Richard Moore

 - a public service of CADRE (Citizens for a Democratic Renaissance) -

                 republication permission given for
                 non-commercial and small-press use

                    005-MAI-DEMOCRACY FOR SALE?.txt

                     * PUBLIC INFORMATION BOOKLET *

                     "THE MAI: DEMOCRACY FOR SALE?"
                      Ruth Caplan <•••@••.•••>
                        Alliance for Democracy
               co-chair: MAI/positive alternatives campaign.

[Outside cover] MAI [full image of Statue of Liberty with price tag and
dollar sign] Democracy for Sale? [in box below image]
[Inside front cover] Published in association with the Ad Hoc Working Group
on the MAI by The Apex Press, an imprint of the Council on International
and Public Affairs, Suite 3C, 777 United Nations Plaza, New York, NY 10017
(Tel/fax 1-800-316-APEX; e-mail: <•••@••.•••>)

ISBN 0-945257-94-5

Printed in the United States of America by Inkworks, a worker-owned union
shop. [union bug here]

The contents of this pamphlet may be freely reproduced, provided its source
is acknowledged.
[Title Page:] The MAI: Democracy for Sale? [Close-up Image of Statue of
Liberty with price tag and dollar sign] Text below image: "The MAI tramples
on our democracy by empowering foreign corporations to sue governments
directly for cash compensation for failure to enforce the MAI. Taxpayers
would be required to pick up the tab."


It's been called NAFTA on steroids.
It's been called a corporate power grab. It's been called the most
significant economic agreement in 50 years.


It's the Multilateral Agreement on Investment (MAI), an agreement under
negotiation in Paris behind closed doors since 1995 by 29 of the wealthy
nations that make up the Organization for Economic Cooperation and
Development (OECD).

If the targeted completion date of late spring 1998 is met, the MAI could
come to the Senate for ratification as a treaty as early as the summer of


Because MAI policymakers in the Clinton Administration don't think the
public needs to know. Apparently they don't think Congress needs to know
either, since America's elected representatives have been kept in the dark
too, even though the text of the agreement is almost final.

But the world's major corporations know about it--and they like it a lot.
The U.S. Council for International Business and other corporate lobbies
have been consulted regularly and are actively involved in developing the
MAI. Meanwhile, non-governmental labor, environmental and community
organizations have been largely shut out.


The MAI is designed to multiply the power of corporations over governments
and eliminate policies that could restrict the movement of factories and
money around the world. It places corporate profits above all other values.
If enacted in its current form, the MAI would radically limit our ability
to promote social, economic and environmental justice. In other words, it
puts our democracy at risk.

This is why the MAI is being strongly resisted by people around the globe.
Citizens' and indigenous movements are rallying against the MAI in North
America, Europe, Africa, Asia and Latin America.


The MAI would set strongly enforced global rules limiting governments'
right and ability to regulate foreign investors and corporations.
Specifically, it would...

*Empower foreign corporations to sue the federal government over federal,
state and local laws, which could force governments to pay damages and/or
overturn their laws. (Investor to State Dispute Settlement)

*Require governments, as a result of binding arbitration, to compensate
foreign corporations for laws that could limit corporate profits, such as
environment, human rights, labor, public health, consumer protection and
local community development standards. Believe it or not, this would even
apply to government policies that could limit future profits. (Establishes
a global "regulatory takings" law.)

*Prevent governments from promoting local businesses by requiring that
foreign corporations be treated at least as favorably as domestic
companies. Foreign corporations could be treated better than domestic
companies, however. (National Treatment)

*Require countries to treat investors from any country in the same manner,
preventing any country or state from using human rights, labor or
environmental standards as investment criteria. (Most Favored Nation)

*Keep governments from requiring foreign corporations to meet certain
conditions, such as maintaining an investment in a community for a set
amount of time, using recycled or domestic content in manufacturing, or
hiring local workers even if the same requirements are applied to domestic
investments. (Performance Requirements)

*Include a bag of tricks such as roll-back and standstill that further
advance economic deregulation. (See Glossary)

*Bind all signatory countries to these obligations for a minimum of 20 years.


