Badder Than NAFTA

Treaty Would Give Global Powers Free Rein in U.S.

illustration by Doug Potter

If you had a problem with NAFTA, wait until you see what's coming next. With a congressional okay and a stroke of the presidential pen, multinational corporations could have the same legal standing as nation-states, including the power to sue national governments for passing legislation thwarting the corporate bottom line. The Multilateral Agreement on Investment (MAI), currently being negotiated by 29 of the wealthiest countries in the world, is the next big leap toward the ultimate goal of one large global market unimpeded by the "inefficiencies" of government.

Until recently, negotiations have been conducted in a cloud of secrecy so thick it took the work of public interest groups - not the U.S. State and Treasury Departments, who have spearheaded negotiations since 1995 - to enlighten our members of Congress. According to Lori Wallach, trade lawyer and director of Public Citizen's Global Trade Watch, Public Citizen tried for a year and a half just to get confirmation that negotiations were even happening. When Wallach asked directly about the agreement, the Clinton Administration claimed it was only a "general discussion" with no text or rules. It was shortly after this conversation that the 170-page draft was leaked and placed on the Internet. Serious opposition to the agreement has been growing ever since. Leading the charge are Ralph Nader's Public Citizen, a consumer-rights group, and Ronnie Dugger's Alliance for Democracy, a national populist movement which the Texas Observer founder created in 1995.

Essentially, the MAI is an investor's rights agreement, designed to remove obstacles to the increasing globalization of the world economy. Its goal is to open all markets, and to ensure protection of foreign investments from government regulation. The main chapter of the MAI, actually entitled "Investor Rights," includes the absolute right to establish an investment, and also stipulates that no government can "impair... the operation, management, maintenance, use, enjoyment, or disposal of investment in its territory" that is foreign-based. Not only would governments' regulatory abilities be limited under the MAI, but they would actually be obligated to be the protectors of foreign investments.

Proponents of the MAI argue that set of global investment rules is needed to "level the playing field" and to ensure that foreign investors are treated no less favorably than local investors. Two key provisions - National Treatment and Most Favored Nation (MFN) - are designed to specifically give foreign investors these "rights." Here in Texas, for example, state citizenship is required for owning farming or ranching land. Under National Treatment, these laws could be challenged by foreign-owned corporations trying to break into the Texas agricultural market. Another possible casualty of the MAI is the Texas system of Enterprise Zones, which gives incentives to corporations for investing in disadvantaged areas. If the MAI were in effect, foreign-owned corporations could demand to have the same privileges for investing regardless of where they invest, thus defeating the intent of Enterprise Zones.

Perhaps one of the more disturbing aspects of the MAI is its protection of foreign investors from "expropriation" or "any other measure having equivalent effect." According to the text, a "lost opportunity to profit from a planned investment would be a type of loss sufficient to give an investor standing." Not only could foreign corporations demand cash compensation for profits lost from regulatory legislation, they could also demand payment if certain legislation curtailed their ability to invest in the first place.

"The MAI would operate as a virtual amendment to the United States Constitution," said Georgetown University law professor Robert Strumburg. To enforce these provisions, the MAI sets up an investor-to-state dispute mechanism, which gives corporations the right to sue nations directly, a right U.S. citizens don't enjoy. Not only is there no appeal process, but citizens, communities, or governments have no corresponding rights.

Currently, the U.S.-based Ethyl corporation is suing the government of Canada for $251 million under NAFTA's similar but more limited dispute mechanism, for banning the sale of Ethyl's gasoline additive, MMT, known to damage anti-pollution systems in cars. The suit claims that the very act of debating MMT's possible ills in the Canadian parliament (possibly sullying their name) constituted expropriation. Some observers predict that the MAI's broadly defined dispute process could create a "global sue fest" inhibiting governments from passing laws that are necessary for the common good but potentially offending to corporations. Unlike any other international agreement, when a country signs on, it is locked in for 20 years. Most trade treaties, including NAFTA, allow countries to get out within six months. But under the MAI, a country is required to stay in for five years and then must meet its obligations for the next 15 years.

The MAI was slated for completion in April, but because of disagreements among negotiators and growing international opposition, the deadline has been indefinitely extended. Administration officials are saying the MAI is "dead in the water" and "we won't sign." But Wallach reminds us that the same tactic was used during the NAFTA and GATT negotiations, and both agreements met their original deadlines. "Don't be fooled," she warns.

When the text is finalized, it will mostly likely go to the Senate as a treaty requiring two-thirds vote for approval - although growing opposition in Congress has prompted some administration officials to suggest re-labeling it as an "international executive agreement," skirting Congress altogether, according to Public Citizen. The good news is, "something this extreme will have a hard time passing the Dracula test," Wallach said. "Can it stand the light of day? I think not."

More info on the MAI is available on the Internet at (Public Citizen's Global Trade Watch), and also at (Canadian-based National Center for Sustainability).

A note to readers: Bold and uncensored, The Austin Chronicle has been Austin’s independent news source for almost 40 years, expressing the community’s political and environmental concerns and supporting its active cultural scene. Now more than ever, we need your support to continue supplying Austin with independent, free press. If real news is important to you, please consider making a donation of $5, $10 or whatever you can afford, to help keep our journalism on stands.

Support the Chronicle  

One click gets you all the newsletters listed below

Breaking news, arts coverage, and daily events

Can't keep up with happenings around town? We can help.

Austin's queerest news and events

New recipes and food news delivered Mondays

All questions answered (satisfaction not guaranteed)

Information is power. Support the free press, so we can support Austin.   Support the Chronicle