THE MAI: A BRIEFING
international */
/* ---------- "Multilateral Treaty A Step Toward C" ---------- */
From: D Shniad <shniad@SFU.CA
Subject: The Corporate Rule Treaty
http://www.policyalternatives.ca/mai.html
The Corporate Rule Treaty
MAI-DAY!
The Corporate Rule Treaty
The Multilateral Agreement on Investments (MAI)
seeks to consolidate global corporate rule
By Tony Clarke
Canadians are gradually becoming aware of the increasingly
powerful role that transnational corporations (TNCs)
are playing in their daily lives. But few are aware
that the power of these global giants is being consolidated
through a series of negotiations that are now taking
place in Paris. Led by the United States, the 29 countries
that comprise the Organization for Economic Cooperation
and Development (OECD) are secretly negotiating what
is designed to be a global investment treaty.
The Canadian free trade experience reminds us of how
crucial such international agreements can be. After
all, the cornerstones of NAFTA (the North American
Free Trade Agreement of 1994) and the FTA (the U.S.-Canada
Free trade Agreement of 1989) are its investment codes.
In turn, these investment codes constitute a bill of
rights and freedoms for transnational corporations.
Through national treatment clauses and provisions for
the elimination of job content requirements, export
quotas and foreign investment measures, these codes
have enormously increased the power of transnational
corporations over our economic, social and environmental
future.
Now Ottawa is actively supporting Washington's bid to
constitutionalize transnational corporate power on
a world-wide scale through the negotiation of a Multilateral
Agreement on Investment (MAI). Initially, the European
Commission (EC) had proposed that a global investment
treaty be developed as the centrepiece of the new World
Trade Organization (WTO). But the U.S. feared that
opposition from developing countries in the WTO would
"water down" any consensus that might be
reached on an investment treaty.
The U.S. therefore decided that the best way to achieve
a "high standard" investment treaty was to
negotiate it through the rich nations' club of the
OECD. As U.S. officials have stated, their prime objective
is "to obtain a high-standard multilateral investment
agreement that will protect U.S. investors abroad."
To that end, the MAI is designed to establish a whole
new set of global rules for investment that will grant
transnational corporations the unrestricted "right"
and "freedom" to buy, sell, and move their
operations whenever and wherever they want around the
world, unfettered by government intervention or regulation.
In short, the MAI seeks to empower transnational corporations
through a set of global investment rules designed to
impose tight restrictions on what national governments
can and cannot do in regulating their economies. The
ability of governments, for example, to use investment
policy as a tool to promote social, economic and environmental
objectives will be forbidden under the MAI. While corporations
are to be granted new rights and powers under the MAI,
they are to have no corresponding obligations and responsibilities
related to jobs, workers, consumers, or the environment.
This spring, a confidential draft text titled Multilateral
Agreement on Investment: Consolidated Texts and Commentary
is being circulated among government and corporate
officials in the OECD countries. Behind closed doors,
secret consultations and negotiations have been taking
place at the OECD headquarters in Paris. The original
plan was to have the draft text ready for approval
at the OECD ministers' meeting scheduled for early
May, 1997, but OECD officials have since decided that
another four to five months will be needed to complete
the negotiations.
If this draft MAI is adopted by the OECD countries,
the cornerstones of a new global economic constitution
will be cemented in place. Even though the MAI will
initially apply only to OECD signatory countries, an
accession clause built into the proposed treaty allows
non-OECD countries to sign into the pact, provided
that certain conditions are met. This gives the U.S.
the tools it needs to ensure that a "high standard"
investment treaty is established on a global basis
without risking a watered-down version through prolonged
negotiations under the WTO.
Indeed, it can be argued that this MAI was originally
pioneered by NAFTA. Many of the terms and conditions
originally laid down in the investment code of NAFTA
have been transplanted into the draft MAI. Even some
provisions that were rejected in the final negotiations
of NAFTA reappear in the OECD investment treaty. Now
a NAFTA-plus investment code is about to be adopted
by the 29 countries of the OECD, thereby setting the
stage for a world-wide investment treaty in the 21st
century.
This new global constitution, however, is certainly
not designed to ensure that the rights and freedoms
of the world's people are upheld by democratically
elected governments. On the contrary, it is a charter
of rights and freedoms for corporations only-a charter
to be guaranteed by national governments in the interests
of profitable transnational investment and competition.
