Statement against an Agreement on Investment in the WTO

Preparations for an investment agreement are currently underway in the WTO in Geneva. The EU aims to launch official negotiations at the next WTO Ministerial Conference in Cancun in September 2003.

Germanwatch and about 100 other European civil society groups have signed the statement below which calls on Governments to

• withdraw poposals for investment negotiations in the WTO,
• fundamentally re-orient the rules of the trade system to promote poverty reduction and sustainable development and to
• initiate a new system of multilateral rules on international companies, including enforceable rules on corporate accountability.

Joint Statement by European Civil Society Groups against an Agreement on Investment in the WTO

As members of European civil society, we call on our governments and the European Commission to drop their proposals for investment negotiations within the World Trade Organisation (WTO) as they reflect the narrow commercial interests of EU multinational companies and undermine EU goals of poverty reduction and sustainable development.

The introduction of investment negotiations in the WTO has been consistently opposed by thousands of groups in civil society and by most of the WTO’s members in the preparatory phase to the WTO Ministerial Conference in Doha in 2001. The EU’s partial success in securing agreement to consider this issue at the next Ministerial Conference in Cancun in September 2003 reflected the exercise of negotiating power by the minority of powerful members over the majority of developing country members. This was a process of forced acquiescence, not consensus.

The aims of the proposed agreement on investment are essentially unchanged from the failed Multilateral Agreement on Investment (MAI), abandoned in 1998. The central aim to remove so-called ‘barriers’ to foreign investment does not reflect the most urgent priorities in the global economy. Recent experience with the NAFTA Chapter on Investment and other

investment treaties has demonstrated the threat that this kind of agreement poses to the public interest. As shown by examples such as the misbehaviour and corporate abuse of Enron, there is no lack of power or rights for multinational companies. What is lacking are the enforceable rules that will ensure that all companies abide by internationally agreed environmental, social, labour and human rights standards and corporate accountability to the societies within which they operate.

At the heart of the proposed negotiations is the restriction of governments’ right to regulate in the public interest. In particular, the development experience of OECD countries and the Asian ‘tiger’ economies has demonstrated the importance of government intervention to promote domestic industry and place conditions on foreign investment. The EU’s investment proposals will restrict the powers of developing country governments to maximise the benefits and minimise the costs of foreign investment, thereby restricting the ability of the poorest nations to diversify and develop their economies.

The rights of foreign investors are accorded priority over the promotion of poverty reduction. ''Favourable investment" conditions in many cases are accompanied by unfavourable working conditions, including exemptions from national labour laws and shrinking social protection. This affects in particular women workers, who in many developing countries find themselves in the majority of labour intensive, export-oriented zones without social security and other social benefits.

Similarly, at the heart of sustainable development is the need for governments to intervene to ensure that patterns of investment promote, rather than undermine, sustainable development. The need for ecological limits, for example, could be challenged as an ‘unnecessary barrier’ to foreign investors; and the creation of incentives for sustainable use by local communities could be challenged as discriminating against foreign investment. The promotion of poverty reduction and sustainable development should be at the heart of any international agreement on multinational companies, not liberalisation.

The international trade system is under intense criticism, including from its developing country members. The EU’s trade policies, and the WTO itself, have lost the confidence of civil society. Deep reform is the overwhelming priority. The EU should not attempt to extend the WTO's unfair and unsustainable rules from trade in goods to huge new areas of the global economy, such as investment and government procurement – each accounting for more economic activity than international trade.

The EU has been unable to prove that a multilateral agreement on investment is necessary and that it should be included in the WTO.

Members of European civil society reiterate our call to

• fundamentally re-orient the rules of the trade system to promote poverty reduction and sustainable development and to
• withdraw poposals for investment negotiations in the WTO.

The updated list of signatories can be found on the Seattle to Brussels Network Website. To sign on please send the name of your organisation and the country to FoEE, wto@foeeurope.org.