Meaning of Multilateral Agreement On Investment:-

Multilateral agreement on Investment (MAI) was a draft agreement negotiated between the members of the Organization for Economic Co-operation and Development (OECD) in 1995-1998.It gives corporations absolute power, and causes them not to be subjected to any national, provincial, nor municipal law. It will grant multinational corporations the unrestricted "right" and "freedom" to buy, sell, and move their operations whenever and wherever they want around the world, unfettered by government intervention or regulation.

· PURPOSE

Its main purpose was to develop multilateral rules that would ensure international investment was governed in a more systematic and uniform way between states.

The aim was to create more consistent, secure and stable investment conditions and to regulate investment in a more uniform, transparent and enforceable manner. Although the agreement was to be negotiated between the member states, the intention was to have an open-agreement which non-OECD members could accede on a negotiated basis. According to MAI supporter Sergio Marchi, one of the main purposes of the agreement was to eliminate the "patchwork" of investment rules.

· Minimise the diverse state regulations in governing the conditions under which investments by foreign corporations could take place.

· Enable compensation to corporations for proven unfair investment conditions causing loss of profit.

· Allow states and corporations recourse to international arbitration to settle any disputes arising under the agreement, instead of national courts in the host state.

A Negotiating Group held its first meeting on 27 September 1995 with the participation of representatives of the OECD’s then 25 member countries and the European Commission.In one statement, they said MAI would be free standing. When its draft became public in 1997, then many comments came from civil society groups and developing countries, particularly over the possibility that the agreement would make it difficult to regulate foreign investors.In the second half of 20 th century, investment protection was developed through the bilateral investment treaties, which are signed between two countries.

The first BIT was between West Germany and Pakistan was signed in 1959.After the some time of first bit research suggests that BIT’s do little more effort to increase the foreign investment. . In 1965, the International Centre for Settlement of Investment Disputes (ICSID) was established in the framework of the United Nations, and in 1967, the OECD prepared the Draft Convention on the Protection of Foreign Property although this was not adopted.

THE EFFECT OF MAI:-

The guiding principle of the MAI is that any foreign corporation must be treated on the same level as a local or national corporation. This principle might seems fair at first sight, but it has serious consequences on national economies. For example, no government could do anything to favor certain sectors of its own economy: subsidies to help local business, or help given to regions with high rates of unemployment, will be forbidden, being considered as an unfair advantage.The government should maid the same subsidies for local people as well as foreign people.

The MAI guarantees all foreign investors the right to establish investment in all economic sectors, including services such as banking, communication, and construction.

In fact, the MAI gives foreign companies better that equal treatment. Under this agreement, governments cannot require foreign corporations to meet certain performance requirements or conditions, even if these conditions are imposed on local companies (like requirements to use local suppliers, to take on local partners, or to hire a minimum

A threat to sovereignty:-

This MAI treaty is a real threat to the sovereignty of any country. It states, among other things, that any country can:

- Unilaterally purchases and own any built structure or productive capacity of any other signatory nation, with no requirement to sustain its viability, employment level, or location in the home country.

- Own any salable natural resource of other countries, and have the national right to any concession, license, or authorization to extract its oil, forest, mineral, or other resources, with no obligation to sustain these resources, or to use them in the interests of the host society;

CONCLUSION:-Mulilateral agreement should be done under the government rules so that it should not be harm and government should be loyal to their rules.

Subject: Accounting for management

Submitted to: Mr. Gurdeepak singh

Submitted by: BINDU

MBA 1^st year