The following is a VERY brief summary of a 'pirated' copy of the MAI draft document which was distributed to national delegates on January 13th, 1997.

The document consists of 'in excess of 170 pages of printed text', but much of this is taken up with footnotes giving individual country exceptions and contributions and explanations of certain definitions and interpretations.

I have attempted to be as brief and concise as possible, and I believe that what I have included covers the essence of the document. Only those portions enclosed in *--* are my own 'color' commentary.

II. SCOPE AND APPLICABILITY

Definitions: of 'investor' and 'investment'

GEOGRAPHICAL SCOPE OF APPLICABILITY

This agreement shall apply in: the land, territory, internal, and territorial seas of a Contracting nation, and if it is a archipelagic state, its archipelagic waters; the maritime areas beyond the territorial seas within which a Contracting nation exercises sovereign rights or jurisdiction.

III. TREATMENT OF INVESTORS AND INVESTMENTS

NATIONAL TREATMENT AND MOST FAVORED NATION TREATMENT

1.1 Each Contracting party shall accord to investors of another Contracting party treatment no less favorable than it accords to its own.

1.2 Each Contracting party shall accord to investors of another Contracting party treatment no less favorable than it accords to investors of any other Contracting, or Non-Contracting party.

1.3 Each Contracting party shall accord to investors of another Contracting party the better of treatments under 1.1 or 1.2.

PRUDENTIAL MEASURES

A Contracting party shall not be prevented from taking prudential measures with respect to financial services, but such measures shall not be used to avoid obligations under this treaty.

TRANSPARENCY

2.1 Each Contracting party shall promptly publish all laws, regulations, administrative rulings, judicial decisions and international agreements which may affect operation under this agreement.

SPECIAL TOPICS

KEY PERSONNEL

A. Temporary entry and stay of investors' key personnel.

Each Contracting party shall grant temporary entry and stay to a natural person of another Contracting party, as well as to that person's spouse and minor children. Each Contracting party shall endeavor to grant authorization to work to the spouse. No Contracting party may require labour market or other economic needs tests or procedures, impose or maintain any numerical restriction relating to temporary entry or stay.

B. Employment Requirements

A Contracting party shall permit investors of another Contracting party to employ any natural person of the investor's choice regardless of nationality or citizenship

No Contracting party may apply national employment quotas relating to the employment of a natural person by an investor.

PERFORMANCE REQUIREMENTS

Paragraph 1:
No Contracting party may impose, enforce, or maintain any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion. management. operation, or conduct of an investment of an investor of a Contracting party, or a non-Contracting party in its territory:

(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase or use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services from persons in its territory;
(d) to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment;
(e) to restrict sale of goods or services in its territory that such investment produces or provides by relating such sales in any way to the volume or value of its exports or foreign exchange earnings;
(f) to transfer technology, a production process or other proprietary knowledge to a natural or legal person in its territory [except when the requirementis imposed or the commitment or undertaking is enforced by a court, administrative tribunal or competition authority to remedy an alleged violation of competition laws or to act in a manner not consistent with other provisions of the Agreement];
(g) to locate its headquarters for a specific region or the world market in that Contracting party;
(h) to supply one or more of the goods it produces or the services it provides to a specific region or the world market exclusively from the territory of that Contracting party;
(i) to achieve a given level or value of production, investment, manufacturing, sales, employment, research and development in its territory;
(j) to hire a given level or type of personnel;
(k) to establish a joint venture; or
(l) to achieve a minimum level of local equity participation.

PRIVATIZATION

Each Contracting party shall accord National/MFN treatment, in case of a privatization, irrespective of the method or timing of the privatization. This applies to all apects of privatization. No arrangements for privatization are permitted to discriminate against foreign investors. All requirements for 'transparency' apply in case of privatization.

MONOPOLIES/STATE ENTERPRISES

A. Monopolies

Nothing in this agreement prevents a Contracting party maintaining, designating, or eliminating a monopoly, but the principles of the Agreement must be observed. It cannot use its monopoly to adversely affect an investor of another Contracting party.

B. [State Enterprises]

Each Contracting party shall ensure that any state enterprise it maintains acts in a manner consistent with this Agreement.

