A Charter of Rights for TNCs

This special report by Anna Pha outlines some of the key features of 
the draft Multilateral Agreement on Investment and what they would mean in 
practice. It appeared in The Guardian on April 15, 1998.

"It is a frightening scenario which forecasts a global economy in which 
nation states count for little and ordinary voters count for nothing at 
all. A world where unemployment remains unreasonably high, the division of 
wealth between rich and poor goes from unfair to outright immoral and a 
complete meltdown of the monetary system is inevitable." (Paul Hellyer, 
author of "The Evil Empire  Globalisation's Darker Side" and senior 
Cabinet Minister in a former Canadian Government.) He was referring to the 
Multilateral Agreement on Investment (MAI).

Member countries of the Organisation for Economic Co-operation and 
Development (OECD), including Australia, began negotiating an agreement on 
foreign investment in September 1995, but it was not until a draft 
agreement was leaked last year that the details became public.

Australia has been involved since the outset, first under Labor and now 
under the Coalition. Treasury has been negotiating in secret, with the 
people of Australia, including Parliament, kept in the dark.

"The MAI seeks to introduce that much needed certainty and reliability for 
investors", said OECD Secretary-General Donald Johnston, not hiding who it 
is intended to benefit.

"Investors need long-term stability of rules and procedures, guarantees for 
entry and establishment, equal competitive opportunities and protection of 
existing investments", the Secretary-General said.

Foreign direct investment is the "driving force of the globalisation 
process that characterises the modern world economy", says the 1997 World 
Investment Report (UNCTAD).
Between 1982 and 1994 the total stock of foreign investments increased by 
400 per cent, much of that growth is attributed by 
UNCTAD to the success of investment liberalisation policies.
OECD-based corporations accounted for 85 per cent of foreign investments in 
1996. (OECD figures). A total of 477 out of 500 of the largest 
corporations, as listed in Global Fortune, are based in OECD countries. 
They will be the main beneficiaries of the proposed Multilateral Agreement 
on Investment.

The efficiency of "market-based" economies depends on "the ease with which 
firms can enter and exit them", says the UNCTAD report. Ease of entry and 
exit of TNCS is one of the central aims of the MAI.

The MAI is basically a charter of rights for transnational corporations 
(TNCs) as investors and speculators and a set of binding obligations on 
governments to protect those rights.

"The ability of governments to use investment policy as a tool to promote 
social, economic and environmental goals WILL BE FORBIDDEN UNDER THE MAI", 
warns Tony Clarke of the Polaris Institute.

It will do this by three principle means:
1. All sectors of the economy of every country which becomes a party to the 
MAI will be opened to foreign investment, while placing strict limits on 
the ability of elected governments to regulate national economies;
2. Foreign investments will be protected;
3. This protection will be enforced.

Total freedom for TNCs  No rights for others

The MAI provides for the removal of restrictions on foreign investment and 
measures that discriminate against foreign investment. It is binding on all 
levels of government  federal, state and local (or regional).

Investment is defined in the broadest terms to include "Every kind of asset 
owned or controlled, directly or indirectly, by an investor..." 

This includes investments in:
*  factories, mines, hotels, banks, hospitals, universities, etc, whether 
government or privately owned or controlled;
*  stocks and shares;
*  bonds, debentures, loans;
*  rights under contracts (construction, management, production, revenue-
*  intellectual property rights;
*  licences, permits, authorisations, other rights conferred by law or 
*  property and property rights  leases, mortgages, etc.
Just about everything!

National Treatment (NT)

A government which signs up to the MAI will be forced to accord foreign 
investors "treatment no less favourable than the treatment it accords to 
its own investors and their investments with respect to the establishment, 
acquisition, expansion, operation, management, maintenance, use, enjoyment 
and sale or other disposition of investments." 

Governments are prohibited from giving preference to local companies or 

They agree not to discriminate among the investors or investments of 
different MAI countries. This would prevent governments from singling out 
individual corporations for special grants or other concessions. It would 
also prevent discrimination in favour of investors from developing 
countries or other countries where there is a special relationship.

