<nettime> Leaked document reveals EU intention to push MAI-like investment agreement in WTO (fwd)

[buro Jansen en Janssen <respub@xs4all.nl>]

Date: Thu, 4 Feb 1999 01:53:42 +0100 (CET)
From: Corporate Europe Observatory <ceo@xs4all.nl>
Reply-To: dif-eu@snore.org
To: dif-eu@freeteam.xs4all.nl
Subject: Leaked document reveals EU intention to push MAI-like investment
    agreement in WTO (fwd)


Ander Europa lijst
------------------

[sorry for cross-posting]

In a leaked document, intended as a discussion paper for
an expert committee of the EU Council, the EU Commission
sets out some elements to define a strategy on how to
include investment as one of the new issues" in the
comprehensive round of WTO negotiations (the so-called
Millennium Round") that the vice-president of the EU
Commission, Sir Leon Brittan has been campaigning for
over the past months.

Read the full text of this leaked document on the web
site of Corporate Europe Observatory
<http://www.xs4all.nl/~ceo/mai/eu/113invest.html>

There are strong indications that several EU Member State
have objected against the contents of the leaked
113-paper and have asked the Commission to come up with a
new version, better incorporating the lessons of the
MAI-debacle.

Therefore we call upon all groups that have been involved
in the anti-MAI campaign, to ask their national
government to comment upon the leaked EU document and
officially dissociate themselves from this text. Such
relatively simple actions within the national context
would constitute a very promising international campaign
(a familiar pattern for anti-MAI campaigners) to further
reveal and thereby effectively stop the secret EU
strategy to sneak in a MAI-like proposal for a
Multilateral Framework on Investments as part of a
comprehensive new round of WTO-negotiations.


Erik Wesselius
Corporate Europe Observatory

----------------------------------------------------------  
Excerpts from the leaked Commission paper:
       
    "many host countries have unilaterally liberalised
    their domestic investment regimes, having realised
    that this is the best avenue to attract much needed
    investment. Thus, circumstances appear ripe for a
    multilateral framework of rules that could
    consolidate this favorable climate, and do so in a
    balanced manner, which could ensure greater
    stability of investment flows, in the interest of
    investors and host countries alike."
  
The EU Commission continues by observing that:
  
    "The elements of an ideal result that at the same
    time opens markets to new investments and then
    protects those that are made would include:
       
       (a)  A broad definition of investment;
       (b)  National Treatment/MFN;
       (c)  Investment protection (expropriation,
            compensation);
       (d)  Free transfer rights;
       (e)  Disciplines of performance requirements;
       (f)  Free entry of key personnel;
       (g)  Effective enforcement mechanisms;
       (h)  Last but not least, opening commitments
            for foreign investment at the admission
            stage."

The leaked document also shows the EU Commission's
strategy for the inclusion of INVESTOR-STATE DISPUTE
SETTLEMENT, another highly contentious point in the
MAI-debate. The Commission proposes an investor-state
dispute settlement mechanism which is not linked to
general from the WTO dispute settlement understanding
(DSU):


    "On enforcement mechanisms, State-to-State dispute
    settlement is part of the WTO "acquis" and would,
    of course, apply to investment disputes too.
    In the investment field, however, there is the
    additional and distinct issue of the means
    available for foreign investors to enforce their
    rights in specific cases where they want to make
    a claim against the host country, typically for
    damages arising from a specific government action
    or decision. In Bilateral Investment Treaties
    (BITs), it is common for host states to give
    "unconditional consent" to investors' resort to
    established independent arbitration bodies.
    In the WTO context, this sort of provisions
    specifying enforcement procedures outside WTO is
    only found very rarely and then only in very
    general terms (e.g. in the enforcement Articles
    - Part III - of the TRIPs Agreement). A BIT-type
    arbitration would be an enforcement mechanism
    that could also be written into a WTO Agreement
    on investment without being linked to the DSU.
    The exact nature of any arbitration mechanism
    would also have to reassure those WTO Members
    (mainly developing countries) who are afraid of
    being "taken to court" by big multinational
    companies."


At this point it may be good to note that the leaked
document was dated 15 December 1998: almost two weeks
after the official decision to close the MAI negotiations
in the OECD because of some governments' (a.o. the French
government) fundamental objections against most of the
above principles.

The following quote from the document shows that the
Commission is well aware of the controversial nature of
the objectives for a multilateral framework on investment
that it outlines in the leaked document:

    "Some, if not all, of these issues will be
    controversial, as the discussion in the WTO Working
    Group on Trade and Investment (WGTI) are showing.
    Thus, the "ideal  result sketched out above may well
    not be the final deal. But even if a perfect result
    is not achieved in a first agreement, the main point
    is to get investment rules firmly implanted in the
    WTO. Further improvements of these rules and
    additional liberalization can be part of future
    agendas, once we have basis from which to work. The
    GATS experience shows that an agreement based on a
    flexible, country by country, bottom-up approach,
    can prove to be extremely effective."

