Magazine Issue 8 - Spring 1999
Return of the Living Dead!You know the feeling when the monsters just wont die?
Exposed to sunshine of public scrutiny, the Multilateral Agreement on Investment has finally shrivelled up and died. This time, the 'Dracula Strategy' worked, but the forces behind the MAI are alive and well and planning not one but a whole host of sequels. Chris Grimshaw hefts wooden stake and garlic and surveys the world of international trade law.
Like a string of Hammer House of Horror movies, a series of new trade and investment treaties are on their way - same plot, same actors, different details. Alas the agenda of corporate dominance is far from dead.
Negotiations on the Multilateral Agreement on Investment were formally pronounced dead on 4th Dec at the OECD, six weeks after France boycotted the talks in Paris. It was a moment of celebration for a global network of campaigners that had sprung up against it and of deep embarrassment for its proponents. "We had nothing to do with it!” said Caroline Dobson, of the International Chamber of Commerce (pages 7-8), one of the leading corporate groups lobbying for the MAI.
"We were all able to agree on the need for openness and trust."The MAI negotiations were dogged by a perception that they were secret and unaccountable," said UK trade minister Brian Wilson. How could anyone have got such an idea?
The UK government now claims that any new investment agreement will have to start with a "blank piece of paper". However, whilst the MAI appears dead, the agenda behind it is not. The plans being discussed in other forums may take very different forms but the intentions behind them are identical.
Back from the dead?
In the breakdown of the MAI negotiations many of the OECD countries were calling for the talks to be moved to the World Trade Organisation (WTO) and this is the current position of the European Union.
The WTO was born on 1st Jan 1995 after the seven year Uruguay Round of trade negotiations. It is the organisation that administers the General Agreement on Tariffs and Trade (GATT) and a range of other international agreements. It is supposed to act as the policeman of the world economy, enforcing the various international laws governing trade and settling disputes. It is also now favoured by most OECD member states as the forum for further investment liberalisation negotiations,although in their desperation the DTI (Department of Trade and Industry) is now suggesting that the United Nations may be selected as the forum for negotiating an investment treaty.
The WTO is not the accountable democratic body it would like you to believe, as the recent case of Arthur Dunkel illustrates. Dunkel was appointed to the dispute panel charged with deciding on the legality of the US "Cuban Liberty and Democratic Solidarity Act" which is opposed by the European Union. Dunkel is also the chair of the International Chamber of Commerce (p.7-8), which has publicly stated its opposition to the Act. The conflict of interest was not considered significant.
Unholy Communion
WTO panels meet behind closed doors and are usually staffed by middle-aged men such as Dunkel, who have made their careers in international law, working for the interests of TNCs. It is unsurprising then, given the narrow views represented on the panels, that Europe's rejection of hormone tainted beef and "dolphin friendly" labelling on tins of tuna have been judged trade barriers by these panels. Their judgements are final and beyond appeals. They have destroyed a tremendous amount of environmental legislation and no doubt prevented far more from ever existing.
In 1995 many of the developing nations at the WTO firmly rejected beginning talks on the proposed MIA (Multilateral Investment Agreement). Many of them felt that the WTO rules and structure favoured the rich nations at their expense. Now with the collapse of the MAI negotiations, the Japan and the EU, championed by the ubiquitous Leon Brittan, are pushing hard for the commencement of a Millennium Round of negotiations within the WTO. Their chief priority in these talks is the negotiation of investment rules, likely to be modelled on the MAI. If the EU were to have its way the Millennium Round negotiations would aim to "finish the job" of deregulating the global economy, further opening markets to all kinds of trade and investment. The US, stung by domestic controversy over the MAI and NAFTA, is surprisingly reticent on plans for the Millennium Round, however. Instead, they favour a less controversial and less visible step-by-step approach to investment rules.
Dance of the Vampires
The suggested Millennium Round is not the only MAI-clone to have appeared last year. May 98 was to have seen negotiations open on a very similar deal known as the New Transatlantic Marketplace (NTM). This was to have been an MAI-like investment treaty between the USA and the EU. It was suggested by a little-known industry group called the Transatlantic Business Dialogue (TABD). The NTM would have contained many of the more controversial elements of the MAI including the dispute settlement mechanism. Fortunately, just as with the MAI, the NTM was rejected by France who believed that it represented a threat to national sovereignty and would be used by the U.S. in order to break into their highly protected broadcasting and arts sector. However, French government documents leaked to Public Citizen in Washington D.C., showed a different picture, indicating that the French protests were largely for the benefit of the French public, and that the government remains committed to the "free trade" agenda.
