AOH :: MAI3.TXT
Document 3 of the MAI
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
III. TREATMENT OF INVESTORS AND INVESTMENTS
NATIONAL TREATMENT AND MOST FAVOURED NATION TREATMENT
1. Each Contracting Party shall accord to investors of another
Contracting-Party and to their investments, treatment no less
favourable than the treatment it accords [in like circumstances] to
its own investors and their investments with respect to the
establishment, acquisition, expansion, operation, management,
maintenance, use, enjoyment and sale or other disposition of
investments.
2. Each Contracting Party shall accord to investors of another
Contracting Party and to their investments, treatment no less
favourable than the treatment it accords [in like circumstances] to
investors of any other Contracting Party or of a non-Contracting
Party, and to the investments of investors of any other Contracting
Party or of a non-Contracting Party, with respect to the
establishment, acquisition, expansion, operation, management,
maintenance, use, enjoyment, and sale or other disposition of
investments.
3. Each Contracting Party shall accord to investors of another
Contracting Party and to their investments the better of the treatment
required by Articles 1.1 and 1.2, whichever is the more favourable to
those investors or investments.
TRANSPARENCY
1. Each Contracting Party shall promptly publish, or otherwise make
publicly available, its laws,
regulations, procedures and administrative rulings and judicial
decisions of general application as well as international agreements
which may affect the operation of the AGREEMENT. Where a Contracting
Party establishes policies which are not expressed in laws or
regulations or by other means listed in this paragraph but which may
affect the operation of the AGREEMENT, that Contracting Party shall
promptly publish them or otherwise make them publicly available.[1](1)
2. Each Contracting Party shall promptly respond to specific questions
and provide, upon request, information to other Contracting Parties on
matters referred to in Article 2.1.
3. Nothing in this AGREEMENT shall prevent a Contracting Party from
requiring an investor of
another Contracting Party, or its investment, to provide routine
information concerning that investment solely for information or
statistical purposes. No Contracting Party shall be required to
furnish or allow access to information concerning particular investors
or investments the disclosure of which would impede law enforcement or
would be contrary to its laws [policies, or practices][2](2)
protecting confidentiality.
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CONFIDENTIAL DAFE;E/MAI(9;7)1tREV2
SPECIAL TOPICS
TEMPORARY ENTRY, STAY AND WORK OF INVESTORS AND KEY PERSONNEL[3](3)
1. Subject to the application of Contracting Parties' national laws,
regulations and procedures
affecting the entry, stay and work of natural persons:
(a) Each Contracting Party shall grant temporary entry, stay and
authorization to work[4](4) and
provide any necessary confirming documentation to a natural person of
another Contracting
Party who is:
(i) an investor who seeks to establish, develop, administer or provide
advice or essential
technical services to the operation of an enterprise[5](5) to which
the investor has committed,
or is in the process of committing, a substantial amount of capital,
or
(ii) an employee employed by an enterprise referred to in (i) above,
or by an investor, [for a I
period of not less than one year,] in a capacity of executive, manager
or specialist and who is essential to the enterprise;
so long as that person continues to meet the requirements of this
Article;[6](6)
(b) (i) Each Contracting Party shall grant temporary entry and stay
and provide any necessary
confirming documentation to the spouse and minor children of a natural
person who has
been granted temporary entry, stay and authorization to work in
accordance with this
Article. The spouse and minor children shall be admitted for the
period of the stay of
that person.
(ii) Each Contracting Party is encouraged[7](7) to grant authorization
to work to the spouse of the
person who has been granted temporary entry, stay, and authorization
to work in
accordance with this Article.
2. No Contracting Party may deny entry and stay as provided for by
this Article, or authorization to
work as provided for icy paragraph l(a) of this Article, for reasons
relating to labour market or other
economic needs tests or numerical restrictions in national laws,
regulations. and procedures.
3. For the purposes of this Article:
Natural person of another Contracting Party means a natural person
having the nationality of [or who is permanently residing in another
Contracting Party in accordance with its applicable law; [8](8)
Executive means a natural person who primarily directs the management
of an enterprise or establishes
goals and policies for the enterprise or a major component or function
of the enterprise, exercises wide
latitude in decision-making and receives only general supervision or
direction from higher-level
executives, the board of directors, or stockholders of the enterprise;
Manager means a natural person who directs the management of an
enterprise, or department, or
subdivision of the enterprise, supervises and controls the work of
other supervisory, professional or
managerial employees, has the authority to hire and fire or recommend
hiring, firing, or other personnel
actions and exercises discretionary authority over day-to-day
operations at a senior level; and
Specialist means a natural person who possesses knowledge at an
advanced level of expertise and who
may be required to possess specific or proprietary knowledge of the
enterprise's product, service, research
equipment, techniques, or management.
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CONFIDENTIAL DAFE;E/MAI(97) 1/REV2
SENIOR MANAGEMENT {AND MEMBERSHIP ON BOARDS OF DMECTORS[9](9)]
No Party may require that an enterprise of that Party that is an
investment of an investor of another Party appoint to senior
management positions [and membership on boards of directors][10](10)
individuals of any particular nationality.
EMPLOYMENT REQUIREMENTS[11](11)
A Contracting Party shall permit investors of another Contracting
Party and their investments to
employ any natural person of the investor's or the investment's choice
regardless of nationality and
citizenship provided that such person is holding a valid permit of
sejour and work delivered by the
competent authorities of the former Contracting Party and that the
employment concerned conforms to the
terms, conditions and time limits of the permission granted to such
person.
CONFIDENTIAL OAFFE/MAI(97)1/REV2
PERFORMANCE REQUIREMENTS[12](12)
1. A Contracting Party shall not, in connection with the
establishment, acquisition, expansion,
management, operation or conduct[13](13) of an investment in its
territory of an investor of a Contracting Party
or of a non-Contracting Party, impose. enforce or maintain any of the
following requirements, or enforce
any commitment or undertaking[14](14):
(a) to export a given level or percentage of goods or services;
(b)to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to goods produced or
services[15](15) provided in its territory, or to purchase goods or
services from persons in its territory; ,'
(d) to relate in any way the volume or value of imports to the volume
or value of exports or to
the amount of foreign exchange inflows associated with such
investment;
(e) to restrict sales of goods or services in its territory that such
investment produces or
provides by relating such sales to the volume or value of its exports
or foreign exchange
earnings;
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CONFIDENTIAL DAFFEIMAI(97)1/REV2
(f) to transfer technology, a production process or other proprietary
knowledge to a natural or
legal person in its territory, except when the requirement is imposed
or the commitment or
undertaking is enforced by a court, administrative tribunal or
competition authority to
remedy an alleged violation of competition laws[16](16) [or to act in
a manner not inconsistent
with articles ... of the TRIPS AGREEMENT];
(g) to locate its headquarters for a specific region or the world
market in the territory of that
Contracting Party;[17](17)
(h) to supply one or more of the goods that it produces or the
services that it provides to a
specific region or the world market exclusively from the territory of
that Contracting Party;
[(I) to achieve a given level or value of production, investment.
sales, employment, or research and development in its
territory;][18](18)
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
[(i) to hire a given level of [local personnel] [nationals];[19](19) ]
(k) to establish a joint venture;[20](20) or
[(1) to achieve a minimum level of local equity participation.]
