by Friends of the Earth
"We are writing the constitution of single global economy. . . . The
question is where - not whether - work on trade and investment should take
place."
Renato Ruggiero, Director-General of the World Trade Organization (October, 1996)
Growing awareness that the Multilateral Agreement on Investment (MAI),
currently under negotiation at the Organization for Economic Cooperation and
Development (OECD), could have potentially far- reaching and negative
impacts on state sovereignty, economic development, national financial
stability and environmental, health, safety and labor standards has
precipitated a general public outcry against the agreement. It has even
dampened enthusiasm among parliamentary bodies, possibly throwing the MAI's
future into question. But the MAI's principles are part of larger effort on
the part of multinational investors and the trade ministries of the U.S. and
E.U. to globalize investment. Their most recent effort culminated in the
December 1997 Financial Services Agreement in the World Trade Organization
(WTO), where many members were forced to open their banking, insurance and
securities sectors to foreign ownership and competition. A strategic retreat
at the OECD may thus prove part of a shell game in which the MAI's agenda
may wane in one venue only to wax in others like the WTO, the International
Monetary Fund (IMF), or in future regional trade blocs like the proposed
Free Trade Area of the Americas (FTAA).
What is the Investment Agenda for the New Global Economy?
Under this agenda, the ability of the world's largest multinational investors to move their money in and out of countries with no strings attached is the primary goal, even if it hurts the majority of the world's workers and businesses. For these purposes, multinational investors are often given the following rights and freedoms:
* the right to compete against domestic companies in all economic sectors;
* the right to acquire any business or property in any economic sector, including natural resources and other strategic industries;
* the right to convert currency and move money across national boundaries at will. This can create currency crises like those that caused the collapse of the Mexican peso or the more recent Asian financial meltdown;
* the right to relocate production facilities at will, regardless of any negative impacts on workers or the host community;
* the freedom from performance requirements, or conditions placed on investment to ensure that the local community benefits.
These would include requirements to hire a certain number of citizens, form partnerships with domestic businesses or governments, or buy from local suppliers; and the right to sue governments for restitution and damages should an investor feel its rights have been violated under the agreement.
And Where is Work on the Globalization of Invesments Taking Place? Just About Everywhere.
Shell #1: The Organization for Economic Cooperation and Development (OECD): The OECD is comprised of 29 industrialized, mostly wealthy countries. It conducts and publishes research and draws up rules on international economic policy, which traditionally have been enacted globally through the General Agreement on Tariffs and Trade (GATT), now the WTO).
Plan to Advance Global Investment Agenda: The OECD's MAI is the most ambitious attempt to date to develop comprehensive rules requiring countries to liberalize (open all sectors of the economy to international competition) and to give foreign investors powerful rights against governments. Negotiators and proponents have good reason to ensure that the MAI survives in the OECD. Many Third World nations are liberalizing their economies in the absence of the MAI. By restricting the negotiations to OECD members but pressuring Third World countries to sign on, the industrialized world alone writes the rules of the global economy.
Public Access: The OECD has no institutional identity outside of the governments of its 29 member nations. Its negotiating meetings are closed and its documents are kept confidential. Concerned organizations found out exactly what negotiators were up to only after a 150-page draft of the agreement was leaked to the public in early 1997 - a full two years after negotiations were launched.
Shell #2: The World Trade Organization (WTO): The WTO is the forum where representatives from its 132 member-nations negotiate trade and investment agreements. It was created during the Uruguay Round of the 1994 GATT negotiations. It enables countries to challenge each other's regulatory laws, and has the power to enforce any rulings set down by arbitration panels.
Plan to Advance the Global Investment Agenda: The WTO has convened study groups on global investment rules and has invited the OECD to submit proposals for multilateral investment rules for WTO members - conceptually identical to the MAI - termed the Multilateral Investment Agreement (MIA). Proposals could be submitted as early as May 1998. If adopted in the WTO, investment rules would automatically bind its 132 industrialized and underdeveloped member-nations. Should MAI negotiators reach an impasse in the OECD, they could press to initiate formal negotiations in the WTO.
Public Access: Work in the WTO is even less transparent than at the OECD, as it tends to involve simultaneous negotiations on a myriad of topics, making its agenda difficult to track. Dispute proceedings are closed to the public.
Shell #3: The International Monetary Fund (IMF): The IMF provides loans, mostly to poor countries who are short of hard currency for international transactions. It is majority funded, and controlled, by the five wealthiest countries (U.S., Germany, Japan, France, and U.K.). Critics point out that its enforcement of high interest rates slows economic growth and causes widespread unemployment in borrower countries. It forces rigid fiscal austerity programs on loan recipients that require deep cuts in public services like healthcare, education, and infrastructure development.
Plan to Advance Global Investment Agenda: The Fund proposes to amend its Articles of Agreement to allow it to require member countries to sell off assets to foreign investors, open up sectors of the economy to foreign competition, and remove controls on the movement of capital. To multinational investors, Third World countries present the most daunting obstacles to investment. The amendment could be a backdoor way of forcing desperate Asian nations and destitute underdeveloped countries to liberalize when they normally would resist the pressure from richer industrialized countries.
Public Access: IMF proceedings and agreements are conducted in secret. There are no recorded votes. The specific terms of loans are always confidential. It is therefore difficult to hold the IMF and its national representatives accountable to the public. However, the U.S., with its 18% voting share, could veto the proposal to amend the IMF Articles of Agreement, which requires an 85% majority.
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