Govt powers over-ridden

While the OECD and Australian Government speak about the jobs that will be 
created, the draft MAI contains provisions that prevent governments from 
taking a range of measures to create jobs.

The clause on "Performance Requirements", says governments shall not 
"impose, enforce or maintain" requirements on investors or "enforce any 
commitment or undertaking". 

For example, a government cannot impose an obligation on a foreign 
corporation to use a certain percentage of local content or to hire a given 
level of local labour, establish research facilities, set up in a 
particular region, establish regional headquarters in that country or make 
a long-term commitment. THESE ARE ALL FORBIDDEN.

Governments SHALL NOT INSIST on the export of a given level or percentage 
of goods and services, or the establishment of joint ventures with domestic 
partners. There are even restrictions on the ability of governments to 
insist on the transfer of technology  a widely touted benefit of foreign 
investment. The MAI assists TNCs in retaining their monopoly over 
production processes and technology.

The Performance Requirements clause outlaws policies that could result in 
benefits to domestic economies and job creation. It does nothing to help 


The section on privatisation does not impose an obligation to privatise 
only on how to do it.

When governments privatise public enterprises or service provision there 
will be no restrictions on foreign ownership.
This would apply to future sales such as Telstra, water, electricity, 
airports, Australia Post and to Qantas and the Commonwealth Bank which has 
been privatised.

The question of whether "special share holding" arrangements for 
management, employees and the general public, etc, are allowed is not 

When a government puts to tender the handling of social security data, 
assessment of tax returns, public bus services, management of public 
hospitals, education programs, etc, it cannot discriminate in favour of 
domestic or in-house bids from within the public sector.

Forty per cent or more of shares on the Australian stock exchange are 
already foreign owned  the government could not place any limit on the 
foreign ownership of Australia in the future.

Public enterprises

Public enterprises and monopolies should act "solely in accordance with 
commercial considerations" in regard to prices, quality, availability, etc, 
says the draft MAI.

This could apply to services like medical, hospital, health insurance, 
education, prisons, policing, gas, electricity, telecommunications, letter 
delivery, libraries, job placement, and payment of social security 

There is, however, no requirement for TNCs to base their prices on 
commercial grounds. They are free to sell at a loss to destroy smaller 
competitors and monopolise markets or to charge high monopoly prices.

Cross-subsidisation is ruled out. The aim is to ensure that big business 
does not end up subsidising other less profitable sectors such as those to 
remote and regional areas or for domestic users.

Where the abandonment of cross-subsidisation may not be politically 
acceptable (e.g. letter delivery), governments are permitted to make grants 
"to pursue social and other non-economic objectives", meaning taxpayers 
foot the bill.

Protection of investments

Governments will accord "fair and equitable treatment and full and constant 
protection and security" to foreign investments.
They shall not impair by "unreasonable" (or discriminatory) measures "the 
operation, management, maintenance, use, enjoyment or disposal of 

Even regulations or laws which do not have the intent of discriminating 
against foreign investors but reduce profitability or investment 
opportunities could be deemed "unreasonable".
Foreign TNCs will have the right to transfer investment capital, profits, 
loan and other related payments in and out of the country, at will, without 

They can do this in a "freely convertible currency", at the market rate of 
exchange, regardless of the impact that it might have on an economy. It 
would give speculators greater powers to manipulate currencies and stand 
over governments.

Governments will not restrict the transfer overseas of information and data 
for processing by foreign investors.

The rights of foreign speculators to invest in shares, bonds, loans or on 
the various futures markets will be sacrosanct. With these rights come the 
right to trade in currencies and move capital across borders at will.

Governments will not be able to take measures to prevent the type of 
speculation that contributed to the Mexican peso crisis or the more recent 
currency crises in Thailand, Indonesia and other SE Asian countries.

A progressive government wishing to control its currency or its foreign 
debt will be savagely punished. Indonesia's economy has been decimated for 
far less.