2. A Contracting Party is not precluded by paragraph I from
conditioning the receipt or continued
receipt of an advantage, in connection with an investment in its
territory of a Contracting Party or of a
non-Contracting Party, on compliance with any of the requirements,
commitments or undertakings set
forth in paragraphs [I(a) and] I(f) through 1(1).[21](21)
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CONFIDENTIAL DAE:FE/MAI(97) 1/REV2
3. Nothing in paragraphs [l(a),] l(b), l(c), l(d), and l(e)[22](22)
shall be construed to prevent a Contracting Party from conditioning
the receipt or continued receipt of an advantage, in connection with
an investment in its territory of an investor of a Contracting Party
or of a non-Contracting Party, on compliance with a requirement,
commitment or undertaking to locate production, provide particular
services, train or employ [workers] [employees][23](23), construct or
expand particular facilities, or carry out research and development in
its territory.
4. [Provided that such measures are not applied in an arbitrary or
unjustifiable manner, or do not
constitute a disguised restriction on investment, nothing in
paragraphs l(b) and l(c) shall be construed to
prevent any Contracting Party from adopting or maintaining measures,
including environmental
measures:
(a) necessary to secure compliance with laws and regulations that are
not inconsistent with the provisions of this AGREEMENT;
(b) necessary to protect human, animal or plant life or health;
(c)necessary for the conservation of living or non-living exhaustible
natural resources.
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
5.[24](25) (a)Paragraphs l(a), I(b). and l(c) do not apply to
qualification requirements for goods or
services with respect to export promotion [and foreign aid ]
programmes[25](26);
[(b)paragraphs l(b), l(c), l(f), and l(h) do not apply to procurement
by a Contracting Party or a state enterprise[26](27); and
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CONFIDENTIAL DAFFEIMAI(97) 1/REV2
(c) paragraphs l(b) and l(c) do not apply to requirements imposed by
an importing Party relating to the content of goods necessary to
qualify for preferential tariffs or preferential quotas;[27](29)
[(d)paragraph l(i) does not apply to requirements imposed by a
Contracting Party as a part of
[privatization operations.][28](30)
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CONFIDENTIAL DAFFEIMAI(97) 1/REV2
PRIVATIZATION[29](31)
Paragraph 1 (Application of National Treatment/MFN)
1. The obligation on a Contracting Party to accord National Treatment
and MFN treatment as
defined in Paragraph XX (NT/MFN) applies to:
a) all kinds of privatization, irrespective of the method of
privatization (whether by public
offering, direct sale or other method)[30](32); and
b) subsequent transactions involving a privatised asset[31](33) .
[Paragraph la (voucher schemes)
2. Notwithstanding paragraph 1, arrangements under which natural
persons of a Contracting Party are granted exclusive rights as regards
the initial privatization are acceptable as a method of privatization
under this AGREEMENT provided that the exclusive right as regards the
initial privatization is limited to natural persons only and provided
that there is no restriction on subsequent sales][32](34).
Paragraph 2 (Right to privatise)
3. Nothing in this AGREEMENT shall be construed as imposing an
obligation on a Contracting Party
to privatise[33](35).
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
Paragraph 3 (Special share arrangements)[34](36)
Alternative I
4. Contracting Parties acknowledge that special share arrangements are
compatible with
Paragraph 1, unless they explicitly or intentionally favour investors
or investments of a Contracting Party
or discriminate against investors or investments of another
Contracting Party on the grounds of their
nationality or permanent residency.[35](37)
Alternative 2[36](38)
5. [Special share holding arrangements including, inter alia, a) the
retention of "golden shares" by
Contracting Parties, b) stable shareholder groups assembled by a
Contracting Party,
c) management employee buyouts, and d) voucher schemes for members of
the public, hold strong
potential for discrimination against foreign investors and are, in
fact, inconsistent with National Treatment
and MFN treatment obligations in many instances.]
Alternative 3[37](39)
Footnote to paragraph 1
6. Special share arrangements which explicitly discriminate (i.e. de
jure) against foreign investors
and their investment are contrary to obligations on National
Treatment/MFN treatment. It is also
understood that when, in their application, special share arrangements
lead to de facto discrimination they
are also contrary to National Treatment/MFN treatment.
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CONFIDENTIAL DAFFElMAI(97)1/REV2
[Alternative 4[38](40)
7. Nothing in this AGREEMENT shall prevent Contracting Parties from
using special methods of
privatization or having special rules as regards ownership, management
or control of privatised assets such
as:
-- a Contracting Party or any person designated by the Contracting
Party maintaining special
shareholder rights to influence or veto any decision concerning such
assets after the
privatization,
-- arrangements under which managers or other employees of an
enterprise are granted special
treatment as regards the acquisition of shares of that enterprise,
-- arrangements under which shareholders are required to maintain
their share in the capital of
the enterprise during a certain period of time,
-- arrangements under which locals of a certain community are granted
special treatment as .
regards the acquisition of this community's property,
unless they explicitly or intentionally favour investors or
investments of a Contracting Party or
discriminate against investors or investments of another Contracting
Party on the grounds of their
nationality or permanent residency.]
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CONFIDENTIAL DAI:E:E/MAI(97)1/REV2
Paragraph 4 (Transparency)
8. For the purposes of this Article, each Contracting Party[39](41) or
its designated agency shall promptly
publish or otherwise make publicly available the essential features
and procedures for participation in each
prospective privatization[40](42). *
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
Footnote
*Alternative 1
This footnote confirms the application of the Transparency Article YY.
Specifically, the
obligations to accord National Treatment and MEN Treatment prohibit
discrimination against
investors and investments of other Contracting Parties with respect to
all arrangements for
making public information about a privatisation operation. [A
Contracting Party that gives to its
investors and investments access to information concerning the fact of
privatisation must at the
same time give that access to investors and investments of other
Contracting Parties. Any
information relevant to the privatisation available to investors of a
Contracting Party must be
available to investors and investments of other Contracting Parties,
e.g. a Contracting Party must
provide financial statements on request. A Contracting Party would
violate National Treatment
if, in order to benefit its investors and their investments, it
refrains from making information
publicly available, either about the fact of privatisation or about
the enterprise or entity to be
privatised.][41](43) [It is understood that in the case of small scale
privatisations, there can be some
variance in the methods used to make information available.]