It means your community could not require a foreign corporation to hire
local people, use recycled materials, use parts made in the U.S.A., or
enter into joint ventures as a condition of operating in your community.

If your community wanted to give a low-interest loan to a local company, it
would have to offer the same low-interest loan to a foreign corporation.

If your community tried to enact these or similar measures, foreign
corporations could sue your government for interfering with their right to
profit that is assured by the MAI. The foreign corporation could choose the
forum for the lawsuit, including the International Chamber of Commerce. The
community would not be able to represent its interests in these disputes
when brought before such private groups. Rather, the federal government
would defend the case behind closed doors.

Does this seem far-fetched? It isn't. Already, using an MAI-like provision
of NAFTA, the U.S.-based Ethyl Corporation has sued the Canadian government
for $251 million in damages related to a public health and safety law. This
law effectively bans a gasoline additive (MMT) produced exclusively by
Ethyl Corp. MMT has been banned in many U.S. states because it harms cars'
pollution control systems and is a suspected toxic substance. Ethyl says it
should be compensated under NAFTA because the Canadian law will hurt its
potential future profits and harm its reputation. This pending case is just
a preview of coming attractions if the MAI goes into effect.

The MAI is a wolf in sheep's clothing. Its proponents insist it is just
trying to get the same treatment for all investors and their assets. In
fact it threatens our democracy. With the MAI in effect, Congress, a state
legislature or a town council considering a new law would have to worry
about whether some foreign company might sue them for cash compensation.


The MAI would establish and consolidate extensive rights for investors and
corporations while limiting existing protections for labor. As a result,
the standard of living and the rights of working people in the United
States and worldwide would be threatened in a number of ways. Here are a

*Foreign corporations would be exempt from many national, state and local
initiatives that promote local employment and investments because the MAI
bans performance standards and other policies that target specific kinds of
development such as small business.

*No one would be able to require foreign firms to hire a certain percentage
of local residents. They could not be required to use domestic materials,
which creates local jobs.

*The MAI makes it easier for corporations to move capital where and when it
is most profitable with little accountability. This would accelerate plant
closings and job loss in the U.S. as corporations seek lower wagesand labor
standards, especially as developing countries are pressured into signing
the MAI.

*As NAFTA has already shown, corporations can use the threat of moving to
other countries to diminish union organizing and power. The MAI would
dramatically increase their ability to use this threat.


The MAI would pose an immediate threat to environmental protection.
Regulating business operations is vital to controlling environmental
damage. The gravest threat to government's power to regulate is in the
MAI's provisions on expropriation and the ability of foreign corporations
to sue governments if policies undermine planned profits.

By allowing foreign corporations to challenge environmental and health
regulations in special "corporate courts," the MAI would arm investors to
attack existing policies or to discourage future government actions for a
safe and healthy environment. Here's how:

TOXICS: If the MAI becomes law, many federal, state and local laws
governing toxics would be endangered. Foreign companies could claim that
the value of their investments would decline due to policies restricting
toxic emissions or disposal practices. As in the Ethyl case cited above,
investors are already trying to intimidate governments and forestall
regulation by suing for huge sums.

PROCUREMENT: Federal, state and local governments are at last beginning to
introduce social concerns into how they spend taxpayers' money. An
executive order directs federal agencies to buy "green" products, such as
those made with recycled content or using renewable energy. Cities and
counties are moving in this direction too. These good efforts would run
afoul of the MAI which would ban any performance requirements, for instance
offering priority to companies using best environmental practices.

SUSTAINABILITY and NATURAL RESOURCES: The MAI clashes with the move towards
a more sustainable future, which many believe should be built on small-
scale enterprises and local control of resources. The MAI would also
guarantee large multinational corporations with new rights to establish
mining, timber or other natural resource-exploiting investments. The MAI
could be used to overcome moratoria on such destructive activities. The
planet simply cannot afford to be bound by the MAI's rules for twenty


Despite important gains over the past few decades, women continue to suffer
discrimination worldwide, with women of color and poor women most affected.
In 1995, nearly one quarter (24 percent) of all women in the U.S. lived
below the poverty line, as compared to 18 percent of men. Also in the U.S.,
women's wages still average only 70 percent of men's pay.

