Multilateral Agreement on Investment
Encyclopedia
The Multilateral Agreement on Investment (MAI) was a draft agreement negotiated between members of the Organisation for Economic Co-operation and Development
(OECD) in 1995–1998. Its ostensible purpose was to develop multilateral rules that would ensure international investment was governed in a more systematic and uniform way between states. When its draft became public in 1997, it drew widespread criticism from civil society
groups and developing countries, particularly over the possibility that the agreement would make it difficult to regulate foreign investors. After an intense global campaign was waged against the MAI by the treaty's critics, the host nation France
announced in October 1998 that it would not support the agreement, effectively preventing its adoption due to the OECD's consensus procedures.
has been taking place in various forms and to different degrees for over a century. Attempts to establish a framework for the protection of foreign investments dates back to the 1920s, most notably negotiating a League of Nations
draft convention. Starting from the second half of the twentieth century, the investment protection was developed through the bilateral investment treaties
, which are signed between two countries and which state the desired conditions under which investment can take place between them. The first BIT, between West Germany
and Pakistan
, was signed in 1959 and their numbers have grown steadily since then, although research suggests that BITs do little to increase foreign investment. In 1965, the International Centre for Settlement of Investment Disputes
(ICSID) was established in the framework of the United Nations
, and in 1967, the OECD prepared the Draft Convention on the Protection of Foreign Property although this was not adopted.
The number of bilateral investment agreements increased rapidly during the 1990s as countries and investors sought more regulation
for security, certainty and mobility for their investments after it became clear that the Uruguay Round
's Agreement on Trade Related Investment Measures
(TRIMS), Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) and General Agreement on Trade in Services
(GATS) addressed only part of investment-related concerns and did not provide enough security for investors nor strong controls on host governments to regulate multinational corporations. In addition to these instruments, in 1992 the World Bank
adopted Guidelines on the Treatment of Foreign Direct Investment. In 1994 the Energy Charter Treaty
provided an example of a multilateral investment agreement, though limited to the energy sector.
Many critics argued that the OECD, as an organization made up solely of rich countries, was more susceptible to direct influence by transnational corporate forces than alternative fora with more universal membership such as United Nations Conference on Trade and Development
(UNCTAD) and the World Trade Organization
(WTO). This argument did not deter OECD nations from proceeding, because they reasoned that poorer countries would have no option than to adopt the MAI once it had been entrenched. The OECD was eventually obliged to agree, and shift its focus to the WTO, following the MAI's collapse on France's defection.
According to MAI supporter Sergio Marchi
, one of the main purposes of the agreement was to eliminate the "patchwork" of investment rules enshrined in the then-1300+ bilateral investment treaties. Contrary to many critics, he argued that the MAI would help prevent "races to the bottom" that would undermine high standards of Canadian regulation. More specifically, the agreement would:
The MAI was supported by both the Business and Industry Advisory Committee to the OECD (BIAC) and the Trade Union Advisory Committee to the OECD (TUAC). While BIAC was interested in stable and consistent treatment of investment, TUAC was interested on setting standards on employment and industrial relations.
There was little public awareness of the details of MAI negotiations until a draft of the agreement was leaked in March 1997. The leaked material prompted criticism from different NGOs globally. As a result, the negotiations failed in 1998 when first France and then other countries successively withdrew after pressure from a global movement of NGOs, citizens' groups and a number of governments of developing countries. In April 1998, the negotiations were formally suspended for six months. On 3 December 1998, the OECD announced that "negotiations on the MAI are no longer taking place".
, which was central in both gathering information and promulgating critical material among members of a vast worldwide network—which came to style itself as a "coalition
" after adopting a few simple and coherent objectives. The unified global campaign relied heavily on internet communications—the first time that the new technology had been deployed on a large scale both to coordinate information and to channel protest communications to devastating effect. The movement significantly placed the most influential mass media
and politician
s in the context of having vested interests. Such conventional oracles were largely sidelined in favour of direct and detailed reportage of sources to the exclusion of corporate "spin
". The separate, non-commercial interests of international civil society
were loudly proclaimed. As ruefully acknowledged by their opponents, the activists had the advantage of highly qualified, eloquent leaders and were able to use the new internet technology to devastating effect.
