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# 51998IP0073

**Resolution containing Parliament"s recommendations to the Commission on negotiations in the framework of the OECD on a multilateral agreement on investments (MAI)** 
  
*Official Journal C 104 , 06/04/1998 P. 0143*

  

A4-0073/98

Resolution containing Parliament¨s recommendations to the Commission on negotiations in the framework of the OECD on a multilateral agreement on investments (MAI)

The European Parliament,

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

- having regard to its resolution of 15 January 1998 on relocation and foreign direct investment ((Minutes of that sitting, Part II, Item 8.)),

- having regard to the draft multilateral agreement on investments of 6 October 1997,

- having regard to Rule 90(5) of its Rules of Procedure,

- having regard to the report of the Committee on External Economic Relations and the opinions of the Committee on Economic and Monetary Affairs and Industrial Policy, the Committee on Legal Affairs and Citizens' Rights, the Committee on Culture, Youth, Education and the Media, the Committee on Development and Cooperation and the Committee on Fisheries (A4-0073/98),

A. whereas as a result of the huge increase in foreign direct investment (FDI) in the wake of economic globalization, a multilateral agreement has become necessary in this area,

B. whereas, although there are more than 1 800 bilateral agreements on FDI which endeavour in varying ways to establish general conditions for FDI, a multilateral framework of binding legal rules may not offer complete guarantees of improved clarity and enhanced security, but does generally provide greater certainty and offer an opportunity for creating the general framework for world trade,

C. aware of the danger, in the absence of multilateral rules of this kind, that, on the one hand, FDI would continue to be subject to numerous constraints and, on the other, relocation might also get out of control,

D. concerned that the draft multilateral agreement on investments (MAI) reflects an imbalance between the rights and obligations of investors, guaranteeing the latter full rights and protection, while the signatory states are taking on burdensome obligations which might leave their populations unprotected,

E. whereas the MAI must not only provide benefits to the industry and the countries of origin, but should also contribute to responsible development of the country of establishment by promoting technology, sustainable economic growth, employment, healthy social relations and protection of the environment,

F. whereas the aim of an MAI should be to prevent ruinous competition between investors which would be harmful to the populations concerned in order to foster, on a global scale, environmentally and socially sustainable and regionally balanced economic development,

G. regretting the fact that the negotiations have hitherto been conducted in the utmost secrecy, with even national parliaments being excluded, although transparency and parliamentary supervision in key international economic issues are of crucial importance for the legitimacy of relevant international agreements,

H. whereas the EU has not yet supplied any studies on the impact of the MAI on trade, commerce and the labour market or intellectual property and whereas the compatibility of the MAI with existing environmental, social and cultural legislation and legislation on intellectual property rights in the EU, relations with the ACP countries and the EU's development policy, and its relationship with international environmental agreements (MEA), international conventions on intellectual property and regional agreements (REIO) have still not been clarified,

I. Puts to the Commission the following recommendations:

1. Emphasizes the need for a broader public debate and ongoing parliamentary monitoring of the negotiations being conducted within the framework of the OECD, bearing in mind that the decisions to conclude an agreement are a matter for the state and national parliaments, the European Parliament and the Council;

2. Calls on the Commission, within a reasonable period, to carry out an independent and thorough impact assessment in the social, environmental and development fields, investigating to what extent the draft MAI is in conflict with:

a) relevant international agreements, such as the Rio Declaration, Agenda 21, the UN guidelines on consumer protection (1985), the UNCTAD Set of Multilaterally Agreed Principles for the control of restrictive business practices (1981) and the HABITAT Global Plan of Action and international commitments already entered into by the OECD;

b) previously agreed OECD guidelines, such as the undertaking to integrate economic, social and environmental policy (May 1997), agreements on the responsibilities of multinational enterprises, as laid down in the OECD Code of Conduct of 1992, and OECD policy on development cooperation as formulated in 'Shaping the 21st century: the contribution of development cooperation' (1997);

c) regional, national and EU legislation designed to promote sustainable development;

3. Notes that non-OECD member states, and hence developing countries in particular, may also accede to the agreement under negotiation, but regards the fact that those countries may not themselves exert any influence on the content of the agreement as a major shortcoming of the MAI, and calls on the states involved in concluding the MAI to refrain from exerting any pressure on the developing countries in order to induce them to accede to it;

4. Regards it as essential that the extension of the agreement to cover a territory whose international relations are the responsibility of one of the contracting parties should be notified to the depositary and the other contracting parties, after which any state which has already acceded may decide not to apply the terms of the agreement to the territory in question;

5. Calls for the question of investment protection to be examined in a multilateral context in which all the developing countries are involved, so that UNCTAD, as well as the WTO, would be the appropriate forum for these negotiations; the WTO's consideration of this question must take full account of the results of the UN conferences, particularly with regard to the environmental and social dimensions;