N.B. The report on the activities of this working group
that was released in December 1998 can be found at
<http://www.wto.org/wto/new/wtwgti2.doc>.

Notwithstanding the controversial nature of its
proposals, the Commission concludes:

    "At the end of the process leading to the 1999
    Ministerial, the recommendations to be presented by
    the General Council should be in direction of a
    rather general negotiating mandate on investment."

To achieve this aim, the Commision proposes the Member
State governments to engage in what it calls  coalition
building":

    "(a) The Community and the Member States should use
         all possibilities for high level contacts to get the
         message on investment across, i.e. that it is a
         win-win issue that would benefit everybody.
    (b)  The Community and the Member States should
         liaise closely with their partners that are
         positively disposed towards WTO investment rules.
    (c)  We should pursue our dialogue with the US, with
         a view to convince it that it is in its interest to
         have a WTO investment negotiation. At present the US
         is at best lukewarm in this respect.
    (d)  We should pursue an in-depth dialogue both with
         European outward investors and with concerned NGOs,
         in order to ensure that the desires of the former
         and the concerns of the latter are taken into
         account as we pursue the inclusion of investment on
         next year's negotiating agenda. The Commission, the
         Council, and a number of Member States have already
         taken steps in this direction. These efforts must be
         pursued and maintained throughout the negotiating
         process. To this end, transparency of the intra-EU
         debate on this issue will be of crucial importance."

So far the European Commission.

-------------------------------------------------------------
Some background and analytical notes on the leaked document
-------------------------------------------------------------

On 27 January 1999, a number of NGO representatives were
invited by Directorate General 1 of the European
Commission (External Relations: Commercial Policy and
Relations with North America, the Far East, Australia and
New Zealand) for a dialogue meeting on environment and
investment issues in relation to the proposed new round
of WTO negotiations.

[For your information: the EU Commission considers
business interest groups like UNICE (the European
Federation of Employers' Organizations) or CEFIC (the
branch organization of chemical industry in the EU) as
NGOs". Therefore, roughly half of the NGO participants in
the dialogue meeting were industry representatives, the
other half representing citizens organizations.]

Less than a week in advance of the meeting, the
Commission faxed me a discussion paper on investment,
prepared by DG1. I have converted this fax into
ASCII-text and spread it through e-mail to NGOs involved
in the issue and some broader e-mail lists (e.g.
mai-not@flora.org).

This public discussion paper differs significantly from
the leaked paper although it has the same origin code
(I/M/2). All controversial sections have been cut out,
and some propaganda on the potential benefits of FDI
for developing countries has been added.

When during the dialogue meeting on 27 January, Mr.
Robert Madelin (head of directorate M of DG1) and Mr.
Rafaele Petriccione (head of the Investment Unit of DG1,
which falls under directorate M) were asked to comment
upon the status of both the public discussion paper and
the leaked text, they stated that the leaked text was
outdated. We should believe that only the public
discussion document adequately reflects the current state
of thinking in the Commission.

However, when comparing both texts one cannot suppress a
strong feeling of distrust. I therefore strongly
recommend you to read the HTML-versions of both
documents, which are published on the Corporate Europe
Observatory web site
<http://www.xs4all.nl/~ceo/mai/eu/>. For your
convenience, I have marked the differences between both
documents.

Apart from learning about the secret agenda of the EU,
these documents will also teach you about the subtle art
of cut and paste. Mark the lettering of the headings in
the public discussion text, which runs A-B-C-D-G. Not so
strange when you know the  original", where chapter
headings run from A to G...

My personal favorites are the replacement of  market
opening rules" (leaked document) by  more sophisticated
rules" in the public document or the omission of a
bracketed explanation from the leaked document in the
public one: scepticism in some quarters (notably the
US)".

But it is also enlightening to see how observations which
are attributed to  the Business sector" in the leaked
113-document have become general truth in the public
discussion document, e.g. in:

    "[according to the Business sector's experience], the
    Community should continue to pursue an improvement
    of investment protection in the WTO forum, including
    with regard to developed countries."

In the leaked document the Commission even explains the
seemingly quite substantial influence of business
interest groups on its paper:

    "The European Business community has made clear its
    position in favour of multilateral rules on
    investment both through its representative bodies
    (UNICE, ERT) and through informal direct contacts
    with investment decision-makers."
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