MAI Free Zones

We waded through the esoteric economic language and put the Multilateral Agreement on Investment in terms everyone can understand- while telling you what's at stake for your community
Near the five-year anniversary of the birth of the North American Free Trade Agreement (NAFTA), one company celebrated by suing the Canadian government.

In April of 1997, the US-based Ethyl Corporation sought $251 million in damages in a lawsuit against the Canadian government over their ban of methylcyclopentadienyl manganese tricarbonyl (MMT).

MMT is a fuel additive that is mixed with gasoline to prevent engine knocking. Many scientists believe that the manganese portion of MMT is a dangerous neurotoxin that can cause nerve damage leading to psychosis, memory loss, and death. MMT has also been known to damage automobile emission control systems.

Before the lawsuit, Canada was the only country in the world where MMT was sold - the demand is so low that Ethyl Corporation is the only manufacturer of the substance worldwide. MMT is banned in some US states and simply not stocked in others because of its dangerous properties. After a long debate, the Canadian parliament voted to ban the import and interprovincial transport of MMT.

Ethyl Corporation retaliated immediately by suing the Canadian government before a NAFTA tribunal for the "expropriation" of its assets - the profits it was denied because of the ban - and for the damage such a lawsuit and even the mere debate over the issue would do to its reputation. When the Canadian government realized that its MMT ban would be ruled illegal under NAFTA' rules, they settled with Ethyl Corporation in July of 1998. Canadian taxpayers paid the company $20 million in damages, and the government was forced to announce that MMT "poses no health risk."

Similar lawsuits are beginning to multiply under NAFTA - including a challenge to a Canadian export ban on PCB (a suspected endocrine disruptor) that was slapped on the government a week after the Ethyl Corporation settlement. And investor-favoring rules like the one that made the Ethyl lawsuit possible are being written into other trade agreements and appearing in international trade venues. However, the trade agreement that has the most people up in arms is the Multilateral Agreement on Investment (MAI).

Modelled largely on NAFTA, the MAI has been called "NAFTA on steroids" by its detractors because, as they say, it' bigger and meaner. For example, under the MAI, investors like Ethyl Corp. could sue governments not just in North America, but around the world for any actions that could be construed as restricting investment flows.

The 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. In fact, few scholars, citizens, activists, and even legislators were aware of its existence until 1997, when a source inside the OECD leaked a copy of the agreement to the Council of Canadians, a non-partisan, independent citizens' group. The Council of Canadians in turn passed the news on to several non-governmental organizations. The media in many countries - particularly the US - has responded to the MAI with a deafening silence.

Nevertheless, news 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 altogether last October. Two months later, the OECD made a formal announcement stating they are no longer conducting negotiations on the MAI. As governments from the industrial countries search for a new venue under which to reach consensus on the MAI, 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.

The MAI- a corporate bill of rights
So what is the MAI, and why has it warranted such secrecy? The overall purpose of this agreement is to facilitate the movement of assets - whether money or production facilities - across international borders. Those who favor the MAI note that international trade is a powerful engine of economic growth, which produces the 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.

Like most international treaties, "the MAI establishes a series of rights and responsibilities," says Lori Wallach of Public Citizen' Global Trade Watch. "Unlike other treaties, the rights go only to foreign investors, while the responsibilities go only to governments."

Although governments must take care not to impose barriers to trade and investment flow, the MAI does not include a reciprocal set of obligations that would hold investors and multinational corporations accountable to local and state governments, labor, communities, or other businesses for their conduct. And unlike the NAFTA provisions, the MAI would broaden the conditions under which foreign investors could sue local governments throughout all signatory countries, whereas NAFTA allows this privilege only under narrowly defined circumstances, and only between Canada, the US, and Mexico. Some of the troublesome provisions in the MAI include:

· Under the current draft of the MAI, investors and companies will have the right to sue governments for losses caused by environmental or health legislation, as in the case with Ethyl Corporation and Canada.

· The MAI draft text would also grant "Most Favored Nation" status 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, many US states have recently adopted "Burma Laws," barring business transactions with Burma (now called "Myanmar") because of the country' numerous human rights violations. These laws could be struck down under the MAI, and the US might even have to pay damages to companies who felt their profits were adversely affected by the laws.

