What Is Multilateral Investment Agreement

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Published on: April 15, 2021

The Multilateral Investment Agreement (MIA) was a draft agreement negotiated between 1995 and 1998 under secret negotiation between members of the Organisation for Economic Co-operation and Development (OECD). [1] It attempted to create a new body of universal investment laws that would give companies unconditional rights to participate in financial transactions around the world, regardless of national laws and civil rights. The project gave companies the right to sue governments when national health, labour or environmental laws threatened their interests. When his project was published in 1997, it was widely criticized by civil society groups and developing countries, in part because of the possibility that the agreement would make it more difficult to regulate foreign investors. After critics of the treaty waged an intense global campaign against the MAI, the host country, France, announced in October 1998 that it would not support the agreement, which effectively prevented it from being adopted because of the OECD`s consensual procedures. The draft AMI text reflects U.S. investment legislation, regulations and practices. Its achievement will be to bring other countries closer to the standards that the United States already applies to all investors, whether domestic or foreign. Indeed, the dispute settlement procedures proposed by the MAI are similar to those traditionally contained in the bilateral investment treaties of the United States (as well as in the overwhelming majority of the approximately 1,100 bits worldwide).

For example, our investment contracts – such as the proposed MAI – give any country that is a party to the agreement the right to initiate arbitration proceedings against another party and to demand financial compensation if that country does not comply with its contractual obligations. 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. “Performance requirements” generally distort the trading and investment decisions that an investor would otherwise make in an open market. This is why the MAI is negotiating a provision limiting the use of certain listed performance requirements. Such provisions are not unusual. In fact, the text being negotiated sounds like the language of NAFTA.

Restrictions on the use of performance requirements are the norm in U.S. bilateral investment agreements. They are also included in the Trade-Related Investment Measures Agreement, negotiated under the Uruguay Round WTO Agreements. However, Ms Lalumiére called for France to continue to liberalise investment projects, but not within the OECD.

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