elected officials. Initially, I find the potential delegation of these vast powers to such an organisation unacceptable and undesirabe. In addition, because of the magnitude of its activities, such an organisation would not be able to function effectively. In short, I do not feel that an organisation of the type contemplated by paragraph 11 is the correct way to solve the problems concerning multinationals.

INFORMATION

Paragraph 14 will require a great deal more specificity regarding the additional types of information that may be requested. For example, exactly what types of information on research and development will be disclosed?

Paragraph 16 refers to "standardized annual accounts and reports for enterprises of a significant size". No indication is given as to the kinds of information that will be required or how it will be used or disclosed. These points must be clarified, if the privacy multinational employees is to be preserved and business secrets maintained.

COMPETITION

Since the United States' antitrust laws are generally more restrictive than those of its European trading partners, some "harmonisation" of these laws would be helpful, especially in the area of cartels. However, because of the amount of government ownership and involvement in business outside the US, I am not sure how effective this harmonisation would be. This may be what is referred to in paragraph 21 where it is stated that: "There appears to be a trend toward increased involvement of governments in enterprises, including direct ownership of firms. If this trend continues, it can be questioned whether such governments can continue to remain objective with regard to the enforcement of antitrust and other laws against enterprises in which they are involved, as opposed to other enterprises. Any dicrimination against foreign-based enterprises is also to be avoided".

While I agree with the statement in paragraph 20 that anti-competitive acts should be removed, I do not agree with the statement that implies that multinationals should provide all information requested by governmental enforcement authorities. The types of information that can be obtained must be designated to prevent abuses of individuals and corporations.

INVESTMENT POLICY

Paragraph 22 seems to imply prior governmental clearance for all types of business investments. It also subjects, in its present form, business to the possibility of being caught in the middle of political disputes between countries, an undesirable result. Initially the types of investments this paragraph contemplates should be stated and then considered by this body at some future date. I hope the intent of this provision is not to require all international investments to receive the prior approval of some governmental body.

Paragraph 24, because of its potential, deserves special comment. Initially, it discusses certain rules that are to be applied to foreign takeovers and states that those rules as well as ". . . other special investment regulations ought to be harmonized in an international agreement". The purpose of this agreement being "... to minimise distortions to trade and investment, harmonising incentives and disincentives and avoiding discrimination on the basis of country or origin".

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There is no indication if this agreement is to be administered by an existing organisation or a newly created one. An existing organisation does not come to mind that has the staff or authority to carry out the objectives of the proposed international agreement. This would seem to mean that a new organistaion will have to be established to administer the international agreement. It is not clear if this is the same or a different organisation from that described in paragraph 11. To be effective, the new organisation would require broad powers including ultimate authority over all major acquisitions and investments. "To minimise distortions to trade and investment . . ." the organisation may have to have some "input" in the economic policies of the various signatory countries. In short, the international agreement would cover areas broader than "foreign takeovers" and for reasons previously cited, I feel that the establishing of such an organisation is not a desirable objective.

FISCAL POLICY

A great deal of the material in this section concerns intercompany pricing rules and exchange of information procedures. I do not see why an additional body of rules for these areas is necessary since they are covered in detail in tax treaties between the industrialised countries. In addition, the US has an elaborate set of pricing rules issued under Section 482 of the Internal Revenue Code of 1954.

The "Tax Policy" statements appearing in paragraphs 27, 28, 32, 33 and 34 are out of place in a document such as the draft Code and should be deleted.

I think the statement appearing in paragraph 31 on bank secrecy should be deleted and no position on this matter taken until it is fully discussed and studied.

CAPITAL MARKET POLICY AND MONETARY POLICY

Paragraph 42, like many of the prior "information" paragraphs, requires clarification. I have difficulty in reconciling the numerous information requirements in the draft code with the Statement in paragraph 43 that "Government authorities are to avoid unduly restrictive capital controls . .

I would like to see some explanation as to why host country nationals must be given stock ownership rights. In the US, this decision is left to the individual corporate owners, a method I favour.

SOCIAL POLICY AND LABOUR MARKET POLICY

This section contains numerous statements concerning labour-management policies which are best left to individual companies and unions to decide. For example, it is very doubtful that an international collective bargaining agreement can adequately meet the needs of workers throughout the world.

As to local participation in corporate decision making, the requirement that nationals of the host country serve in management, seems to be well intended but does not appear to work well in practice. For example, this rule could lead to direct government participation in corporate decision, a practice not found in the US for various reasons.

TECHNOLOGY

The material on this subject is too brief in light of the importance of technology. For example, there is lacking even a general set of rules concerning the kind of protection that would be afforded trade secrets. Thus, a company which is capable of assembling the necessary financial and intellectual resources to develop a new process or product would apparently be required to immediately share its discovery with competitors, without receiving any benefit for its efforts. This type of system can only be viewed as counterproductive over the long term. Another aspect of the technology materials which requires clarification is its relationship to existing patent and trademark laws. These laws generally afford protection for a specified number of years. Is it the intent of the materials in paragraph 52 to amend these laws in some way or to operate in conjunction with them?

An additional aspect of the material in paragraph 52 which should be clarified is to whom the technological know-how will be disseminated. That is, will multinationals be required to make technological information available to local educational institutions, governmental agencies, competitors or only some of these organisations?