6. Stresses that it is essential that the principle of partnership, which is now accepted both by the OECD and by the G8 as the basic characteristic of relations between developed and developing countries, should be respected, so that the interests of the developing countries and their national policies are taken into account as well as the interests of investors;

7. Welcomes the fact that, in addition to the Member States, the Commission is taking an active part in the negotiations, although the EU is not a member of the OECD;

8. Calls for FDI issues to be brought within the sphere of responsibilities of the EU as an integral part of the common commercial policy in the foreseeable future, provided that corresponding codecision and supervision by the European Parliament are guaranteed;

9. Considers non-discrimination, the right to freedom of establishment, transparency and protection against arbitrary expropriation to be essential and fundamental principles for the MAI;

10. Regards most-favoured nation treatment, transparency and national treatment as the basic foundations of the MAI; points out, however, that foreign investors must not enjoy more favourable treatment than national investors;

11. Considers it necessary for a derogation to be made for balance of payments disequilibria coupled with a provision to deter parties from abusively invoking balance of payments problems;

12. Is concerned that the performance requirements might curtail the right of States to implement existing industrial policies and to develop any new ones as required in future, particularly in the field of social and environmental legislation, culture and intellectual property, and fears that EU Member States may come under pressure in these areas in the next few years;

13. Calls on the Commission, therefore, in formulating prohibitions of specific performance requirements, to ensure that the latter do not conflict with the environmental, social, structural and cultural policies of the EU and its Member States;

14. Insists further that reference should be made to compliance with international human rights conventions and environmental and social standards not only in the preamble of the MAI and that the MAI should contain unequivocal provisions which prevent a lowering of existing environmental and social standards by the MAI and make possible the introduction of new standards;

15. Welcomes the inclusion of the OECD guidelines for multinational undertakings as an annex in the MAI, but advocates that those guidelines should constitute a compulsory component of the MAI and calls in any case in this connection on the governments of the Member States to encourage international enterprises to draw up their own codes of conduct comprising provisions in the field of environmental protection, human rights and social matters;

16. Welcomes the comprehensive definition of the term 'investor', which includes both private and public investors, but calls for a more precise definition of investments in the area of patents for plant, animal and human genes and insists, moreover, that in the light of existing relevant international agreements provisions on intellectual property and copyright and related rights should be excluded from the MAI;

17. Considers a degree of scepticism to be appropriate, since the broad definition of the term 'investment' may lead to difficulties in future; therefore calls on the Commission carefully to monitor the further work on definitions and to notify Parliament of any changes;

18. Cannot agree to endorse any agreement which would have the effect of rolling back EU legislation and preventing further harmonization of EU legislation; insists, therefore, on the insertion of a separate part of a Regional Economic Integration Organization (REIO) clause permitting new harmonized measures, e.g. environmental legislation, adopted within the framework of such an organization and replacing the measures previously applied by these States; takes the view that countries belonging to REIOs are not obliged to extend to countries not belonging to the organization concerned the more favourable treatment reserved for member countries;

19. Demands that any proposal should be compatible with international conventions already ratified by the EC;

20. Is aware of the fact that the contracting parties must initially insist on a limited number of derogations from the basic provisions of the MAI, but asks at the same time to be informed whether the standstill and rollback commitments could obstruct the further harmonization of legislation within the EU Member States;

21. Calls for the invoking of national security interests to be made subject to objective criteria which are verifiable under the disputes settlement procedure; in this connection also advocates the inclusion of an anti-abuse clause;

22. Regrets the fact that the MAI largely disregards issues relating to the taxation of undertakings operating internationally, but welcomes the fact that rules are to be agreed on investment incentives with a view to preventing an international subsidy race for relocations which would cause distortions of competition, and calls on the negotiating partners to include taxation and international competition policy in the built-in agenda;

23. Considers the proposed provisions on investment protection, and in particular on expropriation, compensation and the transfer of capital and profits, to be too far-reaching; takes the view that governments must make sure that they cannot be condemned to making compensatory payments if they establish standards on the environment, labour, health and safety;

24. Calls further for provisions on secondary investment boycott measures which forbid the contracting parties to impose obligations or prohibitions on investors or investments from another contracting party on account of investments in a third country, as is the case under the Helms-Burton Act and the d¨Amato Act;

25. Draws attention to the innovative nature of the proposed disputes settlement procedure, which will enable private companies also to take action against the government of a contracting party; considers this development of legal protection to be questionable and asks for it to be considered whether the existing national and international disputes settlement procedures are not adequate; calls in any event for a balanced system of legal protection which enables both the investor to enforce the rights he derives from the agreement and the contracting state to ensure compliance with binding provisions of its environmental and social legislation;

Cultural matters

26. Points out that the cultural autonomy and diversity of the signatory states must not be called into question by the MAI and that the cultural policy objectives and EU initiatives in support of a European cultural policy must not be jeopardized; therefore calls for a derogation in respect of the application of the MAI for the cultural industry in the EU, especially for the audiovisual sector, which might read as follows:

