From: Bob Olsen <bobolsen@arcos.org>
Newsgroups: misc.activism.progressive
Subject: The Environmental Implications OF The MAI
Followup-To: alt.activism.d
Date: 27 Jan 1998 15:16:26 GMT
Originator: rich@pencil.math.missouri.edu
Date: Sat, 24 Jan 1998 01:12:54 -0800
From: David Weston <dweston@island.net>
Subject: Global Brain No.174: Remarks on Environmental Implications OF The
MAI
For those of you who may not have kept up on the MAI, You may be surprised
to learn from the following speech that the MAI would bar IFI discrimination
in lending based on environmental or social responsiblity.
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Remarks on
The Environmental Implications Of The MAI
Michael McCloskey
Chairman
Sierra Club
at the
MAI Conference
Dallas, Texas
January 17, l998
The emerging debate over the Multilateral Agreement on
Investments--the MAI--carries forward the debate that began with
NAFTA and continued with the WTO and fast track. Many of the same
problems are posed once again and would be extended even further.
Indeed, the WTO's head calls this "The constitution for a single,
global economy." It would establish the rights of business, with
nothing said about its responsibilities.
In seeking to protect foreign investment from discrimination, the
agreement would exalt business interests above all competing
social concerns. All of these agreements put economic concerns
ahead of all others and insulate them from processes that would
balance competing concerns. And this would be done through
processes that are less transparent and more remote from
democratic accountability.
In seeking to facilitate the free-flow of capital around the
globe, the agreement assumes that develop- ment is desirable
everywhere. But from an environmental viewpoint, that is hardly
the case. There are better places and worse places--some that are
suitable and some that are not.
Globalization is not proving to be an environ-mentally benign
phenomenon. Nature is already hard-pressed on nearly nine-tenths
of all land. More development will simply press it harder. Some
will argue that greater prosperity will result, and that, with it,
more will be done to control pollution. But there will also be
more pollution to control, and control will only come slowly--if
at all. We should not be adding to problems of climate change and
species extinction.
And the pressure of global competition and cost-cutting will
inexorably press advanced countries to reduce outlays for
environmental protection, as well as for social safety nets. We
are already seeing our domestic industry arguing that the costs of
environ-mental programs must be reduced to meet the costs of
globalization.
Now admittedly, this agreement has not been finalized. Negotiators
for the U.S. government say they are not satisfied yet and that
they are trying to improve its environmental provisions. But many
of these so-called improvements do not meet our concerns and are
not binding, and even they are being strongly resisted. The U.S.
Council for International Business opposes them, as do various
other nations.
What then are our specific concerns? They arise out of the likely
impact of the provisions of the MAI on the power of government to
regulate to protect the environment, its ability to manage land
and natural resources appropriately, the use of government
procurement programs to pursue environmental objectives, and the
threat that the MAI will override environmental programs at the
international level.
Government Regulation
The gravest threat to government's power to regulate is embodied
in the MAI's provisions on expropriation. These provisions go way
beyond the area of settled law in the United States. In effect,
they would enshrine the doctrine of "regulatory taking" in
international law. Compensation would not only be required for
property taken directly, but for that taken indirectly, or
anything "having equivalent effect." Under this elastic wording,
claims could be pressed for diminished value arising from
regulation. While a regulation may not intend to result in a
taking, investors may claim that was the indirect effect.
And that has already happened in Canada where the Parliament
banned a toxic gasoline additive (MMT) from abroad, and the Ethyl
Corporation has sued for damages under weaker provisions of NAFTA.
If the MAI becomes law, many regulations governing toxics could be
endangered as claims would be brought that the value of
investments putting toxics into the environment would be
curtailed. In the Ethyl case, as well as in the Metalclad case in
Mexico, we have already seen investors trying to intimidate
governments and forestall regulation by threatening to bring suit
for huge sums.
Some developing countries fear that they would have less success
in controlling pollution by powerful foreign corporations.
