the Multilateral Agreement on Investment - the MAI
Address by OECD Secretary-General
the Hon. Donald J. Johnston
at the Canadian Club of Montreal
Monday, 25 May 1998
* * * *
L'an dernier, le Conseil des Ministres de l'OCDE nous a demandé de préparer un rapport sur les avantages de la libéralisation des échanges et de l'investissement. Pourquoi ? Parce qu'il semblait que le doute et l'inquiétude grandissaient parmi les citoyens à propos des conséquences de ce qu'il est convenu d'appeler la mondialisation ; à propos des restructurations et des pertes d'emplois ; à propos des licenciements de travailleurs non qualifiés ; à propos de la délocalisation des entreprises cherchant à s'implanter dans des zones où le travail est bon marché et les normes environnementales sont peu contraignantes ; à propos d'une fracture croissante entre les riches et les pauvres. J'arrêterai là l'énumération. Le point important est que la mondialisation est mise en question alors que ce processus traverse une phase critique ; il est même accusé d'être à la source de tous les maux. Les responsables politiques sont pressés par de nombreux groupes d'intérêt de ralentir, voir de renverser, le courant de la mondialisation, de renoncer à penser que l'ouverture des marchés s'accompagne de tous les avantages fabuleux que lui attribuent ses défenseurs et les gouvernements s'entendent dire qu'ils ne doivent pas laisser s'éroder leur souveraineté en signant des accords internationaux comme le projet d'Accord Multilatéral sur l'Investissement (AMI).
Notre rapport, intitulé "Pour l'ouverture des marchés; les avantages de la libéralisation des échanges et de l'investissement", est maintenant publié. Il démontre clairement que l'ouverture des marchés apporte des avantages nets considérables. Dans le poste que j'occupe en tant que Secrétaire général de l'OCDE, je me trouve dans une situation privilégiée qui me permet de disposer d'une vue d'ensemble du débat ; et pas seulement du point de vue des Membres de l'OCDE, mais aussi dans le contexte du monde en développement à travers les travaux de notre Comité d'Aide au Développement (DAC) et par le biais des divers programmes de développement et de coopération que nous menons avec une cinquantaine de pays non-membres. J'ai pris connaissance comme vous-même des arguments des opposants à l'AMI, qu'il s'agisse des accusations de "dumping" environnemental ou de la perte de souveraineté dans des secteurs vitaux de nos économies, la culture étant souvent citée à ce propos, ici au Canada, et en France. Indépendamment du fait que je considère que ces craintes sont sans fondement et que le débat est souvent faussé par la désinformation et la démagogie, je pense que les adversaires de l'AMI se trompent de cible et ne comprennent pas pourquoi de telles règles internationales du jeu en matière d'échanges et d'investissement sont si nécessaires à ce moment particulier de notre histoire. Permettez-moi de m'expliquer.
A mon arrivée à l'OCDE, j'ai été invité à exprimer ma vision de la mission de cette organisation qui ressemble à une sorte de conférence intergouvernementale permanente, réunissant au sein de près de deux cent Comités et Groupes de travail des hauts fonctionnaires, des experts et des responsables politiques venus des quatre coins du globe pour traiter ensemble de toutes les questions de politique gouvernementale à l'exception de celles qui concernent le secteur de la défense. Ils bénéficient, ce faisant, de l'expertise analytique du Secrétariat que je dirige. C'est ainsi que l'OCDE ne se contente pas de livrer un produit unique à ses pays Membres, mais bien des centaines de produits couvrant tout l'éventail des problèmes économiques et sociaux auxquels les gouvernements membres ont à faire face.
Consequently, I describe the OECD not with respect to those products but rather with respect to a purpose and a process. I see economic and social progress (simply defined as raising the living standards and quality of life of all peoples) being maintained by keeping in harmony and balance a triangular paradigm consisting of three interlocked but distinct elements. At one corner of the paradigm is economic growth; at another is social stability, which can be fostered by policies that contribute to social cohesion, and the third is good governance in the broad sense of the word. Here systemic political stability is of course critical. The absence of any one of these factors results in social progress either being arrested or slowed down. This is true in all our countries and has been borne out by the events of history, often with tragic consequences. The challenge for politicians is to maintain that balance which is especially difficult during periods of explosive global change of the kind we are witnessing. While bringing forward policies designed to create economic growth and increased wealth through harnessing the forces of international open markets, they must also ensure that that wealth is distributed equitably across our societies to maintain the other side of the paradigm, social stability. At the moment, the demonstrable new wealth created by globalizing markets is seen by many as running ahead of its equitable distribution in many OECD countries. There is a crying need for adjustment programs in many OECD countries which will permit the benefits of open markets to be brought to all. Rapid changes of the kind we see creates winners and losers. The wealth being generated should ensure that there are only winners, that no one is left behind.
That being acknowledged, let us reflect on the fundamental question as to why globalisation is so critical to the maintenance of the balance in the paradigm which I describe. In a word, the paradigm is not only national within each of our societies, it is also global.
Secretary-General
Donald Johnston |
You may have seen the example drawn from work of the World Bank and others illustrating that if the world's population were to shrink to 100 people with existing ratios, there would be:
60 Asians, 13 Europeans, 13 Africans and 14 from the Western hemisphere;
half of the entire world's income would be produced by only 12 people; 44 would not have access to proper sanitation; 20 would suffer from malnutrition; 32 would be under the age of 15; 23 over the age of 15 would be unable to read and write; and 2 would have a college education; OECD countries account for approximately 60% of the world's wealth with 20% of the world's population.
