Feb 20, 1998
INVESTMENT RULES NOT DEAD, YET
Geneva, 19 Feb (Chakravarthi Raghavan) -- The impasse at the Paris-based OECD, over efforts of transnational capital to write rules binding governments to provide foreigners rights to investment anywhere may not be the end of the story, non-government organizations campaigning on the issue agree.
While the high-level meeting of the 29 OECD members ended Tuesday night, with delegates deferring a decision on the viability of a pact, the negotiating group was holding its meetings following the high-level talks.
After the press briefing Tuesday by Mr. Rans Engering, the Dutch finance official leading the talks, the US held its own briefing to announce that they would not be signing or initialling any agreement in April. He even envisaged the possibility of OECD countries abandoning the effort.
According to NGOs following the process in Paris, there is no progress in evolving a language to deal with the US position under the Helms-Burton law whereby the US threatens sanctions against countries investing in Cuba, Libya, Iran etc and which France and others refuse to accept.
On environment, the Europeans appear to be pushing for an exception on the lines of Art. XX of the GATT, whereas the US wants non-binding language - as in the NAFTA side agreeement.
On the issue of 'expropriation' - where as defined a foreign investor can not only bring suits against a government on a wide range of regulatory issues and measures (of Federal, State and local authorities), the US Justice department and the Environment Protection Agency appears to be ranged against the provision, while the US State Department and US Trade Representative favour it as a way of protecting interests of US TNCs in other countries.
And the differences between the US and France over the culture issue has also not been resolved, with France insisting on something more than the limited exception under GATT/WTO.
The NGOs believe that even if the OECD talks founder, there will be efforts to achieve the same through the World Trade Organization and parallel efforts at UNCTAD's investment division. The NGOs are preparing to take on the two organizations, if necessary.
The European Commission from the outset has preferred negotiations at the WTO - mainly because the Commission has no locus standi in the OECD talks (which are among members States), whereas in any WTO talks, the Commission would be representing and negotiating for the EU members, and in any outcome will gain leverage over the members.
Before the latest outcome in Paris, UNCTAD's Investment Division which has been promoting the idea of a multilateral framework for investment, and has been holding symposia and seminars (funded by the EC and some European governments) appears to have scheduled an Asian regional symposium in India, hosted by the Indian government, on International Investment Arrangements and their implications for Developing Countries.
Meanwhile, the WTO issued a press release Tuesday, in effect distancing itself from the OECD-MAI efforts, and the NGO campaign against it, characterizing the NGOs campaigning against the issue as "special interest groups", and insisting that the WTO head, Mr. Renato Ruggiero had been erroneously quoted on the MAI as writing the constitution for a global economy.
The WTO also said that the only time Ruggiero had made any reference to the constitution of a global economy was at his Chatham House speech in January when he had quoted the US trade specialist, John Jackson, as describing the multilateral trading system as a "constitution for the world economy."
However, in a speech to the UNCTAD's Trade and Development Board in October 1996 (when the WTO secretariat was actively promoting, in the runup to Singapore, investment discussions at the WTO), Mr. Ruggiero had underlined that the multilateral trading order had undergone a profound systemic change from 1947 when it was negotiating tariffs and certain non-tariff barriers.
Ruggiero had told the UNCTAD meeting: "Today, the WTO rules also encompass standards, services, intellectual property, trade related investment and a host of other economic activities that would not have been conceivable even a decade ago.... in moving from shallow to deeper integration and from a narrow to far broader participation we have done much more than add a new rule here or a new member there. We have transformed the nature of the system itself. We have created a global trade architecture which is greater than the same of its parts - a seamless web of interlocking interests and responsibilities, interdependent and indivisible..."
Mr. Ruggiero then added: "We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy...."
Ruggiero's remarks was thus without reference to Jackson, and in the context of the WTO writing rules on services, investment, intellectual property etc -- the issues covered by an MAI.
And the attempt of the WTO to tar the public interest NGOs campaigning on the investment issue as 'special interest groups' is not without irony -- since the WTO is seen by the NGOs as a body promoting the special interests of big transnational exporters.
Both the WTO and the UNCTAD investment division have been promoting the idea of multilateral rules on investment, and both hitched their wagons to the Paris process.
A major argument used has been that the OECD countries would negotiate among themselves an agreement of their own, and then bring it to the WTO and force developing countries to sign on, and hence it is better for developing countries to negotiate at the WTO, so that their interests can be represented.
This was the argument used before Singapore Ministerial meeting of the WTO, and which resulted in the establishment of a study process at the WTO, with some back-to-back meetings at UNCTAD on the same issue.
The United States in the runup to the launch of the Uruguay Round in 1986 had brought up the 'services' issue, and on the basis that services had to be produced and delivered on the spot (and cannot be transported across borders like 'goods') had sought to make trade in services' to mean right to invest, produce and deliver services in another country.
But in the complex negotiations that ensued, the delivery of services was recognized to involve four modes, of which commercial presence, ranging all the way from a commercial office to equity investment, joint ventures etc, was only one mode of delivery.
And in the services negotiations itself, commitments were based on 'positive listing' of concessions offered by countries (and not everything except those listed idea favoured by the US), involving too the issue of 'national treatment' and limitations to it.
At that point in 1994, the US negotiators came to the view that in any investment negotiations at the WTO, developing countries would not be willing to go as far as the US wanted.
The US therefore turned its sights to forging an accord at the OECD, and repeatedly announced that it was aiming for a "high-quality" agreement, with signatories agreeing to open up every part of their economic sectors to foreign investors, and being able only to list some sectors as exceptions where there would be a phasing-in of liberalization.
The negotiations were being conducted in some secrecy, though more transparently than any negotiations at the 132-member WTO - since at every stage all the 29 OECD participants had drafts and proposals before them and negotiated within the full group.
However, some NGOs managed to get hold of a draft accord in, and posted it on the internet, whereupon some of the member-governments were forced to make it public themselves -- though the various exceptions sought by each of the governments have not been made public so far.
The campaign brought the issue to public attention, and showed that many parts of the various OECD governments were not aware of the agreement being negotiated on their behalf: the issue was being handled in some cases by trade ministries, in others by finance ministries, and in some others by their foreign offices.
If the OECD process stymies, efforts to bring it up via the WTO may in fact strengthen the opposition of governments against such multilateral rules, with a dispute settlement process enabling trade retaliation. But even more it would unite the various public interest NGOs of the North and the South, who have already formed a broad coalition against the WTO over the 'globalization' issue.