Better Than the
Multilateral Agreement on Investment


This article examines just one of many reasons why the MAI should be stopped. It then suggests an alternative form of agreement that would better serve the world. This approach may be helpful to anyone fighting the MAI. Please pass it on.

The MAI Would Help Companies Avoid External Costs

To avoid disastrous consequences it is necessary to account for resource depletion, pollution and social break-down. Until we acknowledge that these things threaten our well-being, development will proceed as though it can do no harm and it will destroy us. The MAI would make it difficult to acknowledge these costs and impossible to insist that they be paid.

Externalities are costs which can be avoided. They are different from the costs of materials, labour and the use of space, which have to be paid and are always included in the price of products. Costs resulting from resource depletion, pollution or social break-down do not have to be paid unless payment is required by some authority. At present, it is common practice to enhance competitiveness by ignoring as many externalities as possible.

Including external costs in the price of goods would either provide money to correct the problems caused, or would discourage the problematic activity. Either way, the system would be more responsible. If these costs are not paid as an expense of the production process that causes the problems, public tax money has to be used, or the problems become our legacy to the next generation.

The MAI aids the avoidance of externalities in two ways.

The Race to the Bottom

The purpose of international trade agreements is to make it easier for corporations and other investors to move around the world. The greater the mobility, the more selective these interests can be. If a country chooses to tax profits, legislate high environmental or labour standards, or do any thing else that might cut into profits, investors can move to a country that is less demanding.

As a result there is enormous pressure to lower standards to attract investment. Since Canada started signing onto international trade agreements, many environmental laws have been diluted and enforcement has been substantially reduced. In addition, labour conditions are depreciating as employers threaten to relocate if workers don't make concessions.

Under the evolving global trade regime it is unlikely any country will risk decreasing its competitiveness by requiring investors to take responsibility for the external costs they incur. For making it easier to dump these costs on future generations, the MAI and other trade agreements should be condemned.

The MAI Makes Legislating Responsibility
for Externalities Illegal

The implications of the "Investment Protection" provisions in Section IV of the MAI could make environmentally and socially responsible legislation illegal. If such legislation cuts into profits in any way it could be challenged as "expropriation without compensation".

The definition of "investment" in the MAI is extremely broad. It covers "every kind of asset owned or controlled, directly or indirectly, by an investor," including real property, moveable and immovable property, tangible and intangible property, intellectual property, claims to money and performance, contracts, and more.

In the relatively simple example of land being expropriated for building a road, the issue of compensation is clear cut. The previous owner of the land is due compensation for lost property. However, when the "property" expropriated is the possibility of making money on something and the expropriation is in the form of a law saying that the proposed activity cannot be carried out because it is contrary to values of resource conservation, consumer protection, health, safety, or the like, the issue is much more complex.

Traditionally when a corporation or person feels their interests have been unjustly diminished by a law, they would sue the government. In court, the various values would be weighed against each other. The process would be open to citizens' input and to interpretation by the government in accordance with its democratic mandate. The value of potential profit, although represented, would have no special privilege over other values.

With the MAI, it would be quite different. The company would sue, not through an accountable government process, but through the MAI itself. The decision would be made in secret by an appointed panel to which no citizens' submissions would be allowed. Even if the panel were inclined to give weight to values such as environment or public health protection, there is no legal basis in the MAI for them to do so.

The MAI text does, however, allow the panel to fine offending nations and to require them to change their law(s). (For more details)

Without control over the laws of the land, elected governments would be reduced to the role of tax collectors, skimming the wealth of nations to pay interest to new feudal lords.

Change Based on Misconception

Removing trade and investment barriers is supposed to increase prosperity by making it easier to make money. The making money part appears accurate. Gross world product is rising. It is the increased prosperity that is an illusion (a 'Big Lie' to use the historical phrase). Some interests are getting unbelievably wealthy while a large portion of the population is finding that its economic standard of living is falling. Applying The Market ideology can increase wealth, but the system contains no mechanism or principle for distributing the gains.

The trickle down theory which has posed as a mechanism for distributing new wealth is practically irrelevant today. Decades of automation and comprehensive efforts to reduce taxes, increase efficiency and downsize have plugged the leaks that previously helped wealth return to the communities from which it is derived. The lions share of new wealth is securely retained by those who are already wealthy.

What is the purpose of cutting back on education, health care and environmental protection when there is more wealth in the world than ever before?

Another Sort of Multilateral Agreement

It may be time for a global constitution. It would be an historic step, a land mark in the maturation of our species. It is not a step that should be taken lightly or in haste. The MAI is being pushed through at an alarming pace. It focuses only on the interests of international investors and neglects other matters of importance to civilization and human well-being.

In a complex world, any change in the order of things creates winners and losers. The MAI proposes extensive reordering; it's impact would be immense.

Who will gain from the changes?
Who will lose?
Why should the benefits and costs be distributed as proposed?

The MAI is based on a system of values that takes into account nothing but the flow and growth of money. It seeks to entrench this value system in a long term, legally binding regime. This is unacceptable.

There is another agenda. Over the last fifty years nations have met together to develop covenants, treaties and conventions in the interest of all humankind.

To date, through slow, open and accountable processes, the nations of the world have made commitments to the following:
    • to promote and fully guarantee respect for human rights and social justice;
    • to ensure the preservation and protection of the environment;
    • to create a global structure that respects the rule of law;
    • to achieve a state of peace; justice and security , and
    • to enable socially equitable and environmentally sound development.

These agreements provide a solid foundation from which to pursue unifying rules of fair conduct. The MAI, would effectively nullify the hard work that has gone into them.

If there is to be a Multilateral Agreement it needs to include not just economic efficiency (narrowly defined as maximizing profits), it needs to include:
    • democratic rights
    • recognition that everyone needs to participate in the economy,
    • competition policy
    • corruption policy
    • indigenous rights
    • a global tax authority
    • the regulation of currency speculation and
    • safeguards for labour
    • safeguards for environment
    • safeguards for resources supplies

(For more details see: Citizens' Treaty of Corporate and State Compliance.

If the Multilateral Agreement being pursued were founded on these values, disadvantaged and average people would benefit. Future generations would benefit. The loss would be to profits, but the losers, although remaining fabulously wealthy, could also share in passing onto their children a world of hope.

Why should we have agreements freeing investors to roam the planet looking for the lowest taxes and the lowest standards for environment and labour? These are not poor institutions in need of a break. Many have more wealth than most nations. The MAI could as easily require international companies to take with them the highest labour and environmental standards existing - to practice responsible global citizenship rather than sinking into the role of pirates exploiting weakness wherever they find it?

If the MAI required investors to abide by the highest most responsible standards when they seek investment opportunities in other countries, the whole world could aspire to high standards and truly benefit from investment. The 'playing field' would be 'leveled', and civilization could remain standing upright.

For extensive additional information on the MAI and links to many of the efforts to have it stopped, see: (