Multilaterial Agreement on Investment (MAI)|
Date: Thu, 22 Jan 1998 18:30:11 -0800 (PST)
From: Chantell Taylor <firstname.lastname@example.org> (by way of Michael Eisenscher
Subject: MAI: International Human Rights Crisis; Worries over MAI
The Multilateral Agreement on Investment: An international human rights crisis
By Ward Morehouse,
Co-Director, Program on Corporations, Law and Democracy
2 December 1997
Reflections on Next Steps and a Call to Action
The Multilateral Agreement on Investment (MAI) is an audacious
attempt by giant global corporations larger than most nation states to
consolidate their power by making capital mobility a legally enforceable
property right. It is, in the words of the Director General of the World
Trade Organization, "the constitution of a single global economy." Or as
Tony Clarke of the Polaris Institute and Canadian Centre for Policy
Alternatives in Ottawa characterizes it, "a bill of rights and freedoms
for transnational corporations...a declaration of corporate rule." And
this global property right will transcend internationally recognized human
rights because it will be legally enforceable at the international level
while human rights have historically not been.
For working people and local communities MAI is nothing but bad
news. It will exert downward pressure on wages and increase job insecurity
by making it easier for corporations to move their operations anywhere in
the world. In the same way it will be harder to insist on high standards
for workplace safety and protection of surrounding communities from
industrial pollution and catastrophic accidents like the world's worst
industrial disaster in Bhopal, India. It will make illegal efforts by
states and municipalities to encourage enterprises which are locally owned
and controlled and almost certainly lead to even greater concentration of
wealth and power in the hands of giant antidemocratic corporations.
Under negotiation -- in secret until a draft text was leaked and
put on the Internet in January 1997 -- at the Organization for Economic
Cooperation and Development (OECD) in Paris, the MAI is supposed to be
completed and ready for government approval by spring 1998. The choice of
venue for negotiations is a clever strategy, designed to exclude
participation by governments representing most of the world's population.
*) Contact address: Suite 3C, 777 United Nations Plaza, New York, NY
10017, Tel. 212-972-9877; Fax 212-972-9878; e-mail: email@example.com.
The OECD is a rich man's club, composed of 29 industrialized
countries. Once approved by the governments of these countries, it will
then be presented to the rest of the world as a fait accompli. If they
want to have access to principal world capital markets, they will have no
choice but to sign on. And the compulsion will be intense if the Wall
Street Journal's view of the rest of the world as "money hungry" while
"the global competition for capital heats up" is anywhere near the mark.
The MAI is a turgid document of several hundred pages of text and
commentary organized into half a dozen major segments on such topics as
Treatment of Investors and Investments, Investment Protection, and Dispute
Settlement. But the overriding purpose is simple and clear: the MAI seeks
to establish mobility of capital as a global, legally enforceable private
In doing so, MAI takes a giant step toward constituting
corporations as sovereign instruments of governance, effectively
replicating at the international level the regimen of corporate rule now
well established in the United States through such constitutional
provisions and judicial doctrines as interstate commerce, contracts,
managerial prerogative, and the business judgment rule. Indeed, it even
accords corporations judicial standing similar to that of nation states in
its dispute settlement and investor protection sections!
The potential impact of MAI lies in the rapidly changing global
political economy. The annual revenues of the 500 largest corporations in
the world are some $10 trillion, around twice the size of the gross
domestic product of the United States, the biggest economy in the world
today. In a single year -- 1994 -- the Global 500 revenues increased by 9
percent and its profits soared by a colossal 62 percent. But
notwithstanding such huge profits, the Global 500 in that same year
eliminated 262,000 jobs.
Even more striking still is the startling rate of capital
accumulation among the top 200 global corporations. "The velocity of
transnationalisation of capital as measured as a share of world GDP,"
writes Frederic Clairmont, "is stunning: from 17 percent in the mid-1960s
to 24 percent in 1982 and over 32 percent in 1995."
So if the central purpose of MAI is to establish capital mobility
as a global private property right, the major consequence of its adoption
will be rapid acceleration in the concentration of wealth and power in the
hands of giant, globe-encircling conglomerates and further erosion of
democratic institutions and values worldwide. But what has happened
already is bad enough and has been vividly described in a new book which
was originally published in German and has recently appeared in English,
The Global Trap.
Global corporations, and their agents, the national governments of
the OECD member countries, are well aware of these underlying realities.
Hence their attempt to negotiate such a naked undemocratic grab of power in
secret before popular opposition could be organized. And the Clinton
Administration is following a similar tactic within the United States by
seeking "fast track" legislation that will limit Congress, if the
Administration chooses to treat MAI as an agreement rather than a treaty,
to voting MAI up or down without amendments. As in the case of Third World
governments hungry for foreign capital, Congress will be under strong
compulsion to approve MAI, since the only alternative is the "unthinkable"
one of rejecting it and thus denying US-based corporations access to world
There is ambiguity about whether or not MAI will be submitted to
Congress under "fast track" authority if the Clinton Administration has
that authority by the time MAI is ready for Congressional approval. Some
seasoned observers of the Washington scene think that when the time comes,
Clinton will succumb to the temptation to go for the much less demanding
requirement of a simple majority of both houses of Congress rather than
two-thirds of the Senate as stipulated by the US Constitution for all
treaties. But regardless of how this question is resolved the struggle
over "fast track" is in many ways a surrogate for the struggle over MAI,
involving the same political forces and similar policy issues.
