~-===================================================================-~ PEOPLES PRESS INTERNATIONAL (PPI) - a public service of CADRE (Citizens for a Democratic Renaissance) - http://cyberjournal.org republication permission given for non-commercial and small-press use http://cyberjournal.org/cadre/PPI-archives ~-===================================================================-~ 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." MAI-DEMOCRACY FOR SALE? 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. WHAT IS IT? 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 1998. WHY HAVE YOU NEVER HEARD OF IT? 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. WHY YOU NEED TO KNOW ABOUT IT 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. WHAT WOULD THE MAI DO? 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. WHAT DOES THIS MEAN FOR YOUR COMMUNITY? 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. IT'S A BAD DEAL FOR WORKING PEOPLE 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 few: *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. IT'S AN ENVIRONMENTAL HAZARD 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 years. IT'S HARDER ON WOMEN 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 MAI. *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. IT'S AN ASSAULT ON HUMAN RIGHTS 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 rights. *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. IT'S AN AFFRONT TO GLOBAL JUSTICE 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. IF NOT THE MAI, THEN WHAT? 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 accountable. 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. WHAT YOU CAN DO 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. CONTACTS 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 <criddiough@dsausa> 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 <•••@••.•••> RESOURCES 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 202-783-7400. 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 U.S. http://www.westgov.org Full text of Western Governors' Association report on MAI. GLOSSARY OF MAI TERMS 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 identically. 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 documents. 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. INSIDE BACK COVER _______________________________ 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 with 55 cents postage. Organizational discounts on bulk orders are as follows: Quantity Price/copy Postage 2-10 1.50 $3.00 Priority Mail 11-24 1.50 $5.00 UPS 25-99 1.00 Call Apex Press 100 & above .75 Call Apex Press ______________________________________ 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] BOOKLET SPONSORS 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 Church [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. * CITIZENS FOR A DEMOCRATIC RENAISSANCE (CADRE) * http://cyberjournal.org mailto:•••@••.••• ~================================================~ ~=-=-=-=-=~=-=-=-=-=-=-=-=-=~-~=-=-=-=-=-=-=-=-=~=-=-=-=-=-=-=~ Posted by: Richard K. 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