March 22, 1998
Mark Weisbrot
Sunday Journal, March 22, 1998
Last December President Clinton lost an important battle in the quest for increasing globalization when he failed to get fast-track authority to negotiate new trade and commercial agreements with other countries. That battle was a continuation of the debate that started with NAFTA (the North American Free Trade Agreement) six years ago. NAFTA was a turning point in the democratization of US foreign economic policy. Prior to NAFTA, international trade and commercial agreements were relegated to obscure articles in the business press. In other words, multinational corporations dictated policy in this area, and the public was out of the loop.
The debate over NAFTA changed that, but we still have a long way to go. The globalizers have multiple forums in which to pursue their aims, and many of these remain largely shielded from the light of public scrutiny. One of these is the Multilateral Agreement on Investment (MAI), which our government has been negotiating for almost three years. Alarmingly, most Americans have not yet heard of this wide-ranging treaty, even though it was supposed to have been completed by next month. The MAI would have a much more powerful impact than NAFTA, since its signers would include the 29 industrialized countries of the OECD (Organization for Cooperation and Development). And then the agreement would be opened up to the rest of the world.
The MAI would create new rights and privileges for international investors. For example, it would give corporations the right to sue governments directly for alleged violations of the agreement. Such disputes would be settled by an international arbitration panel, rather than in the courts of any nation.
This is a powerful new tool for intimidating governments from passing environmental or other regulations that a particular company might not like. Currently, under agreements like the 132-nation GATT (the General Agreement on Tariffs and Trade), a corporation may not directly sue a government, but must ask its own government to pursue the complaint.
An example will illustrate the significance of this change. Last year the Canadian government prohibited the import of MMT, a gasoline additive that is effectively banned in the United States. It was banned on the grounds that it was a potential health hazard. The producer of the additive, the American-based Ethyl corporation, sued the Canadian government for $251 million in damages. Their argument is that the Canadian government’s ruling discriminates against Ethyl, and they sued under the provisions of NAFTA that provide for equal treatment of foreign and domestic investors.
This idea that no nation may distinguish between foreign and domestic investors in its laws is the guiding principle of the MAI. As a result, it would make it more difficult for state and local governments in the US, for example, to support local economic development based on local businesses. Municipal governments would not even be able to defend themselves if sued by a foreign corporation, but would have to rely on the federal government– which may be unsympathetic to their aims– to defend them in an unaccountable international tribunal.
These threats to the sovereignty of state, local, and even national governments are the main reason why the MAI has run into trouble and will probably not be completed as scheduled in April. The strong opposition of environmental, labor, and citizens groups from around the world, including the United States also took a lot of wind out of the negotiators’ sails. These groups demanded– unsuccessfully– that the negotiators include meaningful safeguards for the environment and labor rights, and not simply produce a bill of rights for multinational corporations.
The battle over the MAI is far from finished, but there are important lessons to be learned. The most important is that globalization is not the result of blind, uncontrollable forces like “technology.” It is the product of deliberate, negotiated, and one-sided agreements like NAFTA and the MAI, that shift the rules of the game in favor of transnational corporations and their owners. Much of the increase in poverty and inequality we have seen in America over the last two decades– as well as declining real wages for the majority of employees- is the result of these intentional institutional changes.
The good news is that such changes are not inevitable, and can even be reversed. Agreements like the MAI cannot pass what Public Citizen’s Lori Wallach calls “the Dracula test”– expose them to daylight and they are as good as dead. With a little more public awareness, the MAI will meet the same fate as fast-track.