The TABD is another influential industry group, that has been operating since 1995 and consists of the senior executives of over 100 of the largest U.S. and EU based corporations. Since its creation it has been committed to an extreme agenda of trade and investment liberalisation. It is extraordinary in that business clearly sets the agenda then invites government representatives along to informally negotiate on the issues that they have raised. Disappointed by the failure of the NTM, they met again at Salem's Lot (Charlotte, surely -Ed.), N.Carolina from 5th-7th November, in order to discuss alternative measures for the dismantling of trade barriers between the EU and the U.S. Official negotiations then continued at the EU-US Summit in Washington on December 18th.
Pacts with the devil
So what have the bloodsuckers come up with in these times of impending economic and ecological doom? A Transatlantic Economic Partnership (TEP). Instead of going for a whole package of trade liberalisation at once, the TEP opts for a piecemeal approach to the same thing, "the aim being to eliminate or, failing this, reduce to minimum all regulatory requirements",according to TABD literature. In this way they can achieve there aim of an absolutely free market without a single controversial package having to be negotiated and signed. Instead the focus of the TEP talks has been on 'Mutual Recognition Agreements'.
These are agreements between the EU and the U.S. which recognise each others regulatory standards and bodies. At first they proposed that it should be recognised that health and safety, or environmental standards in the EU and U.S. are equivalent. Now they will allow products certified by one side‘s regulators to be traded freely in the other’s territory without all the 'red tape' involved in having to test and certify them again. It was unsurprising that mutual recognition of biotechnology standards were a priority at the Charlotte meeting. If the U.S. Food and Drug Administration (a notorious corporate plaything) can license American products for the European market, then embarrassing and costly disputes such as those over hormone treated beef can hopefully be avoided in the future. While what little scrutiny there was on the TABD concentrated on the NTM, the first six Mutual Recognition Agreements were passed in May and included the pharmaceuticals and telecommunications industry sectors.
In order to give the impression of a balanced agenda, NGOs are now being encouraged to join in a Transatlantic Economic Partnership Environment Group to negotiate a work plan on the interface between trade and environment. It is unlikely that fundamental issues, such as the implications of an economy dependant on growth, will even be discussed. A Transatlantic Environment Dialogue will follow shortly, some time after the world has been sucked dry.
Going for the Jugular
Legend has it that the vampire can hypnotise its victims with its gaze. Currently many nations are being caught by that fateful look and are being seduced into a range of new deals. Here are just a few of them.
Threatening to create the largest free trade zone in history, progress continues on negotiations for the Free Trade Area of the Americas (FTAA) which aims to extend the disastrous North American Free Trade Agreement (which now covers only the US, Canada, and Mexico) throughout Latin America and the Afro-Caribbean countries. Since implementation in 1994, NAFTA has brought mass unemployment to the U.S. and Canada, destroyed environmental regulations, and has sent Mexican labour standards into a nosedive. On the other hand, TNCs gained extraordinary profit margins. The FTAA is scheduled for completion by 2005.
And for the economically poorest continent on Earth, the Clinton administration is preparing the Africa Growth and Opportunity Act (whose growth and opportunity?). Although it was postponed in '98, the Act represents a very immediate threat in 1999. It has been widely criticised by development/aid NGOs such as Oxfam for its MAI-like provisions. Under its terms, 'liberalisation' measures would be imposed on African nations in return for debt-relief and investment. Many Africans view this as a re-colonisation of their national economy.
As we go to press word reaches us of plans for a Free Trade Area of the Mediterranean. Sketchy details include bringing North African countries such as Morocco and Egypt into the agreement to extend European influence around the Mediterranean in much the same way that the EU's 'Agenda 2000' will extend it into central and eastern Europe. The Unholy Roman Empire rises again!
Meanwhile, something is stirring at the International Monetary Fund (IMF). In spite of appaling criticisms of its (in)competence, the IMF Secretariat and some of the OECD nations are planning to amend the articles of association of the IMF in order to introduce "capital account liberalisation" as an objective of the Fund’s operations. This would allow the IMF to discipline or pressurise all its member nations to open up their economies to further financial speculation and direct investment liberalisation. These were precisely the ingredients that led to the meltdown of most of the world’s economies earlier this year.
Coffin up more of the same
There are rays of hope, however. Inspired by the campaign against the MAI several groups including the World Development Movement and the Polaris Institute (www.nassist.com/mai/) are now developing alternative recommendations for global economic treaties. These alternatives start with the protection of the environment and human dignity as their main priorities, and are being developed in open forums on the Internet, where anyone with web-access can participate.
All in all, it is not really the form of these agreements, partnerships, and treaties that is the nightmare, but the intention behind them. Nor is it making trade "free" or market places "open" which causes problems. The problem is for whom or for what they are becoming free or open. Whilst the governments may promise to start with blank sheets of paper in the aftermath of the MAI, there is little indication that they will have any new ideas to write on those pages, or that they have even begun to understand the criticisms levelled at the corporate-dominated marketplace. It doesn't matter on what the rules of the global economy are written. What matters is who writes them and why, and those who have traditionally written them, shrouded in secrecy, have demonstrated manifest incompetence. The horror story, which refuses to die, is that the laws governing our future are largely being written by corporations for the benefit of corporations, and no one else.
