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.

                                    ###

     ------------------------------------------------------------------
     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/
     ------------------------------------------------------------------

     Bob Olsen           Toronto           bobolsen@arcos.org   (:-)