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MAI-DAY!
The Corporate Rule Treaty


The Multilateral Agreement on Investments (MAI)
seeks to consolidate global corporate rule

By Tony Clarke

Canadians are gradually becoming aware of the increasingly powerful role that transnational corporations (TNCs) are playing in their daily lives. But few are aware that the power of these global giants is being consolidated through a series of negotiations that are now taking place in Paris. Led by the United States, the 29 countries that comprise the Organization for Economic Cooperation and De-velopment (OECD) are secretly negotiating what is designed to be a global investment treaty.

The Canadian free trade experience reminds us of how crucial such international agreements can be. After all, the cornerstones of NAFTA (the North American Free Trade Agreement of 1994) and the FTA (the U.S.-Canada Free trade Agreement of 1989) are its investment codes. In turn, these investment codes constitute a bill of rights and freedoms for transnational corporations. Through national treatment clauses and provisions for the elimination of job content requirements, export quotas and foreign investment measures, these codes have enormously increased the power of transnational corporations over our economic, social and environmental future.

Now Ottawa is actively supporting Washington's bid to constitutionalize transnational corporate power on a world-wide scale through the negotiation of a Multilateral Agreement on Investment (MAI). Initially, the European Commission (EC) had proposed that a global investment treaty be developed as the centrepiece of the new World Trade Organization (WTO). But the U.S. feared that opposition from developing countries in the WTO would "water down" any consensus that might be reached on an investment treaty.

The U.S. therefore decided that the best way to achieve a "high standard" investment treaty was to negotiate it through the rich nations' club of the OECD. As U.S. officials have stated, their prime objective is "to obtain a high-standard multilateral investment agreement that will protect U.S. investors abroad." To that end, the MAI is designed to establish a whole new set of global rules for investment that will grant transnational corporations the unrestricted "right" and "freedom" to buy, sell, and move their operations whenever and wherever they want around the world, unfettered by government intervention or regulation.

In short, the MAI seeks to empower transnational corporations through a set of global investment rules designed to impose tight restrictions on what national governments can and cannot do in regulating their economies. The ability of governments, for example, to use investment policy as a tool to promote social, economic and environmental objectives will be forbidden under the MAI. While corporations are to be granted new rights andpowers under the MAI, they are to have no corresponding obligations and responsibilities related to jobs, workers, consumers, or the environment.

This spring, a confidential draft text titled Multilateral Agreement on Investment: Consolidated Texts and Commentary is being circulated among government and corporate officials in the OECD countries. Behind closed doors, secret consultations and negotiations have been taking place at the OECD headquarters in Paris. The original plan was to have the draft text ready for approval at the OECD ministers' meeting scheduled for early May, 1997, but OECD officials have since decided that another four to five months will be needed to complete the negotiations.

If this draft MAI is adopted by the OECD countries, the cornerstones of a new global economic constitution will be cemented in place. Even though the MAI will initially apply only to OECD signatory countries, an accession clause built into the proposed treaty allows non-OECD countries to sign into the pact, provided that certain conditions are met. This gives the U.S. the tools it needs to ensure that a "high standard" investment treaty is established on a global basis without risking a watered-down version through prolonged negotiations under the WTO.

Indeed, it can be argued that this MAI was originally pioneered by NAFTA. Many of the terms and conditions originally laid down in the investment code of NAFTA have been transplanted into the draft MAI. Even some provisions that were rejected in the final negotiations of NAFTA reappear in the OECD investment treaty. Now a NAFTA-plus investment code is about to be adopted by the 29 countries of the OECD, thereby setting the stage for a world-wide investment treaty in the 21st century.

This new global constitution, however, is certainly not designed to ensure that the rights and freedoms of the world's people are upheld by democratically elected governments. On the contrary, it is a charter of rights and freedoms for corporations only-a charter to be guaranteed by national governments in the interests of profitable transnational investment and competition. It is meant to protect and benefit corporations, not citizens. Indeed, through this new global constitution, the rights of citizens and the powers of governments themselves will be largely superseded by those of the transnational corporations.

In effect, the MAI amounts to a declaration of global corporate rule. As such, it is designed to enhance the political rights , the political power, and the political security of the TNCs on a world-wide scale.

It is a mistake that the OECD was chosen as the venue for establishing a "high standard" global investment treaty for transnational corporations. After all, a total of 477 out of the Global Fortune 500 corporations have their home base in OECD countries. In other words, 95.4% of the largest transnational corporations in the world today are headquartered in member countries of the OECD.

The following is an analysis of the MAI in terms of these three dimensions of corporate rule, based on the draft text (dated January 13, 1997, for distribution). This is only a preliminary analysis. A more detailed study of the text by trade experts is required to get an in-depth understanding of the MAI and its implications for different sectors. Nevertheless, what follows provides a glimpse of the big picture. (Note: italics and bold face added for emphasis only).

Political Rights

There is nothing new about corporations having political rights. Throughout the 20th century, corporations have acquired a wide range of political rights under international law, as well as corporate law within countries. Indeed, corporations were given legal rights to "personhood" and "citizenship" in most countries before women and Aboriginal peoples were. Today, a vast body of corporate law and legal doctrine is now in place which serves to recognize and protect the property rights and operations of corporations.

This legal apparatus, in turn, has been reinforced by the new free trade regimes (e.g., the FTA, NAFTA, WTO) which provide constitutional protection for the rights and freedoms of the TNCs. If enacted, the proposed MAI will further consolidate and enhance the political rights of corporations in the following ways:

1. The MAI seeks to codify a special set of rights for corporations as investors. Throughout the official draft text, corporations are seen as investors having a legal status equal to that of the contracting parties which are the nation states of the OECD. The implication here is that TNCs shall be treated as having a legal status with political rights equal to those of nation states. Some delegations go so far as to propose that investors (i.e., corporations) and the "contracting parties" (i.e., governments) be given the same definition in the MAI (p. 90, II, 5). Moreover, the provisions calling for "temporary entry and stay of investors and key personnel" investing "a substantial amount of capital" serves to establish corporations as having a superior class of citizenship rights (p. 12 - A).

2. The MAI attempts to expand the scope