, labor
and environmental standard
s, and Least Developed Countries
. A particular concern was that the MAI would result in a 'race to the bottom' among countries willing to lower their labor and environmental standards to attract foreign investment. The origin of organised opposition was traced by Katia Tieleman in her 2000 UN case study:
-style offshore dispute-resolution tribunal in which corporations could sue governments if legislation, e.g., for national health, labor or environment, threatened their interests or were considered to expropriate actual or potential assets and/or profits.
Prominent MAI critic Mark Vallianatos (Friends of the Earth
) argued that:
and many other contributors to the MAI-NOT newsgroup with the active backing of the Council of Canadians
which had earlier mounted active opposition to the 1994 North American Free Trade Agreement
(NAFTA) between the USA, Canada and Mexico. The Canadian newsgroup was one of several powerful email vehicles for the international campaign.
In Montreal, on May 25, 1998, the Montreal Conference on Globalized Economies was nonviolently blockaded for five hours by hundreds of activists in what was called Operation SalAMI, based on the French acronym of the proposed agreement, AMI, referring not only the sausage, but also to a "dirty friend". Operation SalAMI demanded that Canada withdraw from the negotiations on the M.A.I. The presence of one key MAI player, Donald Johnston (General Secretary of the OECD) at the conference helped to focus the action, one of the three most important anti-MAI events in the world. These mobilizations on an international scale actually led to the shelving of the agreement. The award-winning documentary "Pressure Point - Inside the Montreal Blockade" recorded the drama of this action where 100 people were arrested.
's Global Trade Watch
, and a coordinated network ("50 Years is Enough') including Friends of the Earth
, the Alliance for Democracy, Witness for Peace
, the Sierra Club
, the Preamble Center, the Democratic Socialists of America
and other groups.
's radio programme 'Background Briefing' presented the Quiet Debate—a report about the silence of the Australian government and media on an issue which was arousing fierce controversy in the USA, Britain, Canada and New Zealand. However, Australian activists, including members of Pauline Hanson's One Nation were already studying the leaked MAI draft and corresponding with the Canadian email discussion group MAI-NOT while deciding how to organise a national campaign to link with those of other countries. In January 1998 a national 'STOP MAI' coalition was formed to research issues, lobby parliamentarians and conduct public meetings. In November 1998, prior to the opening of OECD negotiations in Paris, the coalition delivered to the meeting's chairman and to the Australian prime minister a protest letter endorsed by over 500 organisations and individuals. The letter was reinforced by a prominent advertisement in The Australian newspaper on 11 November
. After receiving this report, prime minister Lionel Jospin
addressed the Assemblée Nationale on 10 October 1998 and announced his decision to withdraw. He said the Lalumière Report had identified a number of fundamental problems with the agreement, particularly relating to matters of national sovereignty. Madame Lalumière had also concluded that so many reservations were being incorporated into the agreement that any value for French investors would be limited. M. Jospin noted that, in February 1998, the French government had identified respect for cultural differences as a requirement for French support for the agreement.
Of equal or greater significance was the importance accorded by Mme. Lalumière to the global protest movement which at that time she attributed to the work and influence of NGOs:—
Mme. Lalumière argued, however, that France should continue to pursue further liberalisation of investment régimes though not in the OECD. "On the one hand, under these conditions it would be impossible to achieve the balancing of the concessions demanded by the firms
and, on the other, the objections of the opponents would be just as fierce." France was followed by a succession of other nations including Canada and Australia whose governments had been under relentless pressure from civil society to abandon or radically revamp the MAI.
An attempt was made to insert the investment agenda into a new "Millennium Round" of trade liberalisation talks to be hosted by the World Trade Organization
(WTO). This was to lead to the historic 'Battle of Seattle'
protest actions in November 1999. At the WTO Ministerial in Cancún in September, 2003, a group of more than twenty developing countries united to block the inclusion of the Singapore issues
, including investments, in the Doha Round
of trade talks. One basis of such opposition is outlined in a critical analysis prepared for Canadian universities.
The OECD promotes the Declaration on International Investment and Multinational Enterprises and the OECD Guidelines for Multinational Enterprises
, last revised in 2000. In addition, from May 2006, the OECD has promoted a non-binding set of "good practices" for attracting investment, known as The Policy Framework for Investment (PFI).
- In February 2002, the OECD released a large quantity of documents relating to the negotiations - Non-official online translation of the report which advised the withdrawal of France from the OECD negotiations it was hosting in Paris - at Global Policy Forum
- a summary and update, with collection of links and resources - Australian Broadcasting Corporation's excellent 1997 introductory radio presentation - from UK independent journal Red Pepper - The 1997-99 MAI-NOT Newsgroup (archive)
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade...
