Feb 13, 1998
FINANCE: GREENS ATTACK PROPOSED INVESTMENT PACT
Washington, Feb. 12 (IPS/Danielle Knight) -- North American environmentalists have joined widespread protests against plans by the world's developed nations to deregulate foreign investments that allegedly would give more power to transnational corporations.
A coalition of US and Canadian environmental groups says the proposed Multilateral Agreement on Investment (MAI), being negotiated among the world's wealthy nations and to be signed next May, would guarantee foreign corporations legal powers to circumvent environmental and other laws.
"It's a corporate bill of rights," says Brent Blackwelder, president of the Washington-based environmental group Friends of the Earth. "The 29 wealthiest nations of the world are negotiating an economic agreement that will give foreign investors power over national, state and local governments globally.
"The proposed agreement would guarantee foreign corporations legal power to circumvent environmental and other laws."
MAI negotiations began within the Organisation of Economic Cooperation and Development (OECD) in 1995. The proposed investment pact is designed to make it easier for individual and corporate investors to move assets - whether money or production facilities - across international borders.
It also suggests that host countries should protect investors by putting a ban on the seizure of companies' assets without compensation, and restrictions on return of profits to other countries should be removed.
If a member government fails to comply with these terms regardless of the cause of dispute, the corporation affected may seek redress in an international MAI tribunal.
High-level MAI negotiators will meet early next week to discuss the timeline and current state of the pact talks. While many European countries and the United States are internally split over whether to sign the agreement, Argentina, Chile, Slovakia and Hong Kong, among others, are expected to sign.
MAI proponents maintain the agreement will provide needed protections for US and other international investors against discrimination and expropriation. They believe it also will open new markets to US investors on favourable terms and help businesses, consumers and workers in the long-run by improving the efficiency of the global economy.
The proposed agreement's most prominent supporters are business groups, including the US Council for International Business, the National Association of Manufacturers and the European-American Chamber ofCommerce.
On the other hand, environmentalists - and labour, consumer and women's organisations - call the agreement a "race to the bottom" as countries feel new pressure to compete for increasingly mobile investment capital by lowering wages and environmental safeguards.
Critics claim that the MAI will allow investors to challenge regulatory safeguards that enjoy widespread public support but are viewed by investors as impediments to the free flow of capital.
"The agreement gives new and unprecedented rights to transnational corporations and wealthy foreigners," says Charles Arden-Clark, a senior trade analyst with the European-based World Wildlife Fund International. "By going out of its way to knock down barriers to foreign investment, the MAI would put up new barriers to our democratic right to regulate our local affairs in ways that make good economic and environmental sense."
The North American Free Trade Agreement (NAFTA), referred to by negotiators as "the blueprint for the MAI," is often used as a model for predicting the impact of the proposed investment pact on an investor-state dispute panel. Many state officials point out that in the short two-year history of NAFTA, four lawsuits have already been initiated.
The lawsuits - which will set precedents for future cases under the MAI - are the first time where foreign investors have attacked public health and environmental law as equivalent to an outright seizure of an investment, according to Antonia J. Juhasz, project coordinator for the Washington-based Preamble Center for Public Policy, a progressive policy institute.
One of the lawsuits, for example, began last April when the Canadian Parliament banned the import and interprovincial transport of a gasoline additive produced by the Virginia based Ethyl Corporation.
The additive, according to the Canadian government, is a dangerous toxin that could have adverse health effects if emitted into the air.
Ethyl filed a lawsuit last year under NAFTA claiming that the Canadian ban violated provisions under the agreement. The corporation is seeking $251 million to cover losses resulting from the ban.
Canadian environmentalists say the details of this closed hearing have been kept hidden from the public.
"The public is growing increasingly sceptical of the benefits of NAFTA because of the undemocratic secrecy that have surrounded this hearing," says Elizabeth May, president of the Canada-based environmental group Sierra Club. "The MAI also proposes to have closed, secret hearings without the ability to appeal the international tribunal's decisions - the Canadian people will never let this agreement pass."
Such international trade disputes over domestic environmental regulations have become commonplace and will only increase under the MAI, according to Juhasz.
"The MAI, based on the investment provision of NAFTA, expands the provisions to all economic sectors therefore further undercutting state sovereignty over domestic policy," she says.
Juhasz points out another example involving Metaclad Corporation, a California-based hazardous waste management firm that filed for $90 million in damages for what it says were actions taken by Mexican officials that prevented it from opening of a landfill.
After an environmental impact assessment showed that the facility was built on an underground stream and would likely contaminate ground water used by neighbouring villages, the Governor declared the site part of a 600,000 acre ecological preservation zone.
These lawsuits have caused more conservative environmental groups who have historically been in favour of trade agreements to take another look at pacts such as the MAI.
"Liberalisation of trade can be good and we were originally a supporter of NAFTA, but with these recent lawsuits against domestic environmental regulations - we are taking a critical look at the MAI," said Mark van Putten, president of the Washington-based National Wildlife Federation.
"The MAI is fatally flawed and fails to define environmental standards for corporations while giving them more rights than citizens."
While environmentalists are pressuring Clinton to not join the MAI, citizens around the world - in countries including Finland, France, Germany, Hungary, Kenya, the Netherlands, and New Zealand - are preparing for a week of protests throughout the month against the proposed investment pact.