It is meant to protect and benefit corporations, not
citizens. Indeed, through this new global constitution,
the rights of citizens and the powers of governments
themselves will be largely superseded by those of the
transnational corporations.
In effect, the MAI amounts to a declaration of global
corporate rule. As such, it is designed to enhance
the political rights, the political power, and the
political security of the TNCs on a world-wide scale.
It is a mistake that the OECD was chosen as the venue
for establishing a "high standard" global
investment treaty for transnational corporations.
After all, a total of 477 out of the Global Fortune
500 corporations have their home base in OECD countries.
In other words, 95.4% of the largest transnational
corporations in the world today are headquartered in
member countries of the OECD.
The following is an analysis of the MAI in terms of
these three dimensions of corporate rule, based on
the draft text (dated January 13, 1997, for distribution).
This is only a preliminary analysis. A more detailed
study of the text by trade experts is required to get
an in-depth understanding of the MAI and its implications
for different sectors. Nevertheless, what follows provides
a glimpse of the big picture. (Note: italics and bold
face added for emphasis only).
Political Rights
There is nothing new about corporations having political
rights. Throughout the 20th century, corporations have
acquired a wide range of political rights under international
law, as well as corporate law within countries. Indeed,
corporations were given legal rights to "personhood"
and "citizenship" in most countries before
women and Aboriginal peoples were. Today, a vast body
of corporate law and legal doctrine is now in place
which serves to recognize and protect the property
rights and operations of corporations.
This legal apparatus, in turn, has been reinforced by
the new free trade regimes (e.g., the FTA, NAFTA, WTO)
which provide constitutional protection for the rights
and freedoms of the TNCs. If enacted, the proposed
MAI will further consolidate and enhance the political
rights of corporations in the following ways:
1. The MAI seeks to codify a special set of rights for
corporations as investors. Throughout the official
draft text, corporations are seen as investors having
a legal status equal to that of the contracting parties
which are the nation states of the OECD. The implication
here is that TNCs shall be treated as having a legal
status with political rights equal to those of nation
states. Some delegations go so far as to propose that
investors (i.e., corporations) and the "contracting
parties" (i.e., governments) be given the same
definition in the MAI (p. 90, II, 5). Moreover, the
provisions calling for "temporary entry and stay
of investors and key personnel" investing "a
substantial amount of capital" serves to establish
corporations as having a superior class of citizenship
rights (p. 12 - A).
2. The MAI attempts to expand the scope of investor
rights of corporations by advancing a much broader
definition of investment. By investment, the MAI means
"every kind of asset owned or controlled ... by
an investor ..." (p. 7). It extends to "an
enterprise ... whether or not for profit," to
"rights under contracts" and to "intellectual
property rights," and to "rights conferred
pursuant to law or contract" (e.g., concessions,
licences, authorizations, and permits). (p. 8). It
even covers "real estate or other property, tangible
or intangible ... acquired in the expectation or used
for the purpose of economic benefit or other business
purposes." (p. 9). In other words, the investor
rights of speculators are also to be enshrined in this
treaty. Moreover, it includes "portfolio investment"
(i.e., equity and debt shares and bonds of, and loans
to, enterprises) which is precisely the type of investment
that contributed to the Mexican peso crisis.
3. Under the "national treatment" and "most
favoured nation" clauses of the MAI, foreign-based
corporations or investors are to be accorded special
rights and privileges. Not only will governments be
required to provide corporations from other countries
treatment that is "no less favourable" than
that given to companies within their own countries,
but that treatment must include "equality of competitive
opportunity." (p. 139). Since the standard of
"no less favourably" is being applied, countries
may treat foreign-based corporations better than they
do domestic companies. What's more, national governments
will be forbidden from imposing performance requirements
on the investments of foreign-based corporations (e.g.,
job content, export quotas, import quotas, technology
transfers, local purchasing, etc.). Even if a national
government imposes these performance requirements on
domestic companies, it cannot apply them to foreign-based
corporations.
4. In addition to codifying property rights ranging
from the rights of petroleum corporations to hydro-carbon
resources (p. 95, sec. 35), to all forms of intellectual
property rights (e.g., patents, copyrights, industrial
design, trade secrets, etc.), the MAI emphasizes the
right to the free flow of capital. "All delegations
agreed," the text says, "that the free transfers
of returns was a critical element of the protection
of the investors." (p. 117). No government, therefore,
would be allowed to impose restrictions on the return
of profits made on production in the host country to
the parent corporation. It is also agreed that the
MAI "should provide an absolute guarantee that
an investor will be compensated for an expropriated
investment." (p. 122). This could include investments
that consist of intellectual property rights (p. 114).
