MAI: multinationals' 'bill of rights'

March 11, 1998

By Eva Cheng

"We will oppose any and all measures to create or even imply binding obligations for governments or businesses related to the environment or labour." So warned the US Council for International Business — the US big business club — in a March 21, 1997, letter to US negotiators, making clear what they wouldn't agree to include in the Multilateral Agreement on Investment (MAI).

The MAI is an all-encompassing treaty which will give capital exporters sweeping powers to subjugate the world for the sake of greater profits. The 29-member Organisation for Economic Cooperation and Development (OECD) is due to sign the agreement in May.

Some 85% of the world's foreign direct investments in 1996 came from the developed countries, predominantly the "triad" (US, 25%; European Union, 46%; Japan, 7%). The MAI is little short of a bill of rights for this big capital.

It would give international investors huge powers, including the power (non-existent until the 1992 North America Free Trade Agreement, NAFTA) to sue national governments for compensation for anything they considered an obstacle to their profit-making operations.

Among other things, the MAI seeks specifically to ban any regulations regarding saving or creating jobs, protecting the environment or redressing disadvantages of particular groups (such as indigenous peoples and women).

Indicative of what is in store, last April, US multinational Ethyl, using a similar power under NAFTA, initiated a suit against the Canadian government for US$251 million in "damages" for "illegitimately expropriating" its assets. The Canadian government had banned the import and transport of the petrol additive MMT on the grounds of its toxicity, a move which affected Ethyl's ability to make profits.

The fact that Ethyl was subjected to the same ban in California, for example, did not inhibit it from demanding that freedom overseas. This is one of the many dangers of the MAI: it may allow multinationals to be exempted from rules that may be applied to domestic capitalists.

Similarly, the World Trade Organisation (WTO) recently ruled that the European Union's ban on the sale of hormone-fed beef is an "unfair trade barrier" and illegal under the General Agreement on Tariffs and Trade (GATT), despite the fact that the ban applies to both imported and domestic beef.

The WTO argued that there is "insufficient" scientific evidence to conclude that hormone-fed beef is dangerous.

Secret negotiations

Currently, the WTO mainly governs the export of goods and services, but this sweeping power it has given to transnational merchandise exporters will be extended by the MAI to capital exporters.

The treaty is expected to be signed by non-OECD countries under threat of blackmail from the US, key European countries and Japan, whose markets, capital and technology, many countries, especially in the Third World, could not survive without.

Workers' rights and jobs, the environment, democratic rights and any moves to redress social inequalities of all the treaty's signatories could be profoundly undermined.

If a new government decides to withdraw from the treaty, it cannot do so until five years after it signed. And even after withdrawing, a country will still be bound for another 15 years. So, once signed up, a country is locked into the MAI's obligations for 20 years!

In addition to Australia, the governments of the US, Japan, Germany, Britain, France, Italy, the Netherlands, Switzerland, Luxembourg, Belgium, Austria, Sweden, Denmark, Norway, Finland, Iceland, Ireland, Spain, Portugal, Greece, Hungary, the Czech Republic, Poland, Turkey, Canada, New Zealand, Mexico and South Korea, are negotiating secretly.

There is an alarmingly limited public awareness of the MAI's dangers, not only in Australia, but in most of the OECD countries.

A University of NSW research paper reported that, so far, the Coalition government has consulted only industry groups. Three months before signing, the government still hasn't produced one substantial document informing the public on the treaty, claiming, when challenged, that draft treaties are confidential! On February 20, the Treasury released a summary of the MAI, which, unsurprisingly, supported it.

An anti-MAI activist from New Zealand, Janice Moira Graham, reported, "Almost no one [in NZ] until the middle of 1997, even in policy circles, had heard of the agreement".

First leaked early last year, the MAI's wide implications were not immediately recognised. However, in recent months, opposition has been growing in Canada, France, New Zealand and Australia.


Even a brief review of some of the MAI's core provisions reveals why governments are so keen to keep the public in the dark.

For instance:

  • Multinational investors must be given "national treatment": any arrangement which favours local capitalists or development can be regarded as discriminatory and compensation can be claimed.

The definition of investment is very broad — even education can be covered — which means that a national government must give all "foreign investors" grants or assistance "no less" than it would give "domestic investors". It could mean the end of any form of public funding for public education.

The MAI can also cover investors in stocks, currencies and marketable debt instruments, which are used by big capital predominantly for speculation. This would spell the end of any remaining measures Third World countries have to defend their economy and especially their currencies, putting them at the mercy of "institutional investors".

  • An all-encompassing expropriation clause will give foreign investors the right to seek compensation for any losses arising from government measures, including indirect ones, deemed to have the "equivalent effect of expropriation", including "creeping expropriation" through such things as new taxes.

  • A signatory government has the right to ask for "reservations", but all such areas may be "rolled back" after a specified period. Any legislation which is inconsistent with the MAI must be changed. New legislation inconsistent with the treaty must not be passed.

  • The dispute resolution mechanism provides no access for citizens, individually or collectively.

In late 1994, the triad tried to push through the WTO a similar plan to give capital exporters a free hand, which covered more than 180 countries, but it was strongly resisted by many Third World governments.

The WTO eventually adopted an agreement on trade-related investment measures, TRIMs, but it didn't quite give big capital what it wanted.

The OECD was chosen as the vehicle to do the job, with discussion on the MAI starting in mid-1995. It was to be signed last May, but was subsequently postponed a year, following a controversial January 1997 draft.


Given the overriding powers of foreign investors — predominantly big capital — to demand unfettered freedom, the interests of local capitalists in all the signatory countries are likely to be undermined.

But their calls on "all Australians" to act in the "national interest" must be treated with caution. They have their own reasons to oppose the MAI. (Even Pauline Hanson has come out against it!)

Increasingly, trade unions, academics and others are speaking out in defence of the interests of workers, indigenous people and the environment. They know, for example, that the MAI would make it more difficult to defend the public sector from further privatisation, or to put in place measures to protect jobs, the environment and community interests.

Against the Coalition government's undemocratic attempt to sneak the MAI through parliament, progressives should urgently campaign for an open public debate.

Stop the MAI coalitions have recently been formed in Sydney, Brisbane, Adelaide and Melbourne; they are part of a global network of some 600 organisations. Public meetings are being held, and an SBS program on March 12 will feature problems with the MAI. Visit the Stop-MAI web site on .

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