"A Contracting Party shall not expropriate or nationalise directly or 
indirectly" a foreign investment or "take any measure or measures having 
equivalent effect".

The only exception is where it is for "a purpose which is in the public 
interest" and on a non-discriminatory basis. "Compensation shall be paid 
without delay." It must be equivalent to the fair market value prior to 
expropriation. The compensation can be freely repatriated.

Any change to regulations after a foreign investment has been made or 
planned which harms profits or has the potential to harm profits could be 
considered as "expropriation".

A regulation might be introduced for environmental or health and safety 
reasons but it could still be considered as "expropriation".

Even a taxation measure (e.g. an increase in the corporate tax rate or 
measures to close a tax loophole) introduced after a foreign investment was 
made or planned could constitute expropriation if it does not fall within 
"the bounds of internationally recognised tax policies and practices".

It would be judged by the extent to which taxes of "a similar type and 
level are used around the world..." This applies to direct and indirect 
taxes and social security contributions at all levels of government 
including local government.

The comparison with "internationally recognised tax policies and tax 
practices" could leave any government daring to break the economic 
rationalist mould and attempting to force TNCs to pay more taxes facing 
charges of "expropriation", monetary claims and a binding decision from an 
international court to change its policy.

No protection for workers

The Preamble contains a clause reaffirming OECD members' commitment to 
"observance of internationally recognised core labour standards, i.e. 
freedom of association, the right to organise and bargain collectively, 
prohibition of forced labour, the elimination of exploitative forms of 
child labour, and non- discrimination in employment, and noting that the 
International Labour Organisation is the competent body to set and deal 
with core labour standards world-wide."

However, the Preamble is not binding and such motherhood statements mean 

But even this is too much for the Australian Government which, together 
with two other governments, opposed even this reference in the Preamble.

One of the aims of freeing up the movement of TNCs in and out of countries 
is to create a global labour market in which workers around the world are 
pitted against each other as capital moves to where it can achieve the 
highest rates of exploitation.

Living standards, wages, working conditions and social services will be 
lowered in a "race to the bottom" as governments attack labour rights, 
lower wages and working conditions to attract investments and make markets 
more competitive  a process already under way. The attack on the Maritime 
Union of Australia is just one example.

David Korten (President of the People-Centred Development Forum) writing on 
the MAI summed it up: "For nations, communities, and individual workers 
global competition is about competing against every other nation, community 
and worker in the world for a declining pool of jobs by courting corporate 

"It is not about creating new jobs, but rather about redistributing them to 
those that are willing to give up the most in terms of wages, subsidies, 
tax breaks, working conditions, and environmental standards. More 
fundamentally it is about shifting wealth from communities and working 
people to corporations and shareholders."

No protection for environment

"We will oppose any and all measures to create or even imply binding 
obligations for governments or business related to the environment or 
labour", said Abraham Katz, President of the United States Council for 
International Business.

The US Government (backed by Australia) strongly opposed the inclusion of 
binding provisions on the environment.

In sharp contrast to the pages of text protecting foreign investments, it 
takes some hunting to find any references to protecting the environment  
and most references are in the non- binding Preamble.

The Preamble claims that the MAI will "contribute to the efficient 
utilisation of economic resources".

There is a proposal that the Preamble recognise "that investment  ... can 
play a key role in ensuring that economic growth is sustainable, when 
accompanied by appropriate environmental policies to ensure it takes place 
in an environmentally sound manner." But even if these sentiments are 
included they will not be enforceable.

The delegation of one country to the negotiations sought to include in the 
Preamble a statement "Reaffirming the sovereignty and sovereign rights of 
States over natural resources within the limits of national jurisdiction." 
But this has not been accepted.

There is no agreement over whether the non-binding preamble should be 
implemented "in accordance with international environmental law" or whether 
it should take precedence over such laws.