Even non-conforming tax measures on corporations may
be designated as "creeping expropriation"
for which they could demand compensation.
5. These investor rights of corporations would be applied
in all political jurisdictions by all levels of government
in those countries that are party to the MAI. While
the precise details of how the MAI is to apply to sub-national
levels of government are not spelled out, it is clear
throughout the text that important aspects of the investment
rules are to be followed by all levels of government
(i.e., provincial and municipal, as well as federal
governments). Moreover, the MAI grants to corporations
the right to sue governments or states and provides
a binding investor-state dispute settlement mechanism
(pp. 53-64) for these purposes (see below). While governments
can also challenge other governments under the state-to-state
dispute settlement procedure (pp. 44-52), governments
are not granted reciprocal rights to sue corporations
for damages on behalf of their people. Hence, the political
rights of corporations are greatly enhanced by the
inclusion of this investor-state dispute mechanism.
In effect, the draft MAI points to a massive transfer
of "rights" from citizens to investors in
the new global economy. At a time when peoples all
over the world feel that their fundamental democratic
rights as citizens (e.g., the Universal Declaration
of Human Rights) and the ecological rights of the planet
(e.g., the Earth Charter from the Rio Summit on the
Environment) are not protected by governments, the
rights and freedoms of transnational corporations are
being guaranteed through trade and investment treaties
(like the MAI) that have become the new global economic
constitutions. This transfer of rights, in turn, is
reinforced by radical shifts in the balance of power
between governments and corporations.
Political Power
Once again, there is nothing new about the fact that
transnational corporations wield tremendous political
power when it comes to determining the economic, social
and environmental policies of nation states. Armed
with their own corporate think tanks and machinery
for political lobbying and advertising, corporations
can virtually call the shots when it comes to key policy
issues. The formation of big business coalitions (e.g.,
the Business Round Table in the U.S. and the Business
Council on National Issues here in Canada) has resulted
in a much more systemic and coordinated approach to
influencing political decisions in the capitals of
nation states around the world.
Through these and related measures, such as privatization
and deregulation, the balance of power between the
public and private sectors has been drastically altered,
with corporations increasingly gaining the upper hand
over governments. The MAI includes a number of measures
which serve to strengthen the political power of corporations:
1. Although the MAI does not require governments to
privatize state-owned enterprises, it will certainly
lay down new constraints on the conditions imposed
when the ownership and control of public assets are
privatized. The agreement will require, for example,
that the "national treatment" and "most
favoured nation" clauses apply to the initial
stages of privatization, as well as to subsequent stages.
This means in effect that, when a government decides
to privatize a public enterprise, it must allow foreign-owned
corporations as well as domestic companies to bid on
the assets. While the commentary to the text indicates
that there is still some dispute, the MAI could prevent
governments from utilizing "special share arrangements"
to encourage local workers and communities to buy the
company or to distribute shares to the general public.
It is also understood that these new obligations will
apply to provincial and municipal governments, as well
as the federal government.
2. At the same time, the MAI will impose constraints
on governments in the operation of their state enterprises
and monopolies. In the future, these public enterprises
and monopolies will have to adhere to "national
treatment" provisions in their regulatory functions
and market activities. All purchases and sales of goods
and services will have to be "non-discriminatory."
Cross-subsidization and "anti-competitive"
practices will be prohibited (p. 27). As in the case
of NAFTA, state enterprises and monopolies will also
be required to act "solely in accordance with
commercial considerations. " (p. 27). Hydro power
and water utilities, for example, that provide discounted
services to rural communities could be prevented from
doing so under these provisions. The draft MAI even
includes a proposal that even state monopolies based
on "national standards" be prohibited. (p.
26, notes). Once again, these constraints and obligations
are expected to be applied to state enterprises and
monopolies in provincial and municipal jurisdictions,
as well as those of national governments.
3. Under the MAI, all foreign-based corporations are
to be assured of "fair and equitable treatment
and full and constant security." "In no case"
shall foreign investors be treated "less favourably
than required by international law." Obviously,
the rules on expropriation identified above apply here.
