No to the Multilateral Agreement on Investment!

by Alain Pilote

What is the MAI?

In their latest step towards global control, the world Financiers came out with the MAI-the Multilateral Agreement on Investment which gives corporations absolute power, and causes them not to be subjected to any national, provincial, nor municipal law. It will grant multinational corporations the unrestricted "right" and "freedom" to buy, sell, and move their operations whenever and wherever they want around the world, unfettered by government intervention or regulation.

In other words, corporations will be able to override laws enacted by the people, and will not have to abide by all of these same laws that the rest of the ordinary citizens do. How can any government, that is supposed to protect the rights of the citizens, want that to happen? To accept the MAI is, for our elected governments, an act of high treason. Corporations, rather than elected governments, will be established as our final legal authority; elected governments will exist only to protect the rights of these corporations.

The MAI has been negotiated since 1995 by the 29 wealthiest nations of the world, members of the OECD (Organization for Economic Cooperation and Development), based in Paris, France, and is due for final approval in 1998 (probably in May). The MAI is based on the investment provisions of the North American Free Trade Agreement (NAFTA), but the MAI amplifies these provisions and, unlike NAFTA, which only applies to the U.S., Mexico, and Canada, it would apply them worldwide. The Director General of the World Trade Organization, Renato Ruggerio, said about the MAI: "We are writing the constitution of a single global economy."

The effects of the MAI

The guiding principle of the MAI is that any foreign corporation must be treated on the same level as a local or national corporation. This principle might seem fair at first sight, but it has serious consequences on national economies. For example, no government could do anything to favor certain sectors of its own economy: subsidies to help local business, or help given to regions with high rates of unemployment, will be forbidden, being considered as an unfair advantage. (The government would have to make the same subsidies available to all of the multinational giants asking for them, since the MAI requires that any investment incentives offered to local persons must be made equally available to foreign persons.) Even social security laws are at risk with the MAI, since countries offering more generous social benefits could be accused by foreign companies of offering their countries' workers unfair advantages.

Similarly, national laws that seek to limit foreign ownership of local resources and industries, including agricultural land, mineral resources, and newly developing sectors of the economy, are also forbidden by the MAI. The MAI guarantees all foreign investors the right to establish investments in all economic sectors, including services such as banking, communication, and construction. For example, the present law, which says that no person or corporation can own more than 10% of any one of the big six banks in Canada, would no longer stand... and these banks could be bought by American banks.

In fact, the MAI gives foreign companies better than equal treatment. Under this agreement, governments cannot require foreign corporations to meet certain performance requirements or conditions, even if these conditions are imposed on local companies (like requirements to use local suppliers, to take on local partners, or to hire a minimum number of local employees).

A threat to sovereignty

This MAI treaty is a real threat to the sovereignty of any country. It states, among other things, that any country can:

- unilaterally purchase and own any built structure or productive capacity of any other signatory nation, with no requirement to sustain its viability, employment level, or location in the home country;

- own any salable natural resource of other countries, and have the national right to any concession, licence, or authorization to extract its oil, forest, mineral, or other resources, with no obligation to sustain these resources, or to use them in the interest of the host society;

- bid for and own any privatized public infrastructure, social good, or cultural transmission without any limit of foreign control permitted by law.

When a crown corporation, public utility, or other government enterprise is privatized, the MAI states that it must be offered at tender to all the private-sector investors of all the member MAI countries. If a province privatizes its hydro facilities, for example, there is nothing that could prevent them from being purchased by foreigners. In a few years, transportation, education, and security (police forces) could be supplied not by public authorities, but by the private sector. This is actually the trend being pushed by the big transnational corporations.

The MAI will hasten a world-wide "race to the bottom" by making it easier for investors to move production facilities from one country to another. This could hasten job flight from industrialized countries, and increase the pressure on all nations to compete for investment capital by lowering wages and labor, and environmental and consumer-safety standards.

