The next few months will be decisive for the future of the MAI.
OECD negotiators appear determined not to extend the deadline for the negotiations a second time. They are racing against the clock to resolve conflicts between various countries, and are busily decorating the agreement with non-binding wording on social and environmental standards in an attempt to neutralize the critique and improve the chances of getting the MAI through national parliaments.
Any further delay would leave MAI's future extremely uncertain. Experience has shown that additional time serves only to multiply problems for the negotiators, as more and more negative impacts of the MAI come to light. Most recently, the European Parliament's queries about how the MAI would affect future possibilities for improving social and environmental policies within the European Union has brought problems with the MAI to the surface. The multiplying number of pages of reservations demanded by national delegations have placed the OECD's rosy picture of a "win-win" treaty in a more realistic light. That the negotiating governments are at last becoming wary of the impacts that the MAI will have on their societies is a clear indication of the fundamentally flawed character of the treaty.
MAI negotiators are likely to announce a political agreement on the MAI at the OECD's Ministerial Conference in May. Over the next months, they will focus on adding the finishing touches so that the treaty can be officially signed in November 1998. This is obviously a highly undemocratic procedure, and is symptomatic of the entire process to date. Although the rigid economic model that MAI signatory countries will be forced into may enjoy strong governmental support today, it will likely attract growing critique over coming years as its social, environmental and political impacts become increasingly visible. Joining the MAI involves a 20-year lock-in to a deregulated system in which countries are completely dependent upon the global economy, foreign investments and foreign investors: in other words, upon TNCs. Countries facing economic problems or other challenges will be barred from seeking new solutions. This is not only undemocratic, but also extremely dangerous.
Citizen's campaigns against the MAI are increasing in strength day by day and in country after country, and the media is at last taking notice of the treaty. The NGO plot to kill the MAI has been termed the "Dracula strategy": simply bringing public attention to a treaty that cannot stand up against the light. Thus far, the response from OECD governments to the increasing pressure has been the addition of non-binding language to the treaty's preamble and elsewhere, but most NGOs recognize these as pseudo-solutions that do not change the fundamentally flawed character of the MAI.
The OECD's haste in pushing the MAI through can also be attributed to the fear that the deregulation wave might be losing momentum. MAI negotiations started in 1995 at a time when OECD countries were intoxicated by the signing of the GATT and the birth of the World Trade Organization (WTO). Since then, although many more steps have been taken on the path towards a deregulated world market without borders for goods or capital flows, there are also increasing signs of a backlash arising from Southern governments and from people all over the world. The financial crisis in Asia was a painful lesson for the many Third World countries which had been forced to scrap the very regulations that could have prevented such a crash. Some governments, including Thailand, have now started talking about the need to reintroduce regulation. Critique of the deregulation model has also recently come from surprising corners: financial speculators George Soros and the late Sir James Goldsmith, for example, have both repeatedly warned against the social and environmental dangers of unbridled economic globalization.
The next step includes voicing clearer alternatives, and advocating policies which reduce the current dangerous dependency upon transnational investment. Economic globalization and deregulation have created a vicious circle in which investment dependency forces workers, communities and governments into increasingly harsh competition on wages, taxes, environmental protection and anything else that might influence investment conditions. That international competitiveness is becoming the single most important factor determining the health of a society is a scenario for disaster, and will unavoidably lead to a downwards spiral in social and environmental standards and delay or freeze desperately needed progress in these areas. It is in reaction to this economic dependency upon TNCs that OECD governments have developed the MAI in close cooperation with business lobby groups, and why they are now desperately trying to push it through before the public is clued in to what is happening. Finally, TNC dependency is what is stimulating an increasing number of Third World countries to queue up to sign the MAI, so that they can receive a stamp of approval for having a first class investment climate.
There are no lack of policy options for reducing TNC dependency and putting economic diversity and prosperity of local communities first. These include community reinvestment rules, limits on company size to avoid unfair competition, subsidies for local production for local use, efficient taxation of TNC profits to ensure that the local economy benefits from their presence, regulation of capital flows, and numerous other currently unfashionable policy options. Of course, these are the type of measures which would be banned if the MAI survives. MAI entails the institutionalization of neoliberalism as the only option -- the creation of a global economic constitution that is the equivalent of economic monoculture.
The struggle against the MAI has demonstrated the enormous necessity and potential for grassroots globalization on these complex, far-reaching issues. Information and strategies are being shared among a increasingly strong network of citizens, NGOs, workers, development organizations, women's movements and church groups. Although effective resistance to the MAI has arisen late for a variety of reasons, there is no doubt that NGOs are now catching up. With an increasingly clear common analysis of the dangers of corporate-led globalization, civil society is getting prepared to defend our local economies, our democratic systems and the common good.
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© Corporate Europe Observatory, February 1998
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