Finally, there should be elaboration on the meaning of the phrase "reasonable terms". I'm not sure if these terms will be left to the interested parties to determine or if they will be established by some third paty-for example, the international body referred to in paragraph 11?

Unless these and related areas are clarified, much of the incentive for developing new technology may be removed by the draft code.

POLITICAL ACTIVITIES

I think a more specific body of rules relating to the political activities of multinationals should be developed. This is an area which can be considered by our organisation and should be. We should be able to develop a body of rules that would eliminate the current grey areas.

Amendments of the type I have suggested will improve the draft code but will not, in my opinion, cure its basic failure to fully protect the rights of sovereign governments, owners of MNE's and individual employees. The protection of these rights and the prevention of burdensome and costly administration requirements are an absolute essential in my view.

Thursday, April 22, 1976,

SUMMARY OF DISCUSSION

SESSION IV-POLITICAL ASPECTS OF THE WORLD FOOD SITUATION

(Working Documents: Mr. Houdet, Mr. Nolan and Mr. Symms) 1

Mr. Nolan apologized for Mr. Symms' absence and presented the latter's report as well as his own.

The central topic of Mr. Symms' report concerned the best methods of exploiting the earth's resources and means of production. According to Mr. Symms, private property was the cornerstone in a program to fulfill the world's nutritional requirements. The Western world ought to put an end to its policy of food aid and subsidies. Only private ownership of the means of production would lead to rational conditions of production.

In his report, Mr. Symms quoted comparative figures for the USSR and the USA which highlighted the non-profitability of land in countries where there was no private ownership..

U.S.-U.S.S.R. GRAIN TRANSACTION

Mr. Nolan then passed on to his own report in which he described the grain agreement signed between the USA and the USSR covering shipments amounting to between six and eight million tons per year for five years. Those in favour of this agreement considered that it should lead to a better balance in feeding the world's population. He wondered, however, if this agreement would not also have undesirable effects on the market, in that it in some way withdrew from free circulation grain which until now had found a buyer on the "world market". He feared that in time of shortage, this agreement would remove from the market these quantities fixed in this bilateral agreement.

Apart from this, the USA had abandoned its attempts to influence the USSR in other sectors; this could have been a reciprocal concession in the grain agreement.

What else could be done at world level? The World Food Conference had planned an aid program amounting to 10 million tons of grain, of which the USA would supply 60%. Agreements between the developed countries might jeopardize this plan.

FAVORABLE U.S. AGRICULTURAL TRADE BALANCE

Mr. Houdet noted that in his report Mr. Nolan was in favour of world agreements and this was also the European Community's view. Passing on to bilateral relations, Mr. Houdet recalled the difficulties

1 See pp. 43, 47, and 50, respectively.

encountered because of the U.S. attitude to certain imports coming from the Community (cheeses, Irish meat) although the balance of trade in agricultural products between these two countries seemed very largely favourable to the United States.

As for refunds, had the United States itself not granted subsidies to exporters for the sale of grain to the USSR in 1972? The Europeans for their part had been particularly badly hit by the 1973 restrictions on soy exports, and European agriculture had suffered from this for some time. As he mentioned in his report, Mr. Houdet considered that the European Community countries were fortunate to be in a temperate zone and to possess large tracts of arable land. It was therefore quite natural that they should be among the exporting countries and that they should contribute towards safeguarding world supplies.

It could be argued that in one sense the Lomé Convention was an extension to Article 29 of the Treaty of Rome, in that for certain imports, a price close to that obtaining in the EEC was granted to the ACP countries for particular products.2 This was especially so in the case of sugar.

MULTILATERAL AGREEMENTS BACKED

The rapporteur ended by referring to the conclusion of his report in which he pointed out that multilateral agreements, together with certain medium-term contracts, formed a logical solution, even if this gave rise to certain difficulties of implementation.

Mr. Ryan established a link between the previous political debate and the present agricultural debate. Like Mr. Jahn, he pointed out that the world political situation was uneasy and noted that arms sales were increasing rapidly. Should we not be seeking a form of security other than one based on armaments? In fact, the number of countries which could be agriculturally self-supporting was decreasing. Could we not try to establish more positive links than armaments, for example, foodstuffs? Productive capacity was sufficient, the problem was rather one of distribution. Trade with certain countries could be increased without prejudice to a food-aid programme.

EXPORTING IDEOLOGY OPPOSED

Mr. de Koning agreed with Mr. Symms that private ownership was the basic concept for agriculture in Europe and the USA. But it was not necessarily the only method in the world. Everything was relative. The USA, New Zealand and Australia were at the top of the production league. In Europe we were trying to restructure our agriculture but this would take us until the end of the century. However, in other areas of the world, private initiative would certainly not be sufficient. Agricultural progress in China provided an example of a different approach. He could therefore not agree with Mr. Symms' idea of exporting our ideology.

Coming to Mr. Nolan's report, he commended the valuable information given in this document, even if he did think that the rapporteur

2 The Lomé Convention of 1975 covered trade and development aid to 46 countries of Africa, The Caribbean and The Pacific areas (ACP) and The European Community.