Countries such as Taiwan have barred foreign corporations from
enterring "highly polluting industries." Under the MAI, they could
not do that.
Natural Resources
A number of developing countries have laws requiring that raw logs
be processed to some degree before they can be exported. It is
commonly believed that such laws help protect forests from rapid
exploitation by providing more jobs domestically for each tree
cut. These laws would be disallowed by the MAI.
The U.S. has such laws too. There are limitations on selling raw
logs abroad from national forests in Alaska and parts of Oregon
and Washington and from some state-owned forests too (Oregon and
Idaho)--for the same purpose. These could not survive the MAI.
The MAI also might be used to challenge decisions made to restrict
new development and mines under land use regulation; e.g., to
protect aquifers. These restrictions might be viewed as
discriminatory since domestic developers and miners have long
since established their operations, or they might be viewed as
unduly burdensome. And could foreign-owned industrial farms demand
equal access to federal irrigation water, which has already been
allocated to domestic users? Would turning them down be viewed as
discriminatory? Would this pressure obstruct our efforts to
re-allocate such water to instream uses?
Procurement
At various levels, government is now introducing social concerns
into its procurement decisions. An executive order directs federal
agencies to buy "green" products, such as those with recycled
content or using renewable energy. Cities and counties are moving
in this direction too. Some also avoid buying products, such as
oil, from firms heavily involved with countries having bad human
rights records. Others won't buy wood taken from endangered
tropical forests (e.g., New York City). All of these could run
afoul of the MAI because they violate its ban on performance
requirements.
States providing tax incentives to encourage recycling or
investments in environmental technology might be in trouble too.
International
In NAFTA, special provisions were inserted to make it clear that
conflicting provisions of various environmental treaties were not
to be regarded as overridden. These included the Montreal Protocol
to reduce use of chemicals that destroy the ozone layer, and the
CITES treaty to eliminate trade in endangered species. But the
draft MAI includes no such provisions. Cracking down on traders in
endangered species could be regarded as discriminatory. Some
believe the MAI would prevail against earlier treaties.
International lending institutions have developed "green"
guidelines to determine who is eligible for loans (e.g., World
Bank and Overseas Private Investment Corporation--OPIC). The MAI
would not countenance discrimination on the grounds of
environmental or social responsiblity.
Many developing countries prevent foreign corporations from
exploiting their natural resources; they want their own people to
benefit instead. These restrictions have the effect of reducing
the rate of exploitation. Brazil's rain forests are apt to
disappear faster if these restrictions vanish because of the MAI.
Asian logging and mining combines will got at the job with great
efficiency and on a massive scale.
Dispute Resolution
The MAI sets up special arbitral panels to hear complaints by
investors. In a plunge into the unknown, it also authorizes suits
to be brought in the courts of those signing the MAI to hear these
complaints. However, other affected parties, such as
environmentalists, would have no rights to intervene or be heard.
Environmental expertise would not have to be sought (that is
optional). Much of the proceedings could be kept confidential.
State and local governments could be sued but could not defend
themselves. Agencies such as EPA could be sued by foreign
corporations from around the world.
Conclusion
The MAI would take away the power of sovereign nations to balance
competing economic and social interests. Fundamental imbalances
would be embedded in international law. This should never happen.
The White House needs to hear how you feel about this issue. There
is still time to turn this around. We don't need an unfair MAI.
And we certainly can't tolerate a backdoor attack on our programs
to protect the environment.
###
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Malini Mehra
International Campaigns Officer
Co-ordinator, Sustainable Societies Programme
Friends of the Earth International
PO Box 19199, 1000 GD Amsterdam, Netherlands
tel. +31 20 6221369 fax +31 20 6392181
e-mail: sustsoc@foeint.antenna.nl
www: http://www.xs4all.nl/~foeint/
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Bob Olsen Toronto bobolsen@arcos.org (:-)