SUNS  4310 Tuesday 27 October 1998


DEVELOPMENT: MAI PRINCIPLES ALIVE AND KICKING, ANALYSTS SAY

London, Oct 25 (IPS/Dipankar De Sarkar) -- The collapse of negotiations on the Multilateral Agreement on Investment (MAI) does not mean its controversial principles have been buried - they are incorporated in many bilateral and multilateral agreements, campaigners say.

They say any negotiations on a future MAI should be transferred from the Organisation for Economic Cooperation and Development (OECD) - not to the World Trade Organisation (WTO), as some suggest - but to the UN Conference on Trade and Development (UNCTAD), a 'fairer' forum for developing countries.

"It is a pyrrhic victory for the environmental and Third World groups that have campaigned against the MAI," says Andrew Simms of the international development group, Christian Aid, "its principles are being enshrined in more than 2,000 investment treaties between countries."

Though details about bilateral investment agreements are hard to obtain because they are mostly confidential, UNCTAD reckons that the number of all investment agreements has grown to about 2,000 in the last 20 years.

These include such multilateral agreements as the North American Free Trade Agreement (NAFTA), a reformulated Lome Convention, the Transatlantic Economic Partnership, the African Growth and Opportunity Act and the Mediterranean Free Trade Zone, which is under consideration.

Campaigners say many of these contain the principles that anti-MAI campaigners lobbied against before the negotiations on the agreement failed in Paris this week as a result of withdrawal of support by France.

These principles include investor protection; level playing field or the same treatment for foreign and local firms; and binding dispute resolution.

"The last principle, allowing firms to sue governments (over asset expropriation and discriminatory treatment), in effect gives corporations equal legal status in the international economy to governments," says Simms.

Barry Coates, director of the World Development Movement, a London-based organisation that campaigns on trade and development issues, hopes for a rethink of the principles behind liberalisation. "This message hasn't got through to governments yet," he says. "We were campaigning for decent rules, not just to stop the MAI. But Western governments are regarding this (MAI failure) as a setback for OECD negotiations, rather than seeing it as an opportunity to review what they are doing."

Analysts give varying reasons as to why the MAI negotiations were launched at the OECD. According to Nick Maybe, head of economic policy at the Worldwide Fund For Nature (WWF), the main reason was pressure from the United States, which wanted negotiations to take place in the
OECD. The OECD consists of 29 industrialised nations - none of them from the developing world.

The alternative would have been to negotiate at the WTO, whose membership does include a large number of developing countries in spite of the criticism that its decision-making processes are weighted against poor countries.

"This wasn't an OECD agreement - all that the OECD Secretariat (in Paris) did was to provide a room," Maybe says. The United States, he explains, "drew heavily" on the NAFTA principles in drawing up the agreement.

Simms argues that it is not without reason that the MAI has been dubbed "a solution without a problem". He sees the genesis of the agreement as a bid by transnational corporations to prise open the markets of the larger developing countries of Asia, Africa and Latin America.

"The big industry lobbyists were in there right from the start, but some of the principles such as protecting industries from expropriation were bizarre. UNCTAD estimates such expropriation is negligible," Simms says. "It was essentially meant to be a Bill of Rights for big business."

Because of their fear that the MAI principles are far from dead, some campaigners and analysts sympathetic to Third World concerns want any future negotiations to be held under the auspices of UNCTAD.

"UNCTAD is the obvious forum to look at now," says Maybe. "It's in the UN system and it has been looking at investment for many years. It's true it has not anything like this. Neither has the OECD - and look at the job it did. The UN has experience of negotiations and is therefore more appropriate than the OECD and WTO."

Barry Coates, director of the London-based campaigning group the World Development Movement, points to an UNCTAD process called the Possible Multilateral Framework for Investment (PMFI) that has been running parallel to the MAI negotiations.

However, in contrast to the MAI, the PMFI is specifically geared toward building capacity among developing countries to negotiate such a framework. Whether it can be the definitive alternative to the MAI - or whether such an all-embracing alternative is at all needed - remains an issue of heated debate among campaigners.

Coates, for instance, is guarded in his support to UNCTAD, pointing out that the UN body in recent years has been seen by many campaigners as "leaning a bit too heavily towards TNCs."

"So it's not quite a neutral process," he adds.

As uncertainty clouds the future of the MAI, with some reports suggesting it will now be taken to the WTO for negotiations, analysts warn that some of its principles may be pushed through in future
multilateral agreements, particularly those which are also related to trade.

Developing countries involved in efforts to create a Mediterranean Free Trade Zone, for instance, could be offered a straight swap: lower trade tariffs in developed countries in exchange for incorporating the MAI principles in investment agreements.

Similar controversy surrounds a EU negotiating document in current efforts to renegotiate the Lome Convention, a massive trade and aid pact between EU and 71 African, Caribbean and Pacific region countries. Proposals in the EU negotiating mandate cover everything from democratisation, human rights, gender policies, arms expenditure to migration, threatening to turn the pact into "a regime of political prescription," according to the Sir Shridath Ramphal, chief negotiator for the Caribbean region.

Such deals may not leave developing countries with much choice but to sign up, Maybe fears.

Simms has a larger concern. TNCs, he feels, simply cannot be trusted: almost a decade after the collapse of the Soviet Union, they still meddle in the internal politics of developing countries. And agreements such as the MAI ease their path to intervention, he claims.

There are continuing echoes of the events of the Cold War years when US TNCs allegedly helped plot a coup in Guatemala and overthrew the elected government of Salvador Allende in Chile, and the "involvement of Shell in Nigeria." As it happens, he adds, Shell is also "one of the promoters of the MAI," Simms adds.