In spring 1998, after three years of tough negotiations, the 29 member countries of the OECD were ready to sign the Multilateral Agreement on Investment (MAI), designed to plug certain gaps in existing treaties (particularly that of the WTO) with regard to relations between transnational firms and national governments. The Agreement – incidentally along the lines of the NAFTA – would henceforth forbid any so-called “discrimination” against foreign investors, by enabling them in particular to legally challenge certain national regulations. We know the rest. Interpreted as a “blank check” to transnational firms, the MAI met fierce opposition from groups concerned with the environment, rights of local people, cultural assertion, democracy and even national sovereignty, and it was not ratified; instead, it ultimately served to trigger the huge anti-globalization movement that is currently gaining momentum.
The failure of the MAI was mostly attributed to the highly non-transparent and technical aspect-centric manner in which its negotiation was conducted. With a few years of hindsight, we can nevertheless conclude that the negotiation process, as well as the content and very intention of the Agreement were, if anything, symptomatic of the serious governance problems which we are facing today.
Governance of institutions, first. For it has to be admitted, firstly, that the representation of legitimate interests of the stakeholders in international trade within key organizations such as the WTO and the IMF remains flawed till date, and secondly, there are currently no effective and credible mechanisms for the coordination of multiple NGOs, foundations and private initiatives involved in providing and preserving certain essential “global public assets” like the global ecosystem, gene pool, marine resources, or simply the people’s “goodwill” towards transnational trade and the institutions that regulate them.
Governance of companies and transnational firms too, and in at least two components. For the original intention of the treaty to protect foreign investors obviously focuses on certain legitimate fears, referring among other things to corporate governance (as testified eloquently by the Japanese and Asian crises and also by the scandalous bankruptcies of ENRON, Waste Management, WorldCom, Adelphia, etc.), but it revives, simultaneously and in turn, the old debate on social and environmental responsibility of firms according to the very substance of the claims made by MAI opponents.
Reflections and research aimed at addressing these governance issues are expected to continue throughout this decade, and significant breakthroughs remain to be made.
The Chair’s objectives are therefore to contribute to:
- the advancement of knowledge on the microeconomic aspects of globalization with ramifications for global governance, the management of transnational corporations and the social and environmental responsibility of firms;
- high-level training in economic analysis of the major challenges of globalization and their underlying issues of public or private governance;
- developing a reference and expertise centre on international corporate and institutional governance, for use by companies and public bodies.