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  Issue No 20 Official Organ of LaborNet 02 July 1999  

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International

MAI Back on the Agenda

By Patricia Ranald - Senior Research Fellow, Public Sector Research Centre, UNSW

After being ditched in the wake of an international cyber-protest, the World Trade Organisation is trying to salvage the MAI from the ashes.

Negotiations on the Multilateral Agreement on Investment, described as a legal charter for Multinational Corporations, collapsed in October 1998. The MAI had been under negotiation for three years by 29 governments of the world's richest industrialised countries, members of the Organisation for Economic Cooperation and Development (OECD).

The negotiations had been conducted on a confidential basis with little publicity until 1997, when the draft was leaked on the internet. Once it became public, local, national and international union and community organisations linked through the internet to expose it to public debate. These campaigns resulted in media discussion and parliamentary inquiries in several countries, including Australia, which contributed to the collapse of the negotiations.

The MAI has now been placed on the 1999 World Trade Organisation agenda.

The MAI was promoted by the Business and Industry Advisory Committee to the OECD, consisting of representatives of some of the world's largest transnational corporations. It was drafted in the forum of the governments of the wealthy countries of the world, those from which most transnational investment comes, but was to apply to the global economy.

The governments of the developing countries, which represent the majority of the world's people, and those which benefit least from the global economy, were

excluded. They would then have been under pressure to sign the agreement after the negotiations in order to attract transnational investment.

The MAI was specifically designed to increase the mobility of all forms of investment and financial transactions, and to prevent government regulation of them. Its language was revealing: it referred to MAI "disciplines" being applied to governments. It used a very broad definition of investment, which included all forms of investment and financial transactions.

The MAI went further than other trade and investment agreements because it applied to all forms of government legislation except those specifically exempted. Even the listed exceptions were regarded as "non-conforming measures" which might be rolled back over time.

Transnational investors had to be accorded "national treatment": any legislation which favoured local investment, limited levels of foreign investment or required them to contribute to local development could be regarded as "discriminatory" (OECD, 1998, 13).

Under "investment protection" clauses, transnational investors could not be "impaired" from "operation, management, use, enjoyment or disposal of investments by unreasonable or discriminatory measures" (OECD, 1998, 57). This, combined with the legal powers of corporations to sue governments, (see below) was an unacceptably broad restriction on government policy and legislation.

Under the proposed dispute resolution mechanism, corporations could challenge laws which were inconsistent with the agreement and/or sue governments for damages (OECD, 1998, 70-71). This provision represented a huge increase in the legal powers of corporations over governments. The only similar provision for corporate action against governments is in the North American Free Trade Agreement (NAFTA). Under this provision, corporations have sued Canadian and Mexican governments for damages of tens of millions of dollars over environmental laws which they claimed damaged their investments.

The MAI draft proposed a 20 year commitment: once signed, governments could not withdraw from the agreement for 5 years, and after withdrawal, commitments were still binding for 15 years (OECD, 1998, 105).

The OECD has guidelines on conduct for multinational companies, environmental regulation, human rights and labour rights, based on United Nations conventions and agreements in these areas. After lobbying from unions and other non government organisations, there was reference to these in the draft agreement as voluntary goals, but they were not included as legally enforceable clauses. (OECD, 1998: 7-9, 54-56, 96).

In the course of the MAI negotiations, some business organisations and governments, including the Australian government, consistently refused to consider legally enforceable rights in these areas. Thus the MAI expanded legal

rights of corporations over governments, but placed no corresponding legally enforceable obligations on them.

This expansion of corporate rights over present and future governments and citizens proved unacceptable. National and international movements of unions, environment groups, churches and human rights organisations used the internet to expose the MAI processes, publish drafts and pressure both national governments and the OECD to conduct public debate to the point where the negotiations were abandoned.

