The 5th and 6th of October of 2001 the Observatory of Globalisation of the University of Barcelona hold an International Workshop on "The Regulatory Framework of Globalisation" in Barcelona, Spain, organised with the support of the European Commission. John Williamson, Senior Fellow of the Institute for International Economics (Washington) attended this Workshop and presented  the following paper on "The proposals of the Zedillo Panel for Reforming Global Economic Governance". The author served as Project Director for the Zedillo Panel, but views expressed in this paper do not necessarily reflect those of members of the Panel. They do not reflect either the views of the Observatory of Globalisation of the University of Barcelona or the ones of the European Commission. 

Most of the present paper is devoted to presentation and discussion of the reforms that were suggested in the report. This is preceded, however, by discussion of one reform that is not there, which happens to be the one that the preliminary agenda for this Workshop identified as the topic for the session in which I would speak. I assume that it may be of interest to explore why the Panel did not include any recommendation for providing an "international regulatory framework of foreign investment".

After that, the paper proceeds to consider the Panel’s recommendations under five headings. It starts by looking at the WTO, turns to the handling of labour and environmental standards, then looks at the Bretton Woods institutions, moves on to the creation of an International Tax Organisation, and concludes by outlining the Panel’s proposal for exploring the possible establishment of an Economic Security Council.

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The Zedillo Panel did not suggest any international initiative designed to regulate foreign investment, either in the form of foreign direct investment (FDI) or financial investment. With regard to FDI, what it did instead was to outline the conditions that host countries need to establish in order to attract foreign investment, and commend the UN Secretary-General’s Global Compact as a statement of the practices that foreign investors should adopt in order to be considered good corporate citizens. With regard to financial investment, the report reviewed such progress as has been made in redesigning the international financial architecture, in terms of designing standards and codes and modernizing IMF facilities so as to permit a prompt and appropriate response to countries suffering contagion. It noted the main issue still outstanding in those negotiations, namely the question of whether and when and how to authorize a standstill on debt service payments by a country suffering a capital account crisis, but it did not attempt to suggest a solution.

The Panel did consider the possibility of recommending a multilateral agreement to regulate FDI, but it was unable to agree that this would be a constructive step. One problem was the after-effects of the aborted OECD attempt to negotiate a Multilateral Agreement on Investment, to which members of the Panel had very different reactions. Another was differing views as to what such an agreement should cover: was it to be regarded essentially as a document that would specify the responsibilities of governments, or should it also lay out the obligations of the investors (covering the same sort of ground as the Global Compact)? If merely the former, it would replicate the series of 1900-odd bilateral investment treaties that now exist, and there is a question as to how much value that would add given that the countries still without bilateral treaties are unlikely to have a large potential investment flow between them. If the latter, is a formal treaty the best way to accomplish the objective, or is it likely to require trying to foresee contingencies that are best left for ad hoc resolution as they arise? Is there a danger that language that attempts to take account of hypothetical contingencies could deter FDI? Is this perhaps a situation where one should apply the maxim: "if it ain’t broke, don’t fix it"?

The Panel did not consider the possibility of recommending a multilateral agreement to regulate financial investment. The Panel had 4½ months to fulfill its remit, which was not enough time to consider commissioning any independent research; it endeavored to assemble good ideas that had already been developed by others, rather than to be intellectually pioneering. I know of no blueprint out there for such a multilateral agreement (and not, I think, for want of keeping up with the relevant literature). I will be both surprised and delighted if this Workshop yields such a blueprint.