· The draft MAI text also mandates the principle of "National Treatment," which means that governments would have to treat foreign investors and multinational corporations as well or better than domestic companies. Tax incentives and laws designed to grow small, domestic businesses could be challenged because such laws discriminate against foreign investors and corporations.
   In awarding contracts for health and social services, such as garbage collection or water and sewage, local governments couldn't favor local companies and non-profit organizations without the fear of being sued under the MAI. Therefore, foreign corporations could end up managing a community' health care, running the municipal water system, or taking municipal contracts from local nonprofits, such as a Meals on Wheels program.

· The MAI also prohibits local, state, and federal governments from setting up "performance requirements" under which foreign investors are required to operate to protect the interests of the country' 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 wasn't in its best interests, it would still be bound to MAI obligations for 20 years. Countries are locked into the MAI for five years, after which all of its existing foreign investments are still locked into the agreement for 15 additional years.

Grassroots opposition links up on the Web
Although the MAI was scheduled to be ratified at the OECD by May of 1997, its exposure and the ensuing outcry of protest worldwide was instrumental in postponing negotiations on several occasions - first until April 1998, then again to the following October - when the MAI was ultimately derailed at the OECD. The people who had the power to stop the momentum of this agreement weren't high-powered politicians or CEOs with a conscience, but ordinary citizens armed with computers and access to the Internet.

When the MAI text was initially leaked onto the Internet, hundreds of non-governmental organizations around the world read it and launched protest campaigns within days of its posting. Grassroots organizations from Canada to Malaysia - many of whom are in regular contact through the International Forum on Globalization - have linked their efforts via the Web, trading information and tactics with the click of a mouse.

"We are in constant contact with our allies in other countries," says Maude Barlow, chair of the Council of Canadians. "If a negotiator says something to someone over a glass of wine, we'll have it on the Internet within an hour, all over the world."

In Europe, the effort to break down the wall of media silence surrounding the MAI has been so successful that people have filled the Op-Ed pages of their local papers with anti-MAI editorials and have even taken to the streets to voice their opposition to the agreement. This type of protest was what caused French prime minister Lionel Jospin to pull out of the final round of MAI negotiations at the OECD.

The backdoor MAI
Though the MAI may look dead, it' actually very much alive. Already, Japan and the European Union - including France, whose departure so weakened the MAI discussion at the OECD - are pushing to have negotiations of MAI-like investment liberalization rules moved to the World Trade Organization (WTO).

In addition, several MAI provisions are finding their way into other trade agreements under negotiation, such as the Free Trade of the Americas (FTAA) between North and South America, the Asia Pacific Economic Cooperation forum (APEC) which includes most Pacific Rim countries, and the proposed TransAtlantic Economic Partnership (TEP), which links economies in the US and Europe.

Furthermore, the International Monetary Fund is campaigning to amend its Articles of Association so it can demand that member countries open themselves up to liberalized investment. Several critics have named this effort the "backdoor MAI."

And in the US, the Clinton administration has been fighting to pass Fast Track negotiating authority, which would restrict congressional debate on international trade agreements like the MAI. Under Fast Track, Congress would be required to hold a yes/no vote, with no amendments and a limited amount of discussion. Though Fast Track has been defeated twice in the House of Representatives - due in part to the efforts of US NGOs and activists - the Clinton administration doesn't intend to give up on it. While the mainstream media has been preoccupied with the Lewinsky/Clinton scandal and the afternoon impeachment hearings, a Senate committee has devoted its mornings to hearings on Fast Track and the Crane Sub-Saharan Africa Trade Bill, which passed the House last summer amid protests from NGOs and even the Reverend Jesse Jackson. This bill would cut off existing African trade and aid benefits unless African countries meet a list of MAI-like conditions, such as providing national treatment to foreign investors.

"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 Bill, to Fast Track, and to all of these other trade agreements," says Margrete Strand-Rangnes, MAI Campaign Coordinator for Public Citizen. "The people who are trying to pass these bills have the same agenda as those who want to ratify the MAI."

Welcome to Olympia - MAI-free since 1998
Local governments have been among the first to understand the message of the anti-MAI activists - no surprise since the agreement would dictate how and with whom local communities could do business.

Several municipalities in Canada, Australia, Switzerland, and the US have been so concerned about the agreement that they've passed anti-MAI resolutions, declaring themselves "MAI-free zones" with the aim of generating local press and educating the public about the MAI and how it could affect local communities.

Olympia, Washington, was one of the first US cities to pass such a resolution. "The city council heard a talk on the MAI, took one look at the document, and went crazy," says Sally Soriano of the Washington Fair Trade Campaign. "The anger of those people when they heard about what the MAI could do to our communities was astounding."

