HC Deb 10 December 1997 vol 302 cc995-7
4. Mr. McAllion

What is her assessment of the impact of the proposed multilateral agreement on investment on measures to reduce inequalities between rich and poor countries. [18424]

8. Mr. Chaytor

What steps she will take to ensure that the multilateral agreement on investment includes mandatory safeguards against unsustainable economic development in the poorest countries. [18428]

Clare Short

The multilateral agreement on investment is designed to introduce rules for investment flows, primarily between Organisation for Economic Co-operation and Development countries to ensure that foreign investors are treated in the same way as domestic investors. The MAI is not designed for poorer developing countries but, of course, it could become a model and we are supporting consultation with them on how their interests can be taken into account. My Department is commissioning a study to look at any implications the MAI may have for these countries. The Government will work towards the eventual establishment of a more widely applicable World Trade Organisation agreement on international investment.

Mr. McAllion

Does my right hon. Friend agree that Governments, in particular the Governments of poor countries, must remain free to impose restrictions on foreign inward investment, whether that is to protect their populations or their environments? If she does, can she assure the House that the Government will never sign up to any multilateral agreement on investment that allows multinationals or transnational corporations to use the World Trade Organisation to overrule restrictions that have been placed on inward investment by Governments in the interests of their people and their environments?

Clare Short

I think that my hon. Friend's concerns are a little misplaced. Overwhelmingly, the desire of poor countries is to attract more inward investment to bring about the development that will enable them to have the full economic growth that will benefit the poor. The multilateral agreement on investment is currently intended to apply only to OECD countries and says only that Governments who sign up to it voluntarily are not allowed to treat domestic investment and inward investment differently. In that agreement, which the Government hope to sign, we are trying to ensure protection for core labour standards and environmental standards, for example. We are trying to ensure that, if it becomes a model for the future, the future interests of developing countries are protected. My hon. Friend's fears are slightly misguided. We need more investment in those countries, not less.

Mr. Chaytor

Does my right hon. Friend agree that in the context of the attempts by some multinational companies to sabotage the current climate negotiations in Kyoto, it is crucial that the present OECD non-binding code of good practice is made binding within the multilateral agreement on investment?

Clare Short

I am not sure whether multinational companies are more to blame than Governments for dragging their feet. Companies can promote advertising campaigns, but Governments are responsible for protecting the future interests of the world's people. That is where the primary responsibility lies. I share my hon. Friend's concern and assure him that we are seeking to have the OECD guidelines on multinationals' corporate behaviour associated with the multilateral agreement on investment.

Mr. Faber

I am sure that the right hon. Lady agrees that trade and investment are essential for developing countries. While the multilateral agreement on investment is a welcome step, when will the Government accept as their goal the complementary policy of global free trade by 2020? The right hon. Lady has not been afraid to adopt other targets. Why will she not adopt that one?

Clare Short

That topic has been raised in the House before, when I am sure the hon. Gentleman was present. I have said to him that my view is that broadening trade on beneficial terms is our objective, but that for the very poorest and frailest economies I agree with the recent United Nations Conference on Trade and Development report that a rapid opening up could damage frail economies. We need to include them in the process, but in a way that will enable them to strengthen their economies to take advantage of an opening up. I do not know whether the date that the hon. Gentleman suggests is right. That is the sort of progress that we favour and we are seeking to promote it and work with countries and with the World Trade Organisation to bring it about.

Mr. MacShane

Will my right hon. Friend comment on President Clinton's failure to secure an agreement for a fast track on free trade in the United States? That reflects grave concerns in north America about the failure to add a social dimension to the complex question of trade. Whether on the MAI, which is the subject of the question, or on forthcoming meetings of the World Trade Organisation, can my right hon. Friend assure the House that the Government will side with President Clinton and most other democratic countries in seeking a social element and will not bow to the wishes of multinational companies and authoritarian Governments in the third world?

Clare Short

Obtaining agreement on core labour standards and environmental protection so that globalisation does not lead to a levelling down is an enormously important priority for all the people of the world, wherever they live, otherwise we could have what has been called the rush to the bottom. As my hon. Friend knows, there is no prospect of immediate progress on the adoption by the World Trade Organisation of the human rights clause that many people advocate, but we are seeking to make progress through the International Labour Organisation and by introducing incentives in the European Union's general system of preferences in the form of greater privileges to countries that guarantee core labour standards. I agree with my hon. Friend's analysis, but we must mobilise more international support for that objective.