MAI-Day, May-Day

Proposed international treaty would undermine domestic environmental and labor standards

by Scott Denburg, Free Press contributor

he Multilateral Agreement on Investment (MAI) is a new international economic treaty which is designed to increase the power of corporations over governments. If enacted in its current form, the MAI would be able to eliminate environmental, labor, and social justice regulations.

"We are writing the constitution of a single global economy" according to Renato Ruggiero, Director General of the World Trade Organization.

Haven't heard of it before? Perhaps it's because negotiations have been taking place in Paris behind closed doors. Policymakers in the Clinton Administration have also kept discussion of the ongoing negotiations under wraps.

Information regarding this proposed treaty was initially obtained via a leak sent to Ralph Nader's consumer advocacy group Public Citizen. Since then, activists have been educating the public regarding this issue and its impact upon their communities.

"This new constitution, the MAI, is a creation of, by, and for transnational corporations," said Sally Soriano, Director of the Washington Fair Trade Campaign. "Foreign corporations would be able to sue governments at all levels to overturn their laws or else legally demand cash compensation." The result would be the elimination of environmental and labor protections in signatory countries.

The Multilateral Agreement on Investment (MAI) will serve as a 'bill of rights' for corporations, and bind the 29 most industrialized nations under a far-reaching global trade agreement.

The MAI is the most comprehensive trade agreement ever drafted, even more so than NAFTA. The treaty, according to OECD officials, would "go well beyond the ... provisions of other international agreements [and] ... would provide path-breaking disciplines on areas of major interest to foreign investors." The OECD, or Organization for Economic Cooperation and Development, is the forum where negotiations are ongoing for this proposed treaty.

A 'chill effect' on public policy

The impact of the MAI is far-reaching, according to activists.

The most radical aspect of the treaty is that it gives corporations the ability to sue local, state, and national governments. Up until the creation of NAFTA, only countries could sue countries. Furthermore, under the MAI, the basis for the lawsuit could be that an existing law is inhibiting a corporation from maximizing its profits. The corporation can seek monetary damages for profits lost now and in the future.

"Washington state has environmental laws that require double hulled tankers on Puget Sound" to protect them from spills, said Soriano. "Under the MAI, a foreign corporation could sue the state [of Washington] claiming the added cost" of a second hull harmed its profits.

Lawsuits like this could either bankrupt or paralyze local governments. The government, were it to lose, would have to pay damages and/or overturn existing regulations.

"I would foresee a 'chill effect' happening if the MAI were passed," said King County Councilmember Brian Derdowski. "If the MAI were in effect, the King County Council would have to worry about whether some foreign company might sue the Council for cash compensation."

Ethyl Corporation vs.
the Government of Canada

The ability for governments to compensate for laws that could limit future corporate profits has already been established. Under NAFTA, the Ethyl Corporation of Virginia sued the Canadian government for damages because their law banned the fuel additive MMT in Ethyl's product. MMT is considered a public health hazard because of the emission of manganese.

Ethyl argued in its recent lawsuit against Canada that the Canadian ban of MMT violates various provisions of NAFTA. The money they seek will cover potential future profits and harm to its reputation.

"This NAFTA court is made up of secret tribunals, consisting of corporate attorneys, confirmed by no elective body," said Soriano.

The MAI court could be worse. In the proposed treaty, recourse can be sought by the investor via "competent courts or administrative tribunals of the Contracting party, and to various bodies setup under the Agreement or under UN auspices." The initiator of the lawsuit (the corporation) is able to choose which area they desire. One such option is a tribunal run by the International Chamber of Commerce, hardly an impartial arbiter.

The Ethyl case forces Canada pay for its environmental regulation. Other cases could, and likely will, target other types of regulations. Labor and environmental regulations have been pointed to most often as areas which could become dismembered.

The MAI would "regulate the ability of Government to regulate," according to Dan Seligman of the Sierra Club.

Negotiations stall

The MAI is in the final stages of creation and was expected to be completed by May 1998. Further negotiations, however, have been delayed, in part because of mounting public pressure against the proposed treaty. In Canada, for example, opponents have passed MAI-free zones in numerous cities, have a best-selling book describing the MAI (MAI and the Threat to Canadian Sovereignty by Maude Barlow), and have forced the government to initiate public meetings to discuss the MAI's impact.

An MAI-free zone states that the city or organization opposes the MAI's provisions because of their potential impact.

Negotiations are expected to resume in October and, if approved, would then go to the U.S. Senate for ratification.

Closer to home, activists are getting organized. "Our strategy is to create both a King County and Seattle MAI-Free Zone" said Soriano. So far, the Association of Washington [State] Cities, Tumwater, and Olympia have passed resolutions opposing the MAI. Several other Washington cities are considering following suit.

To get involved with this issue, contact the Washington Fair Trade Campaign, (206) 782-8292, 2323 NW 100th, Seattle, WA 98177. To learn more about this issue, contact WFTC or check out http://www.citizen.org /pctrade/maibg.htm

Scott Denburg is in the final stages of a masters program in international affairs at the University of Washington