The MAI gives TNCs the right to non-renewable natural resources, to the 
exploitation of minerals, including hydrocarbons, and any other natural 

Governments will not be allowed to place obligations on foreign investors 
on the use of these resources to safeguard future requirements, the 
environment, etc.

National environmental laws will apply in theory. But, if a law, regardless 
of why it was introduced, results in "discrimination" against a foreign 
investor or "unreasonably" impairs the operation, management, use, 
enjoyment or disposal of investments, then it could run foul of the MAI and 
result in legal action, compensation, etc.

An international panel will decide what is "unreasonable".
A local government with a policy to buy "green" or "ethical" products, 
might stop using Shell petrol on human rights grounds or refuse to buy 
timber felled from rain forests for conservation reasons.

It could be sued by Shell or the timber company in an international MAI 
court and directed to reverse its policy under the secondary boycott 
provisions of the MAI.

Ethylcorp, a US-based TNC, is using similar NAFTA provisions to claim 
damages because the Canadian Government banned one of its products. The ban 
was on health, safety and environmental grounds.

Another US company Metalclad is suing a provincial government in Mexico 
which refused it permission to operate a plant because it would cause 
severe pollution.

Under the MAI it would become very difficult for a government to impose any 
restrictions on foreign corporations that hampered their freedom to invest 
or restricted their ability to make profits. This would be particularly so 
where no domestic companies were involved.


The MAI covers all levels of government. It is a "top down and 
comprehensive agreement", its principles are applicable to "all segments of 
the economy and to all aspects of the treatment of investors", says Alan 
Larson, US Department of State and Vice-Chairman of the MAI Negotiating 

In the long term there is little that the MAI would leave untouched if its 
proponents succeed in getting the agreement signed by governments.

It could have serious ramifications for the environment, workers' wages and 
working conditions, health and safety, job creation, industry development, 
education, human rights, indigenous rights, consumer rights and standards, 
culture, education, sport, the future of the public sector, monetary 
policy, balance of payments, financial stability, the role of government, 
and democratic rights.

It is harder to imagine what would not be affected.
Once a government signed up, it could not withdraw for a minimum of five 
years and then the provisions would continue to apply for another 15 years 
to investments existing when the notice was given. The commitment, 
therefore, is a 20-year minimum.

Virtually everything is covered by the agreement. There are two types of 

1. General exceptions
A government may take action considered "necessary for the protection of 
its essential security interests" and the maintenance of public order. 
Specific references are made to times of war, emergencies in international 
relations, arms manufacture and obligations under UN peacekeeping.

Governments may invoke temporary "safeguards" restricting the transfer of 
money over borders in the event of or threat of serious balance-of-payments 
and external financial difficulties or where the movement of capital could 
cause serious difficulties for the operation of monetary or exchange rate 
policies. But such measures shall be consistent with the aims of the IMF 

A government can still take prudential measures with respect to financial 
services, for such purposes as protecting investors, depositors, policy 
holders and "to ensure the integrity and stability of its financial 

2.Country specific exceptions
All OECD countries have laws and regulations that do not conform to MAI 
Australia, for example, has restrictions on foreign ownership of the media, 
prescribed levels of Australian content in TV programs, limitations on 
foreign ownership of the privatised Commonwealth Bank, the Foreign 
Investment Review Board's work, cabotage, and land rights for indigenous 
people. These all contravene the proposed treaty.

There is provision for individual countries to list specific exceptions in 
a schedule to be attached to the treaty. The schedule would "grandfather" 
measures that do not conform to National Treatment and Most Favoured Nation 
Treatment to "prevent the introduction of more restrictive measures"  
what's referred to as "standstill".

Governments would not have the right at some time in the future to add to 
their schedule of exceptions. They would be locked in. If a future 
progressive government wanted to pursue alternative economic and social 
policies it would find its hands tied.

The aim is to make deregulation, privatisation and the takeover by TNCs 

These listed exceptions are not permanent. They would be "rolled back" with 
governments expected to regularly defend the continuation of those that 

The "standstill" and "rollback" provisions are referred to in the agreement 
as the "ratchet" effect.

