(FORTUNE Magazine) – Want to glimpse globalization's next frontier? Head to Paris, where the Organization for Economic Cooperation and Development is inching forward on a landmark treaty designed to protect the rights--and money--of foreign investors. Called the Multilateral Agreement on Investment, or the MAI, it has been variously dubbed a constitution for the global economy and a Good Housekeeping Seal of Approval for investment. It's already shaping up as a litmus test for how much ground world leaders are willing to cede to the free market.

The basic idea of the MAI is simple: Governments should not discriminate against foreign investors. The treaty would prohibit restrictions on foreign ownership and strictly limit government-mandated performance requirements, such as allowing a foreign company to build a factory only if it agrees to buy from local suppliers. In addition, governments signing the treaty would allow foreign investors to transfer any profits, capital, royalties, or fees they earn across national borders.

That sounds great--if you're a foreign investor. A lot of governments, however, like favoring domestic investors over foreign ones. To accommodate this, countries signing the MAI could exempt themselves from certain of the treaty's provisions. But they would have to commit themselves to principles known as "standstill and rollback"--the exempted rules could either remain on the books or be done away with, but no tighter restrictions could be enacted.

Why would a government agree to have its hands tied in this manner? Money, of course. Foreign direct investment flows totaled $350 trillion last year, and every nation wants a piece of the action. The MAI would make it easy for investors to pick good places to plunk down their cash. IBM and Cigna have already told U.S. negotiators they would prefer investing in a country that had agreed to the MAI over one that had not.

But other companies aren't sure, wondering aloud whether the treaty is really necessary. Because the OECD consists of nations with advanced economies, most of its 29 member states already have significant investor protections. It is in the developing world that foreign investment nightmares abound, and yet these countries, because they offer rapid growth, may be able to attract foreign investment without agreeing to the MAI.

Then there are the complaints from labor and environmental groups, which contend the MAI will prevent governments from denying investment opportunities to companies that employ child labor or pollute elsewhere. In the U.S., protectionists like Pat Buchanan see the MAI as an attack on American sovereignty and are already preparing to carve up the treaty when it comes before Congress.

If the MAI is so controversial, why didn't we hear about it long ago? Well, it's complicated, and the pace of negotiations has been glacial. After years of American lobbying, the OECD agreed to start work on the treaty in 1995. A final version was supposed to be ready last May, but lack of progress forced a one-year delay. Even now, with five months to go before the next OECD ministerial meeting, several key issues remain unresolved. Then again, it could have been worse. Before U.S. negotiators familiar with the term "missing in action" weighed in, the treaty was to be called the Multilateral Investment Agreement, or the MIA.

--Jeremy Kahn