Envío Digital
Central American University - UCA  
  Number 200 | Marzo 1998



Multilateral Investment Agreement: Friend of the Rich, Enemy of Nations

The Multilateral Investment Agreement (MIA) has ceased to be a secret agreement among the majors and has become a matter of public scrutiny for those who are concerned about democracy, development and human rights for the majority of the population. We have here a passionate chronicle of what is actually happening.

Sergio Ferrari

FROM THE MOMENT IT STOPPED BEING A "SECRET," the proposal for a Mltilateral Investment Agreement (MIA) was questioned from all sides. From the South, from critical sectors of the North and, paradoxically, also from top officials of the very governments whose "experts" constructed the conceptual framework of this international treaty. A final debate within the Ministers' Council of the Organization of Economic Cooperation and Development (OECD) was planned for quick palace approval of the MIA at the end of April, but deadlines have begun to be pushed back.

After two work sessions in the third week of February, the negotiators of the OECD—an organization of the planet's 29 wealthiest countries—went back home with a text full of corrections and numerous questions, an expression of the now stagnated negotiation process. Neither the US representatives, who pulled out 300 pages of reservations, nor the Europeans, some of whom are beginning to fear the MIA's voracity—now believe in the original schedule. According to it, the February meeting was supposed to have put the finishing touches on the final document, after two years of "clandestine" discussions.

The "Bat Test"

The OECD Ministers' Council will reopen discussion of the MIA in April. This will surely be a complicated process, aggravated by the voices of international protest from grassroots movements, NGOs and others that have been growing into a crescendo. They are rejecting a text that must still negotiate rocky roads if it is to legalize the absolute domination of transnationals. As the Uruguayan weekly Brecha recently pointed out, repeating declarations from a critic of MIA, "This treaty did not survive the bat test. It was negotiated behind closed doors and when it came out into the light, all could see how abominable it was."
According to initial estimates, the mechanics ought to have been simple: enveloped in total secrecy, the MIA would be born in the OECD in the second half of 1998 based on the mandate of the World Trade Organization (WTO). Cooked up by the planet's most powerful nations, consulting neither the peoples of the North nor the nations of the South, this new turn of the globalizing screw "from on top" would attack the entire planet. Without a word the United Nations system would appropriate an instrument designed in the image and likeness of the world's most powerful multinational interests. What would be left of the following UN universal principle?
"Every nation has the inalienable right to regulate and exercise control over foreign investments" (United Nations letter on economic rights and responsibilities, 1974).

Both the tyrannical form used to design the agreement and its fateful potential results have led some European intellectuals to speak of the MIA as a "coup d'etats," with states intentionally in plural, because it is a way of taking power by force in all countries, not just one.

Edgard Pisani, former minister of agriculture in France and currently president of the Arab World Institute, agreed with a reflection by Canadian intellectual Tony Clarke when he stated that one can perceive "a plot all over the world to subordinate institutions to the market, which will soon be considered the only legitimate power."
Jack Lang, formerly a minister in France's Socialist government and now president of the French National Assembly's Foreign Commission, adds, "The infernal machine that is destructuring the world is advancing inexorably down the corridors of international organizations. After the deregulation of world trade, the moment came to deregulate investments. Under the name Multilateral Investment Agreement (MIA), the OECD is secretly preparing a clear project: a generalized delocalization of investments."

Alarm Sounds in Europe

On December 4, after almost two years of secret discussions inside the OECD, the Observatoire de la Mondialisation convoked a conference-debate on MIA in the French National Assembly, sponsored by economists, legislators and internationally known artists, among them Jack Lang, Observatoire president Susan George, International Association of Democratic Jurists member Nuri Albala, and Lori Wallach, director of Global Trade Watch in Washington.

An alarm went off that day, and before the incredulous eyes of some of the invited guests reality began to overtake fiction. The contents of the secret agreement were made public and dissected: though it seemed hard to believe, the objective was to give transnational firms a legal status identical to states.

Certain MIA clauses are applicable to both national resources and human activities, including cultural and artistic ones. Some such clauses are:
- the one on "national treatment," which establishes that foreign investors will benefit from identical advantages as national investors. This implies ignoring the rights of a country and its inhabitants regarding foreign investment.