(OECD) in 1995–1998. Its ostensible purpose was to develop multilateral rules that would ensure international investment was governed in a more systematic and uniform way between states. When its draft became public in 1997, it drew widespread criticism from civil society
Civil society
Civil society is composed of the totality of many voluntary social relationships, civic and social organizations, and institutions that form the basis of a functioning society, as distinct from the force-backed structures of a state , the commercial institutions of the market, and private criminal...
groups and developing countries, particularly over the possibility that the agreement would make it difficult to regulate foreign investors. After an intense global campaign was waged against the MAI by the treaty's critics, the host nation France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
announced in October 1998 that it would not support the agreement, effectively preventing its adoption due to the OECD's consensus procedures.
Background
International direct investmentForeign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
has been taking place in various forms and to different degrees for over a century. Attempts to establish a framework for the protection of foreign investments dates back to the 1920s, most notably negotiating a League of Nations
League of Nations
The League of Nations was an intergovernmental organization founded as a result of the Paris Peace Conference that ended the First World War. It was the first permanent international organization whose principal mission was to maintain world peace...
draft convention. Starting from the second half of the twentieth century, the investment protection was developed through the bilateral investment treaties
Bilateral Investment Treaty
A bilateral investment treaty is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in another state. This type of investment is called foreign direct investment . BITs are established through trade pacts...
, which are signed between two countries and which state the desired conditions under which investment can take place between them. The first BIT, between West Germany
West Germany
West Germany is the common English, but not official, name for the Federal Republic of Germany or FRG in the period between its creation in May 1949 to German reunification on 3 October 1990....
and Pakistan
Pakistan
Pakistan , officially the Islamic Republic of Pakistan is a sovereign state in South Asia. It has a coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by Afghanistan and Iran in the west, India in the east and China in the far northeast. In the north, Tajikistan...
, was signed in 1959 and their numbers have grown steadily since then, although research suggests that BITs do little to increase foreign investment. In 1965, the International Centre for Settlement of Investment Disputes
International Centre for Settlement of Investment Disputes
The International Centre for Settlement of Investment Disputes , an institution of the World Bank Group based in Washington, D.C., was established in 1966 pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States...
(ICSID) was established in the framework of the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
, and in 1967, the OECD prepared the Draft Convention on the Protection of Foreign Property although this was not adopted.
The number of bilateral investment agreements increased rapidly during the 1990s as countries and investors sought more regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
for security, certainty and mobility for their investments after it became clear that the Uruguay Round
Uruguay Round
The Uruguay Round was the 8th round of Multilateral trade negotiations conducted within the framework of the General Agreement on Tariffs and Trade , spanning from 1986-1994 and embracing 123 countries as “contracting parties”. The Round transformed the GATT into the World Trade Organization...
's Agreement on Trade Related Investment Measures
Trade Related Investment Measures
The Agreement on Trade Related Investment Measures are rules that apply to the domestic regulations a country applies to foreign investors, often as part of an industrial policy. The agreement was agreed upon by all members of the World Trade Organization. The Agreement on Trade Related Investment...
(TRIMS), Agreement on Trade-Related Aspects of Intellectual Property Rights
Agreement on Trade-Related Aspects of Intellectual Property Rights
The Agreement on Trade Related Aspects of Intellectual Property Rights is an international agreement administered by the World Trade Organization that sets down minimum standards for many forms of intellectual property regulation as applied to nationals of other WTO Members...
(TRIPS) and General Agreement on Trade in Services
General Agreement on Trade in Services
The General Agreement on Trade in Services is a treaty of the World Trade Organization that entered into force in January 1995 as a result of the Uruguay Round negotiations...
(GATS) addressed only part of investment-related concerns and did not provide enough security for investors nor strong controls on host governments to regulate multinational corporations. In addition to these instruments, in 1992 the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
adopted Guidelines on the Treatment of Foreign Direct Investment. In 1994 the Energy Charter Treaty
Energy Charter Treaty
The Energy Charter Treaty is an international agreement which provides a multilateral framework for energy trade, transit and investments...
provided an example of a multilateral investment agreement, though limited to the energy sector.
