1. Secret International Trade Agreement Undermines the Sovereignty of Nations

by Project Censored
Published: Updated:

Sources: IN THESE TIMES, Title: “Building the Global Economy” Date: January 11, 1998, Author: Joel Bleifuss; DEMOCRATIC LEFT Title: “MAI Ties,” Date: Spring 1998, Author: Bill Dixon; TRIBUNE DES DROITS HUMAINS, Title: “Human Rights or Corporate Rights?,” Date: April 1998, Vol., Nos. 1-2, Authors: Miloon Kothari and Tara Krause

SSU Censored Researcher: Corrie Robb
SSU Faculty Evaluators: Tony White and Richard Gale

Mainstream media coverage: Denver Post, August 2, 1998, page A83; Charleston Gazette, September 7, 1998, page A5; San Francisco Chronicle, April 10, 1998, page A22; Washington Times, March 21, 1998, page Al

The apparent goal of the latest international trade negotiations is to safeguard multinational corporate investments by eliminating democratic regulatory control by nation-states and local governments. The Multilateral Agreement on Investment (MAI) plans to set in place a vast series of protections for foreign investment. It would threaten national sovereignty by giving corporations nearly equal rights to those of nations. MAI delegates from 29 of the world’s richest nations have been meeting secretly in France since 1995. A draft of their work was leaked in January of 1997. More wide-reaching and one-sided than NAFTA or GATT, MAI would thrust the world economy much closer to a transnational laissez-faire system where international corporate capital would hold free reign over the democratic wishes and socioeconomic needs of people.

Pushed by the International Chamber of Commerce and U.S. Council on International Business, the major goal of the MAI is to safeguard direct foreign investment, defined broadly as encompassing any assets—factories, products, services, currency; stocks, etc.—which may be located in one country, but owned by a company, corporation, or individual in another country. U.S. direct foreign investment alone has more than doubled in the last ten years.

Traditionally, foreign investment has involved enormous risk, most notably in developing nations where the social, political, and economic climate is not always as conducive to foreign investment as corporations would like. Governments have commonly also put into place tariffs and subsidies favoring their home economies. These provisions shrink foreign profit margins and reduce the dollar amount multinational corporations can take out of a host country.

The new and controversial MAI agreement requires “national treatment” for all foreign investors. Governments will no longer be able to treat domestic firms more favorably than foreign firms. It will be illegal to implement restrictions on what foreign firms can own. Subsidy programs focused on assisting and developing domestic industries will be eliminated. Host nations will also be liable and can be sued by corporations for lost competitiveness and profits. There are no provisions for localized citizen and community legal recourse.

The MAI will also have devastating effects on a nation’s legal, environmental, and cultural sovereignty. It will force countries to relax or nullify human, environmental, and labor protection in order to attract investment and trade. Necessary measures such as food subsidies, control of land speculation, agrarian reform, and the implementation of health and environmental standards can be challenged as “illegal” under the MAI. This same illegality is extended to community control of forests, local bans on use of pesticides and hormone induced foods, clean air standards, limits on mineral, gas and oil extraction, and bans on toxic dumping.

A telling example involves the U.S. based Ethyl Corporation’s suit against the Canadian government. A Canadian law bans the use of MMT, a gasoline additive and known toxin which Ethyl produces. Under the NAFTA protocols which serve as a “model for the MAI,” Ethyl is suing Canada for $251 million, arguing that the regulation is unnecessary and violates their rights as a firm under NAFTA. While still pending, the case is an excellent example, and will test what corporations can claim as their rights under transnational policies like NAFTA and GATT. MAI would go a step further and allow corporations to directly sue any level of government—state, municipal, or federal—for what they perceive as losses based on legislative action, strikes, or boycotts.

Most at risk are developing nations and the natural resource and common property resource base. MAI would seriously exacerbate the pressure on undeveloped nations to deplete their own agricultural, mining, fishing, and forestry assets. The conditions of the agreement would undermine the capacity of local communities and municipalities to govern sustainably and democratically.

First proposed by the World Trade Organization just after the passage of GATT in 1995, MAI negotiations continue among the member countries of the Organization of Economic Cooperation and Development (OECD). The 29-member OECD, an association composed of 29 of the world’s richest countries, originated in the aftermath of World War II to administer U.S. aid to Europe.

UPDATE BY AUTHOR JOEL BLEIFUSS: “The Multilateral Agreement on Investment (MAI) has been described by Renato Ruggerio, the director general of the World Trade Organization as ‘the constitution for a new global economy.’ Yet this is a constitution that has been written outside of the public gaze by anonymous trade bureaucrats. And while there has been almost no citizen participation in the process, the United States Council for International Business, representing 600 corporations as the U.S. affiliate of the International Chamber of Commerce, has been integrally involved in the MAI negotiations. In fact the group has reported, that it has ‘helped shape the U.S. negotiating positions by providing business views and technical advice on specific policy issues at regular meetings with U.S. negotiators immediately before and after each MAI negotiating session.’

“By late 1998, the negotiations at the Organization for Economic Cooperation and Development (OECD) had reached an impasse. Some countries thought that the World Trade Organization should oversee implementation of the agree-ment, while others, principally the United States, wanted MAI kept within the confines of the much more exclusive OECD.

“The mainstream press has almost completely ignored the MAI negotiations. MAI will likely only become a ‘story’ when the negotiations are finalized and the treaty is submitted to the Senate for ratification. And at that point there will be no room for public or legislative discussion over what such a treaty should entail. Public Citizen’s Global Trade Watch [Tel: (202)546-4996; ]http://www.citizen.org] and the Preamble Center [Tel: (202) 265-3263;]http://www.preamble.org] are the two organizations doing the most to monitor the MAI negotiations and to raise public awareness of how the treaty will affect the U.S. and world economics.”