Multilateral Trade Agreement Mustn't See the Light of Day

By Mary Wildfire

(This article appeared in the Charleston Gazette on September 7, 1998)

An article titled "The Explosive Trade Deal Youíve Never Heard Of" in the Feb. 7 issue of Business Week quoted Lori Wallach of Public Citizenís Global Trade Watch. Referring to this "explosive trade deal," she said, "This won't withstand the Dracula test," meaning that it wouldn't survive the light of public scrutiny.

Now why would anything as boring as an international financial agreement be referred to as "explosive" and compared to Dracula? They're talking about the Multilateral Agreement on Investment. The MAI has been under negotiation, in secret meetings in Paris, since May of 1995, under the aegis of the Organization for Economic Cooperation and Development (OECD), also known as the rich nationsí club.

Why the secrecy? Well, in the four years after implementation of the North American Free Trade Agreement, which isnít wildly popular in the U.S., Canada or Mexico, the U.S. has lost 500,000 jobs while Mexicoís wages have fallen and its environmental problems have increased. MAI is based on NAFTA but goes far beyond it both geographically and in scope.

Renato Ruggerio, Director-General of the World Trade Organization, said of the MAI, "Weíre writing the constitution of a single global economy." But if MAI is a constitution, its bill of rights is for investors only ("investors" meaning, in virtually all cases, multinational corporations). It gives them sweeping new rights, but no new responsibilities. Thatís why its best chance of passage depends upon the least public awareness and discussion.

Some of its provisions include:

A mandate that all signatory countries receive Most Favored Nation status -- no discriminating against a country just because it has a terrible human rights record. The boycott that ended apartheid in South Africa would have been illegal under MAI.

All investors get national treatment or better; laws which favor local businesses would be dramatically threatened. This may affect such laws as the Community Reinvestment Act; laws favoring female or minority-owned businesses; laws prohibiting or limiting foreign ownership of land, natural resources or strategic industries (the only exception being in the area of national security); and quite possibly laws involving health, environmental or labor standards.

Key personnel of an investor are guaranteed the right to live in the host country, regardless of its immigration laws. Laws regulating the money flow into or out of a country are banned, except -- possibly -- for a temporary emergency measure during a financial crisis, or other limited cases.

Performance requirements are banned. This means countries canít condition corporate access on benefitting the host locality (by hiring local labor or management, using local suppliers, participating in joint ownership, etc.).

Corporations can demand immediate compensation for expropriation, or measures that have the equivalent effect to expropriation. Here MAI specifies that the intent of the law doesnít matter, only the effect. For example, if itís determined that itís easier for local rather than foreign companies to comply with a recycled content law, then it could be challenged, even though discrimination was not the intent.

Investors are given legal standing to directly sue governments if they think their grand new rights have been abridged. Previously, they had to get their own government to sue the host government on their behalf, which put a check on excessive or bullying litigation.

In suits, investors may elect to use a distant tribunal rather than the local courts - which might be sympathetic to the defendant. These tribunals will accept no public input, no friend-of-the-courts briefs, and will make public only the final decision.

Proponents assure us that genuine environmental, safety or labor laws will not be affected, but only those that are a cover for protectionism, or are not scientifically valid. For an instructive look at what this means, letís consider a recent case before the World Trade Organization, which enforces the General Agreement on Tariffs and Trade. When the European Union banned hormone-fed beef, American producers sued. WTO ruled in their favor, even though the ban applied equally to domestic suppliers and even though there was overwhelming public support for the ban -- because, they decided, there was "insufficient scientific evidence" that hormone-fed beef is dangerous to human health. Are such decisions to be made now, like that one, by a mysterious and unaccountable committee somewhere -- once and for all for the whole world? If so, I certainly hope God sits on each of those committees. Otherwise, this arrangement is not only fascist, itís reckless. One of the purposes of our form of government is to allow the 50 states to experiment with various solutions to problems. Surely this principle should also apply to nations.

These tribunals will, of course, have rosters of experts in various fields to advise them. But isnít there a danger that the selection of these experts will be influenced by business interests? If you don't think so, consider this: the committees that advise the U.S. delegation to the MAI negotiations now include five representatives from environmental organizations and five from labor groups -- who belatedly join the more than 500 business representatives who have been involved from the beginning.

MAI allows a signatory nation to withdraw only after five years, and any investments would be covered by its provisions for another 15 years after that. So if we allow our representatives to sign this Dracula of a document, we will effectively be bound for 20 years to the MAI - a deal which strips much of the remaining power of governments to regulate on behalf of their people, and gives yet more power instead to corporations. It's also an arrangement which furthers the trend toward more centralized and less accountable decision-making. Itís a large step in precisely the wrong direction.

The MAI should not be amended. It should not be modified. It should be shot through the heart with a silver bullet. And then perhaps we should hang garlic on the walls of the OECD and the U.S. Trade Representativeís office, to remind them to represent the people and not just the corporations.

Right now, the signing of the MAI has been postponed a second time while they try to work out differences. If it does resurface in the fall, however, it will probably be as a treaty presented to the U.S. Senate. You will never be asked your opinion, nor given an opportunity to vote on this huge transfer of power.

But there is something you can do: contact Sens. Byrd and Rockefeller and tell them to shoot it down.

Meanwhile, to get more information, call Public Citizen at (202) 546-4996, write them at 215 Pennsylvania Ave. S.E., Washington DC 20003, or contact their Web site at Or you can try the Preamble Collective at (202) 265-3263, 1737 21st St. N.W.,

Washington DC 20009, or

For a voice from the other side, you can call Joe Papovich, Assistant U.S. Trade Representative, at (202) 395-7271.

Mary Wildfire is a writer and environmental activist who lives in Roane County.