Political and Historical Background

    The Multilateral Agreement on Investments (MAI)  is an international trade agreement that would put the rights of corporations and investors above the democratic rights of people at all levels of government.

    The MAI was drawn up behind closed doors in the twenty-nine nation Organization for Economic Cooperation and Development (OECD) in Paris.  When copies of the document were leaked over the internet in 1997 there was such a worldwide outcry that it was withdrawn at the next OECD meeting.  However, critics of MAI point out that MAI represents the world trade agenda of the trans-national corporations, and as such, it will not go away.  They think there will be an attempt to insert MAI-type clauses in World Trade Organization (WTO) and other international trade agreements.

    When there is a conflict between the concept of "free trade" under MAI (or its clones) and local laws, local laws and regulations protecting such rights as air, water, environment, labor, consumer products, and human rights would be invalidated because they would be seen as an interference to free trade.  International trade tribunals, held in secret, would rule on the cases.  Their judgements would be final and could not be appealed.  The tribunals would be held in Europe and would consist of members such as the International Chamber of Commerce.  Losing Countries would have three choices: change their laws, pay compensation, or face trade sanctions.  Our (USA) court system could not overturn these rulings.

    Is this merely alarmist rhetoric?  Consider NAFTA which is a limited, prototype MAI.  In 1997 Ethyl Corporation of the U.S. sued the Canadian Government for $251 million because Canada had a ban on MMT, a gasoline additive made by Ethyl.  It had been banned for health reasons.  When the case was taken before a NAFTA trade tribunal, Ethyl said it should be compensated under the "Expropriation" clause because the law hurt its potential future profits and harmed its reputation.  No MMT business had taken place, but it became obvious that Canada would lose.  So they paid Ethyl $13 million out of court and also repealed their law.

    This year California found that the gasoline additive MTBE was getting into underground water supplies.  MTBE is a suspected carcinogen so California outlawed it.  MTBE is made by Methenex Corporation of Vancouver, B. C. which promptly filed a NAFTA lawsuit against California for almost one billion dollars.

    With the failure of the first attempt at an MAI, "fast track" methods (used in NAFTA) are being attempted by the President and MAI supporters to smuggle provisions of MAI past Congress into international law without debate since it requires only a pass or fail vote which corporate lobbyists could help deliver.

    There are some political and historical perspectives that should be examined to better understand the MAI in whatever future anti-democratic form it may take.

Political Perspective:

To better understand the dangers of MAI two points should be emphasized:

1. MAI is not political in the sense of conservative and liberal, it is simply anti-democratic.
    MAI is not liberal in that it would potentially prevent such actions on a national level as the anti-apartheid sanctions taken against South Africa by the U. S. and other countries, since they could interfere with some corporate investments.  On a state or city level it could effectively prevent such states as Massachusetts and such cities as San Francisco in their embargo against Myanmar (Burma) because of its human rights violations.  The MAI could go against the UN's Universal Declaration of Human Rights.  MAI masquerades as liberal under a "one world" banner though it is often forged in secret by bureaucrats in a top-down, anti-democratic manner.

    What would be the possible effects of MAI?  Under an MAI-type regimen, any corporation, seeing itself as an injured party, i.e., as losing profits, could sue for a damages ruling in a WTO trade tribunal.  Local laws expressing the wishes of local citizens to use the economic/purchasing power of the city to express its community concerns could be affected.  This could involve safeguards to public health and to environmental, cultural, social, labor, consumer, and economic justice.  Recycling could be objected to as interfering with profits.  Laws that seek to redress discrimination against women and minorities would be vulnerable to repeal.

    Under MAI, campaign finance reform laws might interfere with corporations' right to influence elections.  Under MAI, foreign corporations are to be treated at least as favorably as or more favorably than domestic companies.  This offers foreign corporations the chance to "buy" U. S. elections at any level of government.  And why not?  Corporations were given many of the rights of citizens in 1886 as part of the Fourteenth Amendment.  And to not allow them to spend huge amounts of money to influence elections interferes with their First Amendment rights.  To be treated "at least as favorably," foreign corporations deserve this also.  So under MAI logic, Americans should welcome these new "citizens."