Policies designed to address women's poverty and inequality would be
directly attacked by the MAI. Here's how:

*Performance requirements, such as requiring equal pay for equal work and
laws requiring that a certain percentage of employees be women, would be
forbidden under the MAI.

*The MAI's national treatment provision means that any subsidies, aid,
credit programs or grants targeted to women could be considered
discriminatory unless such benefits are also offered to foreign investors.

This could deal a serious blow to women-owned businesses in the U.S. and
worldwide, including those supported by micro-enterprise programs that
enable poor women, particularly former welfare recipients, to become self
sufficient. Already, women-owned businesses in the U.S. are discriminated
against in credit markets and in procurement contracts, despite the fact
that they are the fastest growing sector of the U.S. small business
community and employ large numbers of workers. Women's access to and
control over productive resources would be reduced, not increased, by the

*Small and women-owned businesses would be forced into unfair and
unwinnable competition with giant foreign corporations because of the MAI's
overall goal of boosting the capacity of those corporations to compete in
local markets.

*The MAI would hurt all labor unions, but would particularly undermine
union women who are playing an increasingly active role in unions. Good
wages, benefits for themselves and their families, and job security are
particularly critical for women, who are concentrated in the service
sector, with its low wages and poor benefits, and in industries with high
health hazards and exploitative working conditions, such as garments and
chicken processing. New welfare laws are increasing the number of
low-skilled women entering these jobs.

The MAI would make it easier to move these factories and service jobs
overseas and would encourage owners to use the threat of moving abroad to
lessen women's bargaining power.


A fundamental objective of the MAI is to erect a firewall between economic
and social policy. Many multinational corporations vehemently oppose the
use of economic sanctions to force compliance with human rights, labor and
environmental standards that might affect their bottom line. Nor do they
want to be held directly accountable for their business relationships with
governments that systematically violate these standards.

*The MAI would not allow the Massachusetts law that says no government
agency may purchase from a company that does business in Burma or any
similar law aimed at restricting government purchases that violate human

*Had the MAI been in effect during the 1980s and early 1990s, many of the
investment sanctions aimed at abolishing apartheid in South Africa would
have been forbidden. Nelson Mandela might still be in prison.

*In response to Royal Dutch/Shell's environmental destruction and link to
murders of activists in Oganiland Nigeria, some U.S. communities created
"Shell-free" zones that banned investment by Royal Dutch/Shell and its
subsidiaries. This would have violated the MAI's requirement that all
countries receive "most favored nation" treatment.

*More recently, some states in the U.S. announced that they will divest
from Swiss banks to protest the World War II collaboration between Swiss
financialinstitutions and the Nazis. Under the MAI's twisted value system,
commercial interests are more important than human rights, and so such a
censure would be out of bounds.


The MAI is the final pillar of a system designed to promote unregulated
economic globalization, where values of the marketplace have precedence
over values of social and economic justice.

The goal of the MAI is to eliminate policies that countries, especially
developing countries, use to protect and direct their own resources for the
benefit of their own economies. These include laws regulating the movement
of capital across their borders. Chile, for instance, requires investors to
stay in certain high-risk portfolios for at least six months, as a means of
slowing speculation and encouraging investment in productive activities.
This law would stand in direct conflict with the MAI.

Investors and OECD member nations want to take the right to enact such
policies away from developing countries. This is why negotiations were
moved from the World Trade Organization, to which developing countries
belong -- and where they had blocked earlier attempts to pass an MAI-like
agreement -- to the OECD, where they are excluded. If and when the new
rules are set, developing countries will be told to sign on the dotted line
or lose needed foreign investment.

This is a direct assault on the economic, social and democratic rights of
citizens in non-OECD countries. It is not new. In fact, the MAI locks in
place many of the economic policies that the IMF and the World Bank have
imposed on over 90 countries in the past 15 years. Such harsh policies
underlie international trade pacts like WTO and NAFTA.

Just like these other agreements, the MAI would benefit investors over
workers, corporations over nations, the North over the South, the
well-to-do over the poor, men over women, short-term profit and efficiency
over long-term social and environmental sustainability, and free markets
over free people.


