Multilaterial Agreement on Investment (MAI)

Investment deal a threat to our economic nationalism

By Richard Gwyn,
Citizens Democratic Watch
30 December 1997

"We are writing the constitution of a single global economy."
Renato Ruggiero, Director-General,
World Trade Organization (WTO).

HE'S ABSOLUTELY right. The rules for the free passage of goods and services across national boundaries that Ruggiero administers as the head of the international trading body, the Geneva-based WTO, add up to the equivalent of a constitution.

A constitution, though, decisively different from the constitutions most of us are familiar with. All of these are concerned with "the people" or "the citizen," whose rights, freedoms responsibilities are set out in each constitution's clauses (also, in the instance of federal states like Canada, the respective rights and responsibilities of different levels of government).

The concerns of the constitution Ruggiero was referring to, though, are those of an abstraction - the global economy. People, and citizens, ought to benefit because the more effectively the global economy runs, the wealthier everyone ought to be.

People, as such, though, are not the concern of economic constitutions such as the 1988 Canada-U.S. free trade pact, since morphed into NAFTA, to include Mexico.

Abstractions are just that - abstractions, remote, impersonal, distant. It's difficult for ordinary people to relate to them. As well, anything international has about it an aura of glamour, of grandeur, of an inevitability, before which ordinary people should set aside their commonplace worries for the sake of the global good.

This is the case with another economic constitution now being negotiated and which, once completed, will almost certainly be handed over to the WTO to administer.

It's called the MAI - Multilateral Agreement on Investment. Now being completed by the 29 industrial countries of the OECD (Organization for Economic Co-operation and Development), it will set the rules for all global investors. In essence, these rules will require all countries to treat foreign investors in exactly the same way as they treat their domestic companies.

No more economic nationalism, therefore, and, increasingly, less and less ability for each nation-state to protect distinctive local interests (cultural, environmental, and the rest) any differently from the way these are treated globally, since without uniformity there can be no "single global economy," as in Ruggiero's words.

As yet, this second global economic constitution has attracted almost no public interest. The Council of Canadians, headed by Maude Barlow, has attacked it and has issued a critique by Toronto trade lawyer Barry Appleton.

Having pondered the MAI for some time, I can think of only one way to make it real for non-experts.

This is to think of it as a charter of rights for absentee landlords.

That's what foreign investors and multinational corporations are. They locate their plants, or offices, in Thailand or Mexico or Canada, or wherever. But they have no roots in these countries or any loyalty to them , much in the manner of pre-industrial absentee landlords who just happened to own some fields or forests in this or that part of their country.

How necessary and productive and creative is it to be applying our talents and political energies to making the world safe for absentee landlords, as Canada is doing as one of the most active promoters of the MAI?

The MAI's specific purpose is to make the world as safe as possible for these abstractions, for the first time in international law, for it grants multinational corporations the right to sue governments for alleged breaches of the MAI "which cause, or are likely to cause, loss or damage to the investor." These cases, to be decided by a panel of three judges, one chosen by the corporation, a second by the nation-state government, the third neutral, would determine "compensatory monetary damages . . . or any other form of relief," and would do this on the basis on the terms of the MAI treaty itself rather than of the national laws of the country in question.

As significant, while the MAI spells out the rights of absentee landlords, such as "an absolute guarantee (to) be compensated for an expropriated investment," it provides for no equivalent responsibilities or obligations for multinational corporations to meet environmental standards, local employment, export quotas, local purchasing. Indeed, the treaty appears to prohibit these being applied to foreign investors even when required by national law of domestic companies.

Of course, like all countries, we want foreign investment. Of course, as MAI supporters keep saying, governments can enter "reservations" about areas of national activity - like culture - that they want exempted (a questionable protection, in fact, since disputes will have to be settled by MAI rules, and judges).

The real question is whether we really want to turn our country over to absentee landlords. That's what we're doing, without the public being told.