`Newsgroups: alt.nettime`

	previous	workgroup	thread	next

Subject: <nettime> Lori Wallach: A dangerous new manifesto for global capitalism From: Le Monde diplomatique <dispatch@Monde-diplomatique.fr> Date: 24 Feb 1998 11:37:35 +0100 * * * * * Sender: owner-nettime-l@basis.Desk.nl Precedence: bulk <URL:http://www.monde-diplomatique.fr/md/en/1998/02/07mai.html> LE MONDE DIPLOMATIQUE - February 1998 A dangerous new manifesto for global capitalism ________________________________________________________________________ The Multilateral Agreement on Investment (MAI) would grant imprescriptible rights to multinational corporations at the expense of national governments, which would be forced to defend their laws in court and pay compensation. Late in the day, the public and their representatives may be beginning to wake up to the dangers of the proposed treaty. Those negotiating it in the Organization for Economic Cooperation and Development, have kept very quiet, and earlier experiences of the World Trade Organization do not augur well. By LORI M. WALLACH * ________________________________________________________________________ Imagine an international commercial treaty empowering corporations and investors to sue governments directly for cash compensation, in retaliation for almost any government policy or action that undermines profits. This is not the plot of a science fiction novel of future corporate totalitarian rule. It is just one provision of a largely unknown international commercial treaty just about to be signed, called the Multilateral Agreement on Investment (MAI). The director-general of the World Trade Organization, Renato Ruggerio, has described the MAI quite honestly, saying: "We are writing the constitution for a single global economy." Few people even know that the MAI has been under negotiation since 1995 at the Organization for Economic Cooperation and Development in Paris. The goal of the MAI is to apply the extreme deregulatory agenda of the WTO to the few vital economic sectors not already covered by its rules. This would include: where and under what terms investment in manufacturing and services could be done, trade in currency and other financial instruments such as stocks and bonds, and ownership of land and natural resources. While massive shifts in the global capital flows have reshaped our world in the past decades, investment issues have attracted far less public, press and policy attention than trade flows. Yet many multinational corporations, including major financial interests, have focused on investment issues. They have quietly, but aggressively, pursued global investment rules to suit their narrow interests and assure the consolidation and increase of their hold over governments. Around the world, legislators, scholars, citizens and activists have been largely unaware of the negotiations, much less the 170-page text that the OECD reports is 90% complete. Indeed, it was only in the context of a recent citizens' victory in the United States against the so-called fast track trade authority (1) in April 1997 that Congress became aware of the MAI negotiations with the US State and Treasury Departments which have been going on for three years. This wall of silence is not unique to the United States. In France, the chairman of the National Assembly's Foreign Affairs Committee, Jack Lang, the person most directly involved, admitted in December 1997 that "we do not know who is negotiating what in the name of whom (2)". US government officials denied the existence of an MAI text until an embarrassing day in late January 1997, when a coalition of international citizens' groups managed to get hold of a copy of the text. To the US State Department's chagrin, the text is now posted in full on the Internet (3). A review of the text shows that, like most international treaties, the MAI establishes a series of rights and responsibilities. But, unlike other treaties, the rights granted in the treaty go only to foreign investors and corporations, while the responsibilities go just to governments. Additionally, in contrast to all existing treaties, once governments enter into the MAI, they are irrevocably bound to its terms for 20 years. More precisely, if they do not express their wish to remain a party to the treaty within the first five years, they are committed for the remaining 15 years. The core chapter of the MAI is actually entitled "Investor Rights". These include the absolute right to establish an investment (this includes purchase of land, natural resources, telecommunications and other services, and currency) under the deregulated terms set forth in the treaty. Governments are charged with the obligation to ensure "effective enjoyment" of such investments. To guarantee this, the MAI contains broad provisions providing that foreign investors and corporations will be compensated for any actions a government takes that undermine their ability to profit from their investment. Especially when these actions have the "equivalent effect" of even an "indirect expropriation". What this means is that a "lost opportunity to profit from a planned investment would be a type of loss sufficient to give an investor standing". The "expropriation and compensation" rules are the MAI's most dangerous provisions. They arm every foreign investor or corporation with the power to challenge nearly any government action or policy - from taxes