Intervenor: Vol 23. No 3 July - September 1998

The MAI Is Down, But Is It Out?

On October 20, in Paris, negotiation of the Multilateral Agreement on Investment (MAI) ended at the OECD (Organization for Economic Cooperation and Development), due to the withdrawal of France from the process. While politicians from some countries, including Canada, blustered about trying to push ahead, the international community recognized that this will not be possible at the OECD.

The derailment of the agreement deserves to be celebrated as a major achievement by a world-wide movement of grass-roots, academic, and political opponents. This is the most significant slow-down of the global free trade and investment train in the past decade.

The latest draft text of the MAI indicated that most of the language was settled, contrary to statements from the Canadian government that much remained undecided. The MAI would extend "national treatment" rights to foreign corporations--identical to any rights Canadians and Canadian companies have. It would constrain governments from using "performance requirements" (ie, placing conditions on foreign investment to require local hiring, local purchasing, or to set levels of research and development). The MAI contains "standstill" and "rollback" provisions, which would stop us from passing laws that do not accord with it, and would provide for the systematic future elimination of all "non-conforming" measures. It was designed to bring to a stop attempts to regulate corporations and control foreign investment.

The MAI would permit "investor-state" lawsuits, which would give foreign corporations the right to sue governments if their expected investment returns are reduced by what it calls "expropriation". This is the same type of "expropriation" clause that NAFTA contains, and which allowed Ethyl Corporation of the US to sue the Canadian government for $350 million dollars for banning Ethyl's MMT, a gasoline additive and a known neuro-toxin, see related information below.

A claim similar to the Ethyl one has been filed by Metalclad, a US company, against the poor Mexican state of San Luis Potosi, which refused to approve a waste dump planned by Metalclad, because the dump would pollute the local water supply. This claim is ongoing at this time, and illustrates that environmental laws, such as those requiring environmental assessments could be undercut by the MAI, as they are by NAFTA.

NGOs, including CELA, and other institutions around the world joined together over the past year to oppose the MAI. Debates similar to those we had in Canada over the Free Trade Agreement and NAFTA are now occurring. Important organizations like the World Council of Churches expressed concerns. The European Parliament voted 437 to 8 in March 1998 against signing the agreement as it is now drafted, and called for major revisions.

CELA has contributed by speaking widely on the issue, producing analyses available to the public, attending the international consultation of NGOs and MAI negotiators in Paris last October, and testifying at federal, provincial, and community hearings on the agreement. Most recently, we analyzed the purported "improved" environmental wording for the MAI, concluding that it would not provide any better protection for environmental laws and policies.

Although the negotiations have ended at the OECD, some countries, including Canada, wish to revive them at the World Trade Organization, but the US opposes that move at this time. We will have to wait and see what new strategy is derived by the free traders to press ahead. Undoubtedly, part of the agenda will involve the use of bilateral investment agreements, of which there are now over 1600 in the world, to tie countries into MAI-type restrictions. Activists will need to be vigilant in the days ahead as we develop our own strategies. We will insist that governments retain the necessary powers to act in the public interest, regardless of the priorities of foreign investors. It is gratifying that the international political winds are shifting, The de-regulated capital regime, promoted with single-minded fervour by the free trade "true believers" for two decades is wobbling in major economies like Japan, Indonesia, and Brazil. Even the finance ministers from industrialized countries are debating the merits of some form of controls on capital movements. It is striking that many long-time free trade "true believers" in Canada are now conceding that cracks in the edifice exist and are widening.

We at CELA are proud of the role we are playing in this debate. We are delighted with the ever-growing collaboration of activists around the world on these globe-changing issues. And it's nice to win!

Michelle Swenarchuk is a lawyer, and director of International Programme at CELA