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A Global Constitution

New trade negotiations aim to further reduce barriers to the free flow of investment throughout the world. But one person’s “trade barrier” may be someone else’s “local control.” Where will it lead?
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"In January, word leaked out that secret trade negotiations were taking place under the auspices of the OECD (Organization of Economic Cooperation and Development). Since then, interest in the Multilateral Agreement on Investment (MAI) has been building in conversations on the internet, among public interest groups, and at the recent TOES (The Other Economic Summit held in conjunction with the G-7 meeting in Denver this summer).

Interestingly, there's been a deafening silence from the US press and among US officials about the MAI. In the UK, however, the Guardian newspaper quoted one of the lead negotiators as saying: “We are writing the constitution of a single global economy.”

What is the OECD after with this agreement? And why hasn't the public been brought into the dialogue? Gil Friend, a systems ecologist and business strategist suggests we carefully consider the lessons of NAFTA and GATT as we consider the coming MAI.

 

 

Many people dismissed the anti-NAFTA lobbying led by the strange bedfellows of Ralph Nader and Pat Buchanan as crackpot fear-mongering. But consider some of the legal cases that have emerged in these first few years of the North American Free Trade Agreement and the World Trade Organization:

 

• US-based Ethyl Corporation the sued Canadian government for $350 million for banning import MMT (a fuel additive banned in the US) claiming that the ban was “tantamount to expropriation,” threatening to reduce the value of Ethyl's MMT manufacturing plant, hurt its future sales, harm its corporate reputation, and have a “chilling effect” by encouraging other countries to review their use of MMT.

 

• The US sued, and the WTO (World Trade Organization) overturned, the European Union (EU) ban on importing hormone-treated beef.

 

• Venezuela and Brazil challenged aspects of the US Clean Air Act before WTO, and the regulation was changed.

 

• The EU rule banning the import of fur from leg-hold traps was delayed in response to a threatened US/Canada challenge.

 

• The US House of Representatives voted to gut US dolphin protection to avoid a WTO challenge.

Can it get more absurd? Consider this: Massachusetts recently barred state agencies from doing business with Myanmar (Burma), adapting its anti-apartheid law by replacing references to South Africa. Thailand, the EU, and Japan are threatening to challenge the law before the WTO as a “trade sanction.”

 

“If the WTO had existed during apartheid,” muses Public Citizen's Lori Wallach, “Nelson Mandela might still be in prison.”

 

Now comes the Multilateral Agreement on Investment (MAI), which takes up where GATT and NAFTA leave off. The MAI, if adopted, may 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.

 

 

“Son of GATT”

 

 

The MAI, which is being hammered out under the auspices of the Organization for Economic Cooperation and Development, would extend the GATT/NAFTA/WTO approach to the movement of capital. The confidential draft agreement from this very low-profile process was recently “obtained” by public interest groups, who suggest it raises substantial concerns about the currently popular “lowest common denominator” approach to trade harmonization.

 

According to the Preamble Coalition, a Washington think tank, countries that sign the MAI will be required to:

 

• open all economic sectors to foreign ownership;

 

• treat foreign investors no less favorably than domestic firms;

 

• remove “performance requirements” (laws that require investors to behave in a certain way in exchange for market access);

 

• remove restrictions on the movement of capital;

 

• compensate investors in full when their assets are expropriated, either through seizure or “unreasonable” regulation;

 

• allow investors to sue governments for damages before international panels when they believe a country's laws are in violation of MAI rules; and

 

• ensure that states and localities comply with the MAI.

 

According to the Preamble Coalition, proponents of the MAI claim that the agreement will provide needed protections for international investors against discrimination and expropriation, and help businesses, consumers and workers in the long-run by improving the efficiency of the global economy.

 

Opponents argue that the proposed agreement will accelerate an economic and environmental “race to the bottom” as countries feel new pressure to compete for increasingly mobile investment capital by lowering wages and environmental safeguards. Opponents also claim that the MAI will allow investors to challenge legitimate regulatory safeguards that enjoy widespread public support but are viewed by investors as impediments to the free flow of capital.

 

Note that this is not a business versus activist issue – auto manufacturers support the ban on MMT, for example – but has the effect of being a trade versus sovereignty-and-any-other-competing-value issue. The WTO panel “made clear,” Wallach and Alan Tonelson wrote recently in the Washington Post, that “trade effects trump all other considerations.”

 


Responses to the MAI

The MAI could be the issue that galvanizes a national debate on “free” trade and economic globalization.

The difficulty with these issues is the EGO factor – (Eyes Glaze Over). Many find the issues too arcane or believe there is little that can be done. When citizens feel that way, Congress is also less likely to pay attention.

What You Can Do:

Ask Questions– Ask federal, state, and local officials, and the editor of your newspaper to provide specific information on the effects the MAI would have on state, local and national issues of concern to you. You might want to ask specifically about local and national environmental and labor standards, along with the more general issues of local control and democratic participation in agreements with such serious potential impacts.

Collaborate with others– those heading environmental groups, trade unions, community reinvestment groups, and the organizations listed above. Ask how their efforts would be affected by the MAI.

Join or organizea discussion group about the MAI.

Get on the Web– With the dearth of press coverage, much of the information about the MAI can be found on the web:

http://citizen.typepad.com/eyesontrade/– The website for Public Citizen's Global Trade Watch. Includes the complete MAI draft text as of July 1997; background information on NAFTA, GATT, and the MAI. To join the Public Citizen listserve send an e-mail to Chantell Taylor at ctaylor@citizen.org.

http://world.std.com/~dadams/MAI – This website highlights the activities of the MAI Action Group, located in Boston and sponsored by the Boston Alliance for Democracy. Information about an anti-MAI letter writing campaign is included.

And for the other side of the story:

http://www.wto.org– Website for the World Trade Organization. Includes press releases and a form to send your comments and questions.

http://www.oecd.org– The Organization for Economic and Community Development's website, includes information on the OECD, press releases, and an FAQ page.


Gil Friend is president of Gil Friend and Associates, a consulting group specializing in strategic environmental management, 48 Shattuck Square #103, Berkeley, CA 94704, 510/548-7904, email: gfriend@eco-ops.com ©1997 Gil Friend and Associates; distributed by Los Angeles Times Syndicate.

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