No government will be allowed, by its regulatory measures,
to "impair ... the operation, management, maintenance,
use, enjoyment or disposal of investments in its territory"
by corporations based in another country. (p. 40).
The role of governments, in other words, is not only
to ensure that the properties of foreign-based corporations
are protected, but also to provide a safe haven for
profitable transnational investment and competition.
All of this serves to entrench not only the economic
but the political power base of foreign-owned corporations,
in terms of the pressure they can exert on their host
governments.
4. Governments would also be obligated to follow certain
rules with respect to "investment incentives."
This involves direct financial contributions such as
grants, loans, equity infusions, and loan guarantees,
as well as tax credits and foregone revenue. (p. 33).
While there are differing views on how explicit this
should be in the text, it has been agreed that the
"national treatment" and "most favoured
nation" requirements would be applied to all these
"investment incentives." A more rigorous
set of rules regarding the application of government
investment incentives may be developed after further
negotiations under the MAI.(p. 132). The most dramatic
development here is the indication that tax measures
may be included. (p. 132-3), including even payroll
taxes such as social security provisions. This means
that governments would be obligated under the MAI to
follow the national treatment rules in applying tax
measures and tax credits to all foreign-based corporations.
5. Perhaps the most powerful new weapon which the MAI
gives the TNCs is the mechanism for investor-state
dispute settlements. Unlike NAFTA, which grants corporations
a much more limited scope for litigation, this mechanism
provides corporations with the power to directly sue
governments over any breach of MAI provisions "which
causes [or is likely to cause] loss of damage to the
investor or his investment." (p. 53). It is also
understood that even "a lost opportunity to profit
from a planned investment would be a type of loss sufficient
to give an investor standing to bring an establishment
dispute" under this section. (p. 53 footnote).
If challenged by a corporation, governments are obligated
("unconditional consent") to go before the
tribunal. The tribunal members are to make their judgments
based not on the laws of the host country, but on the
rules of the investment treaty itself (i.e., the MAI).
(p. 60). All awards (which may provide for "compensatory
monetary damages," restitution, or "any other
form of relief") are "binding" and shall
be enforced "as if it were a final judgment of
its courts." (p. 63). According to a footnote,
this is designed to ensure that no government denies
enforcement of an award based on the claim that it
would be "contrary to its public policy."
In these clauses, the MAI further expands the power
of transnational corporations over that of nation states
and national governments. This does not mean that national
governments are to be rendered powerless, but rather
that, in the new global economy, their power is to
be used mainly to provide a favourable climate for
profitable investment and competition. Political power
is to be harnessed to serve the "rights"
of investors, not the rights of citizens. As a treaty,
the MAI will reinforce and constitutionalize this selective
use of government power.
Political Security
One of the essential conditions for transnational corporations
in developing their investment strategies is the assurance
of political stability and security. Measures must
be taken to provide favourable conditions and a safe
haven for profitable transnational investment and competition.
From the standpoint of the TNCs, it is the responsibility
of the state to provide this kind of political security
if corporations are going to be free to exercise their
political rights and power in the new system of corporate
rule.
For these reasons, it is important for a global investment
treaty like the MAI to include built-in measures designed
to provide political security for the investments of
transnational corporations. While some of the components
identified above (e.g., the Political Power section,
item 3) serve this function, the MAI contains other
features which perform this task as well. The following
are some examples:
1. The MAI includes a set of " rollback clauses"
designed to ensure that transnational corporations
will have ongoing favourable conditions for investment.
Any regulatory measures of nation states which do not
conform with the principles and conditions of the MAI
are to be reduced and eventually eliminated. The rollback
provisions are designed to facilitate this process
of liberalization. The contracting governments would
agree to liberalize certain areas of their regulatory
regimes when the MAI comes into force. Although each
participating country has the right to exempt certain
laws, policies and programs from the Agreement, the
MAI will include restricted use of these exemptions
to ensure that they do not apply to all the obligations
under the MAI (p. 122), or that they are not used to
avoid the main obligations of the MAI (p. 65). Unlike
other international agreements, failure by a contracting
government to list any reservations in the annex of
the Agreement would result in all of that country's
laws being subject to the MAI (p. 126). It is likely
that only certain types of reservations will be acceptable
and that contracting governments may be expected to
set "sunset" dates for the termination of
"non-conforming" laws, policies or programs.
