MANY TO MANY Multilateral Agreement on Investment

The Multilateral Agreement on Investment (MAI) – and Democracy

In our September issue we pointed to the responsibility resting with citizens, particularly of those nations committed to democracy, to do their utmost to ensure that neither our governments nor big corporations exercise arbitrary power to the detriment of human rights and democratic principles.

This admonition relates especially to the outdated treaty-making process enabling some states (e.g. New Zealand) to bypass the democratic process by concluding international agreements or treaties as an Act of State without any mandate or ratification from Parliament. This method of treaty-making has at times meant relatively insignificant amendments to domestic legislation being required after ratification. In the case of the MAI, however, this so-called agreement in fact has the status of a major international treaty of unprecedented and far reaching implications for all of us.

Yet as ordinary citizens the treaty does not take us into account. It began in 1995 as a secret agreement between governments and financial investors and, if the 1997 draft had not been leaked to the internet, it would have been concluded without public consultation or any citizen in-put. However, if sufficient interest can even at this late stage be generated in our parliaments and among the public at large, it may still not be too late to make our impact. The agreement is to be finalised by May, 1998, at latest.

The MAI, with no escape clause, binds both present and future governments for a period of a least 20 years. Reservations, if accepted, will be on the condition of a ‘roll back’ rule that will invalidate them after a certain period of time. The objective is the removal of all barriers to free trade.

A growing sense of disquiet now widely prevails. Globalisation is a fact that cannot be ignored, but in its present form it not only works against sustainable development; it magnifies the inequalities within and between nations. The developing countries are particularly nervous and, discussing the MAI, tensions came to a head during the October Commonwealth Conference, held in Edinburgh and attended by the Commonwealth heads of state.

Disagreement over the pace of change of the world economy was the main sticking-point. The Malaysian prime minister, Mahathir Mohamad, speaking of the ‘anarchy of the financial markets’ made an urgent plea for a ‘properly legislated code of behaviour to protect the weak from the strong’and the session confirmed the need to respect the fear of smaller states of being ‘crushed in the stampede to globalise’.

In a well reasoned interview on BBCTV the Jamaican prime minister, Percival Patterson, pointed to instances where ‘free trade was not fair trade’. ‘We should not’, he said, ‘ignore the fact that some countries with their present levels of development, are going to need external aid for some time to come, particularly for building up the infrastructure and the human resource capability which are essential for them to be able to attain self-sustaining growth. He went on to stress that the immediate dismantling of existing preferential trade agreements without sufficiently considering the disruption it is going to cause will not only be a blow to the economy, but to the entire society of the country. ‘In the case of bananas, for example, we are looking at the possible extinction of a number of sovereign states in the Caribbean.’ While acknowledging that free trade ‘is a direction in which we all seek to move’, Patterson cautioned in conclusion: ‘we can’t rush there all at once or some will get trampled in the process.’

It is not perhaps without relevance to mention that just a month prior to the Commonwealth Conference the World Bank president, James Wolfensohn, had put the fight against global inequality at the top of the development agenda when giving his keynote speech at the annual meeting of the World Bank and the International Monetary Fund. He drove home the point that without more equality there would be neither peace nor global stability. ‘We are living with a time bomb’, he said, ‘What we are seeing in the world today is the tragedy of exclusion. Whether you broach it from the social or the economic or the moral perspective, this is a challenge we cannot afford to ignore.’

The MAI, an Illegal Act?

The extent to which the considerations touched upon in this article will be taken into account by the treaty-makers of MAI remains to be seen. Consideration also needs to be given to the legality of such an agreement where its rulings are inconsistent with a country’s constitution.

For example, Tim Madden, a Canadian economist and legal historian, quotes a 1937 ruling of the Privy Council implying that such an agreement would constitute a ‘dire and unlawful subversion of constitutional authority’ and that the Dominion ‘cannot, merely by making promises to foreign countries, clothe itself with legislative authority inconsistent with the constitution which gave it birth.’ The essential terms of the MAI, says Madden, ‘are so radically inequitable in favour of corporations that among the most common informed reactions is to ask how it could possibly be legal. The simple answer appears to be that it is not.’

At least, not for Canada. Yet this question might not be without meaning for countries with no written constitution, whose peoples might have the same reaction to the lack of balance and fairness implied in the terms of the MAI.

Where motivation, timng and implementation is for the wellbeing of all, free trade could be seen as inevitable in our global neihbourhood. But only a radically amended MAI is likely to make this questionable treaty acceptable to all concerned.
--A.B.

Many to Many
a quarterly publication issued by
Operation Peace through Unity

Anthony Brooke and Gita Brooke, co-founders
Te Rangi, 4 Allison Street, Wanganui 5001, New Zealand
phone/fax: +64-6-345-5714 ~ e-mail:
OPTU is an accredited NGO in association with the UN Dept of Public Information
Many to Many
under the aegis of
Operation Peace Through Unity
is a communicating link between
'we, the peoples' of all nations, races, creeds and ideologies offering in the spirit of the preamble of the United Nations Charter an instrument for the furthering of better relationships based on deepening mutual understanding and the aspiration to promote unity and cooperation beyond all differences.