Confidential DAFFE/MAI(97)1/REV2
OECD Organisalion dc Cooperation et de Developpement Economiques OLIS : 13-May-1997
OCDE Organization for Economic Co-operation and Development Dist. : 14-May-1997
Or. Eng.
DIRECTORATE FOR FINANCIAL. FISCAL AND ENTERPRISE AFFAIRS
NEGOTIATING GROUP ON THE MAI (MULTILATERAL AGREEMENT
ON INVESTMENT)
MULTILATERAL AGREEMENT ON INVESTMENT:
CONSOLIDATED TEXT AND COMMENTARY
This document consolidates the results of the work of Drafting
Groups 1-3. Expert Groups 1-5 and informal consultations on
dispute settlement. special topics, intellectual property;
institutional matters and financial matters. The results of the
Negotiating Group's consideration of specific issues are
indicated where possible.
Document couplet disponibk sur OLIS dens son format
d'origine
Complete document avaibbk on OLIS In its original
format
CONFIDENTIAL DAFFE/MAI(97) 1/REV2
CONSOLIDATED TEXTS AND COMMENTARY
(Note by the Secretariat)
This document consolidates the results of the work of Drafting Groups 1-3, Expert Groups 1-5 and informal consultations on dispute settlement. special topics, intellectual property, institutional matters and financial matters. The results of the Negotiating Group's consideration of specific issues are indicated where possible.
The document is divided in two parts: CONSOLIDATED TEXT and COMMENTARY. Country specific proposals on draft text are contained in the Annex.
The status of text is indicated by square brackets, footnotes, or in the Commentary.
Country specific proposals to the Negotiating Group on draft text are reproduced in an annex.
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
TABLE OF CONTENTS
PART ONE: CONSOLIDATED TEXT
Preamble 9
Definitions 11
Geographical Scope of Application 12
Application to Overseas Territories 13
III. TREATMENT OF INVESTORS AND INVESTMENTS 14
National Treatment and Most Favored Nation Treatment 14
Transparency 14
Special Topics 15
Temporary entry, stay and world of
Investors and Key Personnel 15
Senior Management land Boards of Directors 17
Employment Requirements 17
Performance Requirements 18
Privatization 24
Monopolies/State Enterprises/Concessions 30
Investment Incentives 44
Corporate Practices 47
Technology R&D 47
Intellectual Property 47
Public Debt 47
Not Lowering Standards 48
General Treatment 50
Expropriation and Compensation 50
Protection from Strife 51
Transfers 52
Subrogation 53
Protecting Existing Investments 53
State-State Procedures 54
Investor-State Procedures 61
VI. EXCEPTIONS AND SAFEGUARDS
68
General Exceptions 68
Transactions in Pursuit of Monetary and Exchange Rate Policies 69
Temporary Safeguard 70
Prudential Measures 72
Recognition Arrangements 72
Authorization Procedures 73
Transparency 73
Information Transfer and Data Processing 74
Membership of Self-regulatory~y Bodies and Associations 74
Payments and Clearing Systems/Lender of Last Resort 74
Dispute Settlement 75
Definition of Financial Services 77
Lodging of Country Specific Reservations 84
X. RELATIONSHIP TO OTHER
INTERNATIONAL AGREEMENTS 86
Obligations under the Articles of AGREEMENT of
the International Monetary Fund 86
The OECD Guidelines for Multinational Enterprises 86
XI. IMPLEMENTATION AND OPERATION 88 and XII. FINAL PROVISIONS 92
The Preparatory Group 88
The Parties Group 90
Signature 92
Acceptance and Entry Into Force 92
Accession 93
Non-Applicability 93
Review 93
Amendment 93
Withdrawal 94
Depositary 94
Status of Annexes 95
Authentic Texts 95
Denial of Benefits 96
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
PART TWO: COMMENTARY
I. GENERAL PROVISIONS 98
Preamble 98
II. SCOPE AND APPLICATION 99
Definitions 99
Geographical Scope of Application 99
III. TREATMENT OF INVESTORS AND INVESTMENTS 104
General 104
National Treatment and Most Favored Nation Treatment 104
Transparency 107
Special Topics 109
Temporary Entry' Stay and Work of
Investors and Key Personnel 109
Privatization 110
Monopolies/State Enterprises/Concessions 111
Investment Incentives 114
Technology R&D 115
Intellectual Property 116
Public Debt 119
General Treatment 120
Expropriation and Compensation 121
Transfers 125
Subrogation 126
Protecting Existing Investments 126
General 127
State-State Procedures 127
Investor-State Procedures 129
VI. EXCEPTIONS AND SAFEGUARDS 131
General Exceptions 131
Transactions in Pursuit of Monetary and Exchange Rate Policies 135
Temporary Safeguard 136
Prudential Measures :137
Authorization Procedures 137
Transparency 138
Information Transfer and Data Processing 138
Membership of Self-regulatory Bodies and Associations 139
Payments and Clearing System/Lender of Last Resort 140
Dispute Settlement 141
Definition of Financial Services 142
Other Issues 143
New Financial Services 143
Acquired Rights 144
Rightly Initial Establishment Equality of Competitive
Opportunity and Application of National Treatment
in Sub-National Units of Governments 144
Restrictions Based on Dotation Capital of Branches
of Financial Services Enterprises 145
Indirect Investment 145
VIII. TAXATION 146
Expropriation 146
Transparency 146
National Treatment 147
Most Favored Nation Treatment 147
Performance Requirements 148
Transfers 148
Investment Incentives 148
Dispute Settlement 149
Relationship between the MAI and Other International Agreements 149
Accession 150
