-49-

Multinational Enterprises

The need for new international regulation thus affects areas as modern as new technology and as old as war. It also reaches our economic institutions where ingenuity has created new means for progress but with it new problems of social and legal adjustment.

One of the most dynamic contributors to the growth of the global economy has been the multinational enterprise. These institutions have greatly contributed to economic growth in both the industrialized countries where they are spawned and are most active, and the developing countries where they conduct some of their operations. They have facilitated massive

-50-

transfers of capital, technology and managerial skills.
But they can no longer effectively perform this function
in the absence of political decisions defining their
responsibilities but also their rights. If these organizations
are to continue to foster world economic growth, it is in
the common interest that international law, not the exercise
of political will, govern their future.

Some nations feel that multinational enterprises
effectively influence our economies in ways unresponsive to their
national priorities. Others are concerned that these
enterprises may evade national taxation and regulation
through the use of facilities abroad. And recent disclosures
of improper financial relationships between investors and

government officials in several countries raise fresh
concerns.

But it is a fact of life that multinational enterprises
can be powerful engines for good. They can marshall and
organize the resources of capital, initiative, research
technology and markets in ways which vastly increase
production and growth, for mankind everywhere -- and
which governments find it hard to duplicate in developed
and developing countries alike. If an international consensus
on the proper role and responsibilities of these enterprises
could be reached, they could accelerate their vital contribution
to the world economy, A multilateral treaty laying down
establishing

[y]

-52-

agreed legal rules for multinational enterprises does not seem likely in the near future. However, the United States believes the time is ripe for an agreed statement of basic principles. It is prepared to make a major effort and invites the participation of all interested parties.

We are now actively discussing such guidelines, and will support the relevant work of the UN Commission on Transnational Enterprises. We believe that such statements of principle must:

- be consonant with existing principles of international law governing the treatment of foreigners and their property rights;

- call upon multinational corporations to take account of national priorities, act in accordance with local

-53-

[Y]

law, and employ fair labor practices;

-- cover all multinationals, state-owned as well as private;

-- not discriminate in favor of host country enterprises except under specifically defined and limited circumstances.

-- set forth not only the obligations of the multinationals, but also the host country's responsibilities to the foreign enterprises within their bodies;

-- acknowledge the responsibility of governments to apply recognized conflict-of-laws principles in reconciling regulations applied by various host nations.