2. These "rollback" provisions, in turn, are
reinforced by what is known as the "standstill"
measures in the Agreement. Under the "standstill"
clauses, contracting governments would agree not to
introduce any new non-conforming laws, policies or
programs in the future. What this means, in effect,
is that, if any future government wanted to take public
ownership and control over a sector of the economy
that had been previously privatized or reintroduce
regulations that had been scrapped in the past, it
would be forbidden to do so under the MAI. And when
the "standstill" clauses are combined with
the "rollback" clauses in the Agreement,
they produce a "ratchet effect." (p. 127).
"Any new liberalization measures," the draft
Agreement states, "would be 'locked in' so they
could not be rescinded or nullified over time."
(p. 127). Through these measures, the MAI is designed
to facilitate the continuous expansion of investor
rights for corporations.
3. In addition to the obligations of governments to
protect the future investments of corporations (see
Political Power section above, item 3), the MAI could
include provisions designed to protect existing investments.
It is proposed that investments made before the MAI
is signed will be protected under the Agreement. Disputes
arising before the Agreement comes into force, however,
may not be allowed access to the MAI's dispute settlement
mechanism. Nevertheless, transnational corporations
can use the MAI to enforce investor rights that derive
from other investment agreements, including "a
contract granting rights with respect to natural resources
or other assets or economic activities controlled by
the national authority." In effect, the MAI could
be used to enforce contracts that have no binding arbitration
channels in the first place. What's more, the MAI secures
the rights and powers of absentee landlords by allowing,
for example, a British corporation to lay a claim in
Canada on behalf of its Canadian subsidiary. (p. 86).
4. The draft of the MAI also contains clauses protecting
corporations from being targeted by governments for
operations in other countries where they are seen to
be violating labour, environmental and human rights
standards. Application of the "most favoured nation"
clauses would prevent any government from distinguishing
between TNCs based on these standards. Similarly, existing
bans, sanctions or embargoes that restrict investment
in certain countries because of repressive human rights
or labour practices could be challenged as a violation
of the MAI rules and therefore revoked. For example,
the U.S. and Canadian restrictions on investment in
South Africa, which were instrumental in helping to
dismantle apartheid, would be prohibited under the
MAI rules if these countries were signatories to the
Agreement. The sections dealing with "secondary
investment boycotts" and "conflicting requirements"
are designed to secure the rights and freedoms of corporations
to operate in other countries, regardless of their
labour, environmental and human rights records, unless
there is a direct violation of international law.
5. Perhaps the most extraordinary measure proposed in
the MAI draft to ensure political security for investors
is the clause dealing with "withdrawal."
Contracting governments will not be able to withdraw
from the MAI until five years after it has come into
force. On top of that, it is proposed that the MAI
rules continue to cover existing investments in that
country for an additional 15 years. (p. 71). In other
words, once a country has ratified the Agreement, it
is virtually locked-in for a 20-year period. Under
this provision, all corporations based in the contracting
countries will have an ironclad guarantee that the
MAI's investment rules will remain in force for at
least 20 years. Moreover, the accession clause will
outline the terms and conditions for expanding the
MAI to include non-OECD countries. One of the key terms,
of course, will be unconditional acceptance of the
investment rules ratified by the original OECD contracting
governments. Any amendments to the MAI would have to
be ratified by all the parties.
Viewed in terms of these three basic dimensions-political
rights, political power, and political security-the
MAI would consolidate and entrench the system of corporate
rule that is emerging in the new global economy. If
the MAI is ratified by the OECD countries, it will
greatly strengthen the power of the transnational corporations,
while correspondingly weakening the power of nation
states. Increasingly, the role of democratically elected
governments will be confined to developing and implementing
economic, social and environmental policies that serve
the interests of transnational corporations, rather
than the broader interests of their own citizens.
So what does this mean for Canada? It is true that we
have already been burdened with the equivalent of many
of the MAI provisions under the FTA and NAFTA. But
the MAI will include several additional measures that
will tighten the stranglehold corporations already
have gained over public policy-making in this country.
What's more, the new MAI regime will establish investment
rules favouring corporations not only in the U.S. and
Mexico, but in 26 other OECD countries as well. And
this is only the beginning. The MAI is meant to set
the stage for the establishment of a world-wide investment
treaty under the WTO.
There has been talk recently in Washington circles that
the U.S. might be contemplating the addition of side-bar
agreements to the MAI on labour and the environment.