C. Definitions related to Monopolies [and State Enterprises] ........................*legalese*.

CORPORATE PRACTICES AND SENIOR MANAGEMENT AND BOARD OF DIRECTORS

A. Corporate practices

Contracting parties shall not impose obligations on an investor of another Contracting party to act in a manner inconsistent with this Agreement. In particular, Articles of association shall not impose limits to the acquisition of shares, rules on nationality or residency of members of the board of directors, the issuing of different classes of shares with different voting rights which limit the rights of foreigners.

IV. INVESTMENT PROTECTION

1. GENERAL TREATMENT

Each Contracting party shall accord to investments in its territory full and constant protection, and shall not limit in any way the operation, management, maintenance, use, enjoyment, or disposal of investments in its territory of investors of another Contracting party.

2. EXPROPRIATION AND COMPENSATION

A Contracting party shall not expropriate an investment except with immediate, full market value compensation, and based on the principles in 1. above.

3. PROTECTION FROM STRIFE

An investor of a Contracting party which has sufferred losses due to war, or other armed conflict or insurrection, shall be accorded treatment as regards restitution no less favorable than accorded any other third party, or of the domestic investors of the Contracting party on whose territory the loss occurred

TRANSFERS

4. Each Contracting party shall ensure that all payments relating to an investment in its territory of an investor of another Contracting party may be freely transferred into, and out of, its territory without delay. This includes initial investment amounts, profits, payments under contract, proceeds from sale or liquidation, payments of compensation, payments out of settlement of a dispute, and earnings and other remuneration of personnel engaged from abroad.

Each Contracting party shall ensure that such transfers shall be in a freely convertible currency, at the market rate of exchange on date of transfer.

6. PROTECTING EXISTING INVESTMENTS

This Agreement applies to investments existing prior to entry into force of the Agreement.

V. DISPUTE SETTLEMENT

STATE TO STATE PROCEDURES

A. General Provisions

*Provided for are setups of tribunals, third party mediation, multi-lateral consultations, peer pressures, etc.*

INVESTOR-STATE PROCEDURES

D. Disputes between an Investor and a Contracting party.

This article applies only to disputes between a Contracting party and an investor concerning alleged breaches of an obligation which cause, or are likely to cause, loss or damage to an investor or his investment. Such disputes should be settled by negotiation or consultation. The investor also has recourse to competent courts or administrative tribunals of the Contracting party, and to various bodies setup under the Agreement or under UN auspices.

               *Nowhere in this document is there provision for*
               *a Contracting party to sue for damages caused, *
               *or likely to be caused by the actions of an    *
               *investor.                                      *

VI. EXCEPTIONS

GENERAL EXCEPTIONS

The Agreement does not limit a Contracting party's right to act in defense of its essential security, and in the interest of public order, but such actions must be in accord with the Agreement.

VII. RELATIONSHIP TO OTHER INTERNATIONAL AGREEMENTS

(NON-DEROGATION)

If the obligations of a Contracting party, existing before this Agreement becomes effective, are more favorable to an investor than required by this Agreement, the Contracting party shall remain under an obligation to provide such more favorable treatment to all other Contracting parties after the Agreement.

VIII. IMPLEMENTATION AND OPERATION

A Preparatory Group shall prepare for entry into force of the Agreement. A Parties Group shall facilitate the operation of the Agreement.

Decisions on budgetary matters shall be made by a two-thirds majority of Contracting parties whose assessed contributions represent, in combination, at least two-thirds of the TOTAL assessed contributions.

IX. FINAL PROVISIONS

This section deals with signatures to the Agreement by the Contracting parties, the ratification and entry into force of the Agreement, accession to the Agreement by other parties, non-applicability of the Agreement, review and amendment of the Agreement, withdrawal from the Agreement, denial of benefits to an investor.

With respect to:

Withdrawal From The Agreement - a Contracting party may withdraw after at least five years after signing, with six months notice, but the provisions of the Agreement shall apply to any investments in the territory of the withdrawing party for another fifteen years;

Denial Of Benefits - a Contracting party may deny the benefits of the Agreement to any investor of a non-party to the Agreement if that investor has no substantial investment in the territory of the Contracting party within which it is constituted.