*Alternative 2[42](44)
This footnote confirms the application of the Transparency Article YY.
Specifically, the
obligations to accord National Treatment and MEN Treatment prohibit
discrimination against
investors and investments of other Contracting Parties with respect to
all arrangements for
malting public information about a privatisation operation. [A
Contracting Party that gives to its
domestic investors access to information concerning the fact of
privatisation, the enterprise or
entity to be privatised, and details of the privatisation process must
at the same time give that
access to foreign investors. A Contracting Party would violate
National Treatment if it refrains
from making information publicly available, either about the fact of
privatisation, the entity to be
privatised, or the details of the privatisation. It is understood that
in the case of small scale
privatisations, there can be some variance in the methods used to make
information available.]
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CONFIDENTIAL DAFFE/MAI(97)1/REV2
Paragraph 5 (Definition)
9. "Privatisation means the sale or other disposal by a Contracting
Party, in part or in full, of its
equity interest in, or the assets of, a [state] enterprise or
government entity.*
** This article is not meant to cover transactions between different
levels or entities of the same
Contracting Party.
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CONFIDENTIAL DAFFE/MAI(97)1/REV2
MONOPOLIES/STATE ENTERPRISES/CONCESSIONS[43](46)
A. Article on Monopolies[44](47)
[1. Nothing in this Agreement shall be construed to prevent a
Contracting Party from maintaining,
designating or eliminating a monopoly.][45](48)
2. Each Contracting Party shall [endeavour to][46](49) accord
non-discriminatory treatment when
designating a monopoly.
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CONFIDENTIAL DAFFEIMAI(97) 1/REV2
Paragraph 3, chapeau:
3. Each Contracting Party shall erisure that any privately-owned
monopoly that its national [or
subnational] governments [maintain][47](50) or designate and any
public monopoly that its national [or
subnational] governments maintain or designate:
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
Subparagraph a)[48](51)
a) acts in a manner that is not inconsistent with the Contracting
Party's obligations under this Agreement wherever such a monopoly
exercises any regulatory, administrative or other governmental
authority that the Contracting Party has delegated to it in connection
with the monopoly good or service;
Subparagraph b)
b) provides non-discriminatory treatment to investments of investors
of another Contracting Party in its sale of the monopoly good or
service [in the relevant market];
Subparagraph c)
c) provides non-discriminatory treatment to investments of investors
of another Contracting
Party in its purchase of the monopoly good or service [in the relevant
market]. This
paragraph does not apply to procurement by governmental agencies of
goods or services for
government purposes and not with a view to commercial resale or with a
view to use in the
production of goods or services for commercial Sale;[49](52)
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CONFIDENTIAL DAFFE/MAI(97) :/REV2
Subparagraph d)
Alternative 1[50](53)
[d)does not use its monopoly position, in a non-monopolised market in
its territory, to engage,
either directly or indirectly. including through its dealing with its
parent company, its
subsidiary or other enterprise with common ownership, in
anti-competitive practices that
[might][51](54) adversely affect an investment by an investor of
another Contracting Party,
including through the discriminatory provision of the monopoly good or
service, cross-
subsidisation or predatory conducted][52](55);
Alternative 2[53](56)
[d) which competes, either directly or indirectly, or through an
affiliated company, in an
economic activity outside the scope of its monopoly rights does not
abuse its monopoly
position in that activity to act in a manner inconsistent with the
obligations of this
Agreement;]
Alternative 3: zero option[54](57)
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
[Subparagraph e)[55](58)
e) Except to comply with any terms of its designation that are not
inconsistent with subparagraph
(b) (c) or (d), acts solely in accordance with commercial
considerations in its purchase or sale
of the monopoly good or service in the relevant market, including with
regard to price,
quality, availability, marketability, transportation and other terms
and conditions of purchase
or sale.
Nothing in Article A shall be construed to prevent a monopoly from
charging different prices in
different geographic markets, where such differences are based on
normal commercial considerations, such
as taking account of supply and demand conditions in those markets.
Article A, paragraph 3 (e) differences in pricing between classes of
customers, between affiliated
and non-affiliated fimns, and cross-subsidisation are not in
themselves inconsistent with this provision;
rather, they are subject to this subparagraph when they are used as
instruments of anti-competitive
behaviour by the monopoly firm].
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
[Paragraph 4 [56](59)
4. Each Contracting Party is allowed to lodge reservation to the
Agreement concerning an activity
previously monopolised at the moment of the elimination of the
monopoly.]
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CONFIDENTIAL DAFFE/MAI(97) l/REV2
Paragraph 5
5. Each Contracting Party shall notify[57](60) to the Parties Group
any existing designated monopoly
within [60][58](61) days after the entry into force of the Agreement,
any newly designated monopoly within [60]
days after its creation, and any elimination of a designated monopoly
[and related new reservation to the
Agreement][59](62) within [60] days after its elimination.
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
Paragraph 6
[6. Neither investors of another Contracting Party nor their
investments may have recourse to
investor-state arbitration for any matter arising out of paragraph 3
(b), (c), (d) or (e) of this Article.][60](63)
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CONFlDENTlAL DAFFE/MAI(97) 1/REV2
[B. Article on [state enterprises][entities with which a Government
has a specific relationship]
Option 1: zero option[61](64)
Option 2
i) Draft text for an anti-circumvention clause[62](65)
Alternative 1
1. Each Contracting Party shall ensure that any state enterprise that
it maintains or establishes acts in a manner that is not inconsistent
with the Contracting Party's obligations under this Agreement wherever
such enterprise exercises any regulatory, administrative or other
governmental authority that the Contracting Party has delegated to it.
Alternative 2
1. Each Contracting Party shall ensure that any entity to which a
national or subnational government authority has delegated a
regulatory, administrative or other governmental authority acts in a
manner that is not inconsistent with the Contracting Party's
obligations under this Agreement wherever such entity exercises that
authority.
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
ii) Additional provisions
a. No additional provisions.
b. Proposal by Canada and the United States[63](66)
[2. Each Contracting Party shall ensure that any state enterprise that
it maintains or establishes
accords non-discriminatory treatment in the sale, in the Contracting
Party's territory, of its goods or
services to investors of another Contracting Party and their
investments.
3. Neither investors of another Contracting Party nor their
investments may have recourse to
investor-state arbitration for any matter arising out of paragraph 2
of this Article.[64](67) ]
c. Proposal by France[65](68)
[a. Each Contracting Party shall ensure that any entity that a
national or a subnational government
owns or controls through ownership interest or which a national or
subnational governments authority has
a relationship with through any specific legislative, regulatory or
administrative act, any contracts, or any
practices related to some of its activities acts in a manner that is
not inconsistent with the Contracting
Party's obligations under this Agreement.]
