Introduction

Foreign Direct Investment (FDI) has become an increasingly important policy issue over the past two decades. Before the mid-1980s most countries maintained important restrictions and controls on FDI. In the context of increasing globalisation and market-oriented reforms, countries revised their investment regimes. It was increasingly recognised that FDI could contribute to economic growth by transfer of technology, transfer of knowledge and skills and an increase in employment. Additionally, for many developing countries FDI is the largest source of external finance.

Currently, there are a large number of bilateral agreements to promote and protect FDI. Regional agreements on FDI have become increasingly important, especially in the context of economic integration agreements. At the multilateral level no agreement on investment has been reached so far. Negotiations for a Multilateral Agreement on Investment (MAI) within the OECD failed in 1998, and there is now disagreement on whether investment should be an issue for the next round of negotiations in the WTO.

There are two WTO agreements that incorporate some of the issues relating to FDI: the Agreement on Trade-Related Investment Measures (TRIMs) and the General Agreement on Trade in Services (GATS).

The agreements mentioned above mainly relate to the responsibilities of governments in the field of FDI. Attention has also been paid to the responsibilities of multinational enterprises, which are responsible for the bulk of FDI. In June 2000 all 29 OECD Member States, plus Argentina, Brazil, Chile and Slovakia adopted the revised OECD Guidelines for Multinational Enterprises. These guidelines are recommendations on responsible business conduct. These "codes of conduct" are described in the section Social, environmental and welfare aspects of trade.

In this section

This section provides information on:

• the negotiations for a multilateral investment agreement, with special attention for the views of the EU and of developing countries;

• existing multilateral investment instruments (MIGA and ICSID);

• FDI aspects of the existing WTO agreements: the GATS and the TRIMs Agreement.