What's in the MAI?
In sum, the MAI would require countries to open their economies
wide to any interested investor, and TNC complaints about
unfavourable treatment by the host country would be judged in
unaccountable international courts. The main elements of the
agreement are as follows:
- The MAI would encompass an extremely broad range of
Not only direct corporate investment, but stocks, bonds, loans,
debt shares, intellectual property rights, leases, mortgages and
concessions on land and natural resources would be covered. The
health, education, communications, cultural, banking and
construction sectors would all be fair game for foreign
investors; in fact, the only exempted sectors would be defense
- The MAI is based on the principles of national treatment
and most favoured nation (MFN).
In plain language, this would require governments to treat
foreign investors as well or better than domestic investors, and
thus would automatically favour transnational investment over
that of smaller, domestic companies. Restrictions placed by
countries on foreign investment in sensitive sectors -- for
example publishing in Malaysia, Indonesia and Venezuela,
forestry, fishing, mining and agriculture in a number of
countries, as well as toxic waste in Colombia and highly
polluting industry in Taiwan -- would be prohibited.
- The MAI would do away with so-called performance
requirements, measures designed to protect workers and
For example, government requirements for a minimum number of
local people being employed in a foreign firm, the use of a
certain percentage of domestic products, technology transfer and
so forth would become illegal under the MAI.
- The MAI would ban restrictions on the excessive flow of
capital in and out of countries.
Thereby it would increase speculative short-term investments of the type
that caused the 1994 Mexican peso crisis and recent stock market
crashes in Southeast Asia.
- Unlike other multilateral treaties, the MAI would include a
dispute settlement mechanism to allow investors to sue
national and local governments for expropriation.
This mechanism, which grants powerful TNCs the right to challenge
local and national legislation emerging from democratic political
processes, is an extremely dangerous political precedent. A
ruling of expropriation, which the MAI defines not only as loss
of income but also of reputation, requires states to financially
compensate the investor and/or to reform laws. The arbitration
panel would consist of a few trade experts working behind closed
doors, beyond public scrutiny. The ramifications of this
provision upon national environmental, health and safety
regulations are enormous, as exhibited by an ongoing case under
the NAFTA in which the US Ethyl company is suing the Canadian
government for US$ 250 million, claiming lost profits and
reputation due to the banning of a toxic gasoline additive.
- The MAI would in effect lock signatory countries into the
agreement for a 20 year period.
A country can withdraw from the MAI only after five years, and
companies investing in that country are covered under treaty
provisions for an additional 15 years.
- The MAI also includes the dangerous provisions of
standstill and roll-back.
Standstill prohibits signatory countries from introducing new
laws or policies which contradict the MAI -- this would have a
crippling effect on national environmental and social policy.
Roll-back is the procedure by which countries will be forced to
open up protected areas and remove laws considered in violation
of the MAI. OECD countries have identified 1000 pages of
exemptions which would eventually have to be rolled back --
ranging from Austria's exemption of its chimney sweeping industry
to social services in the United States.
- The provisions of the MAI would contradict several
international agreements signed by governments.
These include the Climate Convention and its Kyoto Protocol and the
Convention on Biological Diversity.
- The MAI will be a freestanding international treaty, open
to accession by non-OECD countries.
This means that countries can sign on a take-it-or-leave-it
basis, only allowing time-limited reservations. At least 10
non-OECD countries have expressed interest in joining the MAI
from the beginning, including Argentina, Brazil, Chile and most
likely Hong Kong, Colombia and the three Baltic States: Estonia,
Latvia and Lithuania. Also Egypt is expected to join. 6
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