Even though further liberalisation has been thoroughly rejected by civil society, the architects of the New World Order continue to cough up more of the same.
Bram Stoker's Multilateral Agreement on Investments...
The discovery of secret negotiations at the OECD, in Paris, for the Multilateral Agreement on Investments in early ‘97 caught campaigners by surprise. However the MAI represented an horrific threat to democracy and the environment and a world-wide campaign soon sprang up against it. The primary strategy was very simple, to inform as many people as possible of the MAI negotiations. It was dubbed the ‘Dracula Strategy’, based on the premise that if dragged out into the ‘sunlight’ of public opinion the MAI would simply shrivel up and die.
The MAI was to have been one of the most ambitious economic treaties ever written, aiming for complete deregulation of international investments in all sectors, with the exception of policing and national security. However, it may be fairly described as a bill of rights for transnational corporations (TNCs), as it would have given investors (for which read, TNCs) a number of extraordinary new powers and freedoms but no duties or responsibilities.
It would have specifically prevented nations from imposing any of a number of listed ‘performance requirements’ on investments. Such performance requirements are often used, particularly by southern nations, as a means to manage their economies. They might include requirements to employ a certain proportion of a business’ workforce from the local populace, to transfer technology or proprietary knowledge to the local community, or to export a certain amount of produce. All such performance requirements would be explicitly banned under the MAI, removing nations’ ability to determine their own economic destiny. Power would be shifted even further away from ordinary people and their communities. The MAI went even further however, removing the right to “enforce any commitment or undertaking” as regards to an investment. This may have given foreign investors the complete freedom to do as they will with the workers and natural resources of a nation, and sink their fangs into any investment without interference from governments.
Corporate Welfare
Furthermore TNCs would have been granted new protections against ‘expropriation’ or even “measures having an equivalent effect” to expropriation. Expropriations were defined in extremely vague terms, which included almost any measure that damaged profits. Where expropriation does occur, nations must provide full compensation for all lost profits. In a recently resolved expropriation case under the NAFTA rules, Ethyl Corporation sued for $251m in lost profits when the Canadian government
tried to ban the toxic fuel additive MMT manufactured by Ethyl. In the end the Canadian govt backed down and lifted the MMT ban.
TNCs would also have been granted ‘protection from strife’. This meant that TNCs must be compensated for loss of profits due to war, revolution and even “civil disturbance”, which refers to protests and even labour strikes. Lost profits due to road protests and other forms of NVDA would all have been grounds for compensation. The MAI would have enforced a corporate welfare state, financially insulating TNCs from democracy.
Unaccountable Decisions
The MAI also included highly controversial provisions for the settling of disputes. The MAI would have granted investors the right to directly challenge national and local laws when deemed to be in conflict with MAI rules. This raises the absurd possibility of cash-strapped local councils being vulnerable to legal action by TNCs. Furthermore the panels of experts who will pass judgement on disputes would have met in secret and their judgements would have been final, beyond appeal. This would probably dissuade national and local government from enacting any new legislation that might conflict with the MAI. As the NAFTA rules have demonstrated, MAI would make legislation raising environmental and labour standards almost impossible.
The discovery of secret negotiations at the OECD, in Paris, for the Multilateral Agreement on Investments in early ‘97 caught campaigners by surprise. However the MAI represented an horrific threat to democracy and the environment and a world-wide campaign soon sprang up against it. The primary strategy was very simple, to inform as many people as possible of the MAI negotiations. It was dubbed the ‘Dracula Strategy’, based on the premise that if dragged out into the ‘sunlight’ of public opinion the MAI would simply shrivel up and die.
The MAI was to have been one of the most ambitious economic treaties ever written, aiming for complete deregulation of international investments in all sectors, with the exception of policing and national security. However, it may be fairly described as a bill of rights for transnational corporations (TNCs), as it would have given investors (for which read, TNCs) a number of extraordinary new powers and freedoms but no duties or responsibilities.
It would have specifically prevented nations from imposing any of a number of listed ‘performance requirements’ on investments. Such performance requirements are often used, particularly by southern nations, as a means to manage their economies. They might include requirements to employ a certain proportion of a business’ workforce from the local populace, to transfer technology or proprietary knowledge to the local community, or to export a certain amount of produce. All such performance requirements would be explicitly banned under the MAI, removing nations’ ability to determine their own economic destiny. Power would be shifted even further away from ordinary people and their communities. The MAI went even further however, removing the right to “enforce any commitment or undertaking” as regards to an investment. This may have given foreign investors the complete freedom to do as they will with the workers and natural resources of a nation, and sink their fangs into any investment without interference from governments.