Multilateral Agreement on Investment revived
A constitution for the global economy
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You thought it was all over - but now the draft Multilateral Agreement on Investment (MAI) is back to threaten the developing world. Sadly it is no surprise that developing countries have no hand in writing the agreements that control their wealth. Duncan Chapple* The MAI is an international investment agreement that is being drafted by the Paris-based group of 29 OECD countries. The treaty aims to increase economic growth by giving multinationals greater legal protection and giving governments less power to control their activities.
April's meeting of the key ministers involved in drafting the MAI finished with a whimper. The statement issued gave no deadlines for the development of the MAI. Discussions have dragged on, much to the chagrin of the US, over the possible involvement of developing countries in the decision-making framework of the MAI. Many commentators said the MAI was
Since mid-July, a new flurry of activity suggests that the OECD will adopt the MAI next year. If the OECD does not agree the MAI, the USA will push arrangements similar to MAI down the throats of other international organisations, including the IMF.
The opposition is substantial. A united coalition of over 600 non-governmental organisations [NGOs] from 67 countries leading opposition to the agreement,
International Viewpoint which threatens to undermine international efforts to protect the environment and promote sustainable development. The MAI's proposals would massively limit the ability of working people to win better laws to less the exploitation of the third world by imperialism. Almost any attempt to moderate the accelerating speed at which the North rips off the South and East will be illegal - and punishable in special international courts.
The MAI was due to be signed by OECD countries in April this year. The timetable was very optimistic. Similar negotiations, in the Uruguay round of discussions about the General Agreement on tariffs and Trade, had taken ten years. When April came, the assembled ministers were unable to agree the draft MAI. They
Г also failed to set a timetable for completing their discussions. Instead they agreed a break in negotiations. Many experts opined that MAI was dead. US threatens to give up
When the US State Department finally briefed the NGOs on MAI on July 15, it became clear that negotiations are indeed happening on a bilateral level. At the July meeting two key negotiators — Joe Papovich of the United States Trade Representatives and Alan Larson from the US State Department - played an interesting strategic card, threatening NGOs that if the OECD is unable to agree the MAI negotiations in the next six to nine months, the US will support moving the investment deregulation agenda elsewhere — World
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Trade Organisation [WTO], International Monetary Fund [IMF], etc. The US is attempting to scare the NGO alliance into accepting that the OECD group of rich countries should adopt the MAI. The alternatives, bodies like the WTO, are even less open to the influence of developing countries and NGOs.
The US negotiators clarified the lack of a deadline in this April's ministerial statement on the MAI by saying that there were two significant events on the horizon that put time constraints on negotiations even without a formal deadline: the April 1999 OECD ministerial meeting and the Autumn 1999 WTO ministerial meeting.
Clearly, the US want to finish MAI at the April 1999 OECD meeting. opponents build up their work until then, the US might give up at OECD. Slow progress
Not much has happened with the negotiations since the Ministerial meeting in Paris in April. No new deadline was given to complete the negotiations by, and there will not be a multilateral negotiating session in Paris until October.
However, private negotiations are definitely underway. There were two meetings in July involving MAI negotiators from US, EU and Canada. The first was in Ottawa where US and EU negotiators tried to resolve differences between them. The EU opposes US exceptions for subsidies and procurement programmes, while the US is critical of the regional economic integration programmes supported by the EU.
The second meeting, in London, managed to escape public or media scrutiny. Despite the break in negotiations, most countries sent a representative.
The meeting was called by the 'New government in London to publicise the Fitzgerald report undertaken for the UK government on the likely impact of the MAI. The whole idea as an attempt to deflect criticism about how favourably developing countries would be treated under the MAI and under what circumstances they could be allowed to become decision making partners in the drafting of the Agreement
The UK suggests that developing countries be granted a relatively automatic waiver for a number of MAT's provisions and be treated as founder members - but only after the Agreement been adopted.
However, a number of OECD coun tries, with the US in the forefront of the hard liners. resisted any such blanket provisions for developing countries. Inequality
The developing countries effected by the MAI are frozen out of the decision-making. The OECD wants to get the MAI rules sorted out before they invite in the developing world.
Behind all the talk of free trade, the MAI enshrined unfair trade - in which the third world is plundered and exploited by the big multinationals that benefit from the MAI. It continues the biggest trend of the twentieth century - not rock and roll but growing inequality.
The acceleration of the process of globalisation has coincided with a sharp increase in inequality. In many western countries, the equalisation of income and wealth that took place in the U.S. between 1945 and 1970 has since been reversed Over the last 30 years the richest 20% of the world's population increased their share of world income from 70% to 85%. The share captured by the poorest 20% has declined from 2.3% to 1.4%.
These two trends - increasing economic integration and growing inequality - are causally related. The increasing mobility of multinational corporations enables them to play countries and localities against each other, forcing down wage bills and many working conditions in a global "levelling down". Environmental standards, workplace safety rules and similar safeguards are also weakened as governments come under increasing pressure to accede to the demands of highly mobile corporations who can always find another place to produce.
Democracy itself is undermined as the real power to make crucial economic decisions is increasingly removed from elected governments. This includes not only the ability to regulate in the interests of workers, consumers, and the environment, but also the ability to develop fiscal, monetary, and industrial or planning policies that could assured relatively stable and equitable growth and economic
The inability to make these policy decisions real has contributed greatly to the dramatic slowdown in global economic growth that occurred during the second half of the post-war period, with more than a billion people now unemployed or underemployed world-wide. It has also had a massively conservatising effect on people who identified with social democracy's programmes of bureaucratic
Key policy decisions are increasingly becoming the province of unelected, unaccountable institutions whose role has grown in tandem with the power of transnational corporations: the G-7, the General Agreement on Tariffs and Trade (now including the World Trade Organisation), NAFTA, the International Monetary Fund, and the World Bank
Some of these institutions have the power to review the decisions of national governments and demand they be altered under penalty of economic sanctions. The MAI is one more such undemocratic institution and another large step in the wrong economic and political direction. * The author is a long-time supporter of the Fourth International, and a member of the British revolutionary regroupment Socialist Democracy. He can be contacted by email at <duncan.chapple@btinternet.com>. An earlier version of this article appeared in the September-October 1998 issue of Socialist Democracy, available for £1.50 inclusive of airmail [US $31 from 45 Trafalgar Avenue, London N17 8JG. Email <socdemorg@aol.com> contents feature
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