    MAI is not conservative because it might over-turn many laws favored by conservatives.  U. S. sanctions against Iraq, Iran, and Libya, and even the controversial Helms-Burton Act of 1996, which penalizes foreign investors in Cuba, would inevitably be overturned under MAI.  "Buy American" policies must not interfere with foreign corporations.  Some issues of the conservative Christian social agenda that protect traditional and family values might be prohibited if they interfere with international trade.  For years, conservative Christians have been railing against the Trilateral Commission as a group set up to create the "New World Order" which will usher in the anti-Christ.  The Trilateral Commission created in 1973 is a forerunner of the OECD and now the WTO formed in 1995.  Pat Buchanan, who sees himself as a conservative populist, came out against NAFTA (a proto-MAI agreement) because he had to admit that this multilateral agreement on investments went against the interests of the workers who supported him.

    MAI is not the voice of moderates, which is probably the voice of many small businesses in the U.S.  MAI certainly gives any large corporation, foreign or domestic, a great advantage in competing against local, small businesses which might want to try to protect the interests of local patrons, use local labor or materials, protect the character of the town, keep money in the community, and generally have a vested interested in the community beyond profits.  Any laws set up to help local businesses maintain the character of their community might be over-turned as anti-competitive to large corporations.  This could also include democratic preferences such as who should run public utilities.  Even local water resources might be treated as a commercial commodity in this global market (this has been suggested by some corporations).  Designated historical sites or districts could infringe upon the rights of corporations to do business there, and so they might object.

    The Reform Party, a moderate alternative to the two major political parties, was against NAFTA also.  Ross Perot was sometimes ridiculed for his political slogan about the "sucking sound of jobs going to Mexico."  He should have rather emphasized the broader anti-democratic precedent of NAFTA in which the rights of labor, among many other rights, were clearly threatened.

    Thus, potentially any democratic laws could be seen to interfere with international trade, leading to "expropriation" actions by corporations or investors who see themselves as injured.  Also, cultural traditions and customs not codified into law could be corrupted by profits-first corporate values.  A prime example of the attack on cultural values is the onslaught of movies, videos games, and TV programs in which sex and violence are glorified, trivia is monumentalized, and cultural values are denigrated, all under the perennial commercial rationale of responding to "market forces" from the people.

2.     Anti-MAI measures are not anti-corporation measures.
    Citizens' MAI's are necessary and beneficial when done on a government-to-government level in which the rights, laws, and sovereignty of the citizens of these countries are respected and any resulting agreements, whether conservative or liberal, reflect an open democratic process.

    Anti-MAI measures are not anti-corporation measures though corporations may see them in that way.  It is true that MAI reflects mainstream corporate attitudes, particularly those of transnationals, and the political thinking of mainstream Democrats and Republicans. This is symptomatic of a short-sightedness which does not perceive the long-term consequences.  In a legal sense, MAI is basically amoral rather than immoral since it puts economic efficiency above social or individual morality.  (True liberalism and conservatism are much more concerned with moral issues, which that might interfere with international trade.)  But with the undercurrents of greed, power, and encouraged gluttony (over-consumption) that are involved, MAI can become destructive to society if there are not adequate democratic safeguards.

Historical perspective:

    Of the many historical factors that have created MAI as a mainstream political and economic belief, one point is often ignored: the economic rise of Japan after WWII.

    Because of the cold war that was beginning to rage at that time, Japan was allowed, even encouraged by the U. S., to develop its own form of "capitalism" to ensure that it did not go communist.  Quotes are used around "capitalism" since it was a myth perpetuated by both the U. S. and the Soviet Union.  Because of the hostilities of the cold war, nations were polarized into blocs and Japan definitely was not in the communist bloc.  Since it was a close ally of the U. S., it must have been "capitalist."  In fact, Japan's economy was a form of mercantilism that encouraged exports and protected against imports.  The Japanese became relatively frugal while feeding consumerism abroad, certainly a virtue in the tradition of Benjamin Franklin.
    The "zaibatsu" (mega-corporations), which powered the Japanese war machine and had their roots in historical Japanese culture, became the economic driving force working hand-in-hand with the government.  There was little of a free market.  But it felt right to the Japanese because it was part of their cultural heritage.  The government nurtured and guided the mega-corporations to rebuild the country economically through cooperation with itself and the other Japanese mega-corporations.  Competition was mainly to be used in the export market where the fledgling Japanese economy had to compete.  This maximized economic efficiency and united the people in a common effort.  And it worked only too well, until internal flaws in the system derailed the economic juggernaut at the end of the 1980s.

