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Guidelines for multinational enterprises

OECD legal instruments on international investment

 

The OECD is a global leader in efforts to establish internationally agreed rules and standards for policies on capital movements, international investment, investment statistics, and responsible business conduct. These rules are laid down in legally binding instruments or recommendations that enshrine a broad consensus on good policy design.

The earliest instruments date back to 1961, but they are regularly reviewed, adapted and strengthened ensure that they are effective in meeting today’s and tomorrow’s needs and correspond to the evolving understanding and good practice in their respective fields. Together, these instruments form the ‘acquis’ of OECD standards in the area of international investment that countries that seek to accede to the Organisation or adhere to individual instruments need to commit to and comply with. The most central instruments include the Codes of Liberalisation and the Declaration on International Investment and Multinational Enterprises.

 

OECD Codes of Liberalisation

The Code of Liberalisation of Capital Movements and the Code of Liberalisation of Current Invisible Operations are call for progressive, non-discriminatory liberalisation of capital movements and the right of establishment and current invisible transactions (mostly services) and are legally binding on the countries that have adhere to them. The Codes were adopted in 1961 and the latest revision of the Capital Movements Code was adopted by Ministers in May 2019. The instrument is now stronger – with more effective governance, transparency, and decision-making – and better adapted to new financial stability challenges that may require capital flow management.

 

Declaration on International Investment and Multinational Enterprises

The Declaration on International Investment and Multinational Enterprises of 1976 is a cornerstone of the rules that govern international investment in advanced and emerging economies: It establishes the principle of National Treatment for foreign investors, calls for responsible business conduct of enterprises operating abroad, provides for a means to resolve conflicting requirements imposed on businesses and encourages governments to consider the impact that international investment incentives and disincentives may have on other countries. Decisions define procedures associated with these components of the Declaration that ensure transparency about policy and thorough implementation.

 

All OECD Members as well as 12 non-OECD countries (Argentina, Brazil, Costa Rica, Croatia, Egypt, Kazakhstan, Jordan, Morocco, Peru, Romania, Tunisia and Ukraine) have adhered to the Declaration, and further countries are undergoing reviews to join this growing group.

 

 

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