The OECD has long been at the forefront in efforts to develop international rules relating to capital movements, international investment and trade in services. Member governments have established "rules of the game" for themselves and for multinational enterprises based in their economies by means of legal instruments to which all members must adhere.
These instruments have been regularly reviewed and strengthened over the years to keep them up to date and effective. They contain the principal legal commitments of OECD members and provide an essential yardstick in assessing the extent to which candidates for OECD membership adhere to standards set by these instruments.
OECD Codes of Liberalisation
The Code of Liberalisation of Capital Movements and the Code of Liberalisation of Current Invisible Operations constitute legally binding rules, stipulating progressive, non-discriminatory liberalisation of capital movements, the right of establishment and current invisible transactions (mostly services). All non-conforming measures must be listed in country reservations against the Codes. The Codes are implemented through policy reviews and country examinations, relying on "peer pressure" to encourage unilateral rather than negotiated liberalisation. The Codes were initially adopted in 1961 but have since been revised and expanded in scope.
Declaration and Decisions on International Investment and Multinational Enterprises
The 1976 Declaration by the Governments of OECD member countries on International Investment and Multinational Enterprises constitutes a policy commitment to improve the investment climate, encourage the positive contribution multinational enterprises can make to economic and social progress and minimise and resolve difficulties which may arise from their operations. All OECD countries, and 9 non-OECD countries (Argentina, Brazil, Colombia, Egypt, Latvia, Lithuania, Morocco, Peru and Romania) have subscribed to the Declaration.
The Declaration consists of four elements, each of which has been underpinned by a Decision by the OECD Council on follow-up procedures:
- The Guidelines for Multinational Enterprises constitute a set of voluntary rules of conduct for multinational enterprises. Observance of these Guidelines is encouraged and facilitated by OECD Member Governments through National Contact Points;
- National Treatment: Adhering countries shall accord to foreign-controlled enterprises on their territories treatment no less favourable than that accorded in like situations to domestic enterprises;
- Conflicting requirements: Adhering countries shall co-operate so as to avoid or minimise the imposition of conflicting requirements on multinational enterprises;
- International investment incentives and disincentives: Adhering countries recognise the need to give due weight to the interest of adhering countries affected by laws and practices in this field; they will endeavour to make measures as transparent as possible.
All parts of the Declaration are subject to periodical reviews. A major update of the Guidelines was completed in May 2011.
Convention on Combating Bribery of Foreign Officials in International Business Transactions
The Convention makes it a crime to offer, promise or give a bribe to a foreign public official in order to obtain or retain international business deals. A related text effectively puts an end to the practice according tax deductibility for bribe payments made to foreign officials. The Convention has been signed by all OECD countries and by several non-OECD countries.