Multilaterial Agreement on Investment (MAI)

The Multilateral Agreement on Investment

By Paul Hellyer
25 November 1997

Notes for an address by the Hon. Paul Hellyer to the Sub-Committee on International Trade: Trade disputes and investment of the House of Commons Standing Committee on Foreign Affairs and International Trade. Ottawa, Ontario

Mr. Speller and Members of the Committee. I appreciate the opportunity to appear before you today because I think the Multilateral Agreement on Investment is the most frightening proposition to face the Canadian people in my lifetime.

The MAI is not about establishing rules to ensure that international investment and trade continue to mean jobs and prosperity for Canada, as the Minister of International Trade told you on November 4th. It has nothing to do with trade which is so important to Canada. It is about power and control. It is a treaty on investment which is being crafted as a bill of rights for multinational corporations and the international banks which finance them. It is designed to afford problem-free and relatively risk-free expansion on a worldwide basis; a bill of rights with no corresponding bill of obligations.

THE MAI WOULD BE NOTHING BUT TROUBLE FOR CANADA

Jobs and Investment

We certainly don't need the MAI to encourage foreign investment. As the minister pointed out in his opening statement, foreign investment has doubled in 10 years to $180-billion. Would anyone seriously suggest that we should increase that rate? There is no immediate problem as long as foreigners re-invest their earnings in Canada but when that is no longer attractive to them, and they take their profits in dividends and royalties, has anyone calculated where we will get the foreign exchange required for the payback?

We have been told that foreign investment is essential to create jobs. But that is not necessarily true. Many of the investments of recent years have been takeovers of existing Canadian companies. This has usually resulted in downsizing and a loss of jobs with a reduced demand for Canadian accounting, advertising and other services.

The Minister quoted Industry Canada and his own department to the effect that $1-billion of new foreign direct investment in Canada creates an estimated 45,000 new jobs over five years. As I have just pointed out that would only be true in the minority of cases where no takeover is involved. But the whole question of job creation has to be put in perspective.

On that same scale the Government of Canada's reduction in program spending and transfer payments of more than $10-billion over 4 years has resulted in the elimination of about half-a-million jobs. The point is that the level of job creation in Canada is determined largely by domestic monetary, fiscal and banking policies and these are far more important than foreign investment. Canada is not heavily reliant on foreign direct investment for capital. That is a myth!

There Are No Guaranteed Reservations

We have been led to believe that the government will negotiate the same reservations in MAI that we obtained under the Free Trade Agreement and NAFTA. Frankly, I don't believe those assurances. In my opinion they are just an ether to dull our senses until negotiations are complete and we are faced with a fait accompli.

Let there be no mistake about it. The Americans intend to use the MAI to capture all our holdouts in financial services, telecommunications and the cultural industries. What do you think President Clinton had in mind when he held out Canada as the prize for Congressmen when he asked for "fast track" authority to negotiate treaties? He had in mind everything the U.S. failed to get the last time around.

The Minister told you that Canada would not accept any general commitment to freeze (the so-called standstill) or phase-out ("rollback") restrictions on foreign investment. It would be nice if we could accept that assurance at face value. But we can't, because that is exactly what other countries, including the U.S., will insist on. Charles Ritchie's new book Wresting with the Elephant tells us what happens in a contest between an elephant and a mouse.

Conquest

When Ronald Reagan signed the Free Trade Agreement in 1987 he accomplished what American armies and generals could not do in 1776 and 1812. He conquered Canada. He stripped us of all our protective outer-garments and left us standing in our underwear. Now the U.S. wants our underwear as well.

Jack Valenti, the powerful movie lobbyist, has made it very clear that Canadian restrictions in cultural industries are not acceptable. U.S. investors want the same unrestricted rights in Canada that they have in California.

Canada is indeed fortunate that the conquest wrought by the FTA and NAFTA is still tentative. If push came to shove we could abrogate the treaties in six months. The MAI is designed to make the conquest permanent. The five years abrogation period with grandfather rights for an additional 15 years would mean game over for Canada.

