Top Secret: New MAI Treaty

Should Corporations Govern the World?

From the same wonderful people who brought you NAFTA, the WTO, "Fast-track," and the Asian financial mess, here comes the MAI: the Multilateral Agreement on Investment. 29 countries are now locked in secret negotiations in Paris, completing a new treaty that gives unprecedented powers to global investment bankers, money speculators, and transnational corporations. The MAI will reverse present-day regulatory processes: Instead of regulating corporations, the MAI will regulate your local, state and national governments. The balance of power between corporations and government will be forever altered: In effect, corporations will govern. Let’s call it "NAFTA on steroids." Why is this deal secret? Would public exposure be deadly to the MAI? Maybe so. Here are some details:

[1] Until recently, sovereign governments decided the conditions by which foreign investors could buy-up domestic businesses, banks, TV stations and utilities. Sometimes we might make rules to keep foreign sources from owning controlling shares in our businesses. Or, we might ask new foreign businesses to locate in disadvantaged communities, or enterprise zones, or to invest some profits back into the community. Or, that they hire a certain percentage of local workers. We might not like to deal with companies that have bad human rights or environmental records. We might not want to allow foreign takeovers of cultural industries like the media or the arts. A democratic society should control such things. But all of this will change under the MAI.

[2] The rules of the new MAI impose restrictions on all levels of government: federal, state, county, city. In every jurisdiction, foreign companies must be awarded "national treatment," that is, equal or better terms than local business. So, let’s say your city now favors locally owned businesses in contracts for municipal projects: public works, or stadiums, or local road construction, or provision of school lunches. Or, possibly, your state has certain residency requirements (in Maine, only residents may obtain lobster licenses; in parts of the Midwest, only residents can own farmland). The MAI could negate all such rules. Even "neutral" non-discriminatory laws can be forbidden if their impact might be to slow down foreign entry. For example, your government might make new restrictions on all corporations—domestic and foreign—from expanding mining or forestry operations, to protect dwindling resources. Foreign companies could challenge these limits on the grounds they favor local companies who are already established. The effect will be to inhibit these protections for the environment.

[3] The MAI forbids "performance requirements" for investors. Performance requirements may include hiring local workers, or the use of "domestic content" in production, or the purchase of local services, or the control of land sales based on conformance to zoning laws. These would be outlawed. Other local rules may require the reinvestment of profits in a community. Take a law like the Community Reinvestment Act, requiring that banks that want to expand must make loans in their own community. Such a law would disappear under the MAI. The MAI is the greatest loss for community control in history.

[4] The ban on "performance requirements" would also be fatal to efforts by countries to keep foreign profits from exiting the country, or to prevent such fiascoes as the Asian financial crisis. The MAI effectively abolishes the ability of countries to regulate capital entry and exit, or currency speculation, or to place conditions on portfolio investments. Such ideas as "speed bumps" that require investors to keep their investments for a minimum time, thereby reducing speculation, will be eliminated. Without the ability to make such rules, all countries are increasingly subject to the ravages of "currency attacks," and the whims of giant banks.

[5] Under the MAI, corporations gain a status equivalent to "most favored nations." This means that no level of government could "discriminate" against foreign investors based on human rights or environmental or political practice. Had the MAI been in force during South Africa’s apartheid system, all government sanctions and boycotts against South African investment would have been illegal. Apartheid might still exist. One of the great tools for human rights, environmental and social justice activism would be gone.

[6] Here’s a shocker. The MAI says governments cannot expropriate investments "directly or indirectly...or take any measures having equivalent effect." The MAI even calls it expropriation if investors experience a "lost opportunity to profit from a planned investment." This means that if a new public health law is created—against toxic seepage, say, or to ban fuel additives that cause pollution, or to regulate mining practices to save the environment—these could be called expropriations because they indirectly affect future profits from a planned investment. If so, taxpayers might have to pay a company millions of dollars for an investment they never made! The MAI also cites lost profits from strife: boycotts, public protests, strikes, etc. So, if a protest or strike allegedly lowers an investor’s profits then taxpayers pay. Alarmingly, such rules would provide many governments strong incentives to suppress free expression.