This is one of the most contentious areas of the MAI. Some governments 
oppose rolling everything back, particularly with the growing opposition to 
the treaty since it was leaked last year.

There is a proposal for a second list of exceptions that might be permanent 
and open to new additions. This has not been agreed to. Permanent 
exceptions "might undermine the MAI disciplines", one country argued. The 
aim is to provide certainty and freedom for TNCs from government 

The Australian Government has released a list of its proposed exceptions. 
These include: foreign investment policy on media and real estate; 
fisheries; telecommunications; immigration; privatisation; foreign aid 
contracts; social services; government grants and subsidies; audio visual; 
indigenous persons; privatisation; professional and industry standards; and 
performance contracts.

Treasurer Peter Costello still refuses to say what is covered by each of 
these or whether other countries have agreed to their inclusion.

Dispute settlement

The Dispute Settlement provisions of the MAI give TNCs another powerful new 

As well as providing measures to settle disputes between states 
(consultations, conciliation and arbitration), the MAI will provide 
corporations with the POWER TO DIRECTLY SUE GOVERNMENTS for damages over 
any alleged breaches of MAI provisions.

On the other hand, there is no right of States or people to sue investors. 
A foreign-based TNC is under no obligation to the people of the country 
where it is operating.

An investor may take action concerning any alleged breach of a government's 
obligations under the treaty which "causes loss or damage to the investor 
or its investment".

The action may go before a domestic court or an international tribunal 
WHICH WILL OPERATE UNDER MAI LAWS, not those of the country where the 
investment was made.

The tribunal's decision "shall be final and binding" and carried out 
without delay. The decision will be a public document but not the 
commercial information provided to the hearings.

The TNCs are given powers and rights over nation states and elected 
governments when it comes to defending their rights and freedom.

What happens to sovereignty, government, democratic rights?

"If we reflected upon the economic, social and ethical ramifications of the 
MAI, they reveal what is perhaps its most salient feature. It challenges 
the right of a nation to determine its own economic, social and ethical 
development", said Dr Chandra Muzaffar, Director of Just World Trust.

Tony Clark of the Polaris Institute says: "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", says Tony 

A massive transfer of power from the people and their elected governments 
is already taking place. Society is being robbed of what control it had of 
its powers, its rights to provide for its members, to protect the 
environment, regulate economies.

Power goes to the "markets" dominated by the big corporations. The markets 
have no respect for people, for life, for culture, for nature and take no 
responsibility for the future.

Individual governments in the OECD countries have for a number of years 
been implementing the OECD structural adjustment programs which are part 
and parcel of the MAI. IMF-imposed "packages", regional blocks like NAFTA, 
the EU and APEC are other means to serve the same aims.

The process has involved lifting trade barriers (quotas, tariffs, etc), 
privatisation, competition policy, deregulation, cuts to government 
spending (social services, education, housing, health, etc), floating 
currencies and interest rates, deregulating the finance sector, and labour 
market deregulation (attacks on workers' wages and conditions).

All of these policies, like the proposed MAI, involve a transfer of power 
and wealth from the people to the largest and most powerful corporations.

These policies have resulted in massive profits and a record accumulation 
of wealth for the biggest corporations. This has been achieved at the 
expense of workers whose wages, job security, working conditions, and 
living standards are declining.

Public wealth is being handed over to the private sector through 
privatisation. The MAI would enable TNCs to snap it up.

The MAI is a move toward outright corporate dictatorship. 
Governments and the nation state have not yet been rendered powerless and 
irrelevant but their present powers are being used to protect TNCs and 
provide a favourable climate for their investments.

They are preparing the way for the destruction of the democratic rights of 
the people and the sovereignty of nation states. 

We have been steadily marching towards a TNC dictatorship through the 
operation of various international institutions.

