HC Deb 25 February 1998 vol 307 cc353-5
5. Ms Drown

What measures she is taking to ensure that the needs and views of poorer developing countries are taken into account during the drafting of the multilateral agreement on investment. [29614]

Clare Short

My Department is working closely with the Department of Trade and Industry, which leads on the multilateral agreement on investment. We are determined to ensure that the agreement does not damage the interests of the poorest countries and are pressing hard for strong and binding provision prohibiting any lowering of environmental or labour standards in order to attract investment.

Ms Drown

I thank my right hon. Friend for that reply and congratulate the Government on the work that they are doing to ensure that environmental and labour standards are protected. Does she agree that a key element of development programmes is that a Government should be able to control and filter inward investment and that a developing country should be able to protect its domestic industries just as Britain should be able to protect hers?

Clare Short

With respect, I do not agree with my hon. Friend. Most developing countries, especially the least developed countries, need to attract more inward investment. It is not a question of protecting their own investment, which is limited; they desperately want to attract responsible, beneficial inward investment. The multilateral agreement on investment is meant to cover Organisation for Economic Co-operation and Development countries. It is not meant to apply to developing countries. We are concerned to get accession terms that protect their interests should they seek to join and to get a model that will influence the World Trade Organisation's proposed agreement on investment—a model that will cover all countries. The least developed countries desperately need more, not less, inward investment if they are to develop and achieve sustained economic growth.

Mr. David Heath

I am grateful to the Secretary of State for her comments. Does she agree that we are in the latter stages of the negotiations and many people are still not convinced that there will be no adverse effect on developing countries and environmental standards, and that there are binding responsibilities on multinationals, as opposed simply to rights? Will she give a clear assurance that the Government will not sign the agreement—certainly not in April, which was the original target—until they are assured on all those issues?

Clare Short

The hon. Gentleman knows that there is no chance of that now. The American Administration have made it clear—[Interruption.] May I answer the hon. Gentleman's question? The American Administration have made it clear that there will not be a signature by April, so OECD Ministers have to decide whether to extend the time. The British Government have made it absolutely clear that we will not support the agreement unless there are binding provisions on labour and environmental standards. That is our position, and it is the position of many countries. Some of the campaigns about the agreement are misinformed. A regulated system that makes inward investment more secure and draws it in is in the interests of developing countries. There are possible benefits for the whole world in preventing country after country from competing with one other to attract inward investment by lowering environmental and labour standards. Those are now the top issues for the agreement and it will go through only if it secures what is beneficial.

Mr. Dafis

Is not the danger, though, that developing countries will be prepared to take that investment because they desperately need it, even though the conditions that the MAI negotiated between the OECD countries are not appropriate for them? Is not the whole process in difficulty because of the large number of exemptions that are being negotiated by some countries to protect their local economies? Is not it best to have a proper postponement—about a year—which is what the NGOs, through the World Development Movement, are asking for, so that we can have an acceptable process of developing agreements on investments and trade?

Madam Speaker

I said only a few days ago that hon. Members should ask only one question. There were about three there and a lot of comment.

Clare Short

The World Development Movement's campaign on the agreement is misinformed. It is essential to obtain binding agreements on labour standards and the environment and accession agreements that can protect the proper development interests of developing countries. The British Government are committed to those things and, if we obtain them, they will be wholly beneficial. The suggestion that it is Armageddon now is just wrong.

Mr. Alan Simpson

Is Britain pressing for the inclusion of a clause in the MAI which guarantees the right of developing nations still to impose domestic reinvestment obligations on multinational companies developing in their areas?

Clare Short

As I have already said, the agreement is meant to apply to OECD countries; it is not designed for developing countries. The principle in it is that inward investment should not be treated any worse than domestic investment, and that investment that has come in should not be taken over without proper compensation, for example. We are adding the labour and environmental clauses. I assure my hon. Friend that we are determined to protect environmental interests, labour conditions and the interests of developing countries, and I am confident that without that there will be no agreement.