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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <title>MR. MARCHI - ADDRESS ON THEMULTILATERAL AGREEMENT ON INVESTMENT [MAI]OECD MINISTERIAL MEETING - PARIS, FRANCE</title> </head> <body text="#000000" link="#0000ff" vlink="#551a8b" alink="#ff0000" bgcolor="#c0c0c0"> 98/31 STATEMENT BY CANADA ON THE MULTILATERAL AGREEMENT ON INVESTMENT [MAI] ISSUED BY THE HONOURABLE SERGIO MARCHI, MINISTER FOR INTERNATIONAL TRADE, OECD MINISTERIAL MEETING PARIS, France April 27, 1998 This document is also available on the Department's Internet site: http://www.dfait-maeci.gc.ca 1. Canada: Trade and Investment Canada remains committed to the development of open and fair multilateral rules on investment to complement the beneficial rules we already enjoy on international trade of goods and services. Today, trade and investment are key engines of economic growth. The contribution of investment to world prosperity in recent years is impressive. The past decade has seen global investment increase at an exponential rate, reaching $3.2 trillion in 1996 -- more than four times what it was in 1985. In fact, in recent years, investment flows have grown twice as fast as world merchandise trade. While the link between trade, economic growth and jobs is well understood, the same is not true for the flip side of trade -- investment. Foreign investment has played a central role in Canada's development as a nation and remains essential to securing Canada's continued development and prosperity. It has its foundation in our national experience and aspirations. Foreign direct investment in Canada has almost doubled since 1986, reaching $188 billion in 1997, and contributing significantly to job creation and greater prosperity. Foreign firms established in Canada employ 10 percent of the Canadian labour force. Moreover, of all new direct investment made annually in Canada, 10 percent is made by foreign-owned firms. Outward Canadian investment is making an increasingly vital contribution to our economic prosperity. Since 1996, total Canadian investment abroad has exceeded foreign direct investment in Canada. In 1997, Canadian direct investment abroad totalled $194 billion, a threefold increase since 1986. This increase in outward investment has included a new focus on emerging markets. Canadian firms are meeting the challenge of the global economy and enhancing their market access opportunities by building strategic alliances with global partners and by establishing an international presence. By investing abroad, Canadian companies become more competitive, access new technologies, and then create more jobs and R&D activities back home. Some of our companies (Bombardier, McCain, BCE) have become world leaders in their sectors. Moreover, our small and medium-sized enterprises (Husky Injection Molding Systems Ltd., Teknion Furniture Systems) are advancing their strategic market interests through investing abroad. The best way to help these companies thrive is to create a fair and stable international investment climate. Canada lives by trade. We know firsthand the value of rules that ensure Canadians a fair basis for participating in an increasingly global marketplace of goods and ideas. That is why Canada has always been at the forefront of the development of a world trading system based on rules rather than on power. 2. Bottom Lines not Arbitrary Deadlines In the ongoing negotiations towards a possible Multilateral Agreement on Investment [MAI], we should address the outstanding issues, not impose arbitrary deadlines. Canada strongly opposes any new deadlines. We must all take the time to negotiate rules that will serve our national values and interests. Clearly, Canada will only sign the right agreement at the right time -- in other words, when Canadian interests are met. Canada brings to the negotiating table valuable experience in terms of investment rules. Together with our partners, we have negotiated the North American Free Trade Agreement [NAFTA], an agreement recognized as incorporating the most comprehensive set of investment rules. We have also negotiated bilateral investment treaties with some 24 developing countries, enhancing our trade and investment partnerships and providing welcome assurances of fair treatment for Canadian investments abroad. Canada wants to secure the same quality of rights and obligations within a multilateral agreement. We are all committed to ensuring that the MAI is developed on a solid framework of first principles -- non-discrimination and protection -- supported by an effective dispute-settlement mechanism. In addition, Canada believes that the extraterritoriality issue raised by the U.S. Helms-Burton and Iran-Libya sanction acts must be addressed in the context of the MAI negotiations. The only satisfactory MAI for Canada is one that will serve Canada's interests and support Canadian values. Throughout the negotiations, we stated clearly our positions on key issues. Canada will only accept an MAI with the following elements: a) a narrow interpretation of "expropriation" that makes it entirely clear that legislative or regulatory action by government in the public interest is not expropriation requiring compensation, even if it has adverse profitability consequences for companies or investors; b) ironclad reservations that would fully preserve Canada's freedom of action, at both the federal and provincial levels, in key areas including health care, social programs, education, Aboriginal matters and programs for minority groups, and no standstill or rollback requirements in any of these areas. In other words, no restriction on our freedom to pass future laws in these areas, and no commitment to gradually move our policies into conformity with MAI obligations; c) the continued ability of the Government to preserve and promote Canadian culture and Canadian cultural industries. Simply put, Canada's culture is not negotiable; d) the continued ability of Canada to maintain its current measures relating to areas such as transportation and financial services, business services industries, communications, the auto industry, land and real estate, energy, fisheries, investment review, privatization practices, government finance, agriculture, the supply management regime, and the management of natural resources. For Canada, country-specific reservations are intrinsic to ensuring that our respective national interests are addressed within the text of the proposed MAI. The reservations would have equal legal status with the text of the Agreement and together would determine what each of us will obtain from our partners and what we will undertake in return. No country is committed to any text at this stage, since nothing can be agreed upon until the entire Agreement is agreed upon. Canada, like other countries, retains the full right to add or amend reservations as the negotiations progress. 