Submitted to the Parliamentary Sub-Committee on International Trade, Trade Disputes and Investment, December 11, 1997

By Bill Blaikie, MP ( Winnipeg-Transcona) - NDP Critic for International Trade

The NDP, like many who have expressed their opposition to the MAI, is not against a rules-based global economy. We believe in rules, and in the need to regulate economic activity in the public interest. We welcome the prospect of multilateral agreements and global rules that would create a world in which nations are not played off against each other, and in which no unfair advantage is taken of business, labour, the environment or government.

Precisely because of this we do not believe in a rules-based global economic regime, such as that which the MAI seeks to establish, which gives special status to the rights of investors. Granting various forms of binding protection to investors while making workers, environments, societies, and cultures subservient to investor rights, to be protected only by lofty sounding, non-enforceable language in various agreements, is an example of perverse priorities. There is no urgency to protect further the rights of those who are already very powerful. Many of the global corporations who seek to further limit the power of governments to require certain behaviours of them, are already larger and more powerful economic units than many of the governments they would like to further subdue.

Holding Global Corporations Accountable

What is urgently needed is new forms of global governance that can hold global corporations accountable to the common good in the way that national governments were once able to discipline earlier forms of corporate activity in the interests of society. For instance, we urgently need an enforceable rules-based global economic regime that requires all countries and corporations to adhere to the core labour standards of freedom of association, free collective bargaining, prohibition of forced labour, elimination of child labour exploitation and non-discrimination in the workplace. Those who are content to complete or perfect the enshrining and enforcement of investor rights, while leaving the enforcement of corporate responsibilities and the rights of workers, the environment, and societies for another day, perhaps even another generation, have much to answer for by way of moral reasoning.

The NDP holds, therefore, that the MAI, from a social democratic point of view, is irredeemable, and that no combination of reservations and exemptions can make up for the overall unacceptability of the general provisions of the MAI, and the global corporate agenda of which it is the latest manifestation.

The MAI - Replicating NAFTA at the OECD

The MAI, by the government's own admission, is an attempt to replicate NAFTA at the level of the OECD, in the hope that the MAI itself can one day be replicated at the level of the WTO. And NAFTA, of course, was a replication of the Canada-U.S. Free Trade Agreement. The strategy of those who have successfully advocated a liberalization of trade, investment, and services, and a limitation of the role of government that goes far beyond anything that would have been regarded as possible 15 years ago, has been to start with smaller agreements that become prototypes for larger agreements. To its everlasting shame, Canada, a country which became one of the best countries in the world by employing the power of government in a positive way to offset the inequity and injustice of the marketplace, has been a major player in the development of such prototypes. This tradition continues with the MAI. Unable to overcome, at the WTO, the objection of developing countries to a liberalised investment discipline that would hamstring the ability of their governments to make sure foreign investment actually helps rather than hinders development, the more powerful countries in the world, urged on by the international investment community, want to be able to present the MAI as an established reality that poorer countries abstain from at their peril.

Entrenching Investor Rights: The "Chill" Effect

The most significant and exclusive right the MAI would entrench for investors expands on a feature of NAFTA that enables investors to take governments to a dispute settlement process established by the agreement. Under the existing NAFTA investor-state dispute settlement process, US based Ethyl Corporation is demanding 0 million dollars compensation from the Canadian government for profits lost due to the banning of the toxic gasoline additive MMT. The NDP finds this feature of NAFTA to be offensive, and therefore cannot condone its extension through the MAI. It gives corporations an inappropriate status, sets up a binding, secretive process that will have not only a legal effect, but also a "chilling" effect, by virtue of which governments may, out of fear of such litigation, refrain from environmental and other legislative actions. This "chilling" effect is enhanced by the way in which the MAI expands the definition of "expropriation" to go beyond tangible assets such as property or money to include measures "having equivalent economic effect" and for which "payment of prompt, adequate, effective compensation" is required. This expanded definition, combined with a definition of investment that is extremely broad, including investment in its pre-establishment phase, means that a comprehensive range of what are more properly regarded as domestic political choices can become the object of a binding international arbitration.

The binding investor-state arbitration is stunningly illustrative of the bias that exists within the current global corporate agenda. Neither the NAFTA, nor now the MAI, contain provisions by which a trade union could take a government to a binding dispute settlement process for violation of core labour standards. Global agreements on environmental measures to save the planet are to be voluntary. No opportunity is provided, for example, for the Sierra Club to take a government to binding dispute settlement process for violating emission standards or ozone depletion protocols. But for investors, the sky's the limit when it comes to enforceability of their rights. Corporate responsibilities, however, as sometimes set out in various guidelines, will continue to be voluntary.

The MAI: Anti-Democratic

The aforementioned features of the MAI, when added to other objections that the NDP has about the agreement, such as the uncertainty about the effectiveness of reservations in protecting health-care, education and social services, the extension of national treatment to "investment incentives", the stigmatisation of "performance requirements", and the possibility that the provinces will also be included, give rise to an even greater objection about this affront to the flexibility of democratic decision making.

The MAI would bind Canada for 20 years. Unlike even the NAFTA, which has a six month notice period for termination, MAI requires at least a 5 year period before notice can be given, followed by the requirement to honour existing obligations to existing foreign investors and companies for another 15 years. This is a feature of the MAI that would bind several Parliaments, and is so anti-democratic on the face of it that the MAI cannot be supported by the New Democratic Party of Canada.