Deeper integration resembles the paradigm of the U.S.-Japanese structural impediments initiative. It involves trade flows, the interrelationship between trade and investment flows, technology flows, and it involves structural impediments.
Compared with the surge in the 1980s and the slowdown due to the recession, the new surge looks very different. For the first time in history the main outflows are into non-OECD countries, such as East Asia, particularly China. So if this is the beginning of a new phase of deeper integration, one could argue that any investment policy should involve the non-OECD countries.
On 24 May 1995 we received a major announcement that OECD ministers had requested that the negotiations begin immediately on a multilateral agreement on investments (MAI) and that they should be finished by 1997. As a former drafter of communiques, I consider the ambiguity in this announcement to be very well done. The words are very careful. The announcement describes "a freestanding international treaty open to all OECD members and the European Community and to accession by non-OECD-member countries, which will be consulted as the negotiations proceed." I do not understand what that means. It also states that ministers "should prepare for discussions on investment in the WTO, which it would be appropriate to envisage in the future and encourage the OECD to cooperate with the WTO to this end."
The OECD has played a major role on other issues. It did all the basic work on services. It did all the basic work on trips. It did all the work on agriculture, but it never did anything that was not done with full linkage with the GATT. This is a very different project. This is moving to rules and dispute settlement. But the OECD has never had rules. It has had voluntary codes.
It is significant that the growing resentment, which I have seen at meetings and heard of from the excluded countries, unfortunately threatens a new NorthSouth dispute. And unless we take firmly into account the importance of the Uruguay Round, the friction will be very serious.
Bruce Duncombe, Department of State
I am here to make a few remarks on the relationship between trade and investment and to say a few additional words about the exercise that we have launched in the OECD.
We hear more and more today about market access and that the increasing emphasis on market access will push investment issues to the fore of future trade negotiations. This is particularly true of trade in services, in which delivery often depends on having a physical presence in the market where the services are sold. But the need for a presence in the market is also crucial for many manufactured goods in which design must be tailored to market requirements, in which service and reputation are important and in which a fast response is frequently key.