Indeed the underlying rationale for Clinton's "fast track" proposal
and almost certainly for MAI when it is submitted to Congress -- that
recent trade and investment agreements have brought unprecedented
prosperity to the American people -- is contradicted by a recently released
report, The Underbelly of the US Economy. According to this report, there
were more than 14 million jobless people in the US in 1996, resulting in a
jobless rate of 11.0 percent -- more than twice the official figure. Nor
is this all the bad news for the victims of past trade agreements. Real
wages of American workers are well below what they were 25 years ago and
poverty levels are substantially higher than official figures from
So the first step in the US is to defeat "fast track" legislation
by whatever it takes: A judicial challenge to its constitutionality. A
filibuster in the Senate because it strikes at the very foundation of our
constitution -- the sovereignty of "we the people". Massive non-violent
civil disobedience or a general strike for the same reason.
Democratic forces won the first round through grass roots lobbying
when "fast track" legislation was withdrawn by the Clinton Administration
in early November, 1997, once it became clear that it would not pass the
House of Representatives. But the fight is not over. The Business
Roundtable and its allies in Big Business have vowed to regroup their lobby
initiative, ALOT (America Leads on Trade), to raise a new war chest and to
kick off a "grassroots" lobbying effort of their own in early 1998.
The next step is to defeat MAI. Make no mistake about it. MAI
cannot be salvaged through "side agreements" on labor and environment, a
point which thus far seems to have eluded US trade union leadership and
members of Congress who claim to be opposed to "fast track" legislation.
It is fundamentally and irretrievably flawed. It stands in direct
opposition to the democratic principles on which this country was founded,
no matter how elusive their realization has been.
But the third and most important step is pro-active: To use MAI as
the launching pad for a truly vigorous and searching debate on property
rights and democratic values. For too long we have allowed advocates of
corporate hegemony to dominate this discourse, even appropriating language
which should be ours through the "wise use" movement. It is time to start
a "fair use" movement which recognizes the "reliance interest" of workers
and community in the creation of capital and the transcendence of public
property rights of communities and preservation of the biosphere over
private property rights when they are in conflict.
Why not use as a tool for consciousness raising and political
mobilization the call for a common property rights amendment to the US
Constitution by Winona LaDuke, one of the most articulate and forceful
advocates of the rights of indigenous peoples.
The time has come to recapture the spirit of the American
revolution and claim the sovereignty of "We the People" who did after all,
in the compelling words of the Preamble to the Constitution, "ordain and
establish this Constitution for the United States of America."
The time has also come to move beyond the US Constitution to the
international human rights arena where MAI must be recognized for what it
is -- a monumental assault on internationally recognized human rights,
especially that most fundamental of all rights, the "right to be human."
Tony Clarke, The Corporate Rule Treaty: A Preliminary Analysis, Ottawa:
Canadian Centre for Policy Alternatives, April, 1997.
Urban C. Lehner, "Money Hungry: As the Global Competition for Capital
Heats Up, the Implications for World-Wide Investors and Borrowers are
Enormous." Wall Street Journal, September 18, 1997.
The draft text of MAI is available on the Multinational Monitor website:
Frederic F. Clairmont, The Rise and Fall of Economic Liberalism: The
Making of the Economic Gulag, Penang: Southbound Books and Mapusa, Goa:
The Other India Press, revised edition, 1996.
Frederic F. Clairmont, "Transnational Gulag: Reflections on Power Inc.,"
Economic and Political Weekly, March 1-8, 1997, p. 450.
Hans Peter Martin and Harald Schumann, The Global Trap: Globalization
and the Assault on Prosperity and Democracy, London: Zed Books, 1997.
David Dembo and Ward Morehouse, The Underbelly of the US Economy, New
York: The Apex Press, 1997.
National Journal, 21 November 1997.
Steven Greenhouse, "A.F.L.-C.I.O. Turns Energy against Pacts on Free
Trade," New York Times, September 24, 1997.
On the "reliance interest," see Joseph L. Singer, "The Reliance Interest
in Property", Stamford Law Review, Vol. 40, No. 3 (February 1988). On
public vs. private property rights, see Robert Benson, "The Seventh
Generation Act: A Model Law Allowing Law Suits for Damage to Natural
Resources Needed to Sustain Future Generations," Los Angeles:
International Law Center for Human, Economic and Environmental Defense
(HEED), Summer, 1997.
Speech by Winona LaDuke, "The Common Property Constitutional Amendment"
recorded by Alternative Radio, Boulder, Colorado, Fall 1996.
Upendra Baxi, "From Human Rights to the Right to be Human: Some
Heresies," in Smitu Kothari and Harsh Sethi, eds., Rethinking Human Rights:
Challenges for Theory and Action, New York and Delhi, New Horizons Press
and Lokayan, 1989. See also Winin Pereira, Inhuman Rights, Mapusa, Goa,
Penang, Malaysia and New York: The Other India Press, Third World Network,
and The Apex Press, 1997.
A Work in Progress: December 2, 1997
PROGRAM ON CORPORATIONS, LAW AND DEMOCRACY
777 United Nations Plaza, Suite 3C
New York, New York 10017
Tel. (212) 972-9877 - Fax (212) 972-9878
Co-Directors: Richard Grossman & Ward Morehouse
Bob Olsen, Toronto
For MAI-not subscription information, posting guidelines and
links to other MAI sites please see http://mai.flora.org/