Corporations can sue governments

With this agreement, corporations are given the right to sue governments, judged by an international tribunal, if governments pass laws that would damage corporate profits. Any law aimed at protecting the environment and public health could be considered unfair by any foreign investor. For example, if a law forces a car company to install an antipollution system on its cars, this company could find this law discriminatory against it, and sue the Government, which would have to repeal the law, and pay the company a fine! If challenged by a corporation, governments are obligated ("unconditional consent") to go before the tribunal. The tribunal members are to make their judgments based not on the laws of the host country, but on the rules of the MAI treaty itself. All awards are "binding", and shall be enforced "as if it were a final judgment of its courts."

In fact, the MAI stipulates that any national law that violates MAI rules must be eliminated (either immediately or over a short period of time), and forbids to pass any similar law in the future. This would mean the abolition of many existing national and provincial laws and regulations protecting the environment, natural resources, public health, culture, social welfare and employment laws. It would be forbidden, for example, to have bans on the production or sale of dangerous products, or to have laws designed to conserve valuable natural resources or land. The ability of governments to encourage local economic development would also be restricted, because such laws could put foreign investors at a competitive disadvantage.

In this tribunal business, foreigners would be advantaged over our own nationals: The MAI requires that there be some international participant involved in an investment dispute. Any individual resident in an MAI country, or a business owned by that individual, can launch a claim against the government of another MAI country. For example, Canadian investors are not eligible to bring disputes against the Government of Canada; however, American or Japanese or Japanese investors could. This results in the situation of foreign investors and their investments in Canada having access to the investor-state dispute process, while other Canadians may not. In essence, foreign investors are provided with a better legal remedy than Canadians, under these rules.

A 20-year lock-in

Once governments join this agreement, it is very hard for them to get out of it. Most international treaties require six months notice if a country wants to drop out. The MAI goes farther. Contracting governments will not be able to withdraw from the MAI until five years after it has come into force. On top of that, it is proposed that the MAI rules continue to cover existing investments in that country for an additional 15 years. In other words, once a country has ratified the Agreement, it is virtually locked-in for a 20-year period, giving corporations an ironclad guarantee that the MAI's investment rules will remain in force for at least 20 years.

Say, for example, that Canada ratifies the MAI in 1998. Then, in 2001, a new Prime Minister and government are elected, and they have different views about foreign corporations. Too bad, because they can't pull our country out of the MAI until 2003. Foreign-owned corporations that are already in this country will have the MAI's special rights until the year 2013.

We must say no

What unifies the corporations and investors driving this agreement is the prospect of being freed completely in all of the signatory countries from any accountability to any government or citizen body. They will not have to answer to anybody for the manner in which they use or exploit the markets, resources, subsidies, and assets of the 29 OECD countries, and, soon, of every country on earth. The MAI, if adopted, will make corporate rule absolute.

For Canadians, the real danger is that the MAI will be swept under the rug and ratified without anyone even being aware of its harmful implications and consequences. Fortunately, there are many people and groups who are denouncing this shameful treaty. For example, over 600 non-governmental organizations have issued a joint statement to denounce it.

Last November 24, Archbishop Henri Goudreault, O.M.I., of Grouard-McLennan, in an intervention at the Synod of Bishops' Special Assembly for America, said:

"Governments are having to compete with one another in order to offer the financial giants ever greater advantages and guarantees. The globalization of the economy by multinational corporations is now a reality. Two hundred multinational corporations control more than a quarter of the world's economy, and the Multilateral Agreement on Investment (MAI) currently being negotiated will give these corporations even greater freedom and power."

Maude Barlow, Chair of the Council of Canadians, said: "Transnational corporations have now become so large and powerful that they have replaced nation-states as the defining power structures of the global economy... Small wonder that the heads of state of the world's nations now come cap in hand each year to the World Economic Forum in Davos, Switzerland, to plead with the most powerful corporate leaders to favour their countries with investments. They are all too aware even if they will not let their citizens in on the secret that, while they may govern, they no longer rule.

"The MAI is a dangerous and profoundly anti-democratic proposal. It confers, in essence, nation-state status on private capital and political power to transnational corporations to shape our world in their image. Most distressingly, it has a 20-year lock-in. We can and must say no."

Alain Pilote