    Just as in the game of Monopoly, if one player wins all the money the game is over.  By the 1970s Japan was beginning to accumulate a massive balance-of-payments surplus.  Along with other factors, such as the oil crisis, the capitalist economies, especially the U. S., were suffering financial instability.  The almighty dollar was being devalued, the gold standard was abandoned, and the threat of more tariffs was arising.  In 1973 the Trilateral Commission began to look at three geographical regions or economic spheres of interest: the U.S./Canada, Western Europe, and Japan.  These three centers of economic power were supposed to control their spheres of interest and help coordinate international trade between these spheres.  Free-market capitalism needed standard rules to ensure the game did not destroy any of the major players.

    In the 1980s Ronald Reagan became president and the myths of laissez faire capitalism reached new heights of optimism.  Free trade did begin to open up in many ways, but not much with many countries including Japan.  Why should they change?  The Japanese people were comfortable with the system that had lifted them up from the ashes of WWII to become one of the richest nations in the world.

    Meanwhile, during the Reagan administration the U. S. went from being the greatest creditor nation to the greatest debtor nation in the world.  What the communists were unable to achieve in over 70 years - the destruction of world capitalism - was being accomplished by the type of "capitalism" that the U. S. helped set up in Japan.

    To make things worse, South Korea and the other Asian economic tigers were on the move.  Their model was that of Japan.  That model not only worked the best, but it was also congenial to their Confucian social orders.  Meanwhile, third-world countries were using tariffs and restrictions to try to survive in an ocean of huge capitalist sharks.  When criticized by the U. S. and the other developed countries, some would respond by saying they were doing little more than what the U. S. government, led by the Federalists, enacted against England and the rest of Europe in the early 19th century as American industries were being formed.

    To cut through all this economic chaos and save capitalism, it became obvious to mainstream economic and political leaders that a level playing field for free-market capitalism must be realized.  So such measures as the Uruguay Round, NAFTA, MAI, and the WTO needed to be developed and implemented as soon as possible.  Unfortunately, this created a secretive, elitist, anti-democratic movement whose intent was to force all nations to fit into a one-size-fits-all set of rules for a global economy.  These rules were, of course, the ones that worked best for large, transnational corporations (whose CEO's worked with trade ambassadors to write them), who would be leading the economic revolution.  In their amoral view, man is primarily an economic animal and maximizing profits elevates mankind.  So the moral concerns, political systems, cultures, traditions, lifestyles, i. e., all facets of national identity of world nations, were to be chopped off to fit this procrustean bed of free-market capitalism as envisioned by those who developed the MAI.  And, besides, it was needed to save mankind from economic chaos.

    On the other hand, the world is threatened by economic chaos because the present form of world capitalism is not working.  And the collapse of capitalism would conceivably create the types of chaotic conditions that could again bring forth demagogues like Hitler, with catastrophic consequences.

    Citizens' MAIs must be developed in a government-to-government manner, preferably multilateral in scope.  But this must proceed in a open, democratic way in which the rights, values, traditions, and moral views of the peoples involved - flesh and blood people rather than fictitious corporate entities posing as citizens - can be taken into account when making necessary compromises.  It will be a long, slow process.  But it is the only way we can protect our sovereignty against transnational corporations that seek to rule us when we should be ruling them.

    So to the MAI and its reincarnations -  we must say no!  We deserve something better which preserves democracy as we know it.

    An optimal attitude is to educate people, not moralize, because when people realize what is happening with the anti-democratic ramifications of MAI, the facts will speak for themselves.  For us to appeal to the public, many of whom respond to phrases such as "states rights" and "government interferes too much in our lives," we need to point out how dramatically corporations under MAI could undermine local laws and exploit us in ways that could dominate our lives.  At least when government interferes in our lives we have the right to change the situation with the democratic principles and constitutional safeguards we so loudly proclaim and much of the world admires.  With the WTO meeting in Seattle in late November to plan the next phase of getting MAI-type trade agreements approved, it is time to bring what is happening to light as much as possible in order to involve citizens in a democratic process of evaluation.

by Dennis Ferman