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November 1999 MAI-Free Zones? An International Agreement and What’s at Stake for You By Tracy Rysavy

 

The Multilateral Agreement on Investment (MAI) began in 1995, when the 29 mostly high-income countries that make up the Organization for Economic Cooperation and Development (OECD)—a forum where governments conduct research and negotiate policies on trade and investment—started negotiating the agreement in secret. Modeled largely on NAFTA (the North American Free Trade Agreement), the MAI has been called “NAFTA on steroids” by its detractors because, they say, it’s bigger and meaner. The overall purpose of the agreement is to facilitate the movement of assets, whether money or production facilities, across international borders.

Few scholars, citizens, activists, or even legislators were aware of the existence of the MAI until 1997, when a source inside the OECD leaked a copy of the agreement to the Council of Canadians, an independent citizens’ group. The Council of Canadians in turn passed the news on to several non-governmental organizations (NGOs) and posted it on the Internet. Even though the media in many countries, particularly the U.S., has responded to the MAI with deafening silence, news about the agreement spread through the Internet, bringing the MAI under fire from a broad international citizens’ movement—so much so that negotiations have been stalled twice and France pulled out of the process altogether last October. Two months later, the OECD announced that it was no longer conducting negotiations on the MAI. But governments from the industrialized countries are searching for new venues under which to reach consensus on the MAI, including through the World Trade Organization (WTO). And, as they do, citizens around the world are coming up with new, inventive ways to ensure that the MAI and treaties like it will not be part of the world economy in the new millennium.

MAI 101: A Corporate Bill of Rights
So what is the MAI and why has it warranted such secrecy? The draft MAI text includes a number of troublesome provisions, including:
• Investors and corporations will have the right to sue governments for losses caused by environmental or health legislation, as in the case of the Ethyl Corporation vs. Canada (see sidebar).

• “Most favored nation” (MFN) status would be granted to corporations and investors from all signatory countries. Governments would not be able to pick and choose with whom they would do business based on human rights, environmental, labor, arms control, or other concerns. For example, under the MAI the “Burma Laws” many U.S. states have adopted, barring business transactions with Burma (Myanmar) because of its human rights record, could be struck down. The U.S. might even have to pay damages to companies who felt their profits were adversely affected by the laws.

•The principle of “national treatment” would be mandated, meaning that governments would have to treat foreign investors and multinational corporations as well or better than domestic companies. So, in awarding contracts for health and social services, such as garbage collection or water and sewage, local governments could not favor local companies and non-profit organizations without the fear of being sued under the MAI. Foreign corporations could end up managing a community’s health care, running the municipal water system, or taking municipal contracts from local non-profits, such as Meals on Wheels.

• Local, state, and federal governments would be prohibited from setting up “performance requirements” under which foreign investors are required to operate to protect the interests of the country’s citizens. Such requirements might include: hiring a minimum number of local people in a foreign firm, reinvesting a minimum amount in the local community, or using a certain percentage of domestic products.
• Finally, if a country decided that the MAI was not in its best interests, it would still be bound to the MAI obligations for 20 years.

Proponents and Opponents
Those who favor the MAI note that international trade is a powerful engine of economic growth, which produces goods and services people desire the world over. The MAI would, in their view, increase investor confidence and result in substantial increases in foreign investment and international trade, which would in turn have beneficial effects on worldwide employment and prosperity.

MAI opponents dispute many of the assumptions of the “free traders” and maintain that the most important effects would be to accelerate the “race to the bottom” in environmental and labor standards, increase global financial instability, and further concentrate wealth and power in large transnational corporations. They point to the effects of NAFTA as evidence for concern, and the fact that the MAI would go beyond NAFTA, broadening the conditions under which foreign investors could sue local governments. “The MAI establishes a series of rights and responsibilities,” like most international treaties, says Lori Wallach of Public Citizen’s Global Trade Watch. “Unlike other treaties, the rights go only to foreign investors, while the responsibilities go only to governments.”