X. OTHER PROVISIONS

TAXATION

The Article on expropriation shall apply as it relates to taxation measures. Transparency shall apply to taxation. NT/MFN considerations apply to taxation.

The term "taxes" shall be confined to compulsory, unrequited payments to general governments. This includes social security and "payroll" taxes.

FINANCIAL SERVICES

No Contracting party shall take measures that prevent transfers of information or processing of financial information outside the territory of a Contracting party, including transfer of data by electronic means where such transfer is in relation to an investment.

When membership or participation in, or access to, any self-regulating body, scurities exchange, etc., is required by a Contracting party in order for financial services to operate, the Contracting party shall accord National Treatment to the investor.

DEFINITION OF FINANCIAL SERVICES

Direct insurance - life, non-life, re-insurance and retrocession, insurance intermediation (brokerage and agency), services auxiliary to insurance (consultancy, actuarial, risk assessment, claim settlement);

Banking and other services (excluding insurance) -

Under III. TREATMENT OF INVESTORS AND INVESTMENTS/
NATIONAL TREATMENT AND MOST FAVOURED NATION TREATMENT

7. The question was asked whether the treatment accorded to foreign investors by a sub-federal state or province would meet the national treatment test only if it were no less favourable than the treatment accorded to the investors of the same state or province, or whether it would be sufficient to accord treatment no less favourable than that accorded to the investors from any other state or province. The question will need to be answered by the Negotiating Group in due course.

Under VI. EXCEPTIONS/GENERAL EXCEPTIONS

1. It has been proposed that the general exceptions provisions not be applicable to all of the obligations under the agreement. The ECT (Article 24(1)) is an example of a multilateral agreement that does not allow for general exceptions to be taken with regard to specific obligations concerning compensation for losses or expropriation. Bilateral treaty practice differs on this matter. Some delegations thought that a reference to paragraph 2(c) would be necessary to clarify that actions pursuant to a UN Charter obligation would in any case prevail over the MAI (see paragraph 9, below). The Austrian delegation submitted a proposal which would have the same effect by changing the order of the paragraphs.

2. The question is whether certain obligations of the agreement are considered so central to investor protection, for example compensation in case of expropriation, that a provision should limit the right of a Contracting Party to invoke this Article for actions that would be inconsistent with its obligation to pay compensation in the case of an expropriation.

3. The majority view was that the MAI should provide an absolute guarantee that an investor will be compensated for an expropriated investment. This was questioned by the United States delegation which doubted that in time of war whether a country would be able to pay compensation, in all cases, to an investor of a party with which it is in conflict. In the case that general exceptions would be permitted to override MAI obligations, delegations might further consider whether this should be limited to only essential security interests.

Under VIII. IMPLEMENTATION AND OPERATION

1. STANDSTILL AND THE LISTING OF COUNTRY SPECIFIC RESERVATIONS

1.1. The MAI aims to ensure a high minimum standard of treatment for investors and their investments, including National Treatment and MFN treatment. Standstill would result from the prohibition of new or more restrictive exceptions to this minimum standard of treatment. From this perspective, a violation of standstill would be a violation of the underlying MAI obligations (e.g. of National Treatment and MFN), and the dispute settlement provisions would apply to such breaches of the MAI obligations.

1.3. For those matters where Contracting Parties are ready to commit to standstill, the Drafting Group considered that

a) each Contracting Party should list all non-conforming measures in an Annex of the Agreement;
b) the reservations should describe, in the most precise terms possible, the nature and scope of the non-conforming measures. This would ensure that the scope of the reservations is not broader than these measures and, thus, that the reservations are not of a "precautionary" nature;
c) no additional non-conforming measures could be introduced; and
d) an amendment to a non-conforming measure would be permitted provided it did not decrease the conformity of the measure.

2. ROLLBACK

2.1 Rollback is the liberalisation process by which the reduction and eventual elimination of non-conforming measures to the MAI would take place. It is a dynamic element linked with standstill, which provides its starting point. Combined with standstill, it would produce a "ratchet effect", where any new liberalisation measures would be "locked in" so they could not be rescinded or nullified over time.