The Multilateral Agreement on Investments

this vague and sweeping agreement will have

a strong impact on Canadian culture

 

by H.A. Fraser, ABM Editor

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The Multilateral Agreement on Investments (MAI) is a vague and sweeping agreement being quietly forged in political backrooms. It will affect the cultural industries of all signatory countries including the U.S. and Canada. However, the Canadian Conference of the Arts Director, Keith Kelly, believes the agreement will have a particularly strong impact on Canadian culture. The CCA in Ottawa has sent up a red flag on the current version of the MAI.

The MAI, an initiative of the Organisation for Economic Cooperation and Development (OECD), will be concluded over a year from now in September, 1998, but the CCA is not waiting for the outcome. It has spoken out with detailed information on the agreement which the lobby group believes will prevent all Canadian governments from setting conditions on foreign ownership of arts and communication enterprises. Such enterprises would include radio stations, newspapers, magazines, TV networks, publishing houses.

Mr. Kelley agrees that there will be economic benefits to opening the gates to investment in both directions. All signators to the MAI must extend Most Favoured Nation and National Treatment to foreign investors. In other words, any nation which signs the agreement must provide exactly the same benefits to other signatory states as it does to its own investors and corporations.

 

However, in spite of the economic potential to Canadian investors in foreign markets, Mr. Kelly has strong reservations about its viability for Canadians at home. He is concerned that the MAI, as it now stands, would prevent Canadian governments from imposing domestic content requirements on foreign investors in the arts and communications. For example, if the Canadian government wished to sell TVO, it would have to open the bidding process to all investors who signed the MAI. Mr. Kelly commented to ABM that in its current state, "...it [the MAI] must be stopped because it will mean the erosion of our cultural sovereignty."

 

While France has applied for a cultural exemption from the agreement, Canada, represented at the Washington table by Bill Dymond, has not yet applied for a similar "carve-out". It has yet to be seen whether cultural exemptions are allowed.

 

Mr. Kelly wrote in a Bulletin this past April that under the MAI, investors are broadly defined to include:

 

"a legal person or any other entity constituted or organised under the applicable law of a Contracting Party (signatory state), whether or not for profit, and whether private or government owned or controlled, and includes a corporation, trust, partnership, sole proprietorship, joint venture, association or organisation."

 

The agreement defines investments as:

 

"(a) Every kind of asset owned or controlled, directly [or indirectly] by an investor including:

(i) an enterprise (being a legal person or any other entity constituted or organised under the applicable law of the Contracting Party, whether or not for profit, and whether private or government owned or controlled, and includes a corporation, trust, partnership, sole proprietorship, branch, joint venture, association or organisation);

(ii) shares, stocks or other forms of equity participation in an enterprise, and rights derived therefrom;

(iii) bonds, debentures, loans to and other form of debt [of an enterprise], and rights derived therefrom;

(iv) rights under contracts, including turnkey, construction, management, production or revenue- sharing contracts;

(v) claims to money and claims to performance;

(vi) intellectual property rights;

(vii) rights conferred pursuant to law or contract [such as] or [by virtue of] concessions, licenses, authorisations and permits;

(viii) any other tangible and intangible, movable and immovable property, and any related property rights, such as leases, mortgages, liens and pledges, [unless such assets lack the characteristics of an investment.]"

 

The proposal goes even further in accommodating foreign investment. The MAI provides special treatment which would guarantee to foreign investors the right to have temporary entry and stay of investors and key personnel in any other signatory state. It also provides the right of a dependent of such investors or key personnel to work in Canada during the temporary stay [a period not exceeding 1-3 years].

 

To be eligible for temporary entry and stay the individuals "must comply with applicable measures relating to public health and safety, criminal law and national security".

 

As well as creating new rights for the global investor, the agreement imposes restrictions on signatory states:

 

"No Contracting Party may impose, enforce or maintain any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, operation, or conduct of an investment of an investor of a Contracting Party or of a non-Contracting Party in its territory:

 

(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 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 in any way to the volume or value of its exports or foreign exchange earnings;

(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 or to act in a manner not inconsistent with other provisions of the Agreement];

(g) to locate its headquarters for a specific region or the world market in that Contracting Party;

(h) to supply one or more of the goods that it produces or the services that it provides to a specific region or world market exclusively from the territory of that Contracting Party;

(i) to achieve a given level or value of production, investment, manufacturing, sales, employment, research and development in its territory;

(j) to hire a given level or type of local personnel;

(k) to establish a joint venture; or

(1) to achieve a minimum level of local equity participation."

 

The MAI, as it now stands, may open the door too wide for those who are not already large international players. Mr. Kelly believes that, "The ability of government to encourage regional development programs, co-production agreements, investment policies linked to human rights and environmental considerations will be in direct jeopardy if Canada signs this agrement."

 

 

For More Information:

Keith Kelly, National Director

(613) 238-3561; (613) 239-4849 FAX

cca@mail.culturenet.ca

 

OECD can be found at http://www.oecd.org.

 

The OECD Washington Center can be found at http://www.oecdwash.org.

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