to take care of environmental issues and labour rules to consumer protection - as a potential threat to their profits. As governments all over the world are cutting welfare programmes supporting poor families, how can they contemplate approving a new global corporate welfare programme? Take the case of Ethyl Corporation. This US-based company is using the much more limited North American Free Trade Agreement (NAFTA) expropriation provisions to sue the federal government of Canada for US$251m. In April 1997 the Canadian government banned a particular gasoline additive called MMT - a suspected neurotoxin that damages pollution systems in automobiles. Ethyl is the world's only manufacturer of MMT, which is banned in some US states. The US Trade Representative's office refused to pursue the case, through the governmental dispute resolution system of NAFTA. So Ethyl filed its own suit against the Canadian government claiming that the very act of the Canadian parliament debating an MMT ban constituted an expropriation of the company's assets. Unbelievably, the case is proceeding towards a ruling. If Ethyl wins, the taxpayers of Canada will owe the private corporation US $251m. Such a mechanism within MAI would have the power to paralyse government action to protect the environment, conserve natural resources, ensure fair treatment and safe conditions for workers, or shape investment to suit community interests. Another investor right that could trigger an expropriation action is "protection from strife". Under this provision, governments are liable to investors if there is "civil disturbance" - to say nothing of "revolution, states of emergency or any other similar events". This means that governments owe an obligation to foreign investors to ensure there is no "strife" that could undermine their profitability, such as protests, boycotts and labour strikes. This is likely to encourage governments, under cover of MAI rules, to restrict social freedoms. Meanwhile, MAI does not include an attendant set of obligations or accountability for investor conduct. Governments would be prohibited from treating foreign investors differently from domestic investors. Whatever your opinion of the concept that foreign and domestic investors must always been treated the same, the MAI goes one step further. Under the MAI, it is the impact of a policy - not its intent or a law's textual meaning - that is considered. Thus, apparently neutral laws that can be shown to have an unintended discriminatory impact on foreign capital would be forbidden. This means that neutral laws, placing limits on the expansion of extractive industries, such as mining or forestry, would be vulnerable on the grounds that, in effect, they discriminate against foreign investors trying to gain new access to resources, relative to domestic investors who already have access. Similarly, policies benefiting small business throughout the world, or preferential treatment aimed at fostering development of certain categories of investors or investments, such as the European Union's programme promoting development in economically-stressed regions, can come under attack if a disparate impact can be shown. There is the same risk for land redistribution programmes in developing countries. Under NAFTA, on which the MAI is modelled, Mexico was required to change the land reform provisions of its national constitution. These reforms, created after the Mexican revolution, were eliminated to allow US and Canadian investors to buy up large tracts of land. In four years of NAFTA, this change has resulted in massive dislocation of peasant farmers as agribusiness companies have accumulated large plantations. The "national treatment" rules also cover privatisation. Thus, if the French government decides to sell off the water utility, bidders worldwide must be given the same access as French investors, including for instance any local, democratically-controlled cooperative. Ready to call Tokyo when your water is cut off? How about privatisation of educational services and health care? The MAI also includes a broad ban on "performance requirements." These are measures many countries use to shape investment to benefit public interests. This clause could result in many environmental laws and standards being challenged. In particular, the MAI could threaten the unique laws of many US states that are designed to protect natural resources, for example, the requirement that glass or plastic containers are made from a minimum percentage of recycled content and the preferential purchasing of materials made with recycled content. The treaty's ban on performance requirements could especially threaten national laws in developing countries that are designed to strengthen domestic economic growth. For example, laws requiring foreign investors to form partnerships with local firms. The MAI also would apply the principle of "Most Favoured Nation" treatment to investment rules, requiring equal treatment among all foreign investors and target countries. This would prevent governments from distinguishing between foreign investors or foreign investment targets based on countries' human rights, labour or other records. It would also eliminate the sorts of preferential treatment the EU now grants its former colonies in Africa, the Pacific and the Caribbean through the Lome Convention. If the MAI had been law in the 1980s, Nelson Mandela