3. Engaging Civil Society Recognizing the legitimate concerns that have been raised throughout the community of the Organization for Economic Co-operation and Development [OECD] regarding the pace of globalization, it would be valuable to pause and reflect on the lessons learned from the last three years of MAI negotiations. The OECD member governments must continue to communicate and consult with all our citizens and put in place -- directly and through the OECD Secretariat -- a heightened and ongoing process of dialogue to respond to these concerns. The challenge of negotiating trade and investment agreements for the global economy is matched by the need for transparency and engagement with civil society. In all our countries, there exists apprehension over the pace of economic change, the proliferation of the "bigger is best" competitors forged by international mergers and acquisitions, and the often baffling, diverse forces affecting our economies. We, the OECD community -- employing the full resources of the OECD Secretariat -- must respond to these valid concerns with a full, sustained and open dialogue. By addressing them straight on and taking the time to do it right, we should be able to obtain the best rules possible. Setting arbitrary deadlines will accomplish nothing. Again, the OECD community must better communicate the importance of investment for our economies. That is why the OECD's report on the benefits of trade and investment liberalization is such a positive initiative, and must be widely disseminated for public discussion. In addition, consultations with business and labour groups, and with diverse non-governmental organizations, must be a consistent part of the process. Transparency of our process and engagement of our citizens are essential to our success in developing a good set of investment rules for our countries. In both the purpose and the process of negotiations we cannot lose sight of practical, day-to-day public concerns. Nor can we overlook the intrinsic partnerships of the marketplace. The OECD Guidelines for Multinational Enterprises helped define the responsibilities of corporations in the countries where they invest. We must go further. Both labour and environmental matters must be adequately addressed to prevent a race to the bottom. Protection of the sovereign right of governments to regulate in the best interests of their societies, whether or not such regulation affects the value of investment, must be secured. Our efforts to ensure full national engagement in the development of new trade and investment rules, and to advance transparency of process, must be directed as well to emerging and developing economies. This is especially important for Canada as our export-oriented Canadian companies will increasingly need to be able to invest and expand with confidence if they are to continue to grow and create jobs back home. Canada has always supported the dialogue established with non-OECD countries within the context of the MAI negotiations. We have been strong advocates for the acceptance of developing countries as observers and full participants in the negotiations. For Canada, an MAI restricted to the 29 OECD countries is of limited value. We want truly multilateral rules on investment that would help expand the benefits of responsible foreign investment to all countries, including developing nations. 4. A Proper Home: The World Trade Organization [WTO] To be effective and beneficial, any eventual investment rules must be truly multilateral. Consequently, the MAI process at the OECD must remain open to non-OECD members, and, more importantly, the MAI's ultimate home should be the WTO. This year marks the 50th anniversary of the General Agreement on Tariffs and Trade [GATT]. Fifty years ago, we embarked on an ambitious effort to construct a new international order, based on open markets for trade. Since then, we have witnessed an orderly expansion of the rules of fair and open trade to other countries, which has led to uninterrupted growth in exports. We have benefited from the emergence of an international trading system marked by vastly improved access for goods and services in a truly global marketplace. This is not abstract policy making; today, the 132 members of the WTO engage in a world market for goods, services and technology that sustains economic well-being and provides the means to realize our national ambitions. Some $5.2 trillion in goods are now exchanged annually around the globe. Trade in services represents an increasingly dynamic component of national and global economic activity. In 1994, we succeeded in securing a comprehensive set of rules on trade in services in the WTO. The importance of investment to our national economic experience and aspirations is unique neither to Canada nor to OECD countries. Although OECD countries currently generate and receive the bulk of foreign direct investment, developing countries are increasingly realizing the benefits of foreign investment. A multilateral rules-based framework for investment must reflect the national values, interests and priorities of the broadest possible membership of nations. We all agree that multilateral rules on investment are a natural and necessary complement to rules of trade in goods and trade in services. As was the case for these trade rules, getting the right rules for investment will take time and effort. At the last WTO ministerial meeting in Singapore in 1996, Canada championed the formation of a WTO working group on trade and investment. Canada values the progress achieved to date in the working group, and remains committed to securing WTO engagement in multilateral investment negotiations. Our negotiations at the OECD offer the prospect that we should advance this objective and create the basis for global rules. The MAI would be a first step, but our common objective must remain the development of open and fair global rules on investment. Canada believes that the WTO is the logical destination, and most effective home, for any MAI. 5. Conclusion Canada maintains its commitment to the pursuit of multilateral negotiations on investment, and to ensuring a transparent process. An agreement on investment would complement the rules we already have on trade in goods and services. These trade rules have created a stable international environment, where trade has been able to grow and contribute to our common prosperity. In seeking rules on investment, we need to address the concerns of our citizens. That is why Canada believes we must all take the time to negotiate rules that will serve our national values and interests. Canada will only sign the right agreement at the right time. We believe that ultimately, such an agreement belongs in the WTO, where its benefits can be shared by the full family of nations. </body> </html>

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