The parties or stakeholders in a negotiation between a multinational corporation (MNC) and a national government include the “parent” company, the “host”-country government, "host-country" labor (in some cases), the “host”-country partner (if an acquisition or joint venture), and the “home”-country government (in some cases).  What must they negotiate and agree upon?  What influences the relative bargaining position and strength of the parties?
 

POINTS  OF  NEGOTIATION  IN  FDI  ARRANGEMENTS
MNCs generally want to maximize
· degree of foreign ownership
· amount of imported components or equipment
· tax, infrastructure, import-duty, or labor-training concessions or incentives from national or local governments
· depreciation rates for the investment (which reduce taxes in the host country)

Host countries generally want to maximize
· foreign exchange to be earned from exports from the inward FDI
· direct-labor and managerial employment in the foreign-owned operation
· local content in production
· local ownership (or at least control) of the operation
· local production of new technology
· protection of local competitors

Labor is an important motivation of some FDI.  In some cases, host-country governments want to maximize the returns to labor, through strong standards for labor relations and relatively high wages.  In some cases, however, host-country governments are willing to compromise labor standards quite early in the drive to attain other concessions from MNCs.
The member countries of the International Labour Organization meet annually to review and revise "international standards in all work-related matters, such as

• the abolition of forced labour,
• freedom of association,
• equality of treatment and opportunity,
• employment promotion and vocational training,
• social security,
• conditions of work,
• maternity protection,
• minimum age for entering the labour market, and
• protection of migrants and categories of workers such as seafarers."

DETERMINANTS  OF  NEGOTIATING  STRENGTH
For the MNC:
· internationally unique technology or distribution networks
· recent concessions by the country in similar cases
· timing:  greatest strength before the physical investment is in place

For the host country:
· size and growth rate of the national market (for market-oriented FDI)
· political and economic stability
· dwindling international resource availability (for resource-oriented FDI)
· recent concessions by MNCs in the same sector and/or country
· timing:  greatest strength after the investment, technology, and training are in place, but before the parent company has repatriated sufficient profit

Given the size, strength, and sophistication of large MNCs, smaller and poorer countries have formed alliances to share information and standards for negotiating with MNCs on trade and investment issues.  The Group of 77 and the UN Conference on Trade and Development (UNCTAD) are two of these.  UNCTAD has a very useful web site, reflecting its three decades of information-gathering and standard-setting.  (You have to go from the linked page to the "English" site and then click on "About the Organization" -- I can't get a direct link to work).
 

ON-GOING  RISKS  OF  FDI

Political risks

• unilateral changes in negotiated term
• expropriation (with or without compensation)

INTERNATIONAL  PROTECTION  OF  INTELLECTUAL  PROPERTY  RIGHTS

• varied across countries
• typically less in countries with more to gain than lose from piracy of intellectual property or counterfeiting of trademarked goods
• current norm (from the GATT):  reciprocity (= national treatment) of the IPRs of foreign-based companies operating in a given country
• local protection of IPR requires registration of the patent, trademark, or copyright, and the local use of the IP within a certain number of years (three years according to the Vienna Convention), to prevent local registration purely for the purpose of preventing local competitors from using the IP.