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This article was printed in Exposure Magazine Volume 5 Number 1 (APRIL-MAY
98) and is protected under copyright laws.
Exposure Magazine is published by Contact Network International.
P.O. Box 118, Noosa Heads, Queensland 4567, Australia
Tel/Fax + 61(07)54852966.
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Web site : www.exposuremagazine.com
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ENTER THE NEW WORLD ORDER
BY GRAHAM L. STRACHAN
Since September 1995 representatives of the 29 countries of the Organisation
for Economic Cooperation and Development (OECD) have been meeting in secret
in Paris every six weeks, writing what Renato Ruggerio, World Trade
Organization (WTO) Director General has called "the constitution of a single
global economy". If the product of this conclave, the Multilateral Agreement
on Investment (MAI), is signed in May 1998 as scheduled, national
governments will no longer be in control of their economies. This means that
whatever control people may have had over their economic future through the
democratic process will also be a thing of the past.
While superficially the MAI is about newly created "rights" of Transnational
Corporations (TNCs) and global investors to invest in nations, it is really
about overriding the sovereign power of national governments to protect
their countries' resources, businesses, farms and people from exploitation
by outsiders. It is becoming increasingly evident that the independent
nation state is no longer compatible with the global interersts of
international big business and finance, which are to make ever-expanding
profits by investing wherever they want, whenever they want, without any
restrictions or imposed obligations. For countries like Australia the MAI
spells the end of the right of national self-determination in the economic
sphere. For TNCs and global investors, it means from now on they can treat
the world as their own private oyster.
The MAI creates a corporate bill of rights through investment protection,
investment liberalisation, and investor-to-state dispute settlement
procedures. It consists of a set of rules which place new restrictions on
what governments can do to regulate international investment and corporate
power. These rules seek to protect and expand the power of corporations and
wealthy international investors by guaranteeing them:
a stable investment climate
easy repatriation of profits
open market
access by establishing National Treatment (which requires countries to treat
foreign investors at least as well as domestic investors) and Most Favored
Nation designations
freedom from complying with regulations and legislation pertaining to
environmental, social, and health safeguards
and freedom from any obligation to serve local needs.
Most alarmingly, the MAI grants private investors and corporations direct
legal standing to sue governments and seek monetary compensation at
international tribunals for failure to provide all of the MAI's benefits.
And sue they will. Under similar provisions in the NAFTA treaty, Ethyl Corp.
of America is suing the Canadian government for $367M for trying to ban the
use of MMT, a controversial gasoline additive it produces in Ottawa. The
corporation is demanding "immediate compensation for imposing legislation
which hinders its operations".
FREE MARKET FOR SOME
By making it easier for TNCs and investors to move investment between
countries, the MAI will enable them to exert downward pressure on wages,
work conditions, and job security, and upward pressure on the "inducements"
national governments are obliged to offer to attract their patronage. In
addition, it will become more difficult for governments to insist on
standards for workplace safety and to protect surrounding communities from
industrial pollution and catastrophic accidents like the one in Bhopal,
India. As it has been pointed out elsewhere, when capital can move when and
where it likes but labour cannot, there can be no "free market".
While in many respects the MAI seems to create a "level playing field" for
domestic and foreign investors, in reality the sheer size and huge capital
resources of the globals will give them an absolute advantage, spelling the
end of nationally-based industries and investors, and of any truly national
economy. Once the MAI is in place there will be nothing to stop global
investors from owning and controlling the lot.
Signatory governments will be legally bound for at least 20 years, which
creates the impression they can then pull out if dissatisfied. But after 20
years under this Agreement a signatory nation will be in no position to
withdraw, since they will have no independent national economy left worth
speaking about. All will be absolutely dependent on foreign investment for
their economic survival. They will either stay in, or starve.
Why The Secrecy?
Silence on the MAI has been deafening worldwide, confirming that something
sinister is afoot. The secrecy has been due partly to a gag order by the
OECD, but also the willingness of the world media to aid and abet the forces
behind globalisation. It is evident that along with the right of national
self-determination, the public's "right to know" is a thing of the past.