The General Agreement on Tariffs and Trade (GATT) was used to remove trade 
The OECD, established by the leading industrialised nations, is a "think 
tank" for TNC interests and a means to influence governments to accept 
their policies. It has been largely responsible for the drawing up of the 
structural adjustment programs followed by Western governments over the 
last decade or so.

The IMF and the World Bank set in place international financial mechanisms 
through which the structural adjustment programs were forced on poorer 
nations while the dominating US corporations exercised power over their 

The World Trade Organisation which superseded GATT also provided a 
mechanism to compel governments to accept TNC dictated policies.

The US attempted to introduce a multilateral agreement on investment during 
the Uruguay round of GATT talks but was forced to retreat by strong 
opposition, including from some of the industrialised nations.

The OECD was then given the task of drafting an agreement on investment  
the MAI  for later adoption by the WTO. 

The MAI, if ever accepted and implemented by governments, would put in 
place the final plank in the world-wide domination of the TNCs. It is the 
next main component of a process associated with economic rationalism 
towards what the OECD calls "rolling back the state".

Only the 29 industrialised countries have been invited to take part in the 
negotiation of the MAI. All developing countries were excluded. The view of 
US authorities was that they would get a stronger treaty if negotiations 
were restricted to OECD countries  the countries whose TNCs stood to 
benefit the most. 

Once the MAI is signed and put in place by major governments others would 
be forced by political, economic and if necessary military coercion to fall 
into line.

Smaller, less developed countries would find themselves under considerable 
pressure if they wanted foreign investments. They would have no say 
whatsoever in the provisions of the Agreement.

TNC takeover already underway

The MAI should be seen in context with other government policies of 
privatisation, "small government" and deregulation. The plans already being 
implemented under OECD direction by many governments are part and parcel of 
the TNC takeover. The MAI is the "end-game" which would cement in place TNC 
control on a global scale.

Governments at all levels are contracting out the work of government and 
selling off public assets. Bit by bit the assets and running of government 
and the public sector are being handed over to the private sector.

Whether it be property, communications, information technology, data 
processing, education, legal services, health services, prisons, policing, 
administration, transport, maintenance work, postal services, emergency 
services, water, electricity, libraries, parks, housing  there are no 
limits to what can be taken over by the private sector. In practice that 
means the TNCs.

The MAI does not in itself make it obligatory to sell off public assets or 
contract out work. Governments are already doing that in line with OECD 
structural adjustment policies adopted years ago. Once the decision has 
been taken to sell or contract out a service or asset, then the MAI would 
come into play.

The MAI offers foreign-owned corporations (and foreign individuals) the 
same rights as Australian ones.
In other words privatisation puts Australia on the market and the MAI opens 
the way for it to be taken over by foreign TNCs.

TNCs are not only to be given the same rights to purchase assets and 
contract for services but also to receive the same government subsidies and 
assistance that Australian investors might receive.

They could even have greater rights as the government could not place 
demands on them to use local content or labour or other restrictions that 
could be attached to a contract with an Australian company.

It would not be possible for governments attempting a program of regional 
development and job creation to give preference to local businesses or link 
grants or subsidies to the employment of a certain number of apprentices or 
guarantees of training.

Contracting out in itself raises serious questions such as privacy, 
security, accountability. Everything is shrouded in secrecy  the infamous 
"commercial in confidence" cover-up.

Under this cover there is unlimited scope for corruption, overcharging, and 
abandonment of quality. Transparency is required of governments but not 
when it comes to TNCs.

The thought of TNCs taking over the running of government and the public 
service is frightening enough. It would be even more alarming if 
governments were prevented from placing conditions on the corporations 
taking over. The MAI would do just that.

While seemingly economic in character, the takeover under way has serious 
social, cultural and political ramifications. The economic rationalist 
policies of deregulation, privatisation and "small government" involve a 
transfer of not only the common wealth but also many of the powers and 
functions of government.

Eventually, governments as we know them, will cease to exist. They will 
become at best administrations run by and for the TNCs. The right to elect 
and throw out a government will have little meaning. Governments will have 
little power to implement policies in the interests of the people.