- the one on "favored nation," which eliminates existing individual accords between countries, which at times tend—at least on paper—to help the less developed nations. A number of European NGOs are boldly fighting, for example, to get their countries' governments to increase the prerogatives and advantages for imports from the planet's most impoverished countries. This initiative will die if the MIA is established.

- one on the "impossibility of boycott," which prohibits any sort of boycott of or restriction on investments. As Lori Wallach noted: "If MIA had been valid in the 1980s, Nelson Mandela would still be in prison, because the agreement prohibits boycotts like the one applied to Pretoria during apartheid."
- one on the "obligation of result," which impedes any state from putting any kind of limitations on investors. It also prohibits the state from taking appropriate measures to demand results and imposes on all states that, over time, they do away with current limitations.

- one on "investment protection," by which an investor may demand compensation from a state if it considers that the state's decisions are limiting its earnings or if strikes, problems of public order, emergency situations, war or revolution bother or limit their activities and therefore their earnings.

Out of all these absurd commitments, the gold star goes to the mechanisms for adhering to the Accord, which include an instrument of coercion obliging MIA signatories to meet their obligations for at least 15 years, and then provide 5 years' advance notice of a decision to resign. Any signatory country would thus remain tied to MIA for a minimum of 20 years.

Internet Told the World

The draft of the accord was 90% completed when the first cry of alarm was sounded by US groups who managed to get hold of a copy of the draft document. The Departments of Treasury and State looked ridiculous when, despite their insistent denial of the existence of such a project, the first extracts of the document appeared on Internet.

Reactions to MIA multiplied in the last quarter of 1997 and especially in January of this year. The journalistic attacks by France Inter and Le Monde Diplomatique of France and by Le Courrier of Geneva—to cite only some of Europe's best-known newspapers—intensified the scandal, and influential international organizations rapidly joined the media at the barricades to reject the unacceptable.

Over twenty networks of nongovernmental organizations—among them the ecological network including World Wildlife Fund, Friends of the Earth and Ecoropa, as well as the Swiss Labor Community and Public Citizen, one of the strongest US consumer organizations—raised their voices together. The first battle, which consisted of penetrating the secret world of negotiations among the experts and reporting on the process, was engaged successfully. Nothing has been the same for MIA since.

Just one example: the Swiss Labor Community, which joins the country's five largest NGOs (Catholic Cuaresmal Action, HEKS, Swissaid, Bread for the World and Caritas), some of which have important projects in Central America, distanced themselves from the Swiss government and from some euphoric businesspeople who had already applauded the liberalizing proposal. Attacking the "lack of transparency" of the debate on MIA, they said in an open letter to authorities that "once more politicians seem to have prioritized the needs of multinationals over concerns for society."
In unison with other international networks, the Labor Community insists on confronting the very principle of the agreement, not only because it deregulates transnational activities but because it places transnationals above governments. As they concretely state: "A private investor would be able to sue a government, but neither the state nor its people nor organized civil society would have any right to confront a multinational."
The Third World support agency called Infosud notes that, although on paper MIA only concerns industrialized countries, the primary givers and receivers of direct investments, the impact will be planetary. The Japan-Europe-North America trio alone shares 70% of the world's pie and the OECD member countries, as they themselves recognize, carry out 85% of direct foreign investments.

Any Control on Transnationals Will be Suppressed

The objective of MIA is to eliminate all vestiges of control and any barrier to the mobility of transnational capital. Once signed, a country's government will find it almost impossible to impose any economic, social or ecological conditions on a foreign investor.

