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Re: We hear a lot of talk about Globalization in the marketpl...
Chapman, Spira & Carson - Disscusion

From: Another Side of Globalization, "International Forum on Globalization"
Date: 4/11/99
Time: 6:18:46 PM
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More is being Globalized than securities markets and we are losing track of how quickly it is happening. There are many astute, objective organizations that are involved in looking at the process and some have very interesting things to say about it.

We should not be sanguine about the fact that Globalization is some kind of Panecea that will give us all a better life. That may be true in the long run, but look for a lot of pain in the meantime. We have chosen to copy Victor Menotti's speech before the British Columbia Legislative Assembly's Special Committee on the Multilateral Agreement on Investment (MAI) He is talking about what would happen if companies in the U. S. got control of British Columbian Forests. We cannot fault what he says and from our prospective it is interesting what he says to say.

Testimony of Victor Menotti, Special Projects Coordinator, International Forum on Globalization September 29, 1998—Vancouver, BC

Good afternoon. My name is Victor Menotti. I am the Special Projects Coordinator of the International Forum on Globalization, an international nongovernment, nonpartisan, nonprofit organization based in San Francisco, California, that was formed in 1994 in the wake of NAFTA and GATT by over sixty economists, researchers, scholars, writers, and citizen-activists from thirty countries to stimulate public debate on the many consequences of economic globalization.

At that time, there was virtually no attempt on behalf of governments, the business community, the media, or even civil society to investigate or explain the implications of what we saw as the most significant restructuring of global politics and economics to take place since the Industrial Revolution. In fact, it would be more accurate to say there was considerable effort to conceal information and spurs public discussion on what was happening, as many of the world's legislative bodies were simply presented with already-agreed-to international trade and investment agreements for their immediate approval, with little scrutiny and even less debate. As I am sure you know, many lawmakers became angry as they slowly learned that what they had signed on to either restricted or weakened their ability to carry out their mandate of protecting the jobs, health, environment and security of the very citizens who voted them into office.

Today, by convening these hearings on the proposed Multilateral Agreement on Investment (MAI), the provincial government of British Columbia signals a new day in efforts to bring to light what the process of global economic integration is all about, to understand its full dimensions, and to examine its multiple and profound implications for citizens' democracy, economic equity, social justice, and the natural world. People around the globe will benefit from British Columbia's leadership, and on behalf of citizens in my country working to illuminate these same issues, I thank you.

Citizens and the MAI: Perhaps the clearest explanation we've been given about the MAI slipped out of the mouth of World Trade Organization General-Director Renato Ruggiero, who called it, "the constitution of a single global economy."

In the U.S., it has been useful for Americans to understand this "constitution" by comparing it to our own. In early days, Americans gathered in town hall meetings to discuss and debate which rights they felt they needed in order to protect their interests as citizens. They elected delegates who were sent off to a Constitutional Convention, where they incorporated constituents' ideas with those of their counterparts from other states. Delegates made their best effort at putting things into eloquent words, then they were sent back to town halls for more citizen discussion.

Now compare that process of back-and-forth, which was based on open public debate and created a legitimacy among citizens, to the closed process that has been secretly carried out in a Paris basement at the OECD, where ministers negotiate under the direct and, at least in my country, nearly exclusive advice of some of the world's largest investors. Of course, treaties are negotiated between national governments, but because national governments have established such lopsided structures for determining their negotiating positions that favor corporations while effectively excluding citizen interests, the outcomes are predictably, and unacceptably, unbalanced.

As is often the case, the process determines the product. The result is a proposed text that literally reads, "Governments shall do A,B and C." Or, "Governments shall not do X, Y, and Z." As such, the MAI would reverse the historical relationship where citizens use governments to regulate corporate activity. Instead, under the MAI corporations would now use governments to regulate citizen activity, and fine you whenever you got out of line. The MAI would institutionally subordinate the sovereignty of citizens and their elected governments to the will of foreign corporations, allowing society to be ruled by entities that, by their nature, can be loyal to no flag and are under a legal mandate to maximize shareholder profits, not serve the public interest. Indeed, the MAI would establish and enforce the rights of capital at the expense of the rights of citizens.

Our own State Department negotiators actually told us that they had already briefed our nation's governors, state lawmakers, city council members, and other elected officials, and gotten them to "sign off" on the MAI. We knew this wasn't true, so, taking another cue from Canadians, we have begun asking our local and state leaders to declare our communities "MAI free-zones," where elected officials will continue to regulate foreign investment in their own jurisdictions. Such resolutions have now been passed by the cities of San Francisco and Berkeley, and others are at varying stages of passage in Oakland, Santa Barbara, Los Angeles, Santa Monica, San Diego, as well as the California State legislator. Implications of the MAI for British Columbia

Needless to say, the MAI would become an extremely powerful tool for foreign corporations, especially for American extractive industries who have been drooling over BC's vast forests, minerals, fisheries, fresh water, and other natural resources.

Let me disclaim that I am no authority on British Columbia resource regimes. But I do understand the MAI's functions and I can give a few scenarios for how U.S. corporate interests might employ them.

