MAI

by Marion & Allan Hunt Badiner

 

Business Week calls it "the most explosive trade deal you've ever heard of," and says that it would "rewrite the rules of foreign ownership, affecting everything from factories to real estate and even securities. But most lawmakers have never heard of the MAI."

 

It is an obvious and irrefutable fact that we live in an age of globalization, so why is the Multilateral Agreement on Investments a treaty of unprecedented secrecy? It was not until the spring of 1997, two years after OECD (Organization for Economic Cooperation and Development) began negotiations in Paris that a draft copy was leaked to the press. Much to the chagrin of the multinationals, the full text of MAI is now posted on the Public Citizen website.

 

The MAI treaty is being hammered out by 29 of the richest nations who comprise the OECD, which develops policies used to control the flow of capital investment. The U.S. is represented by the State Dept., Treasury, Office of the Trade Representative and such groups as the U.S. Council for International Business, (the principal lobby arm of major corporations). Until spring 1997, only a handful of people from the participating countries knew anything about the MAI discussions at OECD.

 

The implications of MAI are enormous. It is the logical next step after GATT and NAFTA for transnationals to gain more control of world capital. The document contains a body of rules for governments to follow to promote investment. Environmental laws, labor laws and restrictions, local businesses and local culture are all effected negatively by MAI. If adopted, it will threaten local purchasing preferences, recycled content procurement policies, small business set-asides, community reinvestment laws, currency and stock trading speed bumps, investment restrictions based on human rights and environmental performance, and more. For instance, New York City's recent ordinance banning the sale of woods from endangered tropical rainforests would run afoul of MAI's interdiction of performance requirements. The MAI would drastically curtail every country's ability to regulate foreign investment.

 

In the words of the Director General of The World Trade Association (WTO), "MAI is the constitution for a single global economy." Actually WTO has had questions about the treaty (like that it may strip nations of their tools for sovereignty and could become an instrument for re-colonization), so corporations and their cohorts are using the economic clout of the OECD to rush the finalization of the agreement.

 

 

Some of the new corporate power tools under MAI include:

 

1. Legal Standing: The transnational's legal standing is effectively

equal to nation states. They are granted "most favored nation"

status. The objective was to eliminate discrimination against foreign

investors. Governments cannot regulate capital coming in or going out.

 

2. Performance Ban: Under MAI, governments are forbidden to impose

performance requirements. The restrictions go beyond NAFTA and WTO

bans. Governments cannot discriminate against foreign investment

based on human rights, environmental or political practice.

Governments cannot set performance requirements for local hiring

quotas, joint ventures with local firms etc. Local, Regional and

Federal gov'ts cannot offer any preferential treatment to their own

citizens or reward companies that have responsible environmental

records, progressive hiring practices or even programs that strengthen

local communities.

 

3. Expropriation: The MAI is based on what is known as the "takings

rule" regarding compensation for expropriation. Governments are

prohibited from taking private property "without adequate compensation"

and "valid public purpose." Even lost profits from a planned unrealized

investment would be considered expropriation requiring compensation.

We are seeing this played out right now in Canada with Ethyl

Corporation and the Canadian banning of MMT, a fuel additive that is a

suspected neurotoxin. MAI dictates that the gov't would have to pay

"equivalent to fair market value....without delay." Unlike NAFTA which

specifically exempts certain MEA's (multilateral environmental

agreements), nothing in the MAI or the WTO recognizes their authority;

Furthermore, the rules of national treatment and "most favored nation"

also prohibit the enforcement of these protocols.

 

The greatest environmental threat posed by MAI is the investor-state dispute procedure under which any new laws to protect the environment, labor rules or consumer protections could be considered expropriation.

 

If profits are hurt, the corporation has the right to sue for compensation before an international tribunal of unelected trade bureaucrats. This right is not available to domestic firms competing against them. This puts an inevitable chill on state and federal efforts to rein in corporations concerned only with profit and not the social or ecological impact of their practices.

 

MAI negotiators have proposed several ways to address the environment in the agreement: there will be statements of good intent in the preamble, and the OECD guidelines on corporate behavior will be attached. These measures are non-binding and totally inadequate to protect natural resources and economic safeguards for local enterprise.

 

This agreement exalts business interests over all competing social concerns and insulates them from any attempt to balance them with other priorities, like ecological and social reform. It does this through processes that are remote from democratic accountability. It offers rights to capital that even people don't have: if you travel abroad you must obey local laws--not so investment capital under MAI. If a community or state fought hard and persisted with social or environmental regulations, the Federal government might have to fork over taxpayer dollars to compensate the jilted corporations. MAI will reverse the present day regulatory process: instead of regulating corporations, the MAI will regulate governments. In its essence, MAI is an attack on the local, and puts into place the mechanisms for global corporations to dominate local communities. It is a slow motion coup d' etat against democratic governance.

 

Imagine Hollywood running the Canadian Broadcasting System, or Bundesbank operating American Airlines, or Mitsubishi running Yellowstone Park or the U.S. Postal system. All this and more becomes possible under MAI. Negotiations are now in their final stages in Paris. This would be a good time to let your representatives in Washington know if you think ratification of MAI is bad idea.

 

(Based on materials from the International Forum on Globalization, including the new book, "MAI and the Threat to American Freedom," by Maude Barlow and Tony Clarke, and an article in YES by Gil Friend & Assoc.) --March '98

 

for more info, see:

 

<http://www.foe.org>

<http://www.ifg.org>

<http://www.islandnet.com/plethora>

<http://www.citizen.org/gtw>