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CONFIDENTIALAFFE/MAI<97) l/REV2
C. Definitions Related to Articles on Monopolies [and State
Enterprises]
Paragraph l
1. "Delegation" means a legislative grant, and a government order,
directive or other act
transferring to the monopoly or state enterprise, or authorising the
exercise by the monopoly or state
enterprise of, governmental authority.
Paragraph 2
Alternative 1
[2. "Designate" means to establish, designate or authorise, or to
expand the scope of a monopoly to cover an additional good or service,
after the date of entry into force of this agreement.]
Alternative 2
2. "Designate a monopoly" means to establish or authorise a monopoly,
or to expand the scope of a
monopoly.
Paragraph 3
Alternative 1
3. ['Monopoly" means an entity, including a consortium or government
agency, that in any
relevant market in the territory of a Contracting Party is designated
as the sole provider or purchaser of a
good or service, but does not include an entity that has been granted
an exclusive intellectual property
right solely by reason of such gMnt.][66](69)
Alternative 2
3. "Monopoly" means any person or group of persons, public or private,
whatever its legal nature,
designated by a national [or local] government authority as the sole
supplier or buyer of a commercial
good or service in a market in the territory or part of the territory
of a Contracting party, [for an indefinite
period of time.][67](70) [possible carve out for IPR]
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CONFIDENTIAL DAFFE/MAI(97)1/REV2
Alternative 3[68](71)
[3. "Monopoly" means any person [or entity], public or private,
including a consortium or
government agency, designated by a national [or local] government
authority as the sole supplier or buyer
of a good or service in a relevant [economic] market in the territory
of a Contracting Party, but does not
include a person or entity that has been granted an exclusive
intellectual property right solely by reason of
such grant.]
Paragraph 4
Alternative 1
[4. "Relevant market" means the geographic and commercial market for a
good or service.]
Alternative 2
[4."Relevant [economic] market" means the geographic and product
market for a good or service in
the territory of the Contracting Party.]
Paragraph 5
5. "Non-discriminatory treatment" means the better of national
treatment and most favoured nation
treatment, as set out in the relevant provisions of this
Agreement.[69](72)
Paragraph 6
[6. "State enterprises" means, [subject to Annex ...., ] an enterprise
owned, or controlled through
ownership interest, by a Contracting Party.][70](73)
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
[D. Article on Concessions[71](74),[72](75)
Transparency
1. Any concession shall abide by the following principles:
a) the conditions of participation in awarding procedures shall be
published in due time so as to
enable the candidates to engage and, in so far as it remains
compatible with an efficient
operation of the mechanism of attribution of concessions, to
accomplish the formalities
required by qualifying evaluations ;[73](76)
b) the procedures of awarding are written, at least, in one of the
official languages of the OECD. If, for an awarding procedure, any
entity authorises propositions to be submitted in more than one
language, one of them shall be one of the two of ficial languages of
the OECD.[74](77)
2. This article applies to the delegations covering an amount equal or
superior to XX (amount to be
decided).
3. This article does not apply to delegations which confer a monopoly
as defined in A to the
beneficiary of this delegation.
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CONFIDENTIAL DAFE:E/MAI(97) 1/REV2
Definition[75](78)
1. A concession is any delegation, direct or indirect, which entails a
transferring of operation of
activities, carried out by a governmental authority, national or
subnational, or any public or paragraph-
public authority.
2. The delegation shall be realised either by any laws, regulations,
administrative rulings, or
established policies, or by any private or public contract. The aim of
the delegation is to entrust to a
distinct legal body with the operation of networks or infrastructures,
or the exploitation of natural
resources, and if needed with the construction of all or part of
networks or infrastructures.
3. [if necessary: The legal act of delegation includes the modes of
payment to the investor. These
modes of payment can consist of any price paid by consumers, any
royalty, tax licence, subsidy or
contribution from the delegatory authority. or any combination of
these modes.]
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INVESTMENT INCENTIVES[76](79)
Provisions
Alternative 1
Several delegations believe that no additional text is necessary. They
consider that the current draft articles in the MAI are sufficient to
cover investment incentives at this time.
Alternative 2
Many delegations, however, would favour specific provisions on
incentives in the MAI although they hold different views as to their
nature and scope. Some proposed a built-in agenda for future work.
Discussion of possible provisions focused on the following draft
article which is regarded as a compromise text by those who wbuld
still prefer more far-reaching disciplines.
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CONFIDENTIAL DAFFE/MAI(97) 1/REV2
Article[77](80)
The Contracting Patties confirm that Article XX (on NT and Mew) and
Article XX
(Transparency) applies to [the granting of][78](81) investment
incentives.[79](82)
2. [The Contracting Parties acknowledge that [, in certain
circumstances,] even if applied on a non-
discriminatory basis, investment incentives may have distorting
effects on the flow of capital and
investment decisions.[80](83) [Any Contracting Party which considers
that its investors or their investments are
adversely affected by an investment incentive adopted by another
Contracting Party and having a
distorting effect, may request consultations with that Contracting
Party.] [The former Contracting Party
may also bring the incentive before the Parties Group for its
consideration.]][81](84),[82](85)
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CONFIDENTL4L DAFFE/MAI(97) 1/REV2
3.[83](86) [In order to further avoid and minimise such distorting
effects and to avoid undue competition
between Contracting Patties in order to attract or retain investments,
the Contracting Parties [shall] enter
into negotiations with a view to establishing additional MAI
disciplines [within three years] after the
signature of this Agreement.[84](87) These negotiations shall
recognise the role of investment incentives with
regard to the aims of policies, such as regional, structural, social,
environmental or R&D policies of the
Contracting Parties, and other work of a similar nature undertaken in
other fore. These negotiations shall,
in particular, address the issues of positive discrimination,[85](88)
[transparency[86](89)], standstill and rollbacks.[87](90)]
4. [For the purpose of this Article, an "investment incentive" means:
The grant of a specific advantage arising from public expenditure [a
financial contribution] in
connection with the establishment, acquisition, expansion, management,
operation or conduct of an
investment of a Contracting Party or a non-Contracting Party in its
territory].
46
CONFIDENTIALDAFE7E/MAI(97) 1/REV2
CORPORATE PRACTICES[88](91)
TECHNOLOGY R&D[89](92)
INTELLECTUAL PROPERTY[90](93)
PUBLIC DEBT[91](94)
The [rescheduling] of the debts [loans] of a Contracting Party or its
appropriate institutions
[owed to another Contracting Party or its appropriate institutions and
the related
[rescheduling] of its debts [loans] owed to [private] investors] Will
not be subject to [the
provisions of this Agreement].