One potential outcome might be for U.S.-based firms to try to get what they failed to get in the U.S.-Canada Free Trade Agreement, or in the North American Free Trade Agreement. That is, British Columbia's temperate rainforests are known the world over, not only for their stunning beauty and critical role as a rare and rapidly shrinking ecosystem, but also for their many large trees. As larger and older trees become more and more scarce in U.S. forests, the more globally minded U.S. logging companies want to go where the trees are big.

I understand there are some in B.C. who want to change the province's land tenure system. And that there are generally two opposing forces: one is to localize control into the hands of communities who live on the land and therefore, their health is tied to the health of the forest, and the other wants to see crown lands privatized.

My understanding of the MAI is that reform could only go one way. If some form of privatization were to take place, "national treatment would force the province to open the bidding to foreign investors on equal terms, including any provincial subsidies or support programs. Shifting toward community controlled management and ownership is against the entire thrust of the MAI. Foreign ownership would be almost unpreventable.

From a perspective of community and ecological sustainability, such rules are disastrous, since there is a very strong relationship between being dependent and tied to a particular piece of land and the long term care of that land so that it continues to thrive. That is very different from those who come and go, continually buying and selling land based on their inventory of marketable timber. Global corporations live under a system of imperatives that almost require cut-and-run behavior as a matter of survival.

In light of the recent reversal of the ban on MMT, challenged under much narrower definitions of expropriation than in the MAI, the implications for protecting the environment are particularly serious. If the federal government can be sued for an effective ban on fuel additives to protect public health, then there is nothing to stop others from suing again for one of BC's laws, such as the Forest Practices Code. BC's efforts to reduce the logging rate, or protect biodiversity, or maintain watersheds and salmon runs, or simply preserve natural scenery, could all be challenged if they have the equivalent effect of reducing the planned profits of foreign companies.

For those who may not care so much about protecting BC's forests, don't think there's not a double edge to this weapon. It is equally conceivable that weakening BC's Forest Practices Code could trigger challenges from U.S. based companies who do business in the province's tourism industry, who might claim that more unsightly clearcuts would devalue BC's scenic beauty, reducing the number of tourists, and therefore their profits.

This concept of a "regulatory takings" was so radical that even the Republican controlled 104th U.S. Congress rejected it. But somehow it found its way into NAFTA's investment provisions. And somebody has slipped it into the proposed MAI, where it gets even worse.

Why? Because whether one is for protecting British Columbia's environment or not, the point is that British Columbia would no longer be in control. Nearly everytime the provincial government wanted to act, lawmakers would have to look over their shoulder for foreign corporations dipping a hand into the provincial treasury for cash compensation.

These principles could be universalized to other countries through the MAI, or an exhumed version in the WTO. Or, by expanding NAFTA to South America. Say Chile joins NAFTA and then, after years of strenuous effort, it finally manages to pass its forest comprehensive forest protection laws. U.S. or Canadian logging companies operating in Chile could use the same weapon to either freeze or reverse Chile from strengthening its own environmental laws. Together with Canada, this would put some of the world's greatest remaining temperate rainforests under the dictates of logging corporations.

Extend this to Brazil and other countries in the Amazon region and we lock in the destruction of the world's greatest reservoir of biological diversity. If the MAI is opened up to signatures from the rest of the world, efforts for global forest protection would seem hopeless. The United Nations Conventions to protect biodiversity or mitigate global climate change or protect forests could seemingly die on the vine once corporations are given these powers.

For countries like Chile, all of this sends a double message. First we tell them that if they want to join our club of freely trading nations they must raise their environmental and social standards, but, then if they do, our corporations can sue them for doing so. We already see NAFTA and MAI language being introduced in efforts to create a hemispheric free trade area.

The Shell Game Everybody should understand that, even if the MAI is never finalized, there is a built-in agenda of globalizing capital that will continue to look for other venues to establish itself. Global investors are playing a shell game to keep us guessing which international organization they will try to get a deal through. There are signs that the MAI's chief supporters may give up on moving their agenda through the OECD, where they that by negotiating it in the absence of the Third World, they could achieve an agreement with so-called higher standards. There next move may be through the WTO and make it part of the upcoming Millennium Round, which is expected to be launched next year at the WTO Ministerial in the U.S. But there are positive signs for those who want to open the process by which the rules of the global economy are written: the latest bid for Fast Track was just soundly defeated in Congress last week.

The International Monetary Fund is another venue through which investment flows could be freed up. "Capital account liberalization" is the term being used to signal that the Fund, by getting member countries to agree to amending its charter, intends to oversee the total liberalization of capital movements in and out of countries and enforce them. While an increasing number of members of Congress are becoming aware of the dangers of this move by the IMF, the "best and brightest" in the U.S. Department of Treasury continue to push it. Or, at least, they have not stated that they will abandon the idea. This is particularly jolting when one considers that some countries are imposing new controls on capital, and nearly all economists agree that governments must use them in some form against the world's new Superpower: Global Capital.


Last changed: March 17, 2000