Envío Digital
Central American University - UCA  
  Number 199 | Febrero 1998



Multilateral Investment Agreement: A World Alert

Reprinted from ALAI, January 1998, Ecuador, with additions from a Peoples Global Action e-mail communication.

Envío team

THE ANNUAL MEETING OF THE WORLD ECONOMIC FORUM WAS HELD IN DAVOS, SWITZERLAND, from January 19 to February 3. This forum is the private club of the planet's thousand most important transnational corporations, and is known for promoting brazen globalization programs inspired by an extremist Liberal ideology.

Self-defined as "the organization with the most important international membership" in the world, the forum joins business leaders, governments, institutions, academics and communications media in an alliance. Its mission is to "act as a bridge at the highest level between the business community and governments," creating "a private club atmosphere to deal with the most important economic, social and political issues on the world agenda with an orientation toward action."
In the last 27 years, the Economic Forum has evolved into a fundamental force in favor of the economic integration of multinational companies as well as of national economies. It has played a leadership role in the current economic globalization process. At the beginning of the 1980s, the forum participated in the opening of the Uruguay Round of trade negotiations and contributed to the negotiations to liberalize financial services. In 1998 it met with the objective of setting "priorities for the 21st century."
The concentration of decision-makers from both the public and private sectors at the annual meeting in Davos allows the World Economic Forum to hold private meetings outside of the principal meeting. In the forum, the so-called Governors' Groups are made up of some 50 top-level executives who mold the future of their industries at a world level. These Governors meet once a year during the Davos meeting. Their meetings are characterized by personal, direct, high-level and highly confidential interactions. No voting takes place at these meetings and no public declarations come out of them, except when there is a unanimous request by all Governors for a specific industry.

During the 1997 Davos meeting, one of the issues of great interest to the transnationals and a negotiating point among representatives of the most influential governments in the world was the Multilateral Investment Agreement (MIA).

One consequence of this new accord is to give transnationals the same legal status as states. The MIA will prohibit any control over the movement of capital, including speculative capital. It will prohibit governments from putting conditions on foreign investors. It will obligate states that want to introduce new social or environmental legislation to pay billions to investors. And not only will it make it virtually impossible for national parliaments to introduce new laws limiting the transnationals' field of action, it will force the elimination of existing limitations.

The agreement also has other worrisome characteristics. Only the 29 richest countries in the world—those who are members of the Organization for Economic Cooperation and Development (OECD)—have the right to participate in the negotiations. But once these negotiations are complete, these countries intend the MIA to become a world treaty within the World Trade Organization.

The definition of "investment" in the agreement goes beyond what most people associate with this term. The MIA designates as an investment "any kind of asset that belongs to or is directly or indirectly controlled by the investor," including "all tangible and intangible property, mobile or immobile, and all related property rights" in "the territory, domestic waters or territorial seas" of the signatory countries.

Intellectual property rights are specifically mentioned in the definition of investment, and they most likely include patents on life. The MIA will determine the privatization of plants, animals and human body parts.

If a state signs the agreement, it cannot get out of it for five years, even if its entire population demands it. And after those five years it will have to continue obeying the MIA rules for another fifteen.

The MIA will make all signatory countries—even those with no foreign debt—dependent on the International Monetary Fund—which is controlled by the world's seven richest countries—to obtain temporary permission to establish their own national policies with respect to movement of capital.

The agreement gives the transnationals the right to denounce governments for even debating issues that could damage their reputation, considered in the MIA as one of the "intangible assets" of businesses. They can also demand immediate compensation for the "expropriation" of their good image. The compensation, paid by each country's taxpayers, must cover image repair costs. In other words, publicity.

All of these are minor consequences of the MIA compared to their structural effects. This agreement gives free mobility to capital to concentrate in the countries that offer the best conditions, legalizing what would normally be termed capital flight. At the same time, the World Trade Organization (WTO) guarantees to transnationals the free movement of goods and services between its member countries, almost all countries in the world. This means that they can choose the best conditions for production—low salaries, minimum labor legislation and environmental regulations, etc.—and sell their products throughout the world.

The free trade imposed by the WTO already obliges the countries and peoples of the world to compete with each other to offer the owners of capital the "best" conditions, which means offering the worst conditions to everyone else. The MIA will make this situation even worse, because it will imply that countries must also compete with each other to retain at least part of the benefits of production in their territory since, thanks to the MIA, transfers to Swiss accounts will become a legitimate right of the transnationals. Governments will find themselves obliged to lower taxes to the minimum for powerful enterprises that have plenty with which to pay. Signing the MIA is equivalent to saying goodbye to state services—except the police and army, since "security" is among the conditions that must be offered to capital.

The objective of the MIA is to increase the rights of transnational capital and reduce the rights of governments and peoples. It has been secretly negotiated since 1995, and not even the parliaments of the OECD countries could be informed of its content. The negotiating group hopes to have the agreement ready in 1998. It will then give the national legislative bodies a brief time to sign it. In some countries, the government can sign the MIA without even consulting its legislative branch.

So far there has been no public information about the content and consequences of the MIA. If this does not change, the parliaments of many countries will most likely approve the MIA without having the remotest idea of its consequences, just as they did with the World Trade Organization.

Global Opposition

Resistance and initiatives are emerging to confront neoliberal globalization and transnational power throughout the world. Organizations such as the Landless Movement in Brazil, the Zapatistas in Mexico, the peasant movement in the Philippines, as well as unions and women's, environmental and indigenous organizations, among others, have formulated a call to rain on the party of the world's powerful. Some 600 grassroots representatives of 192 such organizations from 54 countries are meeting in Geneva on February 23-25 in the name of twenty million human beings to establish a platform called Peoples' Global Action against "the globalizers of poverty", against "free" trade and against the anti-democratic World Trade Organization.

People's Global Action will function as an instrument to coordinate, exchange information among and give mutual support to the struggles of all those affected by neoliberal globalization. It calls for nonviolent civil disobedience and the construction of local alternatives for local populations, as responses to the action of multilateral institutions, governments and transnationals. The Multilateral Investment Agreement will be on the agenda of the People's Global Action, which is drafting a declaration to form the basis of a world campaign against the MIA.

For further information on People's Global Action, write playfair@asta.rwth-aachen.de

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