clause in the unilateral and multilateral trading system ((OJ C 61, 28.2.1994, p. 89.)),

- having regard to its resolution of 15 December 1994 on the conclusion of the Uruguay Round and the future activities of the WTO ((OJ C 18, 23.1.1995, p. 165.)),

- having regard to its resolution of 14 December 1995 on the communication from the Commission entitled: 'A level playing field for direct investment world-wide' ((OJ C 17, 22.1.1996, p. 175.)),

- having regard to its resolution of 13 November 1996 on industrial restructuring and relocation in the European Union ((OJ C 362, 2.12.1996, p. 147.)),

- having regard to Rule 148 of its Rules of Procedure,

- having regard to the report of the Committee on External Economic Relations (A4-0294/97),

- having regard to the second report of the Committee on External Economic Relations (A4-0392/97),

A. whereas globalization of trade, production and investment is an opportunity which should be turned to good account while limiting its adverse effects,

B. whereas we have entered the era of the information society, which is characterized by global information and communication networks; whereas the information society will unfold a new economic and social potential; global electronic commerce will result in greater efficiency, increased responsiveness and cost reductions for Europe's enterprises and allow small companies and newcomers on to the market and enable them to extend their reach far beyond what was previously possible; whereas, consequently, the problem of relocation will, in future, need to be analysed in this context,

C. whereas relocation is a logical economic development, which should not be approached from an ideological point of view,

D. whereas the connections between foreign direct investment (FDI) and relocation are complex, whereas the scale of the relocation phenomenon is difficult to measure accurately, and whereas this may lead to unfounded value judgments,

E. acknowledging that considerable progress has been made over the last few years as regards knowledge of the EU's FDI and whereas further methodological and statistical efforts must be made as part of EUROSTAT's working programme,

F. whereas available data suggest that, unlike in the 1970s and 1980s, relocation decisions have now for a number of years been aimed at capturing new markets rather than defensively seeking an advantage in terms of labour costs,

G. whereas relocations designed to conquer fresh markets may, by repatriating profits, underpin employment in the European Union,

H. whereas wage costs are not always the main factors behind relocation,

I. whereas combating defensive relocation must include developing a policy of innovation and training and strengthening links between distributors, manufacturers and subcontractors; whereas such measures may result in relocations back to the country of origin,

J. whereas, while certain forms of relocation represent a logical and healthy economic development, others take place in response to subsidizing measures or tax or social incentives which affect competition and also sometimes have a negative impact on employment,

K. whereas the basis for measures in the area of trade and investment must be shifted from the relatively narrow perspective of growth and the maintenance of free trade and freedom of investment towards the more complex objective of sustainable development, which means that economic efficiency, macroeconomic stability, social justice and environmental sustainability must all be taken into account,

L. whereas, in this regard, the uncoordinated objectives of the public authorities with respect to integrated regional markets have the same effect as competitive deregulation, and this is to be avoided,

M. whereas the Structural Funds should increasingly focus on creating conditions to ensure competitiveness, including basic transport and communications infrastructure, vocational training and promoting the technological research and innovation activities of undertakings established in less advantaged regions in order to boost their capacity to compete with emerging-economy developing countries,

N. whereas competitive devaluation has led not only to instability of trade but also a marked increase in defensive relocations within the Union,

O. whereas the inclusion of countries such as Italy, Spain and Portugal in the first batch of accessions to the single currency will play a vital role in limiting 'defensive' relocation,

P. whereas, in the present context of globalization, multinationals must also become vectors of social development around the world as part of their corporate culture,

Q. having regard to the code of conduct drawn up by the US administration for American multinationals,

1. Once more calls for social and environmental clauses to be included in international agreements and WTO rules;

2. Recommends that the Commission draw up a code of conduct for European multinationals, based on:

- the promotion of trade union freedom and collective bargaining,

- combating forced labour,

- combating child labour,

- the elimination of discrimination in employment and careers, and equal pay for men and women,

in compliance with the relevant ILO conventions (87, 98, 138, 29, 100 and 111), and with environmental standards;

3. Believes that the code should not be compulsory, but that the names of companies which undertake to respect its provisions should be published in the Official Journal of the European Communities;

4. Calls on the Member States to ensure that their credit insurance institutions grant advantages to investments abroad in projects which respect human rights and sustainable development;

5. Recommends that the ILO and the European Union should cooperate closely on this subject; in particular where a European company wishes, in the context of such a project, to take part in the economic development of a region, specific aid should accompany such initiatives, along the lines of the ILO's IPEC (International Programme on Elimination of Child Labour);

