NO INVESTMENT TREATY IN WTO, SAY NGOS

8:42 AM Nov 6, 1995

NO INVESTMENT TREATY IN WTO, SAY NGOS
Geneva 5 Nov (Chakravarthi Raghavan) -- Leading non-governmental organizations (NGOs) of the North and the South, involved in peace, environment, development and women's issues, in a joint statement have expressed their concern over the moves of the European Union and other leading industrialized countries to discuss, and conclude, at the World Trade Organization (WTO) a Multilateral Investment Agreement (MIA) relating to Foreign Direct Investments (FDI).

The statement was prepared during a week of consultations and meetings of NGOs here, marking the 25th anniversary of the UN's Non-Government Liaison Service, on the United Nations as well as a separate NGO consultation preparatory to the ninth session of the UN Conference on Trade and Development to be held in South Africa (Johannesburg) next year.

The NGOs in the week-long meetings heard leading experts on the UN and international system as well as senior officials of UNCTAD on its forthcoming conference, with its major theme of Globalization, and the major trade and development issues facing developing countries.

The statement which the NGOs drew up, after discussions among themselves, had an initial signature of some 30 NGOs and more are expected to join.

The EU proposal for a WTO treaty on investments, the NGOs said, would end the power and legitimate right of States to regulate the entry, conditions of behaviour and operations of foreign companies and foreigners in their country -- a "prime and fundamental sovereign right" essential for any country to determine its own economic and social policies.

The NGOs were particularly opposed to any WTO treaty on this question, since it would impose disciplines on host country, and enforce them through trade sanctions.

Demanding transparency and public accountability of WTO, the NGOs said that the way this issue was being brought on to the WTO agenda illustrated the "secretive, undemocratic and unaccountable" workings of the WTO -- where a few major countries determine the process and the financially powerful lobbies are able to promote and further their interests.

The NGOs asked the WTO member-states to oppose negotiations on investment at the WTO and bringing the issue on to the agenda of the Singapore Ministerial Conference.

They asked the WTO to focus instead on resolving difficulties faced by countries in implementing the Uruguay Round accords and review accords having negative effect on developing countries and introduce public accountability, transparency and democracy in its operations and decision-making processes, including greater access of NGOs to WTO.

Following is the text of the NGO statement:

"We the undersigned NGOs representing sections of civil society in many countries, would like to express our concern and anxiety over the present moves by some Northern countries, especially the European Union (EU), to get the World Trade Organisation (WTO) to discuss the establishment of a multilateral treaty or agreement on foreign investments.

"The EU proposal is that a treaty be created by the WTO member countries to guarantee the rights of foreign investors to enter and establish themselves in all WTO countries, and to be given national treatment (or be treated no differently than local companies.)

"Such a proposal would abolish the power and legitimate right of states and people to regulate the entry, conditions, behaviour and operations of foreign companies and foreigners in their country. This is a prime and fundamental sovereign right which is essential for any country to determine its own economic and social policies.

"This is a precious right which is essentially vital for developing countries to protect. This is because the domestic sector (comprising local firms, local farms and the public sector) has been weakened through colonialism and still requires a longer period of capacity building. The ability to regulate foreign companies as part of economic policy is obviously crucial to enable domestic capacity building which would eventually allow local enterprises to compete successfully in the economy. The removal of the right of developing countries to regulate the area of investments, would effectively close the possibility of domestic economic capacity building.

"For countries in transition, the right and ability to regulate foreign investments is also needed, to enable a relevant mix of policies for the transition to appropriate models of development.

"Foreign investment may have a relevant and indeed significant role to contribute in the development process, provided that this role is placed in an appropriate policy context. This requires that governments continue to be given the right to regulate the terms and conditions for the entry and operation of foreign investment in the various sectors.

"We are particularly opposed to the suggestion that the WTO be the forum for discussions and negotiations on the investment issue. This is due to the fact that the institutional framework of the WTO is such that disciplines would be imposed upon host countries of foreign investment and those countries that fail to meet these disciplines could then be subject to the imposition of trade sanctions and/or penalties. Thus, developing countries would have to give up their right to regulate transnational corporations (TNCs) under the threat of sanctions being placed on their exports.

