(en)Mutilateral Agreement on Investments

Ewald (ewald@ctaz.com)
Fri, 14 Mar 1997 04:12:46 -0700


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The Mutilateral Agreement on Investments has been in negotiations since May, 1995. The final agreement is scheduled for completion in May of this year. However, it must be ratified by the legislatures of the signing countries. This is where the front lines of resistance to this agreement can be established.

Shawn Ewald --------------------------------------------------------------------

M.I.A. Culpa

by

Scott Nova and Michelle Sforza-Roderick

In popular mythology, economic globalization is a natural phenomenon, like continental drift: impossible to resist or control. In reality, globalization is being shaped and advanced by carefully planned legal and institutional changes embodied in a series of international agreements. Pacts like the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA) promote the unregulated flow of money and goods across borders and strip elected governments of their regulatory authority, shifting power to unaccountable institutions like the World Trade Organization. Virtually unreported, the latest and potentially most dangerous of these agreements is now under negotiation.

The Multilateral Investment Agreement (M.I.A.), as the pro- posal is known, is under consideration at the Organization for Economic Cooperation and Development (O.E.C.D.). Its purpose is to grant transnational investors the unrestricted "right" to buy, sell and move businesses-and other assets-wherever they want, whenever they want. To achieve this goal, the M.I.A. would ban a wide range of regulatory laws now in force around the globe. It would also pre-empt future efforts to hold trans- national corporations and investors accountable to the public. The agreement's backers (the United States and the E.U.) intend to seek assent from the twenty-seven industrial countries that make up the O.E.C.D. and then pressure developing countries to sign.

Negotiations are already at an advanced stage. Yet few Americans have even heard of the agreement. Trade officials are treating M.I.A. information like nuclear secrets; the mainstream media are oblivious. Whether the M.I.A. is adopted and, if so, just how far its deregulatory tentacles will extend depend on whether opponents can force the proposal from its present obscurity into the light of open debate. Although the public has been denied access to actual drafts of the agreement, reviews of O.E.C.D. working group reports and an official summary of the M.I.A.'s main features provide a clear picture of its aims and mechanisms.

As proposed the M.l.A. would force countries to treat foreign investors as favorably as domestic companies. Laws placing con- ditions on foreign investment -- like requirements that transnational firms form partnerships with local companies or employ local managers -- would be prohibited. Under this new regime, corporations would find it easier and more profitable to move investments, including production facilities, to low-wage countries. At the same time, developing countries would be denied the tools necessary to wrest benefits from foreign investment. Efforts to promote local development by earmarking subsidies for homegrown businesses and limiting foreign owner ship of local resources would also be barred. If adopted, the M.I.A. will mean foreclosure of Third World development strate gies, increased job flight from industrial nations and enormous new pressures on countries, rich and poor, to compete for increasingly mobile investment capital by lowering environmental and labor standards.

A key M.I.A. provision could also threaten corporate account- ability laws championed by progressives in the United States. The M.I.A. takes aim at statutes in any nation that link the provision of subsidies, tax breaks and other benefits to a corporation's behavior. This ban could be used to challenge a host of local, state and federal measures, including: laws requiring subsidized companies to meet job-creation goals; com- munity reinvestment rules that require banks to invest in underserved areas; and "living wages' requirements for companies receiving public aid or contracts.

Perhaps most disturbing, the M.I.A. would pre-empt strategies for restricting corporate flight to low-wage areas-a major cause of job loss and income stagnation in the industrialized world. On top of the damage done by plant closings and layoffs, corpo- rations use the threat of flight to undermine the bargaining power of unions and scare policy-makers away from the regula- tion, taxation and public spending necessary to raise living standards. Though remote from today's policy agenda, rules lim- iting the capacity of corporations to flee are essential to restoring the ability of government and labor to deal with cor- porations on a level playing field. The M.I.A. would bar such rules as a violation of investors' rights.

In its scope and enforcement mechanisms, the M.I.A. repre- sents a dangerous leap over past international agreements. It lets any corporation that objects to a city, state or national law bring suit before an international M.I.A. panel-which could then order the law overturned as a violation of the pact. Gov- ernments would enjoy no reciprocal right to sue corporations on the public's behalf The full extent of the drafters' ambitions is reflected in W.T.O. director general Renato Ruggiero's recent characterization of the M.I.A. negotiations: "We are writing the constitution of a single global economy."

If the M.I.A. is a "constitution," its bill of rights is for investors only. The agreement does nothing to protect workers or consumers or to shield small businesses from anti- competitive practices by transnationals.

The Clinton Administration backs the M.I.A. for the same reason it supported NAFTA: the view that increased interna- tional commerce is inherently beneficial and that whatever's good for corporations is good for the nation. Negotiators plan to complete the agreement by June 1997, and present it to O.E.C.D. countries for approval as a treaty. This could mean a vote in the U.S. Senate by next fall.

Organizations like Citizens Trade Campaign, Public Citizen's Global Trade Watch and the A.F.L.-C.I.O. have made major strides in educating Congress and the public on trade and investment issues. If unions, consumer groups, environmental- ists, state and local officials and small businesses build on this work and make their voices heard, it is not too late to modify or even derail the agreement.

The outcome is critical-not just because of the destructive provisions of the M.I.A. itself but because it is the next battleground in an intensifying campaign to institutionalize cor- porate dominance. Francis Fukuyama may be satisfied that "the current winning streak of market ideology heralds the end of history." The corporations, however, want to put it in writing.

SCOTT NOVA AND MICHELLE SFORZA-RODERICK

Scott Nova is director and Michelle Sforza-Roderick is research associate at the Preamble Collaborative/Preamble Center for Public Policy in Washington, D.C.

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