6. Calls for coordinated action between the governments of the Member States and the Commission within the OECD to amend the OECD's guiding principles (code of investments); where the country in which a multinational is being established does not have appropriate labour law provisions, a minimum code should be adopted, referring to the code which should apply in the Community;

7. Calls for a conclusion to the Multilateral Agreement on Investments (MAI) within the framework of the OECD;

8. Calls for the Multilateral Agreement on Investments (MAI), currently under negotiation within the framework of the OECD, not to restrict the right of States to monitor respect for human rights and the environment by transnational companies operating on their territory;

9. Considers it essential that the ILO create, as proposed, an international social label to put an end to the prevailing proliferation in this area; should it fail to do so, the Commission should consider establishing a European social label;

10. Welcomes the United Kingdom's decision to accept the social provisions of the Amsterdam Treaty and the directives already adopted by virtue of the agreement; considers that social harmonization in the Union should now be speeded up but that pension and social protection systems will, although this is to be regretted, remain for a long time the responsibility of the Member States;

11. Considers that Directive 94/45/EC on a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees should be modified; regrets the fact that the directive is too vaguely worded, in that it does not stipulate that the European works council must be convened before any decision is taken regarding a relocation or a site closure; calls for an explicit requirement to be laid down for the works council to be convened and its opinion obtained within an appropriate time limit, before any final decision is ratified by the board of the group;

12. Recommends that Community aid to the establishment of a group on a particular site should be conditional upon an undertaking to remain on that site for a minimum period, aid being broken down throughout that period; in the event that this clause is not observed, any monies already granted shall be refunded to the Commission; if the monies are not paid back, interest for late payment shall be charged, pursuant to the provisions of the Financial Regulation and in accordance with arrangements laid down by the Commission;

13. Recommends coordination of aid and tax incentive policies for establishing multinational companies in Member States to prevent unfair competition; in this respect, welcomes the recent Monti proposals;

14. Welcomes the new market access strategy introduced by the Commission, with the aim of identifying trade barriers facing Community undertakings in third countries; calls on the Commission to carry out a specific study of the consequences of the crisis in Asia for European investment in this region;

15. Recommends that the Commission gear the Structural Funds towards establishing an environment conducive to innovation and research among large and small companies in the field of information and teleshopping technology, in line with the Agenda 2000 reforms; calls for staff training, under a better funded ADAPT programme, to be speeded up in order to respond to technological changes in the industrial and tertiary sectors;

16. Calls for the governments of Member States, in conjunction with the Commission, to support this policy by means of tax incentives (credit - tax - research) and the development of risk-capital-type structures; hopes that these measures will be given a fresh start following the decisions taken at the Luxembourg employment summit;

17. Considers that the EUREKA programme, which caters for the specific needs of economic operators, is the most appropriate means of meeting this challenge, but stresses the importance of the fifth research and development framework programme, which should play an essential role in the field of fundamental research;

18. Considers that exchanges of information and experience must be encouraged between participants in the EUREKA programme and participants in the Community RTD programmes;

19. Calls for European firms engaging in direct investment abroad to develop more sustained cooperation with research laboratories in emerging economies through the programme of cooperation with third countries and international organizations (INCO);

20. Calls for a confidence contract to be established EU-wide between distributors, manufacturers and subcontractors, which does not call into question competition rules or harm the interests of consumers; this contract would be aimed at greater loyalty between the various operators, on the basis of improved exchanges of information, especially in the field of innovation and training;

21. Calls on the Commission to give due consideration to the difficulties which countries which did not adopt the Euro in the first wave would encounter in terms of FDI and relocation;

22. Notes that the fluctuation margins established at the Dublin European Council for currencies remaining outside the euro (- 15/ + 15%) would not make it possible to avoid competitive devaluations, which might in some cases contribute to relocation;

23. Trusts that Europe's political authorities will, within the 'Euro Council', give due consideration to the impact which the euro/dollar exchange rate will have on foreign direct investment in third countries;

24. Calls on the Commission to initiate discussions with the governments of the countries of Central and Eastern Europe on the undervaluation of certain of their currencies liable to lead to relocation;

25. Considers that fraud leads to relocation and calls on the Commission to take all the necessary steps to combat this serious problem though its Unit on Coordination of Fraud Prevention (UCLAF);

26. Instructs its President to forward this resolution to the Commission, the Council, the governments and parliaments of the Member States, the Economic and Social Committee, the European representatives of the social partners, the ILO and the OECD Secretariat.