OECD "back to drawing board" on investment

Sovereignty, environment, social, issues seen to be at heart of upset for investment treaty

An attempt by the world's leading industrialised countries to negotiate a multilateral treaty on foreign investment has been set back following a meeting at the Organisation of Economic Cooperation and Development (OECD) headquarters in Paris this week.

Observers at the meeting on Tuesday say that a decision by France last week to pull out of the talks had dealt a "serious blow" to the draft treaty. France claims that the initiative could threaten its national sovereignty. Its withdrawal has created uncertainties about the authority of the EU's delegation in the talks.

According to one source, "no one is talking about negotiations any more, the treaty text as it was six months ago is becoming obsolete". Instead, delegates have agreed to meet again in December to talk about "issues" rather than examine a treaty text. "We are going back to the drawing board," the source said.

Even before the French decision, mounting criticisms had persuaded governments to call a halt to negotiations (ENDS Daily 29 April). Environmental and social NGOs, in particular, claim that the treaty fails to address potential environmental and social impacts and does not involve developing countries on fair terms.

Speaking after Tuesday's meeting, OECD Deputy-General Secretary Joanna Shelton acknowledged that such concerns had fundamentally changed the outlook for the treaty. It is "clear that we are not engaged in business as usual," she told journalists. But she added that the concerns "go well beyond the issue of an investment framework." They "reflect a growing discomfort with the process of globalisation itself and the multilateral agreement on investment has in many ways been symbolic of these concerns."

She warned that the issues would "not go away" regardless of what happened to the treaty in future. France is so far the only government to officially call for the treaty talks to be handled instead by the Geneva-based World Trade Organisation (WTO). But several countries have made similar comments to the press this week. Addressing the European Parliament plenary in Strasbourg, EU trade commissioner Sir Leon Brittan said he personally felt the WTO was "the best long-term home for this work".

NGOs have blamed the failure of the treaty talks on "fundamental flaws". The World Wide Fund for Nature (WWF) said the draft treaty had "conflicted with environmental policies and laws" and that the negotiating process had lacked transparency. It called on the OECD to "make sustainable development the cornerstone of any future investment agreement" and that handing the process over to the WTO would not solve any problems.

Follow Up:
OECD investment treaty page, tel: +33 1 45 24 82 00.

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