But the main big business lobby coalition behind the
MAI, the U.S. Council for International Business, has
issued a stern warning to the Clinton Administration
against such a move.
"The MAI is an agreement by governments to protect
international investors and their investments and to
liberalize investment regimes," said the USCIB
President in a letter to senior U.S. officials on March
21, 1997. "We will oppose any and all measures
to create or even imply binding obligations for governments
or business related to environment or labor."
What is perhaps most disturbing in the forging of the
MAI is the complete lack of any public discussion and
debate. If there is even a sliver of truth in our claim
that the MAI is an instrument for making global corporate
rule absolute, then this should be a major topic for
debate both inside and outside the legislatures of
the OECD countries. Instead, the MAI has drawn virtually
no attention. Most politicians, let alone citizens
in general, have never even heard of it.
For Canadians, the real danger is that the MAI, like
the WTO, will be swept under the rug and ratified without
anyone being aware of its harmful implications and
consequences. If any semblance of democracy is to be
salvaged in Canada, concerted steps must be taken to
forestall this surrender to corporate tyranny. The
forthcoming federal election offers an opportunity
to focus the public spotlight on the MAI and demand
a full-scale public debate about Canada's future in
the global economy.
What follows is a set of Canadian flashpoints in the
MAI related to policy issues that are bound to surface
during the federal election.
Canadian Flash-Points
There are nearly a dozen major sets of public policy
issues that will be directly affected by the MAI in
Canada. With a federal election looming, however, five
policy flash-points stand out above the others.* The
fact that the MAI is being negotiated by high-level
senior bureaucrats under top-secret conditions raises
the question of who in Ottawa is really aware of what
is going on in Paris around the MAI. Presumably Paul
Martin (Finance) and Art Eggleton (Trade) are well
aware of the MAI negotiations and are staying close
to them. Beyond them, however, it is at least questionable
whether any other cabinet minister is being kept abreast
of the negotiations and the implications for their
portfolios.
If this is a reasonably accurate reading of what is
going on in Ottawa on the MAI front, then it may be
possible to pry open some strategic opportunities around
the following five policy flashpoints in this election
climate.
1. JOB CREATION
The failure of the Chretien government to live
up to its 1993 election promise of "jobs! jobs!
jobs!" continues to be a sensitive issue leading
up to the 1997 federal election. The MAI will further
tie the hands of existing and future governments in
Ottawa and the provinces when it comes to developing
a comprehensive job creation strategy:
* Forbidden to apply performance requirements on the
operations of foreign-based corporations, governments
are prohibited from levering employment and other economic
benefits from investors.
* The commentary states that "the MAI should prevent
the application of national employment quotas or labour
market (economic needs) tests." (p. 105)
* Even if the Bank Act were to be amended to ensure
that the big five national banks invest more in loans
for local economic development, this could be struck
down under the MAI.
* What remains of Ottawa's policy tools for redirecting
investment to impoverished regions will likely be eliminated
(p. 34).
* The technology transfer restrictions in the MAI place
severe limitations on Ottawa's ability to ensure adequate
R&D is done to advance Canada's economic development.
While we have seen some of these restrictions before
through NAFTA, the expansion of these investment rules
to include all the other industrialized countries will
multiply the constraints on Ottawa's future options.
2. CULTURAL PROTECTION
The flap provoked by the WTO ruling on the split-run
Sports Illustrated issue in Ottawa could be reactivated
again in terms of the MAI implications for culture.
Given the performance by Heritage Minister Sheila Copps
in response to the WTO decision, it is unlikely that
the minister has been kept adequately informed about
the implications of the MAI. Yet the MAI could have
more serious consequences for cultural protection in
Canada.
* The intellectual property rights provisions (e.g.,
copyright laws) are bound to have implications for
the cultural sector (even though we have this restriction
with NAFTA, we are talking here about all the industrialized
countries) (p. 94-5).
* Under MAI, Ottawa would not be able to use tax credits
to promote Canadian cultural industries (p. 33, 1.1).
* France (perhaps supported by Canada) has proposed
that "literary and artistic works" be exempted
from the MAI obligations (which is not likely to be
acceptable to the U.S.)
* If there is no cultural exemption, then Canadian "educational
products" cannot be protected. (p. 16).