Information about the MAI was almost impossible to obtain until February
1997 when a draft text was leaked and placed on the Internet by French
activists. Since then opposition to the treaty has been taken up by an
increasing number of pressure groups worldwide. Whether or not they will
have any effect, remains to be seen. Chairman of the MAI negotiating group,
Frans Engering, has stated that there could not possibly be any delay in the
passage of the MAI, that "we are entering the last stages".
Once the MAI was finally brought to the attention of the Australian public,
bureaucrats and big business representatives were quick to deny any secrecy.
When Independent MP Pauline Hanson raised the matter in the media in January
1998, accusing the government of intending to secretly "sign away the future
of the country" to multinational companies, a spokeswoman for Assistant
Federal Treasurer Rod Kemp accused her of "scare-mongering based on
ignorance", denying there was any secrecy surrounding Australia's
involvement. Australian Chamber of Commerce and Industry chief executive
Mark Patterson agreed, saying that industry had been consulted extensively
on the agreement. In other words, the government and big business knew about
it, so who else mattered?
Who Benefits?
The driving force behind the MAI is the US Council for International
Business, an American big business lobby coalition. US officials have openly
stated that the objective of the MAI is to protect US investors abroad.
These include the Transnational Corporations (TNCs), international bankers
and finance houses, and speculators.
There are now over 40,000 TNCs, the top 200 of which control over a quarter
of the world's economic activity. They owe allegiance to no country, even
their country of origin. Their sole allegiance is to their own profit
maximisation. With combined revenues totaling $7.1 trillion, these 200
giants are bigger than the combined economies of 182 countries (out of a
total of 191). Indeed, their combined annual revenues amount to almost twice
the combined income of the bottom four fifths of humanity. They are not all
American by any means. Fortune's Global 500 includes 153 US based and 141
Japanese based corporations. The rest are European and others. But the US
sets the trend, and if the others want to stay in the game, they have to
play by the same rules, or lack thereof if the MAI is adopted.
Their ideology is "economic rationalism" where "rational" means "guided by
reason, not emotions". Discarded as non-rational considerations are things
such as concern for human beings and the environment, and ordinary morality.
People are "human resources", adjuncts to commercial activity as labour or
consumers, a means to profit.
Noam Chomsky describes the international business community as "....highly
class-conscious...always fighting a vicious class war [with the masses] and
very well aware of it." The alarming thing about their possession of
inordinate private economic power is their lack of accountability as to its
exercise. There will be even less accountability if the MAI is signed.
"Insofar as power is shifted to the transnational arena," says Chomsky,
"[the ordinary person] is not even a spectator, because only the real
experts and specialists know what's going on in the IMF...." Include now the
OECD.
What Benefits?
While the advantages of the MAI for TNCs and global investors are obvious,
the alleged benefits to the rest of the world in exchange for relinquished
economic sovereignty are pie in the sky.
According MAI Policy Briefs now on the Internet, Foreign Direct Investment
(FDI) will "promote economic growth, jobs and rising living standards
world-wide". In fact the opposite is true. Since the Hawke/Keating
government opened the Australian floodgates to foreign investment in 1983
the people looking for work, or more work than they have, has risen to 25%
of the workforce. Big business is shedding jobs at the rate of 500,000 per
year, offsetting whatever job creation there is in the small/medium sized
business sector, the very sector threatened by the MAI. In the same period
foreign debt has grown from $23 billion to a massive $220 billion. As for
living standards, Australia has slipped from 6th to around 26th in the
OECD's own list of good countries to live in.
Foreign Direct Investment in countries like Honduras has led to the setting
up by governments of "free trade" zones which are little more than slave
labour compounds. In these zones governments build factories to which they
then induce foreign investment with promises of cheap labour, no unions,
tax-free profits, minimal rent, and no import duties on products sold to the
local elites. In the factories women are paid around $3 a day under
conditions as bad as any endured during the worst days of the Industrial
Revolution, for sewing brand name garments such as Levi's for the US market.
The only contribution FDI has made to countries like Honduras has been a
number of temporary dead-end jobs. It does not help the host country pay off
foreign debt, or provide revenue which the government might use for health
or education.