Many critics argued that the OECD, as an organization made up solely of rich countries, was more susceptible to direct influence by transnational corporate forces than alternative fora with more universal membership such as United Nations Conference on Trade and Development
United Nations Conference on Trade and Development
The United Nations Conference on Trade and Development was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues....
(UNCTAD) and the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO). This argument did not deter OECD nations from proceeding, because they reasoned that poorer countries would have no option than to adopt the MAI once it had been entrenched. The OECD was eventually obliged to agree, and shift its focus to the WTO, following the MAI's collapse on France's defection.
Purposes and provisions
While authorizing the negotiations, the OECD Ministerial Council aimed to reach a "broad multilateral framework for international investment with high standards for the liberalization of investment regimes and investment protection and with effective dispute-settlement procedures." The aim was to create more consistent, secure and stable investment conditions and to regulate investment in a more uniform, transparent and enforceable manner. Although the agreement was to be negotiated between the member states, the intention was to have an open-agreement which non-OECD members could accede on a negotiated basis.According to MAI supporter Sergio Marchi
Sergio Marchi
Sergio Marchi, PC is a Canadian diplomat and former politician.Marchi was born in Argentina to an Italian family who subsequently emigrated to Canada...
, one of the main purposes of the agreement was to eliminate the "patchwork" of investment rules enshrined in the then-1300+ bilateral investment treaties. Contrary to many critics, he argued that the MAI would help prevent "races to the bottom" that would undermine high standards of Canadian regulation. More specifically, the agreement would:
- Minimise the diverse state regulations in governing the conditions under which investments by foreign corporations could take place. (In this connection, the agreement embodied acceptance of a compliance regime under which liberalization must proceed forward with no ability to be wound back — the so-called ratchet effect. This would be enforced by so-called rollbackRollback (legislation)For related uses, see Rollback In government and economic contexts, Rollback metaphorically denotes action to repeal, dismantle or otherwise diminish the effect of a law or regulation.-Trade legislation:...
and standstill provisions, to ensure that investors would have access to markets. These provisions required nations to eliminate regulations that violated MAI provisions — either immediately or over a set period of time — and to refrain from passing any such laws in the future.) - Enable compensation to corporations for proven unfair or discriminatory investment conditions causing loss of profit.
- Allow states and corporations recourse to international arbitrationArbitrationArbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
(for instance, through the International Centre for Settlement of Investment DisputesInternational Centre for Settlement of Investment DisputesThe International Centre for Settlement of Investment Disputes , an institution of the World Bank Group based in Washington, D.C., was established in 1966 pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States...
) to settle any disputes arising under the agreement, instead of national courts in the host state.
The MAI was supported by both the Business and Industry Advisory Committee to the OECD (BIAC) and the Trade Union Advisory Committee to the OECD (TUAC). While BIAC was interested in stable and consistent treatment of investment, TUAC was interested on setting standards on employment and industrial relations.
Negotiations
The negotiations on the Multilateral Agreement on Investment were formally launched by the OECD's Ministerial Council in May 1995 and they commenced in September 1995. The negotiations were carried out by a high-level negotiating group consisting of officials from the OECD member states, but working outside the OECD committee structure consulting with the non-member countries. The chairperson of the negotiating group was Frans Engering (Netherlands) and vice-chairpersons were Al Larson (United States) and A. Saiki (Japan). The target deadline to finish the negotiations, set by the OECD Ministerial Council, was mid-1997.There was little public awareness of the details of MAI negotiations until a draft of the agreement was leaked in March 1997. The leaked material prompted criticism from different NGOs globally. As a result, the negotiations failed in 1998 when first France and then other countries successively withdrew after pressure from a global movement of NGOs, citizens' groups and a number of governments of developing countries. In April 1998, the negotiations were formally suspended for six months. On 3 December 1998, the OECD announced that "negotiations on the MAI are no longer taking place".
Protest movement
International protestation against the MAI soon became historically celebrated as the first-ever example of successful mass-activism deploying the InternetInternet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
, which was central in both gathering information and promulgating critical material among members of a vast worldwide network—which came to style itself as a "coalition
Coalition
A coalition is a pact or treaty among individuals or groups, during which they cooperate in joint action, each in their own self-interest, joining forces together for a common cause. This alliance may be temporary or a matter of convenience. A coalition thus differs from a more formal covenant...