Economist Olivier de Marcellus, coordinator of Peoples' Global Action, states: "MIA defines the rights and responsibilities of states and multinationals. States have only responsibilities, and investors have only rights."
No better way to understand the philosophy of this gestating agreement than the interpretation in a February edition of the Swiss pro-business journal Public Issue: "The text being prepared in the OECD comes from the same philosophy as accords made to date, but goes beyond them. The investor will have the right to indemnization in case of expropriation, which is logical. But it will also be able to demand indemnization when the state takes measures equivalent to an expropriation that limit profits."
Continuing its analysis, the article notes with conviction: "In the case of a state that decides to combat industrial pollution, for example, it will have to compensate businesses obliged to make more costly investments to adapt to those environmental measures. The same mechanism will be applied to improvement of public health norms—for example, to a prohibition of certain preservatives in foods—because this will reduce profits for the producer."
It states that every international treaty limits state sovereignty, and adds that "businesses have the right to protect their profits against arbitrary state decisions." It concludes by accepting the current correlation of forces and presenting the future of MIA as an area of dispute: "Economic powers, always active in the corridors of international negotiations, have managed thus far to influence the text in their favor. Now it is the turn of other lobbies to correct the course and give space to other criteria that go beyond those of economic profitability."
This option is false—respond those who criticize the MIA—because, by this point, the secret discussion that has already taken place has created a trend difficult to reverse despite the MIA's high cost, especially for countries of the South. These countries almost by decree, will have to accept the agreement once it is publicly proposed by OECD and blessed by the WTO.

It Will Provoke Surreal Situations

In the hypothetical application of MIA norms as they have been defined to date, "surreal" situations could emerge. In Switzerland, for example, the public entity PTT (Mail and Transport) could be legally sued if a private foreign firm established in Switzerland decides that the low cost of public transport goes against what it considers to be fair competition.

A French, English, Mexican or Nicaraguan public hospital could be sued by a multinational clinic if it determines that the costs of state medical care endanger its profits. Any foreign investor, according to rights granted by MIA, would have access to legal tools to rebel against pollution-reducing environmental standards if these increase production costs, which they normally do.

A particularly disturbing aspect pointed out by Le Courrier is that "the agreement considers the provision of educational services to be one more sort of merchandise—except for military education, which is the only one with protection—and it will be subject to open competition." Thus, from MIA to eternity, education program and content would be in the hands of the World Company or the hundreds of American, English, German or French schools scattered around the planet.

No less impressive are MIA's effects at the cultural level, which are causing major concern among European intellectuals. They are normal concerns given, for example, that the movie market of the Old World, which now absorbs 80% of Hollywood's productions, would be left unprotected by the potential disappearance of the "cultural exception" established in the World Trade Organization accords, which the MIA will not recognize. An added risk is that the support funds for European film could be redirected to finance its chief rival, US film.

Hypothetical and real examples abound. Thailand—which has legislation prohibiting tobacco imports for public health reasons—would have to modify its limitations. In Mexico—which already had to modify its agrarian legislation to join NAFTA—would have to do so even more. After the MIA, not only Canadian and US investors will be able to buy former agrarian reform lands at cut-rate prices, but so will investors from any transnational under any flag.

There are already precedents. In the NAFTA framework, presented as the panacea of liberalization in North America, the US company Ethyl sued the Canadian government for $251 million in April 1997, using NAFTA provisions to argue that the decisions of that government had affected its profits. Ottawa prohibited use of the additive MMT in gasoline, determining that it caused air pollution. Ethyl argued that the prohibition was equivalent to an expropriation. As had been established in the NAFTA accords—and will be in the MIA on a planetary level—the litigation was taken to international courts. If the company wins, the Canadian government will have to compensate the private company.

The Conference of Peoples' Global Action has raised the most vigorous opposition to the MIA proposal. Three hundred representatives of the planet's main grassroots movements—among them 70 from almost all Latin American countries—took advantage of their February 18-25 meeting in Geneva to "globalize" their opposition. They vehemently attacked the MIA in the framework of their public condemnation of the World Trade Organization, the international financial institutions (World Bank, IMF), and the world and regional "free enterprise" agreements.

"As if it weren't enough," charged the manifesto that came out of the Peoples' Global Action get-together, "a new treaty is being introduced by privileged countries: the MIA. This accord will extend foreign investors' rights far beyond their current position in the majority of countries and will severely reduce the rights and powers of governments to regulate the entrance and establishment of company operations and foreign investors."
The manifesto considers the MIA to be the most important attempt to "expand globalization and economic liberalization," forecasting that "it will abolish state power and the sovereign and legitimate right of states and peoples to determine their own economic, social and cultural policies. Power and rights without which less favored countries will be unable to protect either their companies and local production or their public sectors."