* Under the "rollback" provisions, Canada
may attempt to reserve laws that restrict foreign investment
in Canadian magazines but may be required to lay out
a time table for allowing more foreign ownership, if
not removing its restrictions altogether. (re. ratchet
effect).
3. PUBLIC HEALTH CARE
It is clear that the future of Canada's public health
care system remains a highly sensitive issue leading
up to the federal election. Given Health Minister David
Dingwall's recent response to Commons committee questions
over the implications of NAFTA and GATT for drug patent
legislation (C-91), it is unlikely that the minister
is aware of the consequences of the MAI. Yet Canada's
$72 billion public health care industry is bound to
be more threatened under the MAI investment rules than
it has been under NAFTA.
* The MAI could circumvent any of the very limited ("fig-leaf")
reservations or exemptions for public health care that
were written into the NAFTA and the GATT (the only
really allowable exemption under the MAI is for "national
security" purposes).
* The MAI clauses dealing with restrictions imposed
on governments regarding "privatization rights"
and "monopoly/ state enterprises" could have
major implications in setting the stage for a two-tiered
health care system in this country
* The fact that payroll taxes and social security contributions
are to be included in the definition of taxation under
the MAI (p. 77), in terms of investment rules in the
future, could also have serious implications for health
care.
4. ENVIRONMENTAL SAFEGUARDS
The current process of environmental deregulation and
the weakening of environmental standards and protection
that is taking place in this country will very likely
accelerate under the MAI investment rules. Once again,
it is unlikely that Environment Minister Sergio Marchi
has any real idea of what constraints the MAI will
put on him and future ministers of the environment.
* The NAFTA provisions insisting that governments not
apply environmental measures in an arbitrary or unjustifiable
manner and not constitute a disguised restriction on
trade and investment, will be expanded to include all
the OECD countries under the MAI.
* Under the investment products provisions, corporate
challenges to the environmental regulation of production
will likely accelerate, as witnessed by the case brought
by the Ethyl Corp. Canada against Ottawa over the banning
of MMT (manganese fuel additive).
* The intellectual property rights provisions giving
patents full protection are likely to conflict with
the provisions of the bio-diversity convention.
* Under the MAI, acquiring land for preservation and
conservation is not protected, whereas a logging corporation
that buys up a rain-forest for commercial purposes
is protected.
* Sections dealing with rights from concessions, licences,
and permits have serious implications for governments
which attempt to regulate corporations developing natural
resources in their jurisdictions.
5. CONSTITUTIONAL POLITICS
While this may not emerge as a real issue during the
federal election campaign, the fact remains that the
investment rules being laid down under the MAI do have
serious implications for both the sovereignist and
federalist positions in the current constitutional
debate, as well as First Nations and the provinces
themselves. There is no indication, however, that either
Quebec Premier Lucien Bouchard or federal Constitutional
Affairs Minister Stephane Dion is aware of the
MAI and its implications. So, too, for First Nations
leaders and the provincial premiers.
* Sovereignists should be wary of the ways in which
the MAI (which, by the way, they have no role to play
in negotiating) will tie the hands of any future national
government in developing policy for the transition
towards an independent Quebec.
* Federalists should be equally wary that virtually all
the provisions being negotiated under the MAI will
be applicable to sub-national governments (which, in
turn, have not been party to the negotiations that
have been taking place).
* First Nations should also beware that their rights
to self-government and control of their lands and resources
could be threatened by corporations more than by governments
under the MAI.
About the Author
Tony Clarke is the director of the Polaris Institute,
which is designed to provide citizens' movements with
new tools for democratic change in an age of economic
globalization. In the past, he has served as the national
chair of the Action Canada Network, and was social
policy director for the Canadian Conference of Catholic
Bishops from 1975 to 1994. He is the author of "Behind
The Mitre: The Moral Leadership Crisis in the Canadian
Catholic Church" (Harper-Collins 1995) and the
forthcoming "Silent Coup: The Business Takeover
of Canada," to be co-published later this year
by the Canadian Centre for Policy Alternatives and
James Lorimer & Co., Ltd.
This analysis of the MAI was prepared in consultation
with Maude Barlow, Jim Grieshaber-Otto, Ed Finn, and
several U.S. colleagues. It was initially prepared
for the Common Front on the World Trade Organization
in Ottawa, coordinated by the Sierra Club of Canada,
April 1997.
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This is a reprint, all credit goes to the said author Tony Clarke.