47
CONFIDENTIAL DAFFEIMAI(97 ) 1/REV2
NOT LOWERING STANDARD[92](95)
[Alternative 1
The Parties recognise that it is inappropriate to encourage investment
by lowering [domestic]
health, safety or environmental [standards] [measures][93](96) or
relaxing [domestic] [core][94](97) labour standards.[95](98)
Accordingly, a Party should not waive or otherwise derogate from, or
offer to waive or otherwise derogate
from, such [standards] [measures] as an encouragement for the
establishment, acquisition, expansion or
retention of an investment in its territory of an investment or an
investor. If a Party considers that another
Party has offered such an encouragement, it may request consultations
with the other Party and the two
Parties shall consult with a view to avoiding any such encouragement.
48
CONFIDENTIAL DAF:FE/MAI(97) 1/REV2
Alternative 2
A Contracting Patty [shall] [should][96](99) not waive or otherwise
derogate from, or offer to waive or otherwise derogate from [domestic]
health, safety or environmental [measures] [standards] or
[domestic][core] labour standards as an encouragement for the
establishment, acquisition, expansion or retention of an investment or
an investor.]
49
1. The Chairman of the Negotiating Group proposed to keep this
sentence without brackets, noting that several delegations could go
along with this proposal provided that there was a satisfactory
explanatory statement in the commentary [DAFFE/MAI/M(96)4].
2. Proposed by the Australian delegation.
3. Whether there should be an anti-abuse clause, its precise
wording`7, as well as its specific placement is to be decided.
4. Interpretative note: "The granting of an "authorization to work"
may imply that a natural person may have to meet specific professional
qualifications required in order to carry out particular activities.
Professional qualification criteria that may be applicable are outside
the scope of this Article."
5. Enterprise under this Article would have the same meaning as under
the definition of Investment.
6. Interpretative note: "It is understood that the national
authorities may periodically verify continued eligibility under this
paragraph".
7. Some countries prefer "shall endeavor' and may need to refer to
capitals before agreeing to deletion.
8. Several delegations have concerns with extending the benefits of
the MAI Key Personnel provisions to permanent residents of another
Contracting Party. As a result of the Negotiating Group discussion on
23-25 April 1997, the Chairman proposed that at least for the purposes
of investors, nationals and permanent residents should be covered.
Delegations should reflect further on the inclusion of permanent
residents as concerns the categories of executive, manager, or
specialist.
9. Canada, Mexico, and the United States maintained a reservation on
the coverage of the article concerning membership on boards of
directors.
10. It was pointed out that there may be a need to define "senior
management positions" and "membership on boards of directors"
11. It is understood that this article would not interfere with
national anti-discrimination and labour laws.
12. Australia reserved its position on all obligations on performance
requirements that go beyond those in the TRIMS AGREEMENT and the
Energy Charter Treaty.
13. This listing of investment operations omits the following terms
"maintenance, use, enjoyment, sale or other disposition of
investments" which appear in the National Treatment/MFN articles. Some
delegations reserve on the inclusion of the word ' conduct".
14. Canada proposes that the following phrase be added at the end of
the chapeau of this paragraph: "or condition the receipt or continued
receipt of an advantage on compliance with any of the following
requirements". This addition is intended to make clear that the
performance requirements article applies in two basic circumstances:
I) when linked to the establishment, expansion, etc. of an investment;
and ii) when linked to the granting of an advantage.
Unless expressly stated (as proposed) in paragraph 1, there could
always be some uncertainty as to whether the article would apply in
cases of granting an advantage. Canada considers this addition
necessary for legal reasons as well as to provide investors with
greater certainty. As was the intention in the development of a ' one
list" approach, the proposed addition would, in the second case
(linked to an advantage), limit prohibitions to "requirements" imposed
by governments. Extending the prohibitions to only certain (but not
all) "commitments and undertakings' would unduly interfere with
government practices regarding "voluntary" commitments in exchange for
an advantage and could result in a significant burden on Contracting
Parties on lodging reservations for government-firm agreements
containing "prohibited" voluntary undertakings.
15. Austria and Hungary proposed an interpretative note which could
read: "It is understood that this provision does not extend
commitments on cross-border provision of services under the OATS." A
number of delegations felt that this concern should be addressed in
the context of a general provision on the relationship between the MAI
and the WTO obligations. Canada reserved its position on the inclusion
of "services" in l(c) with respect to requirements associated with the
granting of an advantage.
16. A large number of delegations indicated that they can agree to a
final version of this paragraph only if a clear exception is made for
the possibility of enforcing competition laws and for the transfer of
intellectual property rights, as long as the latter is not contrary to
the TRIPS AGREEMENT. The exact wording of this paragraph remains to be
determined in consultation with competition and intellectual property
experts, to reflect the comments made in paragraph 7 of the Report to
the Negotiating Group on Intellectual Property [DAFFE/MAl/(97)131. In
this context questions were raised concerning the meaning of
"proprietary knowledge" and the reference to the relevant authorities.
17. Canada reserves its position on paragraph (g) and notes that the
inclusion of (g) may inadvertently oblige Contracting Parties to lodge
reservations in respect of basic business incorporation laws in so far
as such laws oblige the establishment and or maintenance of
representative or head of rices for legal purposes.
18. It was recognised that paragraph i) is not intended to interfere
with legitimate government employment programmes or employment
discrimination laws. A number of delegations conditioned their
acceptance of this provision on the elaboration of appropriate
language to give greater precision to the obligation and ensure
consistency with the article on Key Personnel. Many delegations
supported the deletion of this paragraph.
19. This item is meant to cover specific performance requirements
expressed in terms of given numbers or
percentages of employees while the article on employment requirements
addresses problems of discrimination among natural persons holding a
valid permit of sejour and work in a given Contracting Party. Some
delegations felt that the prohibition in (j) should apply to the
hiring of national, as opposed (a local personnel. Some delegations
maintained a reserve on this latter proposal. France wondered whether
this provision should apply to residency requirements. Austria
recalled that the Chairman of the Negotiating Group suggested that
residency requirements should not be considered to be inconsistent
with the obligations of the MAI [DAFFE/MA1(97)14].
20. At the Negotiating Group meeting in April 1997, the Chairman noted
that a large majority was in favour
of including (k) and (1) in the list of prohibited performance
requirements. It would not be necessary to have an interpretative note
regarding the application of national treatment and MEN. Canada
reserved its position concerning the inclusion of (k) and (1) noting
with respect to (1) the requirement to have provisions for nominal
qualifying shares. One delegation suggested that items (k) and (1)
could be combined into one provision since in their view they achieve
the same result. Sweden felt that these items should, for the time
being, be kept separate.