The MAI Lives: the “Backdoor” Version
Although at the end of 1998, the MAI looked dead, it is actually very much alive. Japan and the European Union are pushing to have negotiations of MAI-like investment liberalization rules moved to the WTO, and several other MAI provisions are finding their way into trade agreements under negotiation. These include the Free Trade Agreement of the Americas (FTAA), the Asia-Pacific Economic Cooperation forum (APEC), and the proposed TransAtlantic Economic Partnership. In addition, the International Monetary Fund (IMF) is campaigning to demand that member countries open themselves to liberalized investment.

In the U.S., the Clinton administration has been fighting to pass “Fast Track” negotiating authority, under which, Congress would be required to hold a yes/no vote on trade agreements like the MAI, with no amendments and only limited discussion allowed. Although Fast Track has been defeated twice in the House of Representatives, due in part to the efforts of U.S. NGOs and activists, the Clinton administration doesn’t intend to give up on it. Indeed, during the impeachment trial, the Senate held hearings on Fast Track and on the Crane sub-Saharan Africa Trade Bill. This bill, which the House has passed, would cut off existing trade benefits and foreign aid to African countries unless they meet a set of MAI-like conditions.

“Because of the way the MAI is being broken up and spread out to other venues, we have to broaden our efforts and relate the MAI to the Africa trade bill, to Fast Track, and to all of these other trade agreements,” says Margrete Strand-Rangnes, MAI campaign coordinator for Public Citizen.

The Counterpunch: Activism Expands
One thing activists from all parts of the globe, many of whom organized to derail the original MAI agreement, have in common is a belief that the MAI, free trade agreements, and economic globalization are not inevitable. In Europe, people have filled the pages of local papers with anti-MAI editorials and taken to the streets to voice their opposition to the agreement—protests that in part led France to pull out of the MAI negotiations. Local governments have also taken action, realizing the impact the MAI could have on their decision-making powers. Municipalities in Australia, Canada, Switzerland, and the U.S. have passed anti-MAI resolutions, declaring themselves “MAI-free zones.” One of the first U.S. cities to do so was Olympia, Washington, by a unanimous vote, even though the city shares its county with the headquarters of corporate giants Microsoft and Boeing. And grassroots organizations, from Canada to Malaysia, have linked their anti-MAI efforts through the Web. “We are in constant contact with our allies in other countries,” says Maude Barlow of the Council of Canadians. “If a [trade] negotiator says something to someone over a glass of wine, we’ll have it on the Internet within an hour, all over the world.”

One problem with countering the MAI is the fact that, like most international agreements, “there’s so much super-legalese [in the MAI] and it’s so abstract,” says Sally Soriano of the Washington Fair Trade Campaign, who led the anti-MAI effort in Olympia. “If we don’t translate it fast enough, and the media doesn’t grab hold of it soon enough, MAI-like rules are going to be passed quickly and without much discussion.” Still, individuals are becoming informed, and taking action in their own backyards. A woman in Michigan, outraged by what she had heard about the MAI, called Public Citizen’s Strand-Rangnes to learn more. She then started an anti-MAI group in her community. How did she do it? By “talking to the pizza delivery woman about the MAI and she was outraged, too, so we got some people together.” Anna Dashtgard, MAI campaign officer for the Council of Canadians, suggests that this kind of local organizing goes beyond merely creating new guidelines for trade and investment. “It’s a very powerful, very spiritual movement,” she says. “It taps into a collective spirit of hope and faith that we can construct something different; that we are not just a global community based on profit, but on something more fundamental.”

This article is excerpted from a longer one that appeared in YES! magazine and is reprinted with the kind permission of the magazine and its author.

Tracy Rysavy is associate editor of YES!, a magazine of positive futures (www.futurenet.org). For info. about the MAI contact: Public Citizen’s Global Trade Watch program, 215 Pennsylvania Ave., S.E., Washington, DC 20003; Tel: 202-546-4996; www.citizen.org/gtw and the International Forum on Globalization, 1555 Pacific Avenue, SF, CA 94109; Tel: 415-771-3394; www.ifg.org.