In a February 1998 letter to the OECD, over 600 civil society organizations
from 68 countries declared their opposition to the MAI, citing the negative
impacts of the agreement. They noted that the MAI conflicts with many
widely-ratified international treaties supporting human, social and
cultural, economic and political rights of men, women and children.

But they also agreed that international investments require regulation,
given the scale of economic instability and social and environmental
disruption created by the increasing mobility of capital.

So, if not the MAI, then what? The answer is quite simple. We need an
investment agreement that is fashioned with full citizen participation and
approval. We want an agreement that makes people's economic, environmental
and social priorities the tail that wags the global investment dog. And we
want an agreement that holds multinational corporations and investors
accountable to these citizen-defined priorities.

Such an agreement would be far different from the MAI, which promotes
corporate greed disguised as investor rights.

Among the demands made by the 600-plus citizen's groups are that the OECD
and its member countries take the following actions:

1) Immediately suspend negotiations, and undertake, with meaningful public
input and participation, an independent and comprehensive assessment of the
social, environmental, and development impact of the MAI.

2) Require, in any final investment agreement, that multinational investors
be made to observe binding agreements incorporating environment, labor,
health, safety and human rights standards to ensure that they do not use
the MAI to exploit weak regulatory regimes.

3) Eliminate the investor/state dispute resolution mechanism and put into
place democratic and transparent mechanisms that ensure that civil society,
including local and indigenous peoples, gain new powers to hold investors

4) Eliminate the MAI's expropriation provision so that investors are not
granted compensation for a vague, broad notion of regulatory takings.
Governments must ensure that they do not have to pay for the right to set
environmental, labor, health and safety standards, even if compliance with
such regulations imposes significant financial obligations on investors.

5) Open the negotiation process to citizens, which will require, among
other things, timely public release of draft texts and country positions
and the scheduling of open public meetings and hearings in member and
nonmember countries.

6) Broaden government representation at negotiations beyond state, commerce
and finance agencies to a broader range of government agencies, ministries
and parliamentary committees. (For instance, health, education, economic
development, women's, labor, and environment agencies and ministries.)

7) Make provisions for a country's rapid withdrawal from the MAI when it
deems this to be in the best interest of its citizens.


Now is the time to stop the MAI and send a message to policymakers that we
will not allow our democracy - and our right to shape the global economic
policies that affect us - to be sold to the highest corporate bidder.Now is
the time to stand with men and women around the world as they fight for the
same rights. By standing together we can win!

Now is the time to:

Get your community involved! Share this information with friends,
colleagues and activists, and ask them to share it with their networks.
Together you can place action-oriented articles in newsletters of local
organizations and church bulletins, lobby your local officials, organize
press events and host a public debate.

Initiate a campaign to designate your community an MAI-FREE ZONE! Research
the specific impacts of the MAI on your local laws. Write articles for your
local paper detailing these impacts. Work with your local council members
to pass a local resolution declaring opposition to the MAI as infringing on
local self-determination. For sample resolutions and steps to follow,
contact Public Citizen and Alliance for Democracy.

Get to the press! Write Op Eds and letters to your local newspapers or
organize a grassroots press conference opposing the MAI with elected
officials and local groups.

Contact your elected officials! Write to your state attorney general, state
legislators and Congressional delegation, especially your senators. Let
them know about your concerns, and ask them what they know about the MAI,
how it will affect your community, and what they are planning to do about
it. Better yet, visit their offices and meet with them personally.

Get on the NET! There are dozens of websites and e-mail listservers with
useful information on the MAI. (See Resources.)

Get on the radio! Call local talk-radio shows to broadcast information
throughout your community about the MAI. You can even work with your local
stations to host MAI debates on the air.

Join or help start an MAI working group! There are working groups on the
MAI in many states including NY, WA, CA, TX, MA, NJ. Contact Alliance For
Democracy, Sierra Club and Public Citizen for contacts in your area.

Join the growing international anti-MAI movement! Endorse the international
joint NGO statement you read about above, and recruit coalition partners to
do the same.


