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(Cairns... Far North Queensland)


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Selwyn Johnston



One person, with the support of the community, can make a difference



The Multilateral Agreement on Investment (MAI), a major corporation attack on development, environmental protection and workers' rights (and/or parliamentary democracy), has been scrapped.

Negotiations on the MAI began in 1995 within the Organisation for Economic Co-operation and Development (OECD), the 'country club' of 29 rich nations, and came to a crashing halt in November 1998 in Paris. The final blow to the treaty, whose signing had been postponed six months already, was dealt by the host nation, France.

On the eve of the reopening of negotiations, Lionel Jospin, French Prime Minister, described the MAI as "unreformable" and a "threat to the sovereignty of states", after an influential French commission produced a highly critical report (the Lalumiere Report). A central concern appears to have been the threat to the French film industry from unrestricted Hollywood imports.

As the OECD operates by consensus, the withdrawal of support by the French government left the negotiations in an untenable position. On October 29th, Britain finally threw in the towel. Trade Minister Brian Wilson said that the treaty should be abandoned: "Sometimes it makes sense to draw a line and start again", he said in London.

The Guardian reported that "The UK has been one of the most enthusiastic supporters of the MAI. But Mr Wilson indicated that the Government was ready to scrap the treaty and start again."

The abandonment of the MAI is a significant blow to corporate ambitions, and a (partial) victory for popular forces.

The postponement of the signing of the MAI in April 1998 has been described as "an important event, worth considering carefully". In part, the failure resulted from internal disputes, for example, European objections to the US federal system and the extraterritorial reach of US laws, concerns about maintaining some degree of cultural autonomy, and so on. But a much more significant problem was looming.

It was becoming increasingly difficult to ensure that the rules of global order would continue to be 'written by the lawyers and businessmen who plan to benefit' and 'by governments taking advice and guidance from these lawyers and businessmen', while 'invariably, the thing missing is the public voice' - the Chicago Tribune's accurate description of the negotiations for the MAI ... without public interference".

Reports from the Economist, the New York Times, the Washington Post, Time magazine, and the Toronto Globe and Mail all agreeing that the delay had been in part due to "a global band of grassroots organisations, which, with little more than computers and access to the Internet, helped derail a deal" (The Globe and Mail).

The most terrified commentary came from the Financial Times, in an article, which was cited, in the last issue of Freedom. "Fear and bewilderment have seized governments of industrialised countries" as the secret negotiations to impose the MAI "have been ambushed by a horde of vigilantes whose motives and methods are only dimly understood in most national capitals". The hordes included "trade unions, environmental and human rights lobbyists and pressure groups opposed to globalisation". The abandonment of the Treaty is also, in part, due to the threat of accountability posed by these terrifying hordes.

The Financial Times responded to the imminent demise of the MAI with World-weary resignation. The treaty, the paper commented on October 20th, "seems in danger of grinding to an embarrassing halt. Does this matter? Not much. Why not? "The issue the agreement was meant to solve - worries over the sanctity of assets held overseas - is scarcely today's hot topic". This was a highly misleading description of the thrust of the Treaty. '

The World Development Movement (WDM), one of the leading British critics of the proposed treaty, has been pointing out four main dangers from the MAI, based on their reading of a leaked draft text of the agreement.


  1. The MAI would transform rights from citizens to transnational companies. The already limited democratic rights of citizens and powers of elected local and national governments over business investment in their territories would be largely transferred to corporations. Under the MAI, transnationals would have been granted the right to establish in any sector, in any country, in whatever form they chose. A groundbreaking feature of the MAI was that it would grant foreign companies the right to sue local and national authorities in a (business-dominated) international tribunal. Companies could sue for past damages and for hypothetical future damages.
  2. The MAI would undermine development opportunities for the poorest countries. Though negotiated in the OECD as an agreement between the rich countries, the whole purpose of the agreement was to include developing countries, and to grant transnationals unrestricted access to the markets and natural resources of Third World nations. The WDM points out that "No country has ever developed under the rules the MAI would impose". South Korea and the other Asian tigers (and in fact all industrialised nations) have developed by using precisely the interventionist policies that the MAI would rule out.
  3. The MAI could dismantle legitimate social and environmental laws. Foreign companies could sue governments over laws and policies which would affect them more heavily than a domestically owned company. The US-based Ethyl Corporation sued the Canadian government over Ethyl's dangerous MMT additive under similar powers in the North America Free Trade Agreement (NAFTA) - despite the existence of a clause in NAFTA supposedly setting environmental and labour standards for the NAFTA countries. In that case, the Canadian authorities gave-in before the case was complete. It is quite likely that the MAI would have been used in a similar fashion to intimidate local and national governments into dropping or not passing social and environmental protection laws.
  4. The MAI would remove powers of local government and undermine local initiatives. The WDM wrote: "A recent study in the USA identified hundreds of State and local laws that would be ruled out under the MAI. In response, the US negotiator proposed that all US State and local government be exempted from the MAI, revealing that the country pushing the MAI refuses to apply it at home." Under the MAI, local authorities could not require investors to employ local people, use local suppliers, or remain for a minimum period of time - even if such laws were applied equally to both foreign and domestic companies.

The full import of the MAI could not presently be accurately described, in part due to the secrecy surrounding the project, in part due to certain basic social realities. Even if we had the full text of the MAI, and a detailed list of the reservations entered by the signatories, and the verbatim record of the proceedings, we would still not know what the MAI meant.

"The reason is that the answers are not determined by words, but by the power relations that impose their interpretations". The 'worst case' analysis could come true if 'power remains in the dark', and the corporate lawyers who are its hired hands are able to establish there interpretation of the purposely convoluted and ambiguous wording of the draft treaty".

There were also less threatening possibilities that might be realised - depending on the strength of popular forces determined to constrain corporate power. What has actually happened is that the treaty as a whole has fallen apart - for a variety of reasons.

After the Financial Times ran their apocalyptic piece on the 'hordes' threatening the MAI and other international trade agreements, Charles Arden-Clarke of the World Wide Fund for Nature International wrote in to point out that "Government ministries other than trade and finance and parliaments had a crucial time in delaying the treaty signing, as they analysed and reacted to the implications of the treaty". Arden-Clarke pointed out that the new 'trade agreement' (an inaccurate term) "impinges far more directly on the policy-making territories of other government ministries, such as environment, health, development co-operation, etc."

Lionel Jospin, explaining France's withdrawal from the negotiations on l8th October, said that the MAI threatened "the sovereignty of states, which are asked to commit themselves in an irreversible manner". This was partially true. What was actually being threatened was the sovereignty of some states. The threat was proportional to the weakness of the country.

The Financial Times pointed out after it became clear that the MAI was doomed that one major factor in the failure of the treaty was the behaviour of the USA. Many had branded the MAI "as neo-imperialism", the Financial Times noted, and "This accusation was given credence by the USA's behaviour over the MAI's proposed dispute mechanism: when it realised this could be used against Washington, it cooled on the idea".

As on the issues of US State and local government laws, the US sought to protect itself from the corporate vandalism it wished to impose on others.

British Trade Minister, Brian Wilson said on October 28th: "I think this is an opportunity to start with a blank piece of paper, to define our objectives afresh, and then seek to pursue them on an open and consensual basis" - within the World Trade Organisation, for example.

The battle is won... but the war to contain, and reverse, increasing corporate power is decidedly not over.

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Written and Authorised by Selwyn Johnston, Cairns FNQ 4870