21. The term "commitments or undertakings" would be deleted if the
Canadian proposal for the chapeau of paragraph I was agreed to. Canada
and Hungary supported the inclusion of item l(a). This would appear
necessary to cover inter alia, agricultural export support and
trade-marketing support programmer. Hungary referred to their concerns
on the coverage of services. The United Kingdom, on the other hand,
felt that the inclusion of I (a) would be incompatible with the
provisions of the WTO AGREEMENT on Subsidies and Countervailing
Measures. The European Commission felt that there might be questions
about export credits or export promotion, which would be better
addressed in paragraph 5. Italy pointed to the difficulty of
distinguishing in many instances between export promotion and foreign
aid programmer. As regards items (g), (h), (k) and (1), several
delegations failed to see the link between these items and the receipt
of an advantage and suggested that they not be listed in paragraph 2.
Japan also supported the deletion of the reference to l(f).
22. The listing of the subparagraphs would depend on the coverage of
paragraph 2. Several delegations expressed concerns about the scope of
the envisaged carve-out. Questions were raised in particular with
regard to the reference to the provision of "particular" services and
the construction and expansion of particular facilities (which could
be assimilated to investment operations). Germany, the United Kingdom
and the European Commission considered paragraph 3 to be redundant
given the content of paragraph 2.
23. Denmark suggested the use of the term "employee" rather than
"worker".
24. Several delegations shared the view that issues relating to the
environment and protection of human,
animal or plant life or health would be more appropriately treated in
the context of a more general article of the MAI. A number of
delegations also remained concerned about the wide coverage of
subparagraph (a). Many delegations were willing to consider replacing
paragraph 4 with the following interpretative note proposed by Japan
[DAF] E/MAI/STtRD(97)11:
"Nothing in paragraphs l(b) and l© shall be construed to prevent any
Contracting Party from adopting or maintaining measures necessary to
secure compliance with environmental [laws and regulations] that are
not otherwise inconsistent with the provisions of this AGREEMENT and
that are necessary for the conservation of living or non-living
exhaustible natural resources, or [that are necessary to protect
human, animal or plant life or health.]"
The United States considered that the phrase "that are not
inconsistent with the provisions of this AGREEMENT" did not fit well
in this proposal.
25. Japan proposed the following interpretative note as an alternative
for paragraph 5:
"Nothing in paragraph l(a), (b) and © shall be construed to prevent
any Contracting Party from
conditioning the receipt or continued receipt of an advantage, in
connection with an investment in its
territory of a Contracting Party or of a non-Contracting Party, on
compliance with qualification
requirements tor goods or services with respect to export promotion
Land foreign aid] programmes.
Nothing in subparagraph l(b) [or l(c)] shall be construed to prevent
any Contracting Party from
applying the WTO rule of Origin of Goods to the qualification for
procurement by the Contracting
Party or its state enterprise."
26. Many delegations continued to support the inclusion of foreign aid
programmes in paragraph (a). Other delegations felt that this
reference should be deleted. Several delegations failed to see the
link between export promotion (or export credits for that matter) or
foreign aid programmes and investment operations. Italy noted that it
is very difficult in many instances to distinguish between export
promotion and foreign aid programmer. The United States observed that
export promotion covers a much narrower field than export credits or
subsidies. It also noted that foreign aid programmes are not always
given directly to states, but sometimes proceed through private
entities such as Non-Governmental Organizations (NGOs). Domestic
sourcing requirements imposed on such organizations might result in
preferential treatment to domestically-controlled firms over
foreign-controlled ones. The European Commission felt that these
special situations would be better addressed in an interpretative
note.
27. The term ..state enterprise" would need to be defined.
28. Delegations confirmed that the performance requirements article
should not interfere with the Contracting Party's rights and
obligations under the WTO Government Procurement AGREEMENT. Several
delegations questioned however whether the proposed carve-out afforded
by subparagraph 5(b) would achieve that result or might be construed
instead to be in conflict with commitments under the WTO AGREEMENT on
Government Procurement. Other delegations believe that the proposed
language does not achieve this objective and consider it necessary
given that the WTO disciplines do not apply in the same way to all
countries and government entities and that it would be desirable to
preserve the delicate balance reached under the WTO Government
Procurement AGREEMENT. It was generally recognised that the matter
needs to be examined further to ensure that consistency is achieved
between the MAI and the WTO provisions. There was greater support,
nevertheless, for the inclusion of l(b) and 1(c) than for the
inclusion of l(f) and l(h).
Norway and the United States proposed consideration of the following
interpretative note to clarify the relationship with the WTO
Government Procurement AGREEMENT:
"The Performance Requirements article does not affect any obligations
that my exist under the WTO Government Procurement AGREEMENT."
This suggestion was not discussed.
29. Japan suggested that this paragraph could be the subject of an
interpretative note.
30. Several delegations supported the inclusion of paragraph 5(d) to
avoid any potential conflicts between paragraph l(i) and privatization
operations. The problems could also be solved if paragraph l(I) was
deleted. The United Kingdom and the United States opposed the
inclusion of this provision.
31. Mexico and Poland reserve their position on all privatization
obligations. Canada considers that dedicated
MAI provisions on privatization are unnecessary, since the basic
NT/MFN obligations would apply to privatization, and thus Eats
position on all such provisions.
32. Korea reserves its position.
33. Canada, Hungary, Japan and Spain reserve their position on
sub-paragraph (b) as it goes beyond the scope of a privatization
article. Delegations agree that this provision does not apply to the
behaviour of private entities (corporate practices). It is understood
that the meaning of that provision is to prevent Contracting Parties
from imposing rules on such secondary transactions which are
inconsistent with NT/MFN. In the light of this, some delegations
proposed to include language along the lines of "b) measures governing
subsequent ...". It is felt useful that legal experts examine the
ultimate formulation of this provision on the basis of this
understanding.
34. The Czech Republic is ready to withdraw this proposal if reference
to vouchers schemes under paragraph 3, alternative 2, letter d, is
deleted.
35. Norway and Japan propose to insert "prejudice Contracting.
Parties' rules governing the system of
property ownership or" between the words "shall" and "be".
36. Work on paragraph 3 was based on alternative 1, which was
supported by a large number of delegations. However, the United States
maintained its preference for alternative 2. It cannot accept the
phrase "are compatible with paragraph 1" (Alternative 1, paragraph 3)
on the grounds of the implication that such special rules, regardless
of how they are exercised, necessarily conform with NT/MFN. The use,
application or exercise of such relevant measures under the tirets
(alternative I ) may in fact not conform with NT/MFN. Canada shares
this view. Canada and the United Kingdom propose the deletion of
paragraph 3.
37. Japan would still prefer the inclusion of an illustrative list,
such as contained in Room Document 11 or in DAFFE/MAI(97) 1.
