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Multilateral Agreement on Investment

As EU and other western countries continue to batten down the hatches against foreigners, refugees and the unemployed, the reverse is happening in relation to the flow across borders of capital and multinational investment. Borders are to be further opened up under a new OECD agreement called the Multilateral Agreement on Investment (MAI).

By Dara Molloy
Under this new agreement (MAI), the privilege of world citizenship is to be given, not to human beings, but to capital. No government that signs the agreement will be able to prevent the flow of international capital into or out of its country. National sovereignty will be eroded to the point where an investor will have the right to sue or prosecute a government that tries to restrict his movement, even though that might be in the public or national interest.

The first draft of the Agreement was drawn up by the International Chamber of Commerce, representing corporate interests. It was originally intended to be part of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), the forerunner of the World Trade Organisation. However, it was strongly opposed at that time by countries of the South.

The issue was then taken up by the USA, who, with the support of multinational companies, pushed for an agreement to be negotiated within the OECD. The OECD (Organisation for Economic Co-operation and Development) is a group of 29 rich countries, including Ireland, based in Paris. The Agreement was to have been finalised at their April 1998 meeting, but a decision of the European Parliament in March has put a halt to that.

The logic of the MAI is clear to those with capital interests."We are writing the constitution of a single global economy," crows renato Ruggiero, director-general of World Trade Organisation. With worldwide international investments now running at an annual $1,600 billion, the scale of foreign investment demands uniform rules and expanded safeguards. Those in favour point out that foreign investment has been increasing faster than trade in goods and services. In 1995 cross-border investments soared by almost 40%, four times the increase in the export of goods and services. These advocates insist that reducing restrictions on capital is the next logical step after treaties such as GATT and NAFTA reduced restrictions on the mobility of goods and services.

The MAI is based on three principles:
1. Non-discrimination foreign investors must be treated as well as or better than domestic companies;
2. No entry restrictions national and local government cannot restrict foreign investment in any form (e.g. buying of privatised companies) or in any sector (except defence);
3. No conditions national and local government cannot impose "performance requirements", such as to ensure local employment, control currency speculation or to require a minimum period of investment. These conditions are prohibited even if they apply equally to domestic and foreign owned companies.
Private mass motoring ... was seen as an expression of individual freedom.Long and bitter experience has made communities wary about allowing their economies to be controlled by those with no personal stake in them. The MAI would:
- allow investors the unrestricted right to buy, sell, and move businesses, resources, and other assets wherever and whenever they want;
- override all "nonconforming" local, state, and national laws and regulations;
- severely restrict the ability of governments to impose obligations on foreign corporations;
- allow corporations to sue cities, states, and national governments before an international tribunal composed of judges largely of the corporation's own choosing.

Under this constitution, corporations become governments and capital becomes the citizenry.

Misgivings about the agreement have come from many sources. The opponents of MAI contend that capital, unlike other economic factors, brings with it power and control. Long and bitter experience has made communities wary about allowing their economies to be controlled by those with no personal stake in them. MAI would be the Magna Carta of absentee ownership, codifying and reinforcing the dangerous tendency of modern economies to separate those who make the decisions from those who feel their impact. And by doing so the agreement would cripple democracy and undermine community.

Critics also point out that governments traditionally have protected their businesses and citizens against foreign absentee control. Sweden has, in the past, allowed foreigners to own only nonvoting corporate stock; Germany has restricted hostile corporate takeovers. In the United States, Minnesota and Iowa ban corporate ownership of certain agricultural enterprises, and Arizona restricts the sale of public lands to state residents and state businesses.

Until quite recently, almost all countries have required that effective control of their key resources remain in the hands of their own citizens. They have not been penalised for protecting themselves. Indeed, when restrictions on absentee ownership were most widespread, trade, productivity, and economic growth expanded at a healthy pace.

According to the World Council of Churches (WCC), the implications of MAI are the following:
- It takes away democratic powers from national and local government and gives new rights to multinational companies;
- It could effectively dismantle existing environmental and social laws;
- It is unfair and could be damaging for the poorest countries;
- It would remove powers from local government and undermine local initiatives;
- It is being negotiated with no public participation or debate and with the exclusion of the majority of countries.
It takes away democratic powers from national and local government and gives new rights to multinational companies ... At the European Parliament debate in March 1998 many of these misgivings were voiced. The debate concluded with the Parliament's rejection of the Agreement until a thorough analysis of its impact on social, environmental and development conditions was completed. The debate called for investors' needs for protection to be balanced with respect for human rights, and for environmental and social standards. The concerns of developing countries must be considered. There should be a level playing field with regard to incentives for relocations. The debate also called for greater transparency and public debate. The vote was 437 to 8 for deferral until these concerns were met.

The European Parliament's resolution against the MAI puts back the proposed signing date. The EU cannot sign the agreement without the Parliament's approval. Once the agreement is signed, however, non-member countries will be invited to sign on a "take it or leave it basis". They have no say in the negotiations. Once the MAI is signed, a country cannot leave the agreement for five years and successor governments will be bound for fifteen years. If national or local governments breach any of the principles, they can be taken to an international tribunal and sued for past and potential future damages.

The struggle against the MAI has demonstrated the enormous necessity and potential for grassroots globalisation on these complex, far-reaching issues. Information and strategies are being shared among an increasingly strong network of citizens, NGOs, workers, development organisations, women's movements and church groups. Although effective resistance to the MAI has arisen late for a variety of reasons, there is no doubt that NGOs are now catching up. With an increasingly clear common analysis of the dangers of corporate-led globalisation, civil society is getting prepared to defend our local economies, our democratic systems and the common good.

Opposition to MAI within the EU can be directed through elected MEPs, national and local government. For further information on this, contact The One World Society, Box 25, Regent House, Trinity College, Dublin. E-mail:

For further information on MAI:Tony Addy/ Edouard Dommen, Unit III, WCC, 150 Route de Ferney, PO Box 2100, 1211 Geneva 2, Switzerland. Tel: +41 22 7916111; Fax: +41 22 7102335.
Web Sites:
Draft text of Agreement:
Public Citizen and Preamble Center on Public Policy's Campaign of Inquiry:
Organisation for Economic Co-operation and Development:
Institute for Local Self-Reliance New Rules Project:
Western Governors' Association:
The council of Canadians:
  This article was sourced from The Utne Reader Nov/Dec '97; a WCC document on Social Movements, Globalisation, Exclusion; The Irish Times; Pobal an Dúlra; The Ecologist.

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