A TUAC delegation (list attached) had consultations with the OECD MAI Negotiating Group on 15 January 1998. The trade union preparatory meeting held on 14 January had agreed that the trade union delegation at the consultations would focus attention on labour and environment matters. An exchange of information also took place on the wider MAI issues, the problems posed in some countries and the state of negotiations on national and general exemptions. It was agreed that affiliates would continue to pursue this at national level and keep TUAC informed. It was welcomed that a wider public debate was now taking place in some countries on the MAI.

Overview

As you will see from the following report of the consultations, the debate on the treatment of labour issues in the MAI is highly fluid. The TUAC demands for an extensive Preambular reference to core labour standards, the annexation of the OECD Guidelines for Multinationals to the Agreement, and a binding commitment on governments to set up a National Contact Point, are likely to be met. The key issue remains the demand for a binding labour clause in the MAI. While some governments are moving in our direction, more pressure is needed at national level.

Notwithstanding a minority of governments (Australia, Korea, Mexico and New Zealand), the majority of governments may be moving to accept a binding clause covering domestic labour standards. However, progress is slow on the politically more sensitive and legally more complex issue of a binding clause covering internationally agreed core labour standards. The Mexican government has signalled its opposition to joining the MAI should such a clause be enacted, while other governments are coming under increasing pressure from their business lobby.

Governments must be made aware that without such a clause, ratification is increasingly unlikely in a number of key countries. Governments will attempt to resolve these issues at the 16-17 February 1998 High-Level Meeting on the MAI. This has been organised in an attempt to reach a political solution on those aspects of the Agreement that stand in the way of any agreement being reached on the MAI at the April 27-28 meeting of the OECD Council of Ministers. The February meeting will also aim to resolve other "deal breaker" issues including the Helms-Burton clause, and national level exemptions. Only if progress were made on these issues Ministers would be able to agree a framework package on the MAI in April, and move the signing to the Autumn of 1998, allowing the experts to tidy up the text. In contrast, should the February meeting fail to agree on the outstanding issues, governments would come under pressure to abandon the MAI at the OECD and re-think their strategy at the WTO.

Ahead of the High-Level Meeting and the April Ministerial Council meeting, a window of opportunity exists to ensure that, for the first time a multilateral investment agreement contains a binding labour clause. The importance of this for the wider trade union campaign for labour standards in the WTO must not be underestimated. All affiliates and ITS's are asked to lobby their governments to support a binding clause covering domestic labour standards and internationally recognised core workers' rights in the MAI.

Points Emerging from the Consultations

OECD Guidelines for Multinational Enterprises

TUAC's proposals on the Guidelines are likely to be broadly met (see TUAC briefing notes February and September 1997). Thus, the Preamble to the MAI would commit governments to the support of the Guidelines; the Guidelines would be annexed to the Agreement itself (as a non-legally binding element); and the MAI would contain a binding obligation on all Member governments to set up National Contact Points to implement and promote the Guidelines.

Clause on Not Lowering Standards

As to the TUAC insistence that the MAI include a binding clause stating that governments "shall" not seek to attract investment by the suppression or non-enforcement of domestic labour standards, or by the violation of internationally recognised core workers' rights, the following emerged. It appeared that governments are moving towards the acceptance of a binding clause on not lowering domestic standards to attract investment (although this might be narrowly defined in terms of the National Treatment principle). Speakers in favour of this included: Austria, Finland, Luxembourg, the United Kingdom and the European Commission. The Canadian chief negotiator stated that while his government had not reached a formal position it was looking at an obligation to enforce domestic standards. The German negotiator in a confusing intervention spoke in favour of labour issues being "as binding as possible", while the Czech negotiator said that the MAI should have a "strong provision on domestic standards". Some other negotiators stated privately that their governments were moving to accept a binding provision on domestic standards.

Observance of Core Labour Standards

On the issue of acceptance of a binding clause on not lowering internationally recognised core labour standards to attract investment, at the moment there seems to be a significant majority of governments in favour of a statement in the Preamble (non-binding) that countries commit themselves to the observance of internationally recognised core labour standards. ("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.")

TUAC has insisted on the inclusion of a binding clause to ensure their implementation in a non-discriminatory way. There was a limited sign of movement on the government side. The Finnish chief negotiator stated his government's support for a binding provision to protect core labour standards. Apart that positive sign, however, most of the negotiators that spoke posed questions or sought clarifications. For example, the Canadian chief negotiator posed questions as to the points of reference from a legal point of view and the impact of such a clause on those countries that had not ratified the key ILO Conventions in question. The Austrian chief negotiator said that there was room for discussion on the inclusion of a clause covering core labour standards, while a UK negotiator said that core standards were in any case reflected in domestic standards in the majority of OECD countries. These points were responded to by the TUAC delegation.

Privately, members of the OECD Secretariat are becoming aware that without this measure opposition to ratification in a number of key countries could put the MAI in jeopardy, and are working on possible solutions, including making observance of core labour standards a condition of accession to the MAI. Key sticking points remain: hardline governments such as Australia, Korea, Mexico and New Zealand; the United States, under pressure from Republicans and the business lobby; and the business lobby in general. The outcome is far from certain. But the TUAC delegation to the consultations felt that the discussion had shifted quite significantly in our direction over recent weeks.

Informal Debate with Business Representatives

BIAC and the International Chamber of Commerce have maintained opposition to labour and environment clauses in the MAI. Prior to the BIAC consultations on 15 January, this negotiating position was revised to become opposition to any MAI that would include such binding clauses, particularly in the light of the "carve-out" of taxation and the growing list of proposed exemptions (see press articles e.g. Journal of Commerce - 16 January 1998, Financial Times - 19 January 1998, BIAC letter to Financial Times - 15 January 1998). In the light of this, the OECD Secretary-General organised an informal debate between business representatives, TUAC and some negotiators in the margins of the consultations. The BIAC representatives argued that including labour and environmental issues in an investment treaty would distort the agreement and risked overburdening the dispute settlement mechanism. They also argued that such standards would discourage non-OECD countries from signing the agreement. TUAC responded that labour and investment issues were in practice linked and that if countries were not able to commit themselves to core labour standards they were not ready for the MAI. The domestic standards clause would strengthen developing country positions against unscrupulous foreign investors.

The OECD Secretary-General concluded that in the public mind labour and environmental standards were very important and the TUAC representatives pointed out that national parliaments in some countries would not ratify the agreement without such binding standards.