MAIGALOMANIA!

"Investment is a desirable and desired thing... Nonetheless, governments still sometimes find it threatening, because free direct investment limits administrations' ability to control and shape their countries' economic destiny. This is a small price to pay for allowing private sector decision-makers to generate economic benefits worldwide. But it is a price that some governments in some sectors still find difficult to pay. That is a tragedy." ¹

(European Commissioner Sir Leon Brittan)

"The preponderance of restrictions on foreign investment lie outside the OECD area ... Business needs the benefits of an international regime to include the fast-growing counties of Asia, Central and Eastern Europe and Latin America." ²

The International Chamber of Commerce on the MAI

Corporate Empowerment

An analysis of the forces behind any of the recent trade and investment regimes reveals that transnational corporations (TNCs) -- working both nationally and in international coalitions -- are active proponents of the prying open of markets and the removal of barriers to trade and investment. That is certainly the case in the ongoing OECD negotiations on the MAI. A total of 477 of the world's 500 largest TNCs are based in OECD countries and most of these are organized in groupings like the International Chamber of Commerce (ICC), the US Council for International Business (USCIB) and the European Roundtable of Industrialists (ERT). All of these corporate lobby groups have been directly or indirectly involved in the shaping of the MAI. The reason for their interest in a global investment treaty, intended as much for Third World countries as for the OECD states negotiating the agreement, can be found in the increasing percentage of corporate investment that flows in a southerly direction.

Furthermore, TNCs are tightly allied with the neoliberal politicians governing most of their home countries, and generally play a considerable role in both national -- and increasingly international -- policy-making. The 1994 completion of the Uruguay Round and the creation of the World Trade Organization (WTO) was a great victory for TNCs, which together with their governments lobbied for the removal of national barriers to the flow of goods and services. The next logical corporate challenge has been the creation of a treaty which, by dismantling barriers to investment, would provide investors with a so-called "level playing field" across the globe. The various provisions of this Multilateral Agreement on Investment would ensure the most ideal investment conditions for TNCs -- including homogeneous and transparent legal and regulatory frameworks, the standardization of diverse local and national conditions, and best of all, the right to recourse when corporate profits or reputations are damaged.

The Losers

The agreement will grant TNCs with extensive new powers while at the same time denying governments the right to control foreign direct investment in their countries. The rules and regulations which hinder foreign investment and will be dismantled under the MAI are often those that protect workers and jobs, public welfare, domestic businesses, the environment and culture. By subverting national and local priorities to the needs of foreign investors, the MAI poses a dangerous threat to democratic political processes. The impacts would be the most devastating on poorer countries, which would have no chance to build up a balanced economy or break their reliance upon commodity export and resource extraction in the service of industrialized countries and their corporations. Consequences within OECD countries will be different but also dramatic.

Third World Under Siege

Third World Opposition against the MAI and other attempts to impose MAI-style policies has been considerable. Simultaneous to the launching of OECD MAI negotiations, the EU-led attempt at a flying start for a MAI-clone treaty, called MIA, within the World Trade Organisation was obstructed by countries like India and Malaysia. They could not, however, prevent the creation of a WTO working group on investment -- in which the EU and others continue to push for the commencement of MIA negotiations. The OECD countries have adopted a multifaceted strategy to reach their aim of investment deregulation in the South, including tempting Third World countries to sign on to the MAI, keeping an investment treaty on the burner in the WTO, and using other international institutions like UNCTAD and the IMF to further their objectives.

The most recent offensive for investment deregulation was announced by EU Commissioner Sir Leon Brittan, who in early February of this year informed the world that negotiations on a Trans-Atlantic free trade zone, involving the EU and the US, might be launched already in May 1998. ³

Race Against Time

After a smooth first year and a half of negotiations, the MAI entered a far rockier phase in early 1997. Problems arose due to demands by OECD countries for an increasing number of reservations and sectoral carve-outs, and also with the high speed emergence of anti-MAI campaigns in one OECD country after another. Although serious preparations for the MAI had already begun in 1991, non-governmental organizations representing environment, development, women and other sectors sure to be impacted by the MAI were not consulted until October 1997. The negotiators are now embroiled in a race against time in order to avoid another postponement of negotiation deadlines, a delay that might mean the kiss of death for the MAI. That would be a happy ending indeed for a treaty that would tie its signatory countries to the unfettered "free" global market economic model for 20 years. There would be every reason to celebrate the failure of a treaty that would increase competitive pressure on wages and policies, facilitate relocations, and ban many of the policies desperately needed to strengthen local economies and reduce general dependency on transnational corporations.