It is evident that the paradigm of such a village would not be in balance nor sustainable. And it follows that the planetary paradigm is in serious crisis, not always visible from the comfortable surroundings of most OECD countries where most of us here have the good fortune to be born and raised. It is always sobering and I think important to realize that what separates each of us from more than 1.2 billion people surviving on less than 1$ per day, children of the street in the third world scrounging for food in garbage cans -- what has made us different is pure luck of birthright.
But apart from the misery and disease that poverty brings, empirical evidence tells us that it is the creator of the population time bomb constantly ticking away, louder and louder, which unchecked will ultimately destroy the viability of the planet. Estimates range up to a population of 12 billion by the year 2050. That is generally seen as an unsustainable burden on the earth's resources.
We read that our apocalpyse will likely be brought about through a cosmic event such as collision with a comet or large asteroid. That remains hypothetical. The situation I describe is not. It is inevitable and on the world's doorstep unless steps are taken to address poverty on a global scale. We know that increased standards of living and education are the best and perhaps only effective means of population control. That is why globalisation matters. That is why trade liberalisation matters. That is why the Multilateral Agreement on Investment is important.
Foreign Direct Investment (FDI) from the private sector is imperative for such poverty to be eradicated. Currently outflows of FDI are about 350 billion US$ per annum. Official Development Assistance is now less than 60 billion dollars and declining.
More than 85% of FDI capital originates in the OECD area and what is invested in the developing world finds its way to a select number of countries, China receiving almost 30%. Capital must be channeled to the poorest developing countries, but how? That is the question that has bedevilled us ever since the days of the Pearson report 30 years ago! It was entitled Partners in Development. The partnership approach has been reinforced in recent years. Official aid is important, but it can at most serve as a catalyst, creating the human capital and physical infrastructure necessary to attract OECD investment, including your savings. To accomplish that, investors must be satisfied that capital will move freely, that it will be protected against arbitrary state action, that it will enjoy the same treatment as domestic capital and that, if a government acts in breach of its obligations, there will be investor to state recourse. That is what the MAI is all about -- it is an attempt to harness the benefits of capital investment for the creation of sustainable economic growth and in the longer term bring the developing world into the mainstream of sustained economic growth.
We have taken too long to learn the wisdom of the old saying "…give a person a fish and he will feed himself for a day; teach him how to fish and he will feed himself for a lifetime". Capital is critical to that achievement and the MAI is a very modest first step in this process. Those who are attacking the prospect of an MAI should be aware that they are training their guns on the poor of the developing world, the pensioners and shareholders in OECD countries looking to betters returns in emerging markets, and small and medium sized companies who see the MAI as providing business opportunities which so far have been more readily available to the "big guys". The multinationals support an MAI but they are able to navigate in foreign jurisdictions with more confidence and expertise than small business. In other words, they are already there but they would like to secure investment certainty through an MAI and open up greater investment opportunities for all. Hence it is nonsense to talk of the MAI as a charter for multinationals -- it is the SMEs who probably stand the most to gain from the opening up mutually beneficially investment opportunities elsewhere, including in the third world.
There also seems to be a fundamental misunderstanding about the nature of globalisation itself. It is not a process being driven by politicians. It flows from the extraordinary technological developments of recent years, especially in communications and transportation. Electronic commerce is growing at an exponential rate. A joint OECD-Canada Conference in Ottawa in October will be addressing a range of public policy issues from taxation to privacy that are challenging politicians all over the globe. The private sector has the lead role here but it cannot and does not wish to operate within an international anarchy. It would be like the advent of the automobile with no rules of the road -- even as to whether one should drive on the left or the right. What we are witnessing is an effort by governments to put international framework rules in place to ensure that globalisation operates to the benefit of all societies on a level playing field. But governments did not create the phenomenon. It cannot be stopped and it would be singularly stupid to do so, even if it were possible.
The urgency of the unbalanced global paradigm should be clear to all of us. This is not a time to revive the Musical of the 60s "Stop the world I want to get off". It is a time to seize the remarkable opportunities that are being offered to us.
As the latter part of the Twentieth Century recedes into history, it, like some other periods of history, will be characterised by a word or a phrase which in turn carries a multitude of images, lessons and historical memories. The Dark Ages, the Renaissance, the Industrial Revolution are examples. I would predict that this period will be characterised as the dawn of the "Age of Globalisation" with all that implies.
Yes, this is the dawn of the age of globalisation and when historians tell of it, let us make sure that it is a good story: a story of how this generation seized this moment to harness unprecedented opportunities, not just for the developed world but for the world community; of how the poverty, misery and disease in many parts of the developing world were put on the fast track to eradication through multilateral free trade and investment; of how the prosperity of the developed world was sustained through the evolution of the global market and an equitable distribution of its riches and how, in turn, economic growth was firmly established in the developing world through the transfer of capital, technology and know-how combined with unfettered access for their goods and services to the markets of the developed world; of how the widening gap between the rich and the poor in the world community was arrested and then began to narrow.
What a wonderful story it could be and we of our generation have the opportunity to ensure that it is written. As I prepared these comments a familiar passage from Shakespeare came to mind which offers wise counsel.
"There is a tide in the affairs of men,
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries."
Ladies and gentlemen, the global tide of free trade and investment is at the flood. We must seize it before it recedes. Unlike normal tides this one more resembles Halleys Comet -- it may not return for a long time.
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