38. United States' proposal, together with the following note: "As
with other measures contrary to obligations on National Treatment and
MEN treatment, use of special share arrangements should be subject to
listing as reservations. Recognising that Contracting Parties may
privatise assets in the future, Contracting Parties will be permitted
to take precautionary reservations for the use of special share
arrangements in those sectors where Contracting Parties generally have
state-owned enterprises or government restrictions." This proposal was
not discussed by the delegations.
39. This language is put forward as a compromise. A number of
delegations supporting alternative I state
their willingness to accept this compromise pending the outcome of the
discussions in the Negotiating Group on how to handle de facto
discrimination in the context of lodging country specific
reservations. Japan suggested the insertion, after "investments" on
the second line, of the words "on the ground of nationality"; of the
word "intentionally" after "arrangements" on the third line; and, "on
the ground of nationality", after..discrimination" on the same line.
Japan also suggested the inclusion of an illustrative list.
40. This proposal by Hungary has not been discussed by the
delegations.
41. France proposed that the obligation should apply to all levels of
government.
42. It is understood that the obligation of this anicic will be met
wherever the information on a privatisation operation is made
available.
43. The United States and France support the insertion of the
sentences in the bracket. The other delegations see no need for such
text.
44. This alternative was proposed by the United States following
bilateral consultations. It was not discussed by the experts.
45. Canada and Austria reserve their position on the definition.
Several delegations considered that the teens
"state enterprise" and Government entity" would have to be defined in
the Agreement. In addition, the inclusion of "state" in the definition
would make necessary additional text in order to ensure that in case
of sales by several tranches all transactions would be covered even if
the company ceased to be a state enterprise.
46. This note assembles proposals made at various stages on the
subject of monopolies/State enterprises/concessions, namely those
contained in the Consolidated Text [DAFFE/MAI(97) 1 ] of 13 January
1997 and in DAFFEIMAI/ST(97)6 of 21 March 1997.
47. Australia reserves its position on all obligations on monopolies
that go b yond those of the GATT and OATS.
48. The right of governments to designate or maintain a monopoly is
not disputed. Some delegations considered, nevertheless, that this
right should be made explicit for the sake of clarity and certainty.
This right could also be the subject of a footnote or interpretative
note on this paragraph. Other delegations continued, however, to
favour the deletion of the paragraph, notably on the grounds that it
could give rise to questions regarding the obligations on
expropriation and compensation and possible market access provisions
in the MAI.
49. Delegations remain divided on the desirability of removing these
brackets. The issue is linked to the
inclusion of provisions in the Agreement on concessions. Some
delegations are willing to drop the contents of the brackets if there
would be satisfactory provisions in the MAI on concessions.
50. Canada has difficulties with the inclusion of the term "maintains"
since this could create disciplines with respect to existing contracts
between the government and such privately-owned monopolies and have
general ramifications on the rights of existing shareholders. The
United States is of the view that this problem could be increased by
the coverage of sub-national entities. Other delegations consider it
essential that monopolies designated by sub-national authorities
should be covered by the disciplines. They recognised that the
reference to national and supranational governments might not be
necessary in light of the solution found for the general treatment of
sub-national entities under the MAI.
51. There is broad agreement that the issue of delegated regulatory
powers of monopolies should be the subject of an anti-circumvention
clause. Many delegations felt that the matter could be addressed in
the context of a general anti-circumvention clause for the MAI.
52. Japan raised the issue of the treatment of sub-contracting of
monopoly activities. New Zealand remains concerned about the broad
scope of carve-out implied by the second sentence and favours its
deletion, noting that much, if not all, of the core business of
government is not involved in producing goods and services for
commercial sale.
53. Canada, France, Switzerland and the United States supported this
alternative on the basis of it being broader and more precise than
alternative 2.
54. France felt that the inclusion of this term would be necessary to
cover damages incurred by foreign investors in the pre-establishment
phase.
55. France could agree to the deletion of the phrase "in particular
through the abusive use of prices" on the understanding that this
practice was covered by the terms "predatory conduct". Mexico
considered that the term "abusive use of prices" has a broader
coverage than the concept of anti-competitive practices.
56. This proposal, based on Article VIII of the OATS, was supported by
Denmark, Finland Germany, New Zealand and the European Commission.
These delegations considered that this provision would be useful in
dealing with the activities of monopolies outside the scope of their
monopoly rights, without getting too deeply into competition policy.
The United States wondered what abuses of monopoly positions would be
'inconsistent" with the obligations of the MAI.
57. Some delegations considered that alternatives I and 2 involve too
great of an intrusion into competition
policy and supported their deletion. Austria and the Czech Republic
supported alternative 2 as a fallback in view of its more limited
implications for competition policy. Korea supported alternative 3 on
the ground that abuses of dominant positions should be dealt with
under competition policy.
58. This is a proposal by Canada and the United States. Many delegates
questioned, however, the feasibility and desirability of requiring
monopolies to act in accordance with "commercial considerations".
Canada provided a number of explanations in favour of the inclusion of
subparagraph e):
Sub-paragraph (e) would present the advantage of increasing
transparency: non-commercial considerations must be both
non-discriminatory [as indicated in (b), (c) and (d)] and must be
clearly stated in terms of its designation. (Note, however, that if a
government wants to continue to pursue social and other non-economic
objectives, it can still do so through the designation.) Sub-paragraph
(e) would also clarify that outside the terms of a monopoly's
designation, a monopoly should act in accordance with commercial
considerations just like any other enterprise (i.e. that it not use
its monopoly power to influence the market). This is, in the view of
Canada, particularly important given the potential power of monopolies
over markets in the context of accession. Fmally, the proposed
language in the two notes would make it clear that charging different
prices to different customers, for example, might be justified on the
basis of commercial considerations. Consideration could be given to a
definition of "commercial considerations" along the lines of accepted
wording in GATE Article XVII. Many delegations questioned, however,
the feasibility and desirability of requiring monopolies to act in
accordance with "commercial considerations".
59. Proposal by France. Some delegations were opposed to the principle
of lodging reservations after the entry into force of the MAI. Japan
proposed that such reservations be made the subject of scrutiny by the
"Parties Group" to ensure that they do not negatively affect the level
at liberalization under the MAI.
60. Japan suggested that the concept of prior notification found in
Article V111.4 of the GATS should also be
examined and that the Parties Group should have a role in examining
all notifications resulting from this article.
61. It was suggested that the period of three months, which is the
notification period for monopolies under
paragraph V111.4 of the OATS, could be an alternative. However, it was
felt that the length of the notification period could usefully be
decided in light of other notification requirements that might arise
under the Agreement.
62. The issue of lodging new reservations for monopolies is linked to
the question dealt with under paragraph 4 of this Article.