Over-rides international law

"The MAI elevates the rights of investors far above those of governments, 
local communities, citizens, workers and the environment. The MAI will 
severely undermine even the meagre progress made towards sustainable 
development since the Rio Earth Summit in 1992", says the statement issued 
by NGOs from around the world in Paris in October 1997.

"The MAI fails to incorporate any of the several relevant international 
agreements such as the Rio Declaration; Agenda 21; UN Guidelines for 
Consumer Protection (1985); the UNCTAD Set of Multilaterally Agreed 
Principles for the control of Restrictive Business Practices (1981); and 
the HABITAT Global Plan of Action."

It runs roughshod over the OECD's own Guidelines for Multilateral 
Enterprises 1976.

Stopping the MAI

The drafting of the MAI was scheduled to be completed in May 1997. There 
were strong objections and disagreements among the governments concerned 
and its conclusion was delayed until May this year. 

Last year the secret negotiations and the terms of the proposed agreement 
were leaked to the world, resulting in a mass movement of outrage and 
opposition and the formation of an international network to stop the MAI.

It is now reported that the mass protest movement and the many 
disagreements between OECD member countries have forced a further 

As this series of articles is published by The Guardian it is rumoured that 
the US is pressuring other OECD governments to sign up for the main 
principles incorporated in the MAI. 

Signing the agreement is voluntary. So even if the negotiating process were 
completed Australia does not have to sign. The wealthier states are in a 
stronger position to refuse.

It is urgent that the Australian Government be pressured not to sign even a 
partial document. The MAI should be made an election issue.

NGO declaration

A joint NGO statement (October 27, 1997) representing development, 
environment and consumer groups from around the world described the MAI as 
a "damaging agreement which should not proceed in its current form, if at 

"There is an obvious need for multilateral regulation of investments in 
view of the scale of social and environmental disruption created by the 
increasing mobility of capital. However the intention of the MAI is not to 
regulate investments but to regulate governments.

"The MAI elevates the rights of investors far above those of governments, 
local communities, citizens, workers and the environment.

"The MAI contains no binding, enforceable obligations for corporate conduct 
concerning the environment, labour standards and anti-competitive 

"The MAI gives foreign investors exclusive standing under a legally binding 
agreement to attack legitimate regulations designed to protect the 
environment, safeguard public health, uphold the rights of employees, and 
promote fair competition."

"The MAI is explicitly designed to make it easier for investors to move 
capital, including production facilities, from one country to another 
despite evidence that increased capital mobility disproportionately 
benefits multinational corporation at the expense of most of the world's 

The Australian Council of Trade Unions says in its statement on the MAI 
that "The problem is not barriers to mobility, but rather the fact that 
capital has too much freedom to move and too great an ability to avoid 
responsibilities to society.

"We believe that there should be international regulation of investment 
issues and do not accept the basis of the proposed treaty which regulates 
governments and not multinational corporations."

NGO demands

The NGO statement calls for the suspension of MAI negotiations and an 
independent and comprehensive assessment of the social, environmental and 
development impact of the MAI with full public participation.

Any agreement should:

* require multinational investors to observe binding agreements 
incorporating environment, labour, health, safety and human rights 
standards to ensure that they do not use the MAI to exploit weak regulatory 

* ensure that an enforceable agreement on investor responsibilities takes 
precedence over any agreement on investor rights;

* eliminate the investor/state dispute resolution mechanism and put into 
place democratic and transparent mechanisms which ensure that civil 
society, including local and indigenous peoples, gain new powers to hold 
investors to account;

* eliminate the MAI's expropriation provision so that investors are not 
granted an absolute right to compensation for expropriation;

* renegotiate the terms of withdrawal to enable countries to more easily 
and rapidly withdraw from the agreement when they deem it in the interest 
of their citizens.

Specific interest groups have been lobbying governments to list exceptions 
to protect local industries, the environment, labour rights, culture, 
indigenous people's rights, and to retain control over natural resources 
and economic development.

