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OECD investment pact "not dead," just convalescing

Brian Love, Paris newsroom

PARIS, March 26 (Reuters) - An OECD treaty on investment liberalisation is not dead even if an initially hoped-for deal by end-April is no longer on the cards, OECD Deputy Secretary General Joanna Shelton said on Thursday.

"Contrary to reports saying otherwise, the MAI treaty is not dead. MAI remains very much alive at the OECD," Shelton told reporters.

"Yes, there is a time problem. This is simply proving more complex than thought at the beginning. Every agreement is toughest at the end," she said.

U.S., French and other key players said after talks in mid-February the treaty -- called the Multilateral Agreement on Investment (MAI) -- was far from acceptable and the U.S. team at the talks said they saw no deal by the end-April deadline.

Since then, the Organisation for Economic Co-operation and Development has been going to considerable lengths to keep the momentum going and saying the project will survive, even if it has taken a knock.

Rather than go for broad political agreement on the treaty at the annual ministerial meeting on April 27-28, the OECD's Paris-based secretariat is now limiting its ambitions to securing a renewed political mandate.

Shelton told a news briefing the treaty might have stalled but that representatives of the 29 OECD countries as well as the European Commission made it clear at a meeting here last week there was a unanimous political will for it.

The April 27-28 meeting was expected to back this up with a fresh negotiating mandate.

While bilateral agreements exist between many OECD states on fair treatment of investors, the OECD treaty is a first attempt to create an extensive, multilateral pact obliging countries to treat foreign investors in the same way as they treat their own.

Among other things, the treaty could affect national rules on foreign ownership restriction, notably in the domain of corporate privatisation, as well as the way governments hand out subsidies.

One of the main snags in the talks is the insistence by France and several other major players that the U.S. repeal trade sanctions legislation such as the Helms-Burton Act against Cuba on the grounds that the U.S. cannot have laws which also hit at other countries doing business with Havana.

Shelton stressed that the Helms-Burton conflict was being dealt with elsewhere than at the OECD -- mainly between the European Commission in Brussels and Washington -- but she conceded that a deal on this issue was crucial.

``It is very important that it is resolved so that the political atmosphere on MAI can be positive,'' she said.

U.S. negotiators said in February that they could not live with the treaty as it was shaping up and noted that they had problems with exceptions being negotiated from the rule of non-discrimination.

Those included a waiver clause to protect European government actions linked to European Union integration.

France is also insisting along with Canada that cultural material, for the large part cinema, be exempted from the investment liberalisation treaty, as it was from free trade rules at the World Trade Organisation in Geneva.

Other OECD officials at the briefing said Frans Engering, who is standing down after three years chairing MAI treaty talks in Paris, had produced new proposals last week in an attempt to generate a consensus on protection of the environment and labour standards.

One of the officials said four key proposals had been put on the table, including an important new provision which would legally oblige signatory states not to compete for inward investment by lowering labour or environment standards.

Copyright 1998 Reuters Limited

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