In Australia there was a parliamentary inquiry and broad public debate. Over 900 submissions were made to the Commonwealth Parliamentary Joint Standing Committee on Treaties Inquiry on the MAI. These came from a wide range of organisations including churches, Amnesty International, the Australian Council of Trade Unions and a number of national unions, the Australian Council for Social Services, the Australian Conservation Foundation, the Women's Electoral Lobby and the Australian Local Government Association.

These organisations support the concept of international regulation of investment. They want an agreement on investment regulation which is fair to investors but does not give them unreasonable powers over governments.

This majority position contrasts with the minority opposition to the MAI expressed by Pauline Hanson and other extreme right wing nationalist groups, which oppose all forms of international regulation, including United Nations Conventions. The inquiry report recommended that much wider community consultation be conducted before any Australian government signing of the MAI.

The global movement against the MAI is the first to defeat an international economic agreement. This shows that we are not powerless in the face of globalisation pressures and that governments can be prevented from trading away their ability to regulate corporations.

The MAI was concerned with increasing the mobility of investment, and was conceived before the 1997 East Asian economic crisis. The crisis and its aftermath in Latin America and Russia have prompted a new international debate about the desirability of increasingly mobile investment. There is now an international discussion on an alternatives to the MAI negotiated through United Nations structures which would regulate transnational investment in the public interest and safeguard labour and environment standards. (UN Commission on Human Rights, 1998).

A version of the MAI is now being prepared for the World Trade Organisation discussions, which involve both industrialised and developing economy governments, in Seattle in November 1999. Some developing economy governments, notably the ASEAN countries and India, have announced they will oppose it because of its effects on economic development policy.(Bridges Weekly Trade News Digest, 1999).

Unions and other community organisations are lobbying governments and preparing campaigns around the WTO negotiations. Further mobilisation of networks which defeated the original MAI proposal will be needed to ensure that governments are held accountable in these negotiations, and to develop positive alternatives which can regulate investment in the public interest.

References

- Bridges Weekly Trade News Digest, (1999) vol 3 no. 4 ,February 1st.

- Organisation for Economic Cooperation and Development, (1998) Multilateral Agreement on Investment: The MAI Negotiating Text (as of April, 1998), Paris, www.oecd.org

- Ranald, P (1998) Disciplining Governments: what the MAI would mean for Australia, Evatt Foundation and Public Sector Research Centre, University of NSW.

- Ranald, P and Goodman, J, (1999) Corporate power and globalisation: Opposing the Multilateral Agreement on Investment (MAI) , Pluto Press, forthcoming

- United Nations Commission on Human Rights, Sub-Commission on Prevention of Discrimination and Protection of Minorities, Fiftieth session, 'Resolution on the Realisation of Economic, Social and Cultural Rights: the International Economic Order and the Promotion of Human Rights', 20 August 1998.

Patricia Ranald is Senior Research Fellow at the Public Sector Research Centre, University of New South Wales


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*   Issue 20 contents

In this issue
Features
*  Interview: They�re Not All Bastards
The Australian Industry Group�s Roger Boland is one employer representative who believes trade unions will continue to play an important role in the economy - and society - of the future.
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*  Unions: Always the Pay is No Good
Fair Wear's campaign for clothing industry homeworkers is changing the way we think about consuming.
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*  History: A Refreshing Advance
Women workers organising in the NSW Rail and Tramways Department Refreshment Rooms in the 1920s.
*
*  International: MAI Back on the Agenda
After being ditched in the wake of an international cyber-protest, the World Trade Organisation is trying to salvage the MAI from the ashes.
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*  International: Courage Against the Odds
A Cuban trade union leader urges for a 30 year blockade to be lifted, with a fundraiser to be held this Thursday.
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*  Review: Without You I'm Nothing
British pop music doesnt come any better than Placebo.
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»  Trades Hall
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»  Piers Watch
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Letters to the editor
»  Thanks from the Hyde Park Hyatt
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»  The Chant of a Jilted project Co-ordinator
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»  Have the Times Really Changed?
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»  You've Got to be Kidding!
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