" after adopting a few simple and coherent objectives. The unified global campaign relied heavily on internet communications—the first time that the new technology had been deployed on a large scale both to coordinate information and to channel protest communications to devastating effect. The movement significantly placed the most influential mass media
Mass media
Mass media refers collectively to all media technologies which are intended to reach a large audience via mass communication. Broadcast media transmit their information electronically and comprise of television, film and radio, movies, CDs, DVDs and some other gadgets like cameras or video consoles...
and politician
Politician
A politician, political leader, or political figure is an individual who is involved in influencing public policy and decision making...
s in the context of having vested interests. Such conventional oracles were largely sidelined in favour of direct and detailed reportage of sources to the exclusion of corporate "spin
Spin (public relations)
In public relations, spin is a form of propaganda, achieved through providing an interpretation of an event or campaign to persuade public opinion in favor or against a certain organization or public figure...
". The separate, non-commercial interests of international civil society
Civil society
Civil society is composed of the totality of many voluntary social relationships, civic and social organizations, and institutions that form the basis of a functioning society, as distinct from the force-backed structures of a state , the commercial institutions of the market, and private criminal...
were loudly proclaimed. As ruefully acknowledged by their opponents, the activists had the advantage of highly qualified, eloquent leaders and were able to use the new internet technology to devastating effect.
Active opposition
According to Theodore H Cohn in Global Political Economy Theory and Practice (2005), "[t]he most effective opposition to the MAI was launched by a wide-ranging coalition of civil society NGOs. These NGOs argued that the MAI would threaten protection of human rightsHuman rights
Human rights are "commonly understood as inalienable fundamental rights to which a person is inherently entitled simply because she or he is a human being." Human rights are thus conceived as universal and egalitarian . These rights may exist as natural rights or as legal rights, in both national...
, labor
International labour standards
International labor standards refer to conventions agreed upon by international actors, resulting from a series of value judgments, set forth to protect basic worker rights, enhance workers’ job security, and improve their terms of employment on a global scale...
and environmental standard
Environmental standard
An environmental standard is a policy guideline that regulates the effect of human activity upon the environment. Standards may specify a desired state or limit alterations An environmental standard is a policy guideline that regulates the effect of human activity upon the environment. Standards...
s, and Least Developed Countries
Least Developed Countries
Least developed country is the name given to a country which, according to the United Nations, exhibits the lowest indicators of socioeconomic development, with the lowest Human Development Index ratings of all countries in the world...
. A particular concern was that the MAI would result in a 'race to the bottom' among countries willing to lower their labor and environmental standards to attract foreign investment. The origin of organised opposition was traced by Katia Tieleman in her 2000 UN case study:
[T]he start of the opposition against the MAI can be traced back to a couple of individuals, [who] remained the leading figures in its further development. By the end of 1996, Martin KhorUsing a variety of websites, NGOs mobilized a strong and diverse opposition composed of human rights groups, labor and environmental groups, and consumer advocates.Martin KhorMartin Khor is the Executive Director of the since 1 March 2009. He replaced Dr. Yash Tandon who was the Executive Director of the South Centre from 2005-2009. Mr...
, Director of the Third World NetworkThird World NetworkThe Third World Network is an international network of organizations and individuals involved in issues relating to environment, development and the Third World and North-South issues. It has its international secretariat in Penang, Malaysia...
based in Malaysia, obtained a document prepared for the OECD Ministerial meeting of May 1995 as well as for future WTO negotiations by the European Commission (Commission of the European Communities 1995: A Level Playing Field for Direct Investment World Wide, March 1, Brussels). From the document, Mr. Khor understood that multilateral investment negotiations, which his organisation as part of a large coalition opposed at the WTO, might be ongoing at the OECD. He informed some NGO colleagues, among whom was Tony ClarkeTony ClarkeAnthony Richard Clarke, known as Tony Clarke, is a former independent Northampton Borough Council councillor, previously a British Labour Party politician, and was Member of Parliament for Northampton South from 1997-2005.-Labour Councillor and former MP:Before becoming an MP, Clarke had...
, Director of the Polaris InstitutePolaris InstituteThe Polaris Institute is a Canadian think tank based in Ottawa. Its stated goal is "to help empower citizen movements towards democratic social change"...
in Canada.
Tony Clarke managed to get a copy of the MAI draft. After turning "the text into a readable document and adding an analysis and interpretation" [sourced to interview with Tony Clarke, Brussels, April 28], he posted it to an international email distribution list about globalisation called le Forum international sur la globalisation in February 1997.