63. Some delegations explained that paragraph 3(a), unlike paragraphs
3(b), 3(c), 3(d) and 3(e), would
discipline. circumventions of a Contracting Party's obligations --
including non-discriminatory treatment. The same dispute settlement
alternatives should therefore be made available as those for when a
Contracting Party's own actions are challenged. Canada, Japan and the
United States also pointed to the novelty and complexity of the
proposed provisions on monopolies, which argue in favour of limiting
the dispute settlement procedures to state-to-state disputes apart
from paragraph 3(a). They also believed that most governments do not
even allow private "anti-trust" actions in their own courts by their
citizens; thus it would be a leap to suggest that there be
privately-initiated scrutiny of monopolies' anticompetitive actions
pursuant to 3(d). These delegations considered that state-to-state
dispute settlement should provide a useful procedural compromise. Many
delegations considered, however, this paragraph should be deleted as
they believe that Contracting Parties should only sign up to
commitments that they would be prepared to defend against individual
investors.
64. Several delegations supported this option. Some of them were
willing, however, to consider the coverage of state enterprises in the
context of an anti-circumvention clause which would cover all
enterprises, i.e. both state and private enterprises to which
authority has been granted by any level of government. The Netherlands
could not support any of the options presented and will submit an
alternative option.
65. Both alternatives address the issue of anti-circumvention of the
M, I obligations through the delegation of regulatory, administrative
and other governmental authority to entities not covered by the anti-
circumvention clause for monopolies found in paragraph 3, subparagraph
(a) of the Article on monopolies (see Section A above). The first
alternative is limited to state enterprises wherever they exercise
regulatory, administrative or other governmental authority. The second
alternative covers all entities wherever they exercise regulatory,
administrative or other governmental authority without distinction of
being privately or publicly owned. Some delegations considered this
alternative goes too far in the domain of corporate practices. Other
delegations were of the view, however, that it would be both possible
and appropriate, in order to ensure the purpose of the
anti-circumvention clause, to cover all entities as far as they have
been given governmental authority. As with the anti-circumvention
clause for monopolies, many delegations argued, however, that these
matters could be addressed in the context of a general
anti-circumvention clause for the MAI.
66. Canada and the United States believe that the need for such
provisions is predicated by the fact that state
enterprises are different from private enterprises because of the
links with governmental authorities. Italy pointed Out that when an
enterprise is under civil law and the state is a shareholder, the
state does not have any special privilege in comparison with any other
shareholder. Therefore the government does not have any special
authority to influence the behaviour of enterprises.
67. Some delegations pointed out that this paragraph would be needed
whichever alternative was chosen. Mexico would like this paragraph to
apply to both paragraphs I and 2.
68. This proposal was offered as a compromise by France, which
favours, nevertheless, option (a) (i.c. no additional provisions) as
its first option.
69. Spain proposes the exclusion of concessions with exclusive rights
from the definition of monopolies [see DAFFE/MAI/EG3/RD(96) 1 41]
70. While it is recognised that the MAI would need to draw a line
between monopolies and concessions, serious doubts were expressed
about the use of an ";.;definite period of time" as possible criterion
for the demarcation.
71. Belgium considers alternative 3 to be acceptable provided that
Article A, paragraph 1 is accepted. In that case, it would perhaps be
better to replace in paragraph 1 the term "designating" by the term
"establishing".
72. Germany, Netherlands and the United Kingdom questioned the need
for this definition.
73. A number of delegations questioned the need for a definition of
state enterprises.
74. Proposal by France. It was recognised that there is a link between
the issue of concessions and monopolies [paragraph 2 of the article on
monopolies (see Section A)]. Those delegations favouring the inclusion
of provisions on concessions into the MAI are ready to drop their
opposition to the inclusion of "best endeavour" in paragraph 2 if the
suggested provision on concessions are included in the MAI. Many
delegations question the need for this article. Some delegations felt
that further work was required to clarify the issues.
75. Norway provided a background note on natural resources and
concessions in the context of the MAI [DAFFE/MAUST~D(97)2].
76. A number of delegations consider that the issue of transparency is
particularly important for concessions
and that special provisions should be developed on this topic under
the MAI. Other delegations wondered why similar provisions have not
been proposed for monopolies.
77. Spain proposed to replace the reference to the official languages
of the OECD by the official languages
of the United Nations. Italy and Japan questioned the need to impose a
language requirement for the publication of awarding procedures.
78. This proposal needs funkier consideration. Norway favours the
deletion of the reference to natural resources in the proposed text.
With respect to mineral resources, including hydrocarbons resources,
Norway also proposes to replace paragraph (vii) of the current
definition of "investment" in the MAI, with the following language:
-- Rights conferred pursuant to law or contract regarding property
ownership over mineral resources, including hydrocarbon resources;
-- rights conferred pursuant to any law, regulation, administrative or
contractual provision or
instrument issued thereunder by which the competent authorities of a
Contracting Party entitle an
investor or a group of investors, on its own behalf and at its own
risk, the exclusive right to prospect
tor or explore for or produce minerals, including hydrocarbons, in a
geographical area."
79. This text reproduces the contents of DAFFEIMAI/ST(97)3.
80. The Group proceeded on the basis of report of EG2 with respect to
the treatment of tax incentives [DAFFE/MAI/EG2(97) 1 ].
81. Some delegations favoured the deletion of "the granting of'."
82. While it is agreed that investment incentives should be subject to
NT and MFN obligations, there are different views on the desirability
of making this explicit. Consequently, some delegations consider this
paragraph to be unnecessary. Ireland maintains a pre-scrutiny
reservation on the text of this drain article. The dispute settlement
mechanism would, in particular, apply to this article. One delegation
raises the possibility of taking reservations with regard to NT.
83. Several delegations point out that not all investment incentives
are bad -- the problem arises in drawing a line between good and bad
incentives. It is suggested that the distorting effects of investment
incentives on investment decisions and capital Rows should be balanced
against their possible benefits in achieving legitimate social
objectives. Other delegations note that these concerns were addressed
in paragraph 3 of the draft article.
84. Some Delegations remain unconvinced by the need for special
consultation procedures for non discriminatory investment incentives
as defined in paragraph 2, although final judgement would need to
await the decisions taken on the coverage of the MAI. The presumption
is that, as with other agreements, consultations would be the first
procedural step of the dispute settlement mechanism of the MAI. It
should be possible to revisit the adequacy of the provisions on
dispute settlement and the role of the Parties Group when their
configuration is better known. One delegation questions whether the
dispute settlement mechanism of the MAI could apply to investment
distorting investment incentives or to investment incentives granted
illegally. These questions would also deserve further attention. Some
delegations questioned the role of the parties group in any
consultation process.
85. One delegation suggested the first sentence of paragraph 3 could
be added to paragraph 4, and the rest of paragraph 3 deleted.
References
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