Contact the following organizations for more information about how you can
get involved:

Alliance for Democracy: David Lewit, 617-266-8687 <•••@••.•••> or Ruth
Caplan 202-244-0561<•••@••.•••>

Democratic Socialists of America: Chris Riddiough 202-726-0745

Friends of the Earth: Andrea Durbin <•••@••.•••> or Mark Vallianatos
<•••@••.•••> 202-783-7400

Public Citizen's Global Trade Watch: Chantell Taylor, 202-546-4996, x303

Sierra Club: Dan Seligman, 202-675-2387<•••@••.•••>

50 Years Is Enough: Lisa McGowan, 202-879-3187 <•••@••.•••>


Written materials:

The Multilateral Agreement on Investment and the Threat to American
Freedom, by Tony Clarke and Maude Barlow, Stoddart Publishers, Canada,
March 1998, $9.95. Distributed in the USA by The Apex Press (800-316-APEX)

Multilateral Agreement on Investment: Potential Effects on State & Local
Government, Western Governors' Association, April 1997

Other background materials and research reports are available from:

Center for International Environmental Law. Write to 1621 Connecticut Ave.
NW, Wash., DC 20009, or call 202-332-4840.Friends of the Earth. "License to
Loot." Write to 1025 Vermont Ave. NW, 3rd floor, Wash., DC 20005 or call

Harrison Institute for Public Law. "MAI--Impact on State & Local
Government” and “MAI Sovereignty Concerns....”" Write 111 F Street NW, Room
102, Wash., DC 20001 or call 202-662-9608.

Preamble Center for Public Policy has avariety of reports on the impact of
the MAI. Write 1737 21st Street NW, Wash., DC 20009, or call 202-265-3263.

Public Citizen's Global Trade Watch. "Everything You Wanted to Know about
MAI but Didn’t Know to Ask." Write to 215 Pennsylvania Ave. SE, Wash., DC
20003, or call 202-546-4996.

RFK Memorial Center for Human Rights. "The Multilateral Agreement on
Investment: A Step Backward in International Human Rights." Write to 1367
Connecticut Ave., NW, Wash., DC 20036 or call 202-463-7575.

MAI websites:

http://www.citizen.org/pctrade/mai.html Public Citizen's Global Trade
Watch. Wealth of information including complete MAI text.

http://www.foe.org/ga/mai.html Friends of the Earth - US. Information
includes potential environmental impacts.

http://www.rtk.net:80/preamble/mai /maihome.html Preamble Center for Public
Policy. In-depth analysis of agreement.

http://www.islandnet.com/~ncfs/maisite Island Centre for Community
Initiatives and National Centre for Sustainability in Canada. Articles,
updates, pros & cons, good links.

http:// www.flora.org/mai-not Ontario Public Interest Research Group. Good
information on what is happening.

http://www.oecd.org/daf/cmis/mai/ maindex.html Organization for Economic
Cooperation and Development's site created to promote the MAI.

http://www.state.gov.html U.S. Dept. of State. Official MAI negotiators for

http://www.westgov.org Full text of Western Governors' Association report
on MAI.


Expropriation ("takings"): Refers to government seizure or nationalization
of private property. The MAI would broaden this definition to include
indirect expropriation (regulations, like land zoning codes, that
substantially cut into the profits of the investor) and "measures of
equivalent effect" (laws that impose significant environment, health,
safety, labor costs on an investor, even when applied equally to all
foreign and domestic investors).

Foreign Direct Investment (FDI): Establishes a physical presence in a
foreign country, like building a production facility or acquiring control
over a certain percentage of a company, service or natural resource.

General Agreement on Tariffs and Trade (GATT): International trade
agreement that sets rules for the movement of goods and services across
borders, primarily by requiring countries to reduce tariffs. Recent GATT
negotiations have aimed at reducing non-tariff barriers to trade, such as
subsidies and regulations. The 1994 GATT talks, which established the WTO,
included limited rules on investment

International Monetary Fund (IMF): Founded in 1944, along with the World
Bank, with the mandate of providing short-term balance of payments support
to member countries. In the 1970s and 1980s, the IMF expanded its role,
forcing borrowing countries to follow a strict set of economic policies
such as labor market deregulation, high interest rates and cuts in
government expenditure in return for IMF loans.