In the United States, the NGO Public Citizen Global Watch put the draft on its web page. Lori Wallach, a graduate of Harvard Law School, became one of the strongest leading organisers of the international campaign against the MAI. Building on the credibility of her status as a lawyer, she transformed the legal OECD documents into accessible wording, often "ready for use" in the subsequent NGO campaigns. Her role as provider of information combined with her role as provider of explanation gave her a power-position in the campaign. She would launch the campaign under the name of the "Dracula Strategy" implying that simply exposing the MAI project to the light would be sufficient to kill it (sourced to an interview with Susan GeorgeSusan George (political scientist)Susan George is a well-known Franco-American political and social scientist, activist and writer on global social justice, Third World poverty, underdevelopment and debt. She is a fellow and president of the board of the Transnational Institute in Amsterdam...
). NGOs showed that they were well interconnected. In no time, the document was distributed and action was taken in different parts of the world. The campaign against the MAI was born.
Arguments
MAI opponents pointed to a perceived threat to national sovereignty and democracy and argued that it would involve participating nations in a "race to the bottom" in environmental and labor standards. The MAI prompted criticism that it appeared to establish a new body of universal investment laws to guarantee corporations excessive powers to buy, sell and undertake financial operations all over the world, severely diluting national laws, e.g., on environmental protection, regulation of labour standards and human rights established in developed countries. By their arguments, the draft proposed a North American Free Trade AgreementNorth American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
-style offshore dispute-resolution tribunal in which corporations could sue governments if legislation, e.g., for national health, labor or environment, threatened their interests or were considered to expropriate actual or potential assets and/or profits.
Prominent MAI critic Mark Vallianatos (Friends of the Earth
Friends of the Earth
Friends of the Earth International is an international network of environmental organizations in 76 countries.FOEI is assisted by a small secretariat which provides support for the network and its agreed major campaigns...
) argued that:
- The MAI would restrict governments' ability to limit the participation of foreign multinationals in sectors they deemed critical, whether for developmental, environmental or other reasons. "For example," he wrote, "the Philippines currently bans foreign investment in rural banking, and Honduras limits foreign investors in forestry to a minority stake. Such protective measures would not be allowed under the MAI as it is currently written."
- The agreement would establish the principle of "national treatment" (in which government must treat foreign companies as favorably as domestic companies) as the norm for international investment. Indeed, in some cases, foreign corporations might have stronger protections than domestic investors. "The MAI bars many types of performance requirements, or conditions, even if those conditions are imposed on local companies. Examples of forbidden conditions include requiring investors to form a partnership with a local company and requiring a minimum number of local employees — the types of policies governments use to help ensure that local people benefit from foreign investment."
- "The MAI matters because its rules can be enforced. If a foreign investor thinks a country where it has invested is violating the MAI, the investor has a choice: to complain to its own government, which can take the host country to binding international arbitration, or to directly challenge the host country. In either case, the arbitration process is closed — citizens cannot participate — and one-sided, as neither governments nor affected communities can challenge the behavior of investors. This imbalance points out the MAI’s fundamental flaw: despite the need for corporate accountability in the international economy, current versions of the MAI contain no binding obligations on corporate investors."
Canada
A strong campaign was mounted by Maude BarlowMaude Barlow
Maude Victoria Barlow is a Canadian author and activist. She is the National Chairperson of The Council of Canadians, a citizens’ advocacy organization with members and chapters across Canada. She is also the co-founder of the , which works internationally for the human right to water...
and many other contributors to the MAI-NOT newsgroup with the active backing of the Council of Canadians
The Council of Canadians
The Council of Canadians is a progressive citizens' organization that advocates on behalf of its members across the country. Founded in 1985 to oppose the Canada-U.S...
which had earlier mounted active opposition to the 1994 North American Free Trade Agreement
North American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
(NAFTA) between the USA, Canada and Mexico. The Canadian newsgroup was one of several powerful email vehicles for the international campaign.
In Montreal, on May 25, 1998, the Montreal Conference on Globalized Economies was nonviolently blockaded for five hours by hundreds of activists in what was called Operation SalAMI, based on the French acronym of the proposed agreement, AMI, referring not only the sausage, but also to a "dirty friend". Operation SalAMI demanded that Canada withdraw from the negotiations on the M.A.I. The presence of one key MAI player, Donald Johnston (General Secretary of the OECD) at the conference helped to focus the action, one of the three most important anti-MAI events in the world. These mobilizations on an international scale actually led to the shelving of the agreement. The award-winning documentary "Pressure Point - Inside the Montreal Blockade" recorded the drama of this action where 100 people were arrested.
