The MAI negotiations have ground to a halt because both the process and substance of these negotiations were fundamentally flawed, said Charles Arden-Clarke, Head of WWF International's Trade and Investment Unit. The result was a draft agreement that conflicted with environmental policies and laws. It failed to balance the new rights it would give foreign investors with their social and environmental responsibilities in the host countries.
The MAI started off the wrong way - with a narrow investment liberalisation focus and with negotiators only from economic ministries and not from environmental and social affairs ministries. Lack of transparency was another problem. Even the six-month consultation and assessment period, agreed in April by Ministers, produced only patchy consultation with the general public in OECD countries.
If an alternative to the MAI is sought, it must be in a forum and with a process that enables all the ministries and stakeholders affected by foreign investment rules to be consulted, and have their interests fully represented, said Mr Arden-Clarke. The World Trade Organisation, which France has suggested as the alternative venue for investment negotiations, does not currently fit this bill.
Past experience shows the United Nations bodies to be a more transparent forum for negotiations. They have also had more success in integrating social and environmental objectives with economic ones, in addition to meeting the needs of more countries than just the richest ones.
The current global financial crisis shows that we do need multilateral rules to govern international financial flows. A proper MAI should promote an upward spiral of environmental standards and be designed to support environmental agreements such as Kyoto Protocol on climate change. Under no circumstances should the agreement allow investors to challenge legitimate environmental policies as expropriation.
The MAI experience shows that sealing investment liberalisation negotiations in a black box, on an accelerated timetable, was bound to fail, added Mr Arden-Clarke. Any future investment negotiations will need far more sophisticated policy formulation, and a more transparent and inclusive negotiating process to meet current environmental, social and economic challenges.