[7] To further aid corporate domination over governments, the MAI gives private corporations and investors unprecedented legal standing to sue sovereign nations. Grievances would not be heard in a nation’s domestic courts. Corporations could select for their suit from a list of closed international venues that are entirely secretive. Or they could bring their complaint under the rules of international arbitration. Nation-states (and local governments) would be bound by such rulings. Giant cash payments to corporations might ensue. A preview of this process is found in the present-day suit by Ethyl Corporation against Canada (based on a similar provision in NAFTA). Ethyl is asking $251 million because Canada banned MMT, a suspected neurotoxin, in Ethyl’s product. Ethyl says that even debating the ban in Parliament is equivalent to expropriation of company assets.

[8] Some say that the MAI will benefit Third World economies, thus "helping feed a hungry world." This is deeply cynical because exactly the opposite is the case: the MAI enshrines the abilities of rich investors to dominate poor countries. These countries need control over investment on their soil, to encourage local businesses and workers to build a base for the future. They must have full sovereign authority to regulate entry that could overpower and destroy local business. Small countries use tools such as tax breaks for domestic industry; preferences for local banks over foreign banks or local farmers over agribusiness giants; preferences for local businesses in government contracts; and requirements that foreign investors become partners with local people who retain 51% ownership. All of these controls would be dead under the MAI. All countries would be submerged under the new freedoms of multinational capital. So then, just who gets fed? Hungry investment bankers, only.

[9] Most alarming, the MAI negotiations have been undertaken for two years with no public scrutiny or involvement. The public and press have been excluded. The draft texts were never released (until after a purloined copy appeared on the Internet). The U.S. is represented only by the State Department, Treasury, and the Office of the Trade Representative, and such groups as the U.S. Council for International Business. Why have consumer groups, democracy groups, environmentalists, small businesses, labor, and other NGOs been excluded? What goes on here? Whatever happened to democracy?

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MAI Futureworld?

Under the new MAI treaty, no nation will be able to restrict foreign investment into any segment of its economy. Neither could it make rules about reinvesting profits in local communities, or hiring local workers, or respecting cultural traditions, or protecting the environment. If approved, even public property, once it has been partially privatized, would be subject to foreign takeover. We may indeed see Hollywood running Canadian Broadcasting, or Bundesbank operating American Airlines or Yellowstone Park. Or, Mitsubishi managing the Louvre, or the Taj Mahal. In an era of privatization, global corporatization, and total freedom of investment, anything becomes possible.

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MAI Meets Democracy

Business Week says it’s "The most explosive trade deal you’ve never heard of ... [it] would rewrite the rules of foreign ownership, affecting everything from factories to real estate and even securities. But most lawmakers have never even heard of the Multilateral Agreement on Investment." Why not? Why have the public, the press and lawmakers been excluded from these negotiations? It’s time to demand the full details. Please read below.

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The fundamental question is this: Who should make the rules we live by? Elected democratic governments? Or corporations and speculators? Sorry to say, the MAI amounts to a Bill of Rights for global corporations and global banks, while it abrogates the rights of national governments, local communities and democratic society. Director-General of the World Trade Organization, Renato Ruggiero, calls the MAI "the Constitution for a single global economy."

Do you want an economy where corporations are the true governing bodies? Is this why it’s all been so hush-hush? Where is the public debate on this crucial issue? If people in democratic societies ever get wind of what is going on here, public outrage will be considerable. It’s time we all get involved. Negotiations are now in the last stages in Paris. A committee is making final drafts toward approval by the 29 nations in the Organization for Economic Cooperation and Development (OECD) in April. If signed in the OECD, then each member nation’s legislature—or other public body—will have to approve it. Find out everything you can about this. Use the coupon below. Contact the organizations listed. Thank you.

