The WTO and foreign investment: implications and alternatives for developing countries

The European Commission (EC) and other OECD countries would like a foreign investment treaty (or `multilateral investment agreement') within the World Trade Organisation (WTO). This would allow foreign companies to establish themselves with 100 per cent equity in all sectors (except security) in any WTO country; and receive `national treatment' on a par with local firms. National policies favouring local enterprises or facilities would be deemed discriminatory, and thus illegal under WTO rules. The penalties for non-compliance with WTO agreements are extensive. This article explores the grave implications of such a treaty for developing countries, and suggests alternatives that are available to them.