United States
A strong campaign was led by Lori Wallach of Public CitizenPublic Citizen
Public Citizen is a non-profit, consumer rights advocacy group based in Washington, D.C., United States, with a branch in Austin, Texas. Public Citizen was founded by Ralph Nader in 1971, headed for 26 years by Joan Claybrook, and is now headed by Robert Weissman.-Lobbying Efforts:Public Citizen...
's Global Trade Watch
Global Trade Watch
Global Trade Watch was founded by Lori Wallach in 1995 as a division of the U.S.-based advocacy group Public Citizen that monitors the World Trade Organization and other trade agreements such as the North American Free Trade Agreement and the Central America Free Trade Agreement...
, and a coordinated network ("50 Years is Enough') including Friends of the Earth
Friends of the Earth (US)
Friends of the Earth U.S. is a part of Friends of the Earth International, the world's largest grassroots environmental network.Current campaigns focus on clean energy and solutions to global warming, protecting people from toxic and new, potentially harmful technologies, and promoting smarter,...
, the Alliance for Democracy, Witness for Peace
Witness for Peace
Witness for Peace is an United States-based activist organization founded in 1983 that opposed the Reagan administration's support of the Nicaraguan Contras, alleging widespread atrocities by these counterrevolutionary groups. Witness for Peace brought U.S. citizens to Nicaragua to see the effects...
, the Sierra Club
Sierra Club
The Sierra Club is the oldest, largest, and most influential grassroots environmental organization in the United States. It was founded on May 28, 1892, in San Francisco, California, by the conservationist and preservationist John Muir, who became its first president...
, the Preamble Center, the Democratic Socialists of America
Democratic Socialists of America
Democratic Socialists of America is a social-democratic organization in the United States and the U.S. affiliate of the Socialist International, an international federation of social-democratic,democratic socialist and labor political parties and organizations.DSA was formed in 1982 by a merger of...
and other groups.
Australia
In November 1997, the Australian Broadcasting CorporationAustralian Broadcasting Corporation
The Australian Broadcasting Corporation, commonly referred to as "the ABC" , is Australia's national public broadcaster...
's radio programme 'Background Briefing' presented the Quiet Debate—a report about the silence of the Australian government and media on an issue which was arousing fierce controversy in the USA, Britain, Canada and New Zealand. However, Australian activists, including members of Pauline Hanson's One Nation were already studying the leaked MAI draft and corresponding with the Canadian email discussion group MAI-NOT while deciding how to organise a national campaign to link with those of other countries. In January 1998 a national 'STOP MAI' coalition was formed to research issues, lobby parliamentarians and conduct public meetings. In November 1998, prior to the opening of OECD negotiations in Paris, the coalition delivered to the meeting's chairman and to the Australian prime minister a protest letter endorsed by over 500 organisations and individuals. The letter was reinforced by a prominent advertisement in The Australian newspaper on 11 November
France
France's withdrawal followed consideration of a report on the negotiations drawn up by a French MEP, Catherine LalumièreCatherine Lalumière
Catherine Lalumière is a French politician of the Radical-Socialist Party.Before her political career, she lectured on public law at the University of Rennes and the University of Paris I...
. After receiving this report, prime minister Lionel Jospin
Lionel Jospin
Lionel Jospin is a French politician, who served as Prime Minister of France from 1997 to 2002.Jospin was the Socialist Party candidate for President of France in the elections of 1995 and 2002. He was narrowly defeated in the final runoff election by Jacques Chirac in 1995...
addressed the Assemblée Nationale on 10 October 1998 and announced his decision to withdraw. He said the Lalumière Report had identified a number of fundamental problems with the agreement, particularly relating to matters of national sovereignty. Madame Lalumière had also concluded that so many reservations were being incorporated into the agreement that any value for French investors would be limited. M. Jospin noted that, in February 1998, the French government had identified respect for cultural differences as a requirement for French support for the agreement.
