Take Courage – Remember the MAI?

“Please Mr Gould, what can we do to stop it?” was a question prompted by my article in the Herald a couple of weeks ago about the risks posed to our democracy by the Trans Pacific Partnership.

My first reaction was to reply “I wish I knew!” The government’s readiness to ignore public opinion if it runs counter to the interests of big business, and – as in the case of the deal over pokies with Sky City – to prevent any future government from reviewing such arrangements does not, after all, inspire much confidence that public opposition to a carte blanche for overseas corporations will have any effect.

But I have had second and better thoughts – and those who have followed these issues over a couple of decades or more might understand why. We have, after all, been here before – and on that earlier occasion, governments and big business backed down in the face of public concern.

We should not forget that the TPP is just the latest of the persistent attempts by global corporations (most often American) to establish a regime that allows them to pursue their own interests in any given country, irrespective of the wishes of the citizens of that country and of the policies of their elected governments.

The saga begins with the power conferred on international corporates, as the global economy began to develop, to threaten national governments that, if they didn’t do what they were told, they would lose valuable investment to more compliant regimes. The subsidies demanded from our government by Warner Brothers are just one recent minor example.

But that was not enough for global investors. They feared that once an investment was made, and the country concerned realised what a bad deal had been done, a future government of that country might try to reassert domestic law to ensure that national interests were properly protected.

So they demanded as the price of investment in individual countries a series of Bilateral Investment Treaties whose effect was to limit the ability of both governments and courts in the host country to restrict the freedom of overseas investors to do what they liked.

But even this did not go far enough. Global corporates persuaded the OECD that these bilateral treaties should be brought together in a wide-ranging international treaty which would rationalise and make uniform all such provisions and would establish the primacy of global corporate interests over national democracy right across the globe.

Negotiations for this Multilateral Agreement on Investment (MAI) began within the OECD in 1995. At first sight, there was a cautious welcome for the idea; national governments saw the opportunity to restrain the freedom enjoyed by international investors to ride roughshod over local democratic interests.

As the negotiations proceeded, however, it became increasingly clear that the proposed treaty was really a charter for global investors – a charter that would ensure that their operations could never be challenged either by elected governments or properly constituted national courts.

It was proposed, for example, to establish a compliance regime under which “liberalisation” would always move forward, with no power to wind it back — the so-called “ratchet” effect. This would be enforced by so-called “rollback” and “standstill” provisions, requiring nations to eliminate regulations that were contrary to MAI provisions — either immediately or over a period — and to refrain from passing any such laws in the future.

Compensation would have to be paid for any national rules that caused loss of profit to investors. Disputes arising under the agreement would be settled in a specially constituted tribunal instead of by the national courts of the host state. The intention was that neither governments nor affected communities could challenge the behaviour of investors, who accepted no binding obligations on themselves.

There was little public awareness of these details of these provisions until – crucially – a draft of the agreement was leaked in March 1997. The leaked material prompted a wave of criticism. Opposition to the MAI began to mount – first in the US and then increasingly among other OECD countries. Such was the backlash that first France and then other countries successively withdrew from the negotiations. On 3 December 1998, the OECD announced that “negotiations on the MAI are no longer taking place.”

Does this brief account of the central features of the MAI sound familiar? Of course it does. Not deterred by the failure of their project in 1998, global corporates have now returned to make another attempt. The MAI provisions that were – as soon as they were exposed to “sunlight” – rightly condemned and finally rejected are now central elements of a TPP being peddled as an innocent “free trade” arrangement but being negotiated in secret.

The signs are growing that, like the MAI before it, the TPP is in trouble; as more information is leaked and becomes available, the chances of a secret deal being agreed over the heads of voters are falling fast. Concern is mounting in participant countries, including the US. Even our own government might be forced to think again once we are no longer kept in the dark and realise what is at stake. We still have the chance to make our voices heard.

Bryan Gould

29 November 2013

This article was published in the NZ Herald on 6 December.