Definitions 150
Standstill and the Listing of Country Specific Reservations 151
Rollback 153
Lodging of Country Specific Reservations 154
ANNEX:
COUNTRY SPECIFIC PROPOSALS FOR DRAFT
TEXTS
Geographical Scope 158
Regional Economic Integration Organizations 160
Conflicting Requirements 161
Secondary Investment Boycotts 165
Culture 167
Public Order 168
Subnational measures 169
Taxation 170
Social Security Contributions 171
The Svalbard Treaty 172
Labour Market Integration Agreements 173
Sami People 175
CONSOLIDATED TEXT
I. GENERAL PROVISIONS
PREAMBLE
The Contracting Parties to this AGREEMENT,
Desiring to strengthen their ties of friendship and to promote greater economic co-operation between them;
Considering that international investment has assumed great
importance in the world economy and has considerably contributed
to the development of their countries;
Recognising that AGREEMENT upon the treatment to be accorded to
investors and their investments will contribute to the efficient
utilisation of economic resources, the creation of employment
opportunities and the improvement of living standards;
Emphasising that fair, transparent and predictable investment
regimes complement and benefit the world trading system;(3)
[Wishing that this AGREEMENT enhances international co-operation with respect to investment and
the development of world-wide rules on foreign direct investment in the framework of the world trading
system as embodied in the World Trade Organization.](4)
Wishing to establish a broad multilateral framework for international investment with high
standards for the liberalization of investment regimes and investment protection and with effective dispute
settlement procedures;
[Resolved to implement this AGREEMENT in a manner consistent with environmental protection and
conservation;]9
CONFIDENTIALAFFE/MAI(97) 1/REV2
[Reaffirming their commitment to the Rio Declaration on Environment and Development and
Agenda 21, including to sustainable development as reflected therein,](5) [and recognising that investment,
as an engine of economic growth, can play a key role in ensuring that growth is sustainable, when
accompanied by appropriate environmental policies to ensure it takes place in an environmentally sound
manner];
[Renewing their commitment to the observance of internationally
recognised core labour
standards [, i.e. freedom of association, the right to organise and bargain collectively, prohibition of forced
labour, the elimination of exploitative forms of child labour, and non-discrimination in employment] [and
noting that the International Labour Organization is the competent body to set and promote core labour
standards world-wide.]]
Affirming their decision to create a free-standing AGREEMENT open
to accession by all countries;6
[OECD Guidelines]
HAVE AGREED AS FOLLOWS
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1. France proposed that the Preamble include the following language on taxation: 'aware of the importance of taxation for investments and investors, emphasizing that double taxation agreements cover most OECD countries in a satisfactory manner, and that tax policy considerations shall be taken into account in the process of accession of new Contracting Parties, in particular the existence of a network of bilateral tax treaties;" This proposal was not discussed. It may need to be revisited in the light of further consideration of taxation matters by the Negotiating Group.
2. Norway, with the support of Iceland, proposed that the Preamble include the following language on natural resources: "Reaffirming the sovereignty and sovereign rights of States over natural resources within the limits of national jurisdiction."
3. Some delegations proposed an explicit reference to the World Trade Organization. Canada proposed the addition immediately after the words "world trading system" of: 'encompassing multilateral and bilateral investment instruments as well as agreements of the World Trade Organization". This proposal would need some refinement to ensure that it does not limit the scope of the phrase "world trading system" by excluding, for example, regional agreements.
4. The European Community proposed this language. Some delegations oppose the inclusion of such language because they believe that it would prejudge, and be prejudicial to, future work on investment in the World Trade Organization.
5. The square brackets in this tires, the first set of brackets in the next tires and the overall brackets on this and the next tires were requested by some delegations which oppose inclusion of texts on the matter concerned in the Preamble. The brackets do not reflect a divergence on drafting at this stage, although some delegations have concerns with respect to the reference to 'conservation'. The US has put forward additional language on the environment and labour which is set out in the Commentary. Denmark supports the proposed additional language on the environment.
6. Some delegations proposed that the statement that the AGREEMENT is open to accession by all countries be strengthened.
7. Preambular text on the OECD Guidelines has been developed during informal consultations on institutional matters. The text, together with an accompanying footnote, is found on page 85.