Senator WATSON (4:18 PM) —From the outset, let me state that the Liberal-National Party coalition will not be taking any binding action on this treaty, or on any other treaty, without careful consideration and without full parliamentary scrutiny. I think that puts an end to the reckless allegations that were raised earlier by Senator Cook.

One of the unintended benefits which will undoubtedly arise from this MAI measure is that it will significantly lower the cost of investment capital to Australia. Nobody has mentioned that, but that is a consequence. Traditionally Australia has paid a premium on its investment capital. Under our government, that premium has been significantly reduced due to the sound economic policies of Mr Costello and the government. So the cost of capital will come down and that will be a big benefit in balance of payments issues.

For the past decade, developed nations have been determining international trade agreements focused on liberalisation of all aspects of trade and trade related issues. The most significant of those measures—as all citizens would know—has been the Uruguay Round of the General Agreement on Tariffs and Trade which was signed in 1994. What was important in this agreement, as opposed to previous GATT rounds, was that rather than simply focusing on questions of tariffs and anti-dumping clauses, countries were asked to look at questions of the relationship between trade and investment, intellectual property rights and services.

However, at the same time as consideration of investment is taking place at the WTO, the OECD has initiated a process to draft another international investment agreement, the Multilateral Agreement on Investment, which is the topic of today's debate. Globalisation calls for enhanced international cooperation, for the world economy to be more efficient, and for the equity of markets to be protected. The strong performance of GATT is now recognised and it is the appropriate time for a multilateral agreement on investment.

While most bilateral treaties are limited to the protection of investments after they are made, the MAI will provide legal guarantees for both the investment itself and for the making of an investment. Investment under this MAI will cover direct investment, portfolio investment, real estate investment and rights under contract. It will cover measures taken at all levels of government, not only federal and state governments but also local government. The measures will include laws, regulations and administrative practices.

The core of the MAI is non-discrimination. MAI parties will commit themselves to treat foreign investors and foreign investments no less favourably than they would treat their own investors. The big thing is not to discriminate amongst investors or investments of different MAI parties. Further investment and investor protections include provisions for transparency, transfer of funds, entry and stay of key personnel, performance requirements, expropriation and dispute resolution. Everybody around this parliament surely believes in these vital issues of transparency. It will bind countries to a set of rules governing the treatment of foreign investments and investors leading to a better investment environment. This will improve living conditions, raise standards, and so on.

The development of the MAI by the OECD complements the work of other major rule-making bodies for international trade and finance, namely the World Trade Organisation and the International Monetary Fund. So it will be a freestanding treaty, open and accessible by non-OECD economies, with the same rights and obligations as for OECD members.

Membership will provide greater attractiveness for potential investors; better market access opportunities and legal protection for their foreign investments; full partnership in implementing the agreement; and access to dispute settlement procedures. Governments actually welcome foreign direct investment. Together with international trade in goods and services, FDI promotes economic growth, jobs and rising living standards throughout the world.

A World Trade Organisation study reports that `low levels of trade and inflows of FDI are symptoms rather than causes of the plight of many of the poorer countries'. Unless the flow of FDI is increased in these countries and increased trade occurs, it is almost impossible for any major economic improvement to occur. Asia is a case in point. Asia would have been in a much worse condition today had foreign investment not underpinned the local economies.

Investors need long-term stability of rules and procedures. Investors need open markets and equal competitive opportunities with domestic investors. Investors need protection of existing investments. Indeed, they may need international mechanisms for settling disputes with host governments.

Economists, political leaders and advocates on both sides of this debate are recognising the need for a thorough and reasoned examination of where globalisation is taking the country. It is perceived that the gains for increasing competition and the more efficient allocation of resources are far greater than contemplated losses.

I put it to you, Madam Acting Deputy President, that a great deal of misinformation has been circulated—and we have heard a lot of it this afternoon—about the proposed MAI. Proper public discussion, therefore, becomes distorted. The MAI is a very important matter and the government will and is considering it properly and fully. There has been an extensive, ongoing consultation process on the MAI. Treasury has consulted—

Senator Margetts —Who with?

Senator WATSON —With the states, the territories, Commonwealth departments and agencies, the Australian Chamber of Commerce and Industry, the ACTU and—listen to this, Senator Margetts—the Australian Conservation Foundation. So that is not a bad coalition. We believe in open and transparent treaty making. This government introduced a rigorous treaty making process in 1996. This process ensures that binding action is not taken on any treaty until it has been subject to proper public and parliamentary scrutiny. (Time expired)