WRITTEN QUESTION P-1057/98

by Paul Lannoye (V) to the Commission

(30 March 1998)

Subject: Multilateral Agreement on Investment

The draft MAI currently under negotiation in the OECD, in which the Commission is taking an active part, contains certain basic provisions which might jeopardize implementation of the Community policy on the environment, the international conventions on the environment and the various implementing protocols which have been signed by the Union.

This applies particularly to the following measures:

- performance requirements;

- compensation for "creeping expropriation", since a legislative or tax measure with an environmental objective may be regarded as equivalent to expropriation;

- the principle of national treatment applied generally to all types of investments;

- the standstill and roll-back principle.

Is the Commission in possession of an assessment of the foreseeable impact of these various provisions, not only on Community legislation on the environment but on the various Community policies which have a direct or indirect impact on the environment?

Furthermore, does the Commission agree that any multilateral agreement on investment must be subordinate in law to the international conventions already in force or to any future such conventions on the environment?

Answer given by Sir Leon Brittan on behalf of the Commission

(6 May 1998)

The issue raised by the Honourable Member is actively being discussed at this stage of the negotiation on a multilateral agreement on investment (MAI). It relates to achieving a balance between MAI disciplines (no expropriation without compensation, national treatment/most-favoured nation, standstill, roll-back and limitations on performance requirements) and other important areas of public policy of concern to MAI parties and to avoid unintended consequences on normal regulatory practices. In this sense the issue of the implications of the MAI is wider than the area of environmental policies and legislation.

Since the negotiations are still continuing, an evaluation of the environmental impact of the MAI is difficult to make. The Commission is committed to ensuring that the MAI will not put obstacles in the way of present Community environmental policies and legislation and their further development.

So far the MAI negotiating group is discussing an incomplete package of proposals for a text that intends to deal with this issue in a comprehensive way. The different elements so far contained in papers before the group include:

- the preamble, indicating the resolve of the parties to implement the MAI in a manner consistent with sustainable development and with environmental protection;

- the affirmation in the text of the agreement of the right of contracting parties to regulate in a non-discriminatory manner to ensure that investment activity is undertaken in a manner sensitive to health, safety or environmental concerns;

- a provision preventing the lowering of domestic environment measures to attract an investment; and

- an exception in the prevention of performance requirements article covering such requirements that could affect compliance with laws and regulations, or that could affect health, safety or the environment.

For its part, the Commission has proposed to introduce in the agreement a general exception similar to the General agreement on tariffs and trade (GATT) Article XX which would apply to measures necessary to protect human, animal and plant health and life and to protect exhaustible natural resources.

On the basis of the same considerations, international rule-making in the field of environment can continue without being hampered by the MAI. For this reason a specific article to subordinate the MAI to international environmental agreements does not seem necessary.