Agreement On Multilateral Investment

It is also an effort in several other areas to negotiate comprehensive, high-value investment agreements. More than 1,100 bilateral investment contracts (ILOs) are now in force worldwide. In most cases, these agreements have been concluded between a developed country (mostly OECD) and a developing country. The United States, for example, has signed 40 ITOs to date and 31 have entered into force. Multilaterally, the World Bank, the Forum for Asia-Pacific Economic Cooperation (APEC) and the WTO have investment-related instruments, most of which have no dispute settlement mechanisms. Developing countries also participated in the negotiations on each of these instruments. However, there is no high-level agreement among OECD members – the world`s largest recipients and suppliers of foreign direct investment – which is part of the reason why the United States is currently participating in the negotiations. Typical example, a country that requires an investor to obtain government approval before investing (the United States does not have such a “screening” procedure for investments) could accept the investor`s agreement to purchase all of its raw materials locally or to export all or a certain percentage of its manufactured products. Sometimes governments make such “performance requirements” as a condition for the investor receiving a government subsidy or other benefit offered by the government.

International direct investment has been taking place for more than a century in different forms and to varying degrees. [2] Attempts to create a framework for the protection of foreign investment date back to the 1920s, including the negotiation of a draft League of Nations convention. [3] From the second half of the 20th century, investment protection was developed by the Bilateral Investment Agreements (ILOs) which are signed between two countries and specify the desired conditions for investing among themselves. The first ILO between West Germany and Pakistan was signed in 1959[4] and their numbers have continued to increase since then, although studies indicate that the ILO does little to contribute to the increase in foreign investment. [5] In 1965, the International Centre for Settlement of Investment Disputes (ICSID) was established within the framework of the United Nations, and in 1967 the OECD prepared a draft convention on the protection of foreign property, although this was not adopted. [3] Theodore H. Cohn in Global Political Economy Theory and Practice (2005) said: “The most effective opposition to the MAI was launched by a broad coalition of civil society NGOs. These NGOs argued that the MAI would threaten the protection of human rights, labour and environmental standards and least developed countries. A particular concern was that the MAI would lead to a “race to the bottom” between countries willing to lower their labour and environmental standards to attract foreign investment. Katia Tieleman traced the origin of the resistance organized in her 2000 UN case study: [D] the beginning of opposition to the MAI can be attributed to a few people who remained leaders in their later development. Until the end of 1996, Martin Khor, director of the network of the third world network based in Malaysia, received a document prepared for the OECD ministerial meeting in May 1995 as well as for the future negotiations of the European Commission at the WTO (European Communities Commission, 1995: A Level Playing Field for Direct Investment World Wide, 1 March, Brussels).

The document shows that Mr Khor understood that multilateral investment negotiations, that his organisation could be part of a grand coalition that opposed the WTO, could be under way within the OECD.

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