Investment: Broadly defined by the MAI to include direct investment in a
plant or service; portfolio investment (stocks and bonds); real estate
including concessions for mining, timber, oil and gas extraction;
contracts; and intellectual property rights.

Most Favored Nation Treatment (MFN): Requires governments to treat foreign
investors from any country that signs the MAI "no less favorably" than the
treatment given to investors from any other MAI country, regardless of
human or labor rights or environmental considerations.

National Treatment: Requires governments to guarantee that foreign
corporations have an investment climate "no less favorable" than domestic
companies. MAI signatories could treat foreign corporations more favorably
than domestic investors.

Non-governmental organizations (NGOs): Used by international agencies
primarily to describe non-profit organizations. NGOs were not asked for
input on the MAI and almost none were even briefed until after most issues
had been settled.

North American Free Trade Agreement (NAFTA): A 1994 trade and investment
agreement between Canada, Mexico and the United States. NAFTA's investment
rules are the "blueprint" for the MAI

Organization for Economic Cooperation and Development (OECD):
Self-described as "an intergovernmental organization comprising 29 advanced
economies from Europe, North America and the Pacific region." The OECD is
mainly known for gathering data and performing economic analyses, and is
often described as the "think tank" of the industrialized world. The MAI is
its first attempt to produce binding international rules.

Performance Requirements: Rules that a host government places on investors.
Includes requirements to use domestic suppliers or materials, hiring local
workers, and requirements that a foreign investor enter into a joint
venture with a local company. The MAI would ban most performance
requirements outright, even when they treat domestic and foreign investors

Rollback: Would require signatory countries to eliminate existing laws that
would violate MAI rules either immediately or over a set period of time.
Standstill: Would require signatory countries not to pass new laws or
strengthen existing laws if they conflict with the MAI.

U.S. Council for International Business (USCIB): The main business lobbying
group for the MAI, representing over 200 multinational corporations. The
organization has official advisory status to the U.S. government and the
OECD on trade and investment negotiations and access to confidential

World Trade Organization (WTO): Formed by the 1994 Uruguay Round of GATT
negotiations to oversee and enforce GATT trade rules. In 1996 the WTO
established a working group to consider if and how the WTO should regulate
foreign investment. Potential WTO investment rules are called the
Multilateral Investment Agreement (MIA), not to be confused with the MAI
that is being negotiated at the OECD.


To order additional copies of this booklet,

Send mail orders to:
The Apex Press
Suite 2C, 777 UN Plaza
New York, NY 10017

For credit card orders, phone/fax 1-800-316-APEX

For a single copy, send $2.00 , plus a self-addressed, stamped #10 envelope
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The Ad Hoc Working Group on the MAI wishes to express special thanks to
Ruth Caplan with Alliance for Democracy for coordinating this project; to
Lisa McGowan of 50 Years Is Enough, Chantelle Taylor of Public Citizen, and
Chris Riddiough of Democratic Socialists of America for their invaluable
contributions in writing the booklet; and to Doug Hinrichs for the layout
and design work. Many other members of the Ad Hoc Working Group gave
generously of their time as well. _______________________________

[outside back cover]


Alliance for Democracy
Asia Pacific Center for Justice and Peace
Center for International Environmental Law
Center of Concern
Columban Fathers Justice and Peace Office
Communications for a Sustainable Future
Democratic Socialists of America
50 Years Is Enough
Food First
Friends of the Earth
Global Exchange
Institute for Agriculture and Trade Policy
Maryknoll Missioners Justice and Peace Office
Network, A National Catholic Social Justice Lobby
Public Citizen's Global Trade Watch
Service Employees International Union (SEIU)
Sierra Club
Sustainable Alternatives to the Global Economy
United Auto Workers (UAW)
United Steelworkers of America
Witness for Peace
Women's Division, General Board of Global Ministries, The United Methodist

[space for local contact information]


  * Non-commercial republication authorized - include headers & sig *

                  Restore democratic sovereignty
                  Create a sane and livable world
             Bring corporate globalization under control.

     Posted by: Richard K. Moore | PO Box 26, Wexford, Ireland
  mailto:•••@••.••• | http://cyberjournal.org
    * Non-commercial republication authorized - incl this sig *