Governments have listed numerous exceptions in areas where the MAI runs 
counter to existing laws and government policy. Canada, for example, has 26 
pages of "exceptions".

The Australian Government claims that it will "lodge all exceptions 
required to protect current policies and ensure that no current policy is 
overridden or subsumed ..."

If it really meant that and could really do it, and other governments did 
likewise, it would render the treaty meaningless.
The World Development Movement, a British NGO, examined the probable 
effects of the MAI on US legislative powers. It found that hundreds of 
state and local government laws would be ruled out.

In response, it was proposed that the US negotiator seek exemption for all 
of these non-conforming laws.

While the US administration might wish to protect its own sovereignty, it 
does not feel the same way about the rights of the people of other nations. 
The US has criticised the long lists of exceptions submitted by some 

One way in which the MAI could be defeated is by forcing governments to 
increase their lists of exceptions.

The demands of the NGOs and others campaigning against the MAI give a good 
foundation for popular demands to be placed on governments.

Defeating the MAI

Differences between negotiating parties seem to be widening as governments 
respond to international and domestic pressures.

However, governments that attempt to oppose the MAI could face considerable 
pressure from the financial markets. The further the process of 
deregulation and opening up of economies goes, the greater the power of the 
financial markets becomes and the less control or ability governments have 
to determine affairs.

The sovereignty of nation states is under threat as never before. The role 
of the state, and with it the ability of the people to have some say in the 
direction of events, is more and more limited.

Each step demanded of countries (floating currencies, lifting controls on 
capital flows, etc), gives the financial markets greater powers and the 
means to force the next steps in opening up their economies to TNC 

Internal differences

There are many and growing differences between governments over the 
tightness of the agreement, the extent of exceptions, how these might be 
agreed upon and phased out.

Another issue is the relationship between the MAI and the European Union 
and other regional agreements. Will the favoured treatment given to 
regional partners in the EU be permitted once the MAI is in force?

There have been major debates about the extent to which government 
subsidies and assistance and deregulation should be included in the 

Other highly contentious issues are labour and environmental standards, 
cultural industries and whether exceptions can be permanent.

One of the most urgent tasks is to spread information about the MAI and 
build the movement against it. STOP MAI groups have been formed around 
Australia. (See previous page for who to contact.)
Campaigns demanding the inclusion of strong provisions on these questions 
and the addition of as many exceptions as possible and for permanent 
exceptions could widen the differences and help bring the agreement down 
under its own weight.


Some examples of what the MAI(1) could mean in practice:
* 100% foreign ownership of Telstra, water, electricity, roads, airports, 
bridges, private hospitals, stock exchange
* 100% foreign ownership of financial sector
* Murdoch's TV channels given public funding as given to ABC and SBS
* No local content rules for TV
* No restrictions on foreign ownership of media
* No requirement to use Australian actors in films
* Commercial fishing licences could not be reserved for Australian 
* Local health centre bans on use of Nestles products outlawed
* Private hospitals receive the same funding as public hospitals
* Cultural subsidies given to foreign corporations on the same basis as to 
Australian film, print, dance, art, music, etc
* Foreign corporations have equal rights to government subsidies as 
Australian businesses
* Adult Migrant English Services or TAFE programs contracted out to foreign 
* Social Security data processing of unemployed files carried out by a 
foreign corporation like EDS or Serco
* Tax returns processed overseas if Taxation Office contracts out the work.

(1)The above are indicative of what might occur. The final position would 
depend on what areas, laws and regulations the government includes in its 
list of "exceptions" and whether it would be possible to make any 
exemptions permanent.

EU     European Union
IMF    International Monetary Fund
MAI    Multilateral Agreement on Investment
MFN    Most Favoured Nation
NAFTA  North American Free Trade Agreement
NT     National Treatment
OECD   Organisation for Economic Co-operation and Development
TNC    Transnational Corporation
WTO    World Trade Organisation