Loss of Sovereignty

You have been told by others about the loss of sovereignty in key areas. I will not repeat those arguments except to say that I would not like to see a Canada which would be prohibited by law from barring goods made by children working 10 or more hours a day for 10 cents an hour in a barbed-wire enclosure sealed by armed guards. A compound where they can be subjected to physical and sexual abuse. Yet this would be the case if the MAI is extended to other countries as planned.

In a letter to U.S. officials on March 21, 1997, the President of the U.S. Council for International Business wrote: "We will oppose any and all measures to create or even imply binding obligations for governments or business related to environment and labor."

The loss of sovereignty I want to talk about is the loss of our right to restrict foreign investment if the survival of our country is at stake. Under the MAI we would not be able to say enough is enough. We could not say that foreigners could not buy more than 50% of our forests. They could buy them all. We could not say that foreigners can not own more than 80 per cent of our oil and gas reserves. They could own them all. We could not say that American agribusinesses could not buy more than 50 per cent of the farms in Elgin county. The MAI treaty would say that they can buy them all.

The Principle Behind the MAI is Wrong

There are people who say the MAI could be made acceptable with adequate safeguards. That is not my view. The MAI is irredeemable because the idea of allowing foreigners "citizens rights" is wrong. Very, very wrong! There should be some advantage to birthright or citizenship earned by people who come to Canada to help make it great. In most cases these citizens care about Canada and would be inclined to preserve and protect its interests.

The citizenship acquired through investment treaties is a hollow mockery of citizenship. Its only allegiance is to the almighty buck. It is a citizenship which wants to cherry-pick the best of the world's resources and industries and consolidate its power in all the major sectors of economic activity. This pursuit of world oligopoly will result in less competition, fewer jobs and an almost impenetrable barrier to new entrants in the major fields of economic activity. It is the embryo of an evil empire representing capitalism's ugliest face.

The Evil Empire

The Hungarian-born American financier George Soros is not alone when he warns that unfettered capitalism is replacing fascism and communism as the greatest threat to open societies. That is exactly what is happening. We are spawning a world where the managers of industry and money, and shareholders in their enterprises, get the lion's share of the world's wealth and where the rest get little, if anything. It is an empire where the division of wealth becomes increasingly unequal and ordinary citizens count for nothing at all because it won't matter whom they elect. The real power will lie in the hands of unelected, unaccountable bureaucrats and autocrats.

The MAI is the Final Test as to Whether Democracy is Dead in Canada Canadians have become increasingly cynical about the parliamentary system and for good reason. Members of Parliament are elected every three or four years but then they seem to forget about the interests of their constituents and become merely spokesmen or apologists for the party line - a line which all too often has been foisted on them by bureaucrats. A few examples.

When Bank of Canada Governor Gerald Bouey brought on the 1981-82 recession which put half-a-million Canadians on the breadlines his action would never have been approved by a free vote of the Liberal caucus. It was done without their knowledge or consent yet they soon found themselves being expected to defend the indefensible.

Then, when Governor Crow perpetrated a similar crime in 1990-91, the Conservative caucus defended a policy they had rightly described as "insane" ten years earlier. The infamous GST was another case of faceless officials imposing their will on a helpless electorate.

The MAI will be the test supreme. It was not part of the platform of any party in the last election. In fact, most Members of Parliament had never heard of it last May even though negotiations had been underway for two years at that time. And you might not have become aware at that time if someone hadn't leaked a copy of the draft treaty which shocked and alarmed those of us who read it first.

The Minister mentioned the advantage of transparency in international rules yet there has certainly been no transparency in respect of the MAI. When I raised the subject with a reporter in April she phoned the Prime Minister's office for clarification and drew a blank response. It makes you wonder who is running the country.

The MAI is an American invention that may be in its perceived short-range interests. It is not in Canada's interests. Nor is it good for the world. Canada, which is a small country next to its elephantine neighbour, must oppose the MAI with all its might. First on its own behalf, because its very survival is at stake, and next on behalf of other small countries which will be jaw-boned into joining the evil empire.

I feel so strongly about this that I have written a book entitled The Evil Empire: Globalization's Darker Side which puts the MAI in the wider context. I have a copy for each of you. I hope you will read it and conclude that you should recommend to the government that it should withdraw from negotiations forthwith.

PAUL HELLYER