I find myself puzzled by Rose Dyson's review of the Barlow and Clarke book
on the MAI. I'm not quite sure of what is being argued. For example, Ms.
Dyson points out that "Chilling statistics in the book, gathered by the
United Nations, underscore the urgency of the problem. Twenty years ago
there were 7,000 transnational corporations in the world. Today there are
more than 40,000. The top 200 have annual sales which are larger than the
combined economies of 182 of the 191 countries in the world." I see this as
an argument in favor of agreements like the MAI, even if that was not Ms.
Dyson's intent (nor Barlow's and Clarke's). Whether we find it warming or
chilling, the fact that a very large number of corporations which once could
only operate domestically now operate internationally would seem to require
a set of rules which define the rights of both the investor and the host.
One of the most frequently expressed fears about the MAI is that it will
usurp the powers of national governments. If Ms. Dyson's review reflects
the book accurately, this fear is played on to the point of mongering by
Barlow and Clarke. I have read various parts of the MAI, and have found
nothing that prevents governments from passing or using labor legislation,
environmental legislation, or other types of legislation that apply to
corporate behavior. What the agreement does appear to say is that laws
which apply within a particular country must apply equally to both
domestically and foreign owned corporations. There is nothing new in this.
Provisions for MFN/NT treatment already exist in a variety of international
agreements.
In my opinion, one of the most beneficial aspects of the MAI is that it will
impose a common standard of behavior on the hosts of foreign capital. Under
its provisions, governments will be prevented from imposing, enforcing, or
maintaining a variety of special requirements on the foreign investor,
including requirements relating to exports, domestic content and purchase,
technology transfer, personnel, joint venturing, and local equity
participation. It would not appear that the MAI will forbid these
requirements; it will simply not permit them to be imposed arbitrarily by a
contracting government. I have seen nothing that suggests that special
arrangements cannot be negotiated between the host and the investors if
there is no coercion.
These provisions might be of particular benefit to the underdeveloped world,
and especially to countries which are trying to modernize and reform their
economies, and which are in great need of foreign capital. It should not be
overlooked that eastern European countries such as Poland and Hungary are
now OECD members and are playing a role in drafting the agreement. As
well, several developing nations which are not members, including Argentina,
Brazil, Chile, Singapore and Taiwan, are reportedly interested in signing
when the agreement has been completed. Other Asian countries will also
probably want in, especially after the recent debacle which was fueled, at
least in part, by the absence of firm rules on investment and by foolish (in
hindsight) political interference in the economy.
Ms. Dyson argues, again presumably reflecting the book, that "Ironically,
given our traditions, one of the most ardent supporters and promoters of
global free trade without tariff barriers to international investment and
trade, codes to protect the environment, labor rights, social programs or
cultural diversity is Canada." Why is this ironic? The Canadian economy
has always been highly dependent on trade and foreign investment. And, most
certainly, the federal and provincial governments are not without "codes to
protect the environment, labor rights, social programs or cultural
diversity". These exist in some abundance, and if more laws and codes are
required, they will be legislated. The MAI will not stop them. All that it
will do is ensure that they apply equally to foreign and domestic investors.
Some parts of Ms. Dyson's review are a little hard to figure out,
suggesting, perhaps, some leaps of logic in the book itself. For example,
it is not easy to see the connection between Canada's negotiation of
international treaties, growing income disparities nationally and
internationally, and the UN Charter of Economic Rights and Duties of the
State. Indeed income disparities are widening both domestically and
internationally, but is this because of a greater liberalization of trade?
Is it seriously being proposed that countries will not be able to exercise
their rights and duties under more liberalized trade? Rather than being a
repressive force, free trade can be beneficial to democratization by eroding
class-based and special-interest-based monopolies.
The statement that global income disparities have doubled in the last five
year is nonsense. World Bank data indicate that there has been some shift
in global GNP from low and middle income economies to high income economies
between 1985 and 1995. In 1985 low and middle income countries appropriated
21.1% of global GNP while high income countries appropriated 78.9%. By
1995, the proportions had changed 18.8% and 81.2%. While this is a
disturbing trend, it is not something that could be considered a major
shift. It must also be considered that enormous shifts were taking place
within the low to middle income world. Asian economies were growing perhaps
too rapidly, while the economies of Sub-Saharan Africa and the former Soviet
Union were stagnant or shrinking.
An MAI is needed because capital flows are no longer something that national
governments can control by themselves. Control can only come about by
international agreement. As was demonstrated in Asia recently,
international investors are powerful economic actors. There must be
agreement on what they can or cannot do. And like it or not, countries have
now become enormously dependent on international capital. If they are to
enjoy its benefits, the rules by which they play must be clear. We do need
to think very seriously about whether the MAI that is being negotiated is a
good one, but we should stop well short of going into a rant simply because
it is being negotiated.
Ed Weick