Of equal or greater significance was the importance accorded by Mme. Lalumière to the global protest movement which at that time she attributed to the work and influence of NGOs:—
For the first time, one is seeing the emergence of a global civil society represented by NGOs which are often based in several states and communicate beyond their frontiers. This evolution is doubtless irreversible. On one hand, organisations representing civil society have become aware of the consequences of international economic negotiations. They are determined to leave their mark on them.
Furthermore, the development of the internet has shaken up the environment of the negotiations. It allows the instant diffusion of the texts under discussion, whose confidentiality becomes more and more theoretical. It permits, beyond national boundaries, the sharing of knowledge and expertise. On a subject which is highly technical, the representatives of civil society seemed to us perfectly well informed, and their criticisms well argued on a legal level.
Mme. Lalumière argued, however, that France should continue to pursue further liberalisation of investment régimes though not in the OECD. "On the one hand, under these conditions it would be impossible to achieve the balancing of the concessions demanded by the firms
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
and, on the other, the objections of the opponents would be just as fierce." France was followed by a succession of other nations including Canada and Australia whose governments had been under relentless pressure from civil society to abandon or radically revamp the MAI.
Subsequent developments
Proponents of MAI (such as the U.S., Canada, and several EU members) continue to promote similar to MAI investment provisions through regional trade agreements, bilateral investment treaties, bilateral free-trade agreements and discussion at the World Trade Organization to be incorporated into the General Agreement on Trade in Services. Before the end of 1998, the UK trade minister Brian Wilson began to announce that investment negotiations could be shifted to the WTO. A senior treasury officer, cited in a 1999 Australian parliamentary report, stated that "any future work on the matter known as the MAI needed to address the OECD Ministers' requirement to protect the sovereign right to regulate and to ensure citizens were not harmed by efforts to liberalise foreign investment. There was also a need to continue to engage 'civil society', and to expand participation in the process by countries that were not members of the OECD".An attempt was made to insert the investment agenda into a new "Millennium Round" of trade liberalisation talks to be hosted by the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO). This was to lead to the historic 'Battle of Seattle'
WTO Ministerial Conference of 1999 protest activity
Protest activity surrounding the WTO Ministerial Conference of 1999, which was to be the launch of a new millennial round of trade negotiations, occurred on November 30, 1999 , when the World Trade Organization convened at the Washington State Convention and Trade Center in Seattle, Washington,...
protest actions in November 1999. At the WTO Ministerial in Cancún in September, 2003, a group of more than twenty developing countries united to block the inclusion of the Singapore issues
Singapore issues
The "Singapore issues" refers to four working groups set up during the World Trade Organization Ministerial Conference of 1996 in Singapore. These groups are tasked with these issues: transparency in government procurement, trade facilitation , trade and investment, and trade and competition...
, including investments, in the Doha Round
Doha round
The Doha Development Round or Doha Development Agenda is the current trade-negotiation round of the World Trade Organization which commenced in November 2001. Its objective is to lower trade barriers around the world, which will help facilitate the increase of global trade...
of trade talks. One basis of such opposition is outlined in a critical analysis prepared for Canadian universities.
The OECD promotes the Declaration on International Investment and Multinational Enterprises and the OECD Guidelines for Multinational Enterprises
OECD Guidelines for Multinational Enterprises
OECD Guidelines for Multinational Enterprises are annex to the OECD Declaration on International Investment and Multinational Enterprises. They are recommendations providing voluntary principles and standards for responsible business conduct for multinational corporations operating in or from...
, last revised in 2000. In addition, from May 2006, the OECD has promoted a non-binding set of "good practices" for attracting investment, known as The Policy Framework for Investment (PFI).
See also
- Foreign direct investmentForeign direct investmentForeign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
- United Nations Conference on Trade and DevelopmentUnited Nations Conference on Trade and DevelopmentThe United Nations Conference on Trade and Development was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues....
External links
- Official drafts at various stages of the final year's negotiations- In February 2002, the OECD released a large quantity of documents relating to the negotiations - Non-official online translation of the report which advised the withdrawal of France from the OECD negotiations it was hosting in Paris - at Global Policy Forum
Global Policy Forum
Global Policy Forum or GPF, founded in 1993, is an organization seeking to promote accountability of international organizations such as the United Nations and strengthen international law....
- a summary and update, with collection of links and resources - Australian Broadcasting Corporation's excellent 1997 introductory radio presentation - from UK independent journal Red Pepper - The 1997-99 MAI-NOT Newsgroup (archive)