Time has been Gained: How much and To Do What?

Starting early with the counter-festivities planned around the 50th anniversary of GATT/WTO, which will be officially celebrated with pomp and circumstance in Geneva in May, the Peoples' Global Action established a varied calendar of "decentralized actions" ranging from a bicycle march from Frankfurt to Geneva to the holding of an alternative summit to the one which will be held in Chile to advance the application of the Free Trade in the Americas Treaty sponsored by the United States.

Peoples' Global Action also proposes national mobilizations, a campaign of letters, faxes and electronic mail messages to the World Trade Organization to overload its circuits on the days leading up to its "birthday," a media lobby and pressure on governments to confront this globalized system "whose consequences are disastrous for the peoples of all countries."
In an attitude of "resistance," Peoples' Global Action ratified the decision of the movements represented in it "not to respect the laws and regulations imposed by globalization, understood to be the MIA and the inhuman world systems defined according to multinational interests." It proposes that direct constructive action and civil disobedience become the essential characteristics of this new alliance of people against globalization. The manifesto leaves the door open for all peoples to define, the most appropriate means of resistance for them according to their own reality.

Given that the lid has been blown on the clandestine process by which the MIA was designed and that, after this victory, abundant information has been flowing from left to right, it is possible to hope for a realignment. It is not surprising that some of the OECD technocrats, including Frans Engering, president of the MIA negotiating group, have had to plan for two elements that did not exist before. The first, the political times. Anticipating that the initial calendar could be delayed up to a year, they accept that the globalization of the debate will make the cost of the ideological-informational confrontation greater and the results will force wealthy countries to a new strategy.

The second element refers to the potential need to incorporate "social and ecological clauses" in MIA regulations, a rhetorical formula to prepare capsules of contention and, eventually, divide the opposing front. Similar to what happened with the GATT/World Trade Organization treaties, incorporating some stoplights—which are never obeyed later—would sweeten the accords without diluting the essence of their voracity against the majority of the planet and the peripheral nations to the South.

Who Will Stay at the Anti-MIA Barricades?

Both the political times and the incorporation of social clauses illustrate profound cynicism. For two years, neither planetary consultations nor "humanist" regulations were a real concern; they have only emerged now because of the force of international outrage.

Another factor is no less significant. That is the fact that important spokespeople from powerful countries—including primary actors in the OECD—are now criticizing aspects of the MIA that they claim not to have known about before. Is that just electoral opportunism, a mechanism to win points in the negotiation, or populist rhetoric? Anything is possible and only time will judge the intentions of these eleventh-hour criticisms. At any rate, it will not be easy for European Social Democratic politicians and intellectuals who are now opposing the MIA to maintain firm positions when they have to decide between "larger" state policy and "smaller" principles of dignity.

Looking at the future, it is key to coldly evaluate the ability of grassroots movements in the North and the South and some governments from peripheral countries to oppose an agreement that will affect the less favored of both the North and the South, and favor only the Northern transnationals that invest in the South and their local political allies.

If we look at the immediate background—the World Trade Organization accords—it is clear that the force of popular "resistance" at the planetary level leaves much to be desired. Those who resist face a tough reality: a lack of synthesis, sometimes because of lack of knowledge, between the daily battles against neoliberal adjustments and recipes and the big battle against the major framework treaties that conceptually and financially feed those same recipes.

The power behind the MIA is not exactly weak. Forty thousand corporations control 80% of world trade; the 200 primary transnationals at the planetary level control a quarter of world economic activity; the profits of corporations like Ford or Toyota are greater than the GDP of South Africa or Denmark.
Despite all this weakness facing so much power, the new formulas for communication and planetary action and certain recent experiences still allow one to believe that a new concept of resistance is developing. It is enough to recall the mobilizations against the IMF and World Bank on their 50th anniversary, the meetings for humanity and against neoliberalism in Chiapas and Spain, the European marches against unemployment, the constant responses to adjustments in the south and this latest Global Peoples' Action Conference in Geneva. Is it enough to successfully confront the MIA? The question is on the table, and only time will give the response.

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