Last December, Soriano took the issue to the mostly Republican King County Council in Seattle and asked them to pass an anti-MAI resolution. "This is the county where Microsoft and Boeing are headquartered, but the vote was unanimous against the MAI," says Soriano.

Councilmember Maggi Fimia, who co-sponsored the measure, says, "The agreement could inhibit many normal local government functions. For example, if lands owned by a foreign investor were rezoned, that investor could presumably bring a lawsuit before an international tribunal."

The King County Council sent out press releases to every newspaper in Washington about their resolution, but only one paper - the independent Seattle Weekly - published an article on the action. Soriano blames some of the media reticence on the obscurity of the conversation around the MAI.

"People' eyes just glaze over when you talk about the MAI. There's so much super-legalese, and it's so abstract. If we don't translate it fast enough, and the media doesn't grab ahold of it soon enough, MAI-like rules are going to be passed quickly and without much discussion."

The citizens' inquiry

With the Eyes Glaze Over factor in mind, the Council of Canadians took an MAI Inquiry on the road last fall, aiming to translate the MAI and other trade and investment issues into understandable terms while educating Canadian citizens about potential repercussions.

More than 15,000 Canadians in the eight provinces have participated in the Inquiry process. Council chair Maude Barlow and several prominent Canadian and US citizens - including PFN chair David Korten – acted as "commissioners" during the hearings, speaking about the MAI and its potential consequences for local communities. But what was different about the hearings was that interest groups - including representatives from labor, healthcare, education, environmental, aboriginal rights, entertainment, and religious groups - and average citizens took up most of the time presenting their own testimony about how the MAI would affect their communities and livelihoods.

For example, the Canadian Teachers' Federation had this to say about the treaty: "The MAI in its present form remains a seriously flawed document. ... Some schools have developed guidelines to regulate the involvement of big business in education. Under the MAI, such rules could be challenged as unfair investment restrictions."

But the Inquiry didn't end with anger and opposition. "Not only was it clear that participants wanted to stop the MAI," says Anna Dashtgard, MAI Campaign Officer for the Council of Canadians, "but they want this movement to monitor and push for limits on corporate control at the local, national, and international levels."

In addition, the Inquiry participants felt that their agenda should include devising alternatives to the global economy. Canadians aren't alone in this regard. Organizations around the world are now creating alternate versions of the MAI to give concrete weight to what fair and just trade and investment rules would be like.

"We've spent the past two years opposing the MAI," says Dashtgard. "We've temporarily set back negotiations, and we have a voice now. Inquiry participants felt that it's time to create new, human-based terms for trade and investment that we can recommend to government and corporations, instead of just saying, ‘No, no, no.'"

In a joint statement, several labor groups who attended the hearings – including the Canadian Autoworkers Union and the Canadian Labour Congress -; noted, "What we do need are much stronger controls on transnational corporations to ensure that they operate in the interests of communities by creating jobs, respecting human rights, protecting the environment, conserving our resources, and paying their fair share of taxes."

Dashtgard says that participants have followed up in every province with community events and demonstrations around the MAI and trade and investment issues. The Council plans to conduct similar hearings and events in rural areas during the next phase of the campaign.

Nurturing hope
One thing that activists from all parts of the globe seem to have in common is the belief that the MAI, free trade agreements, and economic globalization are not inevitable.
"People are becoming savvy on the MAI because they're facing the hard consequences of, for example, NAFTA," says Public Citizen's Strand-Rangnes. She notes that the most powerful thing people can do is talk to others. "A woman in Michigan called me because she was outraged by what she'd heard about the MAI and wanted to learn more. Two days later, she called again and said she was starting an anti-MAI chapter in her community. When I asked her how she did it, she said, ‘Well, I started talking to the pizza delivery woman about the MAI, and she was outraged too. So we got some people together.'"

Anna Dashtgard feels that this kind of organizing goes beyond merely creating new guidelines for trade and investment. "It's a very powerful, very spiritual movement. It taps into a collective spirit of hope and faith that we can construct something different; that we're not just a global community based on profit, but on something more fundamental. Every major change that has taken place throughout history has had this type of collective spirit behind it."

Tracy Rysavy, YES! associate editor, encourages people to distribute this article and use it to combat the econo-speak surrounding the MAI. For more information, contact: Public Citizen's Global Trade Watch, 215 Pennsylvania Ave. SE, Washington, DC 20003; 202/546-4996;; and The Council of Canadians, Suite 502, 151 Slater St., Ottawa, Ontario K1P 5H3; 613/233-6776;
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