Along the Mexican/US border there are over 1800 "maquiladoros", foreign
owned export-only factories in which foreign investors exploit cheap Mexican
labour. The Mexicans live in shanty towns around the factories with no
sewerage, running water or electricity. Filthy waste disposal practices by
the investors mean that toxic waste runs through the shanty towns in open
drains. Since offending the investors might cause them to take their
investment elsewhere ( ie. the Hawaiian pineapple industry was moved to the
Philippines virtually overnight, leaving 6000 jobless) it is difficult for
the Mexican government to get them to observe better standards. After the
signing of the MAI it will be impossible.
The MAI proponents claim that FDI will "provide consumers with increased
quality, wider choice and lower prices". Economic rationalists repeatedly
make these claims, but they bear no relation to reality. They are based on
the irrational expectation that oligopoly, the near monopolistic control of
markets by a few huge conglomerates, can somehow provide all the benefits of
a truly competitive market. It never has, and never can, as Galbraith showed
convincingly years ago.
The Third World
MAI Policy Briefs also claim that the Third World needs FDI to get it out of
the poverty trap, pointing to WTO "studies" which allegedly show that "low
levels of trade and inflows of FDI are symptoms rather than the causes of
the plight of many of the poorest countries." WTO "studies" notwithstanding,
the evidence against that theory is overwhelming. The plight of the Third
World has been extensively analysed and documented. Third World poverty is
the result of debt to the First World, and the crippling interest burden
that goes with it. As for the benefits of FDI, observers report that Third
World people watch their children die of starvation while foreign investors
reap record harvests and profits from export "cash-crops" grown on the best
available land. FDI in its present form is in large part responsible for the
Third World's tragic predicament. To suggest that more of the same can
reverse the situation, especially when the MAI will ban conditions on FDI
ensuring it provides lasting real benefit to local populations, is an insult
to the memory of the Third World dead through starvation.
The fact that the MAI is being negotiated through the "rich nations" club,
the OECD, and not through the World Trade Organisation (WTO) as originally
intended, should ring warning bells for the developing world. The official
MAI explanation is that the OECD countries are the ones with the major stake
in the Agreement, accounting as they do for most of the world's FDI (447 of
the world's 500 largest TNCs are members). But there is another explanation.
The WTO includes developing countries among its members, and the United
States (US) feared that their opposition might "water down" any consensus
reached. The US therefore decided that the best way to achieve a high
standard investment treaty was to negotiate it through the OECD, and build
an accession clause into it which allows non-OECD countries to sign into the
pact, provided they "meet certain conditions".
According to Ward Morehouse, Co-Director of the US-based Program on
Corporations, Law and Democracy, an anti-MAI lobby, "The choice of venue for
negotiations is a clever strategy, designed to exclude participation by
governments representing most of the world's population. Once approved by
governments of OECD countries the Agreement will then be presented to the
rest of the world as a fait accompli. If they want to have access to
principal world capital markets, they will have no choice but to sign on."
Threshold Question
Groups opposing treaties like the MAI tend to argue that they "won't work",
or that their requirements are "too harsh" and need to be tempered through
side agreements on labor and environment. Such arguments play right into the
hands of the proponents. Once the details of the thing are being discussed,
it has already been accepted in principle. As Ayn Rand (ironically a great
defender of capitalism, though not this sort of capitalism) said, "never
accept unquestioningly your opponent's premises". The premises in this case
are: "We must have globalisation. We must have the MAI, it's just a case of
getting consensus as to its clauses." Wrong! This thing is bad in principle.
There is no a priori rule which says international investors have a right to
own and control the world and its resources, or to reorganise the world to
suit their own purposes. The premise that the world cannot survive without
FDI is also flawed: civilisation progressed for 10,000 years without it, and
it could happily do so for another 10,000.
There is a threshold question to answer before the MAI is even considered:
Whose World Is This? In whose interests should it be organised: big
business', or the people's? The two no longer coincide. It may well be they
are incompatible, unless big business very quickly learns to temper its
greed with human concerns. #
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