THE INTERNATIONAL FORUM ON GLOBALIZATION
Committee on Global Finance
1555 Pacific, San Francisco, CA 94109
415-771-3394 fax: 415-771-1121 email: ifg@ifg.org

The following signers are members of the International Forum on Globalization Board of Directors and/or Committee on Global Finance:

Maude Barlow, Council of Canadians, Ottawa
Walden Bello, Focus on the Global South, Bangkok
Brent Blackwelder, Friends of the Earth, Washington D.C.
John Cavanagh, Institute for Policy Studies, Washington D.C.
Tony Clarke, Polaris Institute, Ottawa
Herman E. Daly, University of Maryland
Susan George, Transnational Institute, Amsterdam
Edward Goldsmith, The Ecologist, London
Martin Khor, Third World Network, Penang, Malaysia
Andrew Kimbrell, International Center for Technology Assessment, Wash. D.C.
David Korten, People-Centered Development Forum, New York
Bernard Lietaer, University of California, Berkeley
Jerry Mander, Public Media Center, San Francisco
David Morris, Institute for Local Self Reliance, Minneapolis
Helena Norberg-Hodge, Int’l Society for Ecology and Culture, Devon, U.K.
Carl Pope, Sierra Club, San Francisco
Mark Ritchie, Institute for Agriculture & Trade Policy, Minneapolis
Vandana Shiva, Research Foundation for Science, Technology and Natural Resource Policy, New Delhi
Steve Shrybman, West Coast Environmental Law Association, Vancouver, B.C. Victoria
Tauli-Corpuz, Indigenous People’s International Centre for Policy Research, Philippines
Lori Wallach, Public Citizen, Washington D.C.

MORE INFORMATION

In addition to contacting the International Forum on Globalization (see coupon), you can obtain excellent information and/or ideas for what to do, from the following organizations:

Council of Canadians 904-251 Laurier Ave., W, Ottawa, Ontario K1P 5J6 Canada
Tel: 613-233-2773 Fax: 613-233-6776 coc@web.net

Friends of the Earth 1025 Vermont Ave., NW, Washington D.C. 20005
Tel: 202-783-7400 Fax: 202-783-0444 foe@foe.org http://www.foe.org/ga/mai.html

Institute for Policy Studies 733 15th St., NW, Washington D.C. 20005
Tel: 202-234-9382 Fax: 202-387-7915 ipscomm@igc.apc.org

Preamble Center for Public Policy 1737 21st St., NW, Washington D.C. 20009
Tel: 202-265-3263 Fax: 202-265-3647 juhasza@rtk.net http://www.rtk.net:80/preamble/mai/maihome.html

Public Citizen-Global Trade Watch 215 Pennsylvania Ave., SE, Wash. D.C. 20003
Tel: 202-546-4996 Fax: 202-547-7392 http://www.citizen.org/pctrade/mai.html

The Transnational Institute Paulus Potterstraat 20 1071 DA, Amsterdam, NL
Tel: 31-20-662-6608 Fax: 31-20-675-7176 tni@antenna.nl

Third World Network 228 Macalister Rd., 10440 Penang, Malaysia
Tel: 60-4-226-6728 Fax: 60-4-226-4505 twn@igc.apc.org

(Coupon)

To: The International Forum on Globalization Committee on Global Finance, 1555 Pacific Avenue, San Francisco, CA 94109

Please send me an information packet about the MAI. (Enclose $10 to cover costs and shipping.) Here is a donation to support the IFG’s educational work on the major issues of economic globalization. (Donations are tax deductible.)

___$500 ___$250 ___$100 ___$50* ___$25* Other__________________

*Donations of $25 include IFG one-year membership, newsletter, plus MAI information. *Donations of $50 include above plus a signed copy of "The Multilateral Agreement on Investment (MAI) and the Threat to American Freedom," by Maude Barlow and Tony Clarke (forthcoming from Stoddart Publishers).

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