Multilateral Agreement on Investment
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The Multilateral Agreement on Investment (MAI) was negotiated between members of the Organisation for Economic Co-operation and Development (OECD) between 1995 and 1998. Its purpose was to develop multilateral rules that would ensure international investment was governed in a more systematic and uniform way between states. When it was leaked to the public it met with intense scepticism, as the rules in the agreement looked to undermine the sovereign power of the Nations that were in negotiation.
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[edit] Background
International investment has been taking place in various forms and to different degrees for over a century. There have always been rules in place, most typically through the development of Bilateral Investment Treaties (BITs), which are signed between two countries and which state the desired conditions under which investment can take place between them. The first BIT was signed in 1960 and their numbers have grown steadily since then.
However with the collapse of the Soviet Union in 1989 and the onset of apparent globalisation, the number of BITs exploded during the 1990s as countries and investors sought more regulation for their investments. Sensing the need for more secure and stable investment conditions, the OECD drafted a copy of the MAI for negotiation between its member states, who hoped to regulate investment between themselves and eventually between themselves and non-members in a more uniform and transparent manner.
In May 1995, the OECD began negotiations on a Multilateral Agreement on Investment (MAI). The US, eager to avoid interference from poor countries, considered the OECD Council a “safe” body since only rich countries are members of the organization. Secret negotiations took place from 1995 until 1997 when an OECD source leaked a copy of the draft agreement to a Canadian citizen group. The leak revealed that the MAI sought to establish a new body of universal investment laws that would guarantee corporations unconditional rights to buy, sell and do financial operations all over the world, without any regard for national laws and citizens’ rights. The draft gave corporations a right to sue governments if national health, labor or environment legislation threatened their interests.
However, 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 governments of poor countries. MAI opponents saw the agreement as a threat to national sovereignty and democracy and argued that it would lead to a "race to the bottom" in environmental and labor standards. The failure of the MAI negotiations proved a success for the global movement against the MAI. However, rich governments continue to push for similar investment provisions in regional trade agreements and the World Trade Organization (WTO). At the WTO Ministerial in Cancun in September 2003, the richer WTO members tried to introduce a Multilateral Investment Agreement (MIA) through the “Singapore” issues. These efforts failed again, however, as a group of more than twenty poor countries united in demanding a fairer trade deal. As a result, the deal collapsed.
[edit] Main purposes of the Agreement
- To minimise diverse state regulations in governing the conditions under which investments by foreign corporations could take place.
- To compensate corporations for unfair or discriminatory investment conditions.
- To allow states and corporations to sue states in international tribunals for unfair investment conditions.
[edit] Protests
However after three years of intense negotiations, members of the OECD refused to sign an agreement they felt was too radical a change in the governance of international investment. Despite similar developments in the area of trade, states were unwilling to make their governance of investment more uniform. Public protests against the agreement, including a campaign led by Lori Wallach of Public Citizen's Global Trade Watch, also were influential upon the member states' reluctance to sign, and by 1998, the OECD decided to no longer pursue the ratification of the MAI.
"The 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 rights, labor and environmental standards, 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. A crucial turning point occurred when [in February 1997] Ralph Nader's [[[Public Citizen]] ] acquired a copy of a OECD draft MAI agreement and put it on the internet. Using a variety of websites, NGOs mobilized a strong and diverse opposition composed of human rights groups, labor and environmental groups, and consumer advocates."[1][2]
Some countries were disappointed with this failure and have sought to introduce a similar agreement for discussion at the World Trade Organisation (WTO), to be incorporated into the General Agreement on Trade in Services (GATS), but these efforts too have been met with significant protest.
[edit] Notes
- ^ Cohn, Theodore H. (2005). Global Political Economy Theory and Practice. p. 350
- ^ Taglieri, Joe (October 9 1998). "Making profit the world's highest law; the Organization for Economic Cooperation and Development's 1998 draft of the Multilateral Agreement on Investment National". Catholic Reporter 34 (43): 3. ISSN 0027-8939.
[edit] External links
- Multilateral Agreement on Investment. Retrieved on 2006-10-27. Nine media articles on the MAI.