might still be in jail! This is because the MAI would require the revocation of investment boycotts or restrictions - like those in force against South Africa during the days of apartheid - except those defensible under a narrow "essential security" exception. The MAI stands to transform governance around the world by literally replacing many roles now performed by governments with direct corporate rule. Included is the enforcement of international treaties. The MAI would thus confer on private investors and corporations the same rights and legal standing as national governments to enforce its terms. In particular, the right to take governments to court, when they choose and at the tribunals of their choice. Including the arbitrage panel of the International Chamber of Commerce! Before such inherently biased arbiters, investors are granted the power to claim compensation because they have not obtained all the benefits promised under the treaty. How are governments to be brought before such 'courts' or made to pay up? The MAI text includes a provision that binds governments to "unconditional consent to the submission of a dispute to international arbitration". Only investors and corporations, not citizens or communities, have such private rights of action. The MAI also provides for state-to-state dispute resolution through international tribunals modelled on the WTO - with no conflict of interest or transparency rules, due process guarantees or other basic judicial safeguards. Government and industry supporters of MAI have resorted to broad generalities: "Don't worry", they argue, "there's nothing new in this treaty. It's just about 'rationalising' existing investment practices". Yet, the MAI, like a political Dracula, simply cannot survive sunlight. The sudden revelation of the MAI text in Canada ignited political turmoil greater than that of the decade-old fight against free trade with the US. New Zealand's parliament exploded into fury against the government when word leaked out. In the US, the MAI was attacked on the floor of Congress. Ironically, the constituency that should be most up in arms, the world's labour movements, which are represented at the heart of the OECD, have simply called for a "social charter" to be added to the treaty, rather than its underlying rules to be replaced. This position is dismissed by environmental, human rights and consumer experts - and now a growing number of US unions - who consider the suggestion to be like putting icing on a cake laced with strychnine. Not that government or industry representatives have any intention of putting binding environmental, labour or human rights provisions into the MAI. Their latest tactic is to promise to accept numerous exceptions and reservations to the treaty - which shows precisely how much of our existing domestic law and policy the MAI is putting at risk. It is as if our governments are promising to wrap our valuables in paper as they add more fuel to the fire consuming our homes" The governments of Canada and France are now publicly committed to ensuring broad MAI exceptions for culture, while, in the United States, negotiators have their strict marching orders from Hollywood to use the MAI to pry open this sector. However, years of experience with the GATT, and now WTO, as well as other international commercial agreements, has shown that even the so-called full "carve out" exceptions often prove meaningless. Just ask the banana growers in the Caribbean who were savaged in a US-initiated WTO challenge of European banana trade policy. (The EU had a full reservation in the WTO for the Lome Convention which sets banana trade terms). Like the WTO, at the MAI there would be no outside appeals when such exceptions are simply disregarded. We should be questioning further investment deregulation and government disempowerment given the results of the present model of globalisation are proving so unacceptable. Already, any nation wanting to respond to public demands to address economic and social problems must do so in the context of worldwide financial instablility, speculation and massive international investment flows. No-one wants this situation to continue. Except for the few who would have an interest in seeing it escalate. ______________________________________________________________ * Lori Wallach is director of the Global Trade Watch division of Ralph Nader's consumer group, Public Citizen. (1) A special presidential power to circumvent Congress in trade negotiations which are then not subject to amendment, but have to be ratified or thrown out. President Clinton has not used this prerogative in negotiating an Americas' free-trade zone. (2) At the conference on Globalisation and Democracy: the dangers of the Multilateral Agreement on Investment, organised by Observatoire de la mondialisation (globalisation watch) at the Assemblee Nationale, Paris, 4 December 1997. (3) Thanks to the Ralph Nader-founded consumer group, Public Citizen: at www.citizen.org. Original text in English <URL:http://www.monde-diplomatique.fr/md/en/1998/02/07mai.html> --- # distributed via nettime-l : no commercial use without permission # <nettime> is a closed moderated mailinglist for net criticism, # collaborative text filtering and cultural politics of the nets # more info: majordomo@icf.de and "info nettime" in the msg body # URL: http://www.desk.nl/~nettime/ contact: nettime-owner@icf.de