"Moreover, the WTO is supposed to be an organisation dealing with trade issues, and is not mandated to establish rules relating to the rights of foreign investors per se. The WTO can only make provisions for investment measures which have distortive effects on trade flows. These are dealt with under the present TRIMS (trade related investment measures) agreement in the WTO. Hence, no further new regimes in the area of investment are required. The WTO's mandate and powers should not be extended beyond trade to investments per se, especially since the WTO is non-transparent, imbalanced and undemocratic organisation in which the majority of countries are unable to have their interests adequately represented.

"As NGOs, we are also very aware of the adverse economic, social, environmental and cultural effects that foreign investments and companies have had and can have - even when these companies are subject to government regulation. If the proposed treaty is accepted, then the already inadequate regulations most countries have on foreign investment will be compulsorily removed. This would most likely result in a great expansion in the number and intensity of negative effects. Potential effects include the losses and closure of many local firms and farms, increased unemployment, greater profit outflow leading to balance of payments difficulties, the inability of the domestic sector to build its capacity, loss of economic and political sovereignty, as well as the substantial buying of land and property by foreigners. Adverse environmental and cultural effects would also be experienced, as more foreign firms introduce new industries, industrial products and cultural "services" in a totally unchecked manner, and at an accelerated pace.

"Further, we are most concerned that the way in which this proposal is being pushed onto the agenda is yet another illustration of the secretive, undemocratic and unaccountable workings of the WTO, where the governments or trade officials of a few major countries can determine the process without notifying the public or even their Parliaments/legislatures. Moreover, a direct consequence of this is that financially powerful lobbies -- particularly large corporations -- are able to promote and/or further their interests, through WTO rules. It is thus imperative that mechanisms be created to ensure the WTO is more accountable to the public in all countries.

"We therefore make the following suggestions and demands:

* Member countries of the WTO should oppose suggestions that the issue of foreign investment be introduced on the work agenda of the WTO.

* The investment issue should not be accepted as an agenda item for the WTO Ministerial Meeting, to be held in Singapore in December 1996.

* Instead, the WTO should focus its attention on resolving difficulties faced by countries in adjusting to the Uruguay Round agreements of GATT. Developing countries facing losses and problems should be assisted through concessions, exemptions and compensation. Through a review process, revisions should be made to those parts of the agreements that have adverse effects, particularly on developing countries.

* There must be more public accountability, transparency and democracy in the operations and decision-making processes of the WTO. This should include greater access for NGOs to the WTO.

* Before any new proposals and issues are officially tabled in the WTO, the public should be notified. A broad public assessment should be made and taken into consideration before decisions are made.

* The issue of the role of foreign investments and a balanced and comprehensive discussion of the rights and obligations of foreign investors as well as of governments and people should be discussed in fora other than the WTO, such as in the United Nations. Such discussions could determine the areas of competence of various agencies.

"We invite other interested non-governmental organizations to sign-on to this statement."

Initial signatories of the statement include: Third World Network, The Women's International League for Peace and Freedom (Switzerland), Instituto del Tercer Mundo (Uruguay), NCOS (Belgium), Coordination SUD (France), ISODEC (Ghana), Association of Women's Clubs (Zimbabwe), ENDA (Morocco), MWENGO (Zimbabwe), ISMUN (Switzerland), World Economy Ecology and Development Association (Germany), Inter-Africa Group (Ethiopia), ACTIONAID (India), Women's Environment and Development Organisation (WEDO, United States), FAVDO (Senegal), Country Women Association (Nigeria), CEDEA (Argentina), CCIC (Canada), Committee for the Development of Women (West Indies), IBASE (Brazil), MANI TESE (Italy), Cordillera Women's Education and Resource Center (The Philippines), Transnational Institute (Belgium), MOVIMONDO (Italy), Mexican Action Network on Free Trade (Mexico), DESCO (Peru), ICDA (Brussels), ECONEWS (Kenya), UBINIG (Bangladesh), EURODAD (Belgium).