'Nothing in this agreement shall be so construed as to prevent any contracting party from taking any measure to regulate investment by foreign companies and the conditions of activity of these companies in the framework of policies designed to preserve and promote cultural and linguistic diversity';

27. Asserts that accession to the MAI would prevent the implementation of European Union legislation in the cultural sector under Article 128 of the Treaty, because the principles of the MAI, i.e. the 'national treatment' principle and the 'most favoured nation' principle, if applied to the cultural sector, would directly undermine the functioning of the EU's various initiatives in the cultural and audiovisual sector;

28. Believes that at the very least the MAI should contain an exemption for the audiovisual sector. This should be implemented in the form of a reservation in respect of the national treatment, most favoured nation and the performance-related obligations with regard to present and future policies, irrespective of the technologies used;

29. States that the multilateral agreements already in place to regulate intellectual property are legally binding international agreements. They make further multilateral agreements on these issues, under the auspices of the MAI, unnecessary. These agreements include those of the EU itself, the World Intellectual Property Organization (WIPO), and the World Trade Organization¨s Treaty on Intellectual Property (TRIPS);

30. Insists therefore on the exclusion of intellectual property from the scope of application of the MAI, in order to retain the tradition of authorial rights and moral rights that exists in many European countries. Any inclusion of strictly economic definitions of intellectual property, which exclude references to authorial rights or moral rights, would be contrary to the multilateral agreements already operating in this field;

31. Regrets the pressure being brought to bear by certain OECD Member States on applicant members not to apply the EU audiovisual 'acquis communautaire'. Such pressure is completely unethical and contrary to EU enlargement procedure;

32. Stresses that nothing should endanger the freedom of the European Union or its Member States to take initiatives to promote and support cultural and linguistic diversity, now or in the future;

33. Asserts that unconditional liberalization of the cultural industries would frustrate the legitimate objectives of cultural policy. The basic principles of the MAI, that is the 'national treatment' principle and the 'most favoured nation' principle, if applied to the cultural sector, would directly undermine the functioning of the EU's various initiatives in the cultural and audiovisual sector. These initiatives are essential for the EU to continue to meet its legal obligations under Article 128 of the Treaty. Accession to the MAI would, therefore, prevent the proper implementation of EU legislation in the cultural sector. The support mechanisms existing in the EU and individual Member States are specifically designed to enhance European cultural pluralism and diversity. It is clearly contradictory to open up such mechanisms automatically to third countries;

Fisheries

34. Urges the European Union and the Member States not to sign and ratify the Multilateral Agreement on Investment until the following can be assured:

- the fishing communities throughout the EU have been consulted and been provided with ample opportunity to discuss the implications of the MAI on their industry;

- the ability of the European Union to establish and implement policies for the conservation of fish stocks and the management of Community fisheries will not be compromised;

- the Commission and the Member States will continue to be able to conduct their regional and structural policies as they choose so as to benefit those areas which are dependent upon fishing for a significant portion of their livelihood;

- the European Union can manage its internal market for fisheries products in a sustainable way and according to its own policies;

- the Community maintains its ability to negotiate fisheries agreements with third countries which are consistent with the conservation of fish stocks and coherent with Community development policy;

- the European Parliament has been fully consulted under the assent procedure;

Legal aspects

35. Proposes that structures for the democratic ratification of any agreement to be concluded in the framework of the WTO or the OECD should be put in place and that the interrelationship between legislation of international organizations, the EU and Member States be scrutinized;

36. Instructs its Legal Service to work in close cooperation with the competent Commission services and to keep the draft MAI and relevant Community legislation under review in order to evaluate whether existing Article 189b acts would be affected by the MAI; further instructs its Legal Service to report regularly on its evaluations;

37. Calls on the Commission, the Council and the Member States to submit, pursuant to the procedure provided for in Article 228(6) of the EC Treaty, the definitive draft of the MAI to the Court of Justice for full examination;

II. Calls on the OECD to respond specifically and in detail to the above observations concerning the draft MAI;

III. Believes that a process of open dialogue and consultation on these matters should form an integral part of the MAI process, and that there should be an explicit commitment to transparency in the negotiations. The opinion of the European Parliament must inform the negotiating position of the Commission, on behalf of the European Union. Looks forward to seeking a second opinion from its relevant committees once the text of the final agreement has been received by the European Parliament for its assent;

IV. Calls on the parliaments and governments of the Member States not to accept the MAI as it stands;

V. Calls on the Council to consult Parliament, pursuant to Article 228(3), second subparagraph, of the EC Treaty, on the possible conclusion of the MAI on behalf of the European Union under the assent procedure;

VI. Instructs its President to forward this resolution to the Council, the Commission, the governments and parliaments of the Member States and the Secretariat of the OECD.

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