cj#670> MAI – yet another brick in the wall


Richard Moore

Dear cj,

Just when you think you've seen the worst of globalization, you find out
about yet another commission, taking yet more momentous and radical chunks
out of the world as we know it.

Since MAI focuses directly on the question of global mobility of capital,
it can perhaps be seen as the very center of the wedge.  Thanks Charles.


Date: Wed, 23 Apr 1997
From: Charles <•••@••.•••
To: "Richard K. Moore" <•••@••.•••
Subject: MAI

Subject: MAI:The next brick in the globalist wall

Preamble Center for Public Policy:


        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 (WTO).

        Virtually unreported, the latest and potentially most dangerous of
these agreements is now under negotiation at the Organization for
Economic Cooperation and Development (OECD).  The purpose of the
Multilateral Agreement on Investment (MAI), as the proposed pact is
known, 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 MAI would ban a wide range of
regulatory laws now in force around the globe and preempt future efforts to
hold transnational corporations and investors accountable to the public.
The agreement's backers (the United States and the European Union) intend
to seek assent from the 29 industrial countries that comprise the OECD and
then push the new accord on the developing world.

        Negotiations are already at an advanced stage. Yet few Americans
have even heard of the agreement.  Trade officials are treating MAI
information like nuclear secrets; the mainstream media is oblivious.
Whether the MAI is adopted, and, if so, just how far its deregulatory
tentacles will extend, depends on whether opponents can force the proposal
from its present obscurity into the light of public debate.

        As proposed, the MAI would force countries to treat foreign
investors as favorably as domestic companies; laws violating this principle
would be prohibited.  Under these conditions, transnational corporations
would find it easier and more profitable to move investments, including
production facilities, to low-wage countries.  At the same time, these
countries would be denied the tools necessary to wrest benefits from such
investment    like laws mandating the employment of local managers.
Efforts to promote local development by earmarking subsidies for home-
grown businesses and limiting foreign ownership of local resources would
also be barred.  If adopted, the MAI will mean foreclosure of Third World
development strategies, increased job flight from industrial nations, and
new pressures on countries, rich and poor, to compete for increasingly
mobile investment capital by lowering environmental and labor standards.

        A key MAI provision could also threaten corporate accountability
laws championed by progressives in the U.S.  The MAI takes aim at statutes
in any nation that link subsidies, tax breaks and other public benefits to
corporate behavior.  This ban could be used to challenge a host of local,
state and federal measures, including laws requiring subsidized firms to
meet job-creation goals, community reinvestment rules that require banks to
invest in underserved areas, and the "living wage" laws that are the focus of
activist campaigns across the country.

        Perhaps most disturbing, the MAI would preempt 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, corporations use the threat of flight to
undermine the bargaining power of unions and scare policymakers away
from the tough regulation and strong public investment necessary to raise
living standards.  Though remote from today's policy agenda, rules limiting
the capacity of corporations to flee are essential to restoring the ability of
government and labor to deal with corporations on a level playing field.
The MAI would bar such rules in any country that is a party to the

        In its scope and enforcement mechanisms, the MAI represents a
dangerous leap over past international agreements.  It grants any
corporation with a regulatory gripe the right to sue a city, state or national
government before an international tribunal   with a binding outcome.
Governments would enjoy no reciprocal right to sue corporations on the
public's behalf.  And the MAI ignores most of the exceptions in previous
agreements allowing governments leeway in critical areas like public health
and resource conservation.  The full extent of the drafters' ambitions is
reflected in WTO Director General Renato Ruggerio's recent
characterization of the MAI negotiations: "We are writing the constitution
of a single global economy..."

        If the MAI is a "constitution," its bill of rights is for
investors only.

        The agreement contains no standards to protect workers or consumers
or to shield small businesses from anti-competitive practices by

        The Clinton Administration backs the MAI for the same reason it
supported NAFTA: the view that increased international commerce is
inherently beneficial and that whatever's good for corporations is good for
the nation.  Negotiators originally planned to have completed the agreement
by May, to present it to OECD countries for approval as a treaty; it has now
been delayed at least until this fall.

        Organizations like Citizens' Trade Campaign, Global Trade Watch,
and the AFL-CIO have made major strides educating Congress and the
public on trade and investment issues.  If unions, consumer groups,
environmentalists, 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 MAI itself, but because it is the next battleground in an
intensifying campaign to institutionalize corporate dominance.  While
pundits rhapsodize about the triumph of unrestrained capitalism, corporate
leaders know that social democratic politics may yet make a comeback.
And they aspire to tie the hands of future policymakers by using their
present political clout to inscribe deregulation indelibly in
international law.

        Frances 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 is the director and Michelle Sforza-Roderick is a research
associate at the Preamble Center for Public Policy, Washington, D.C.

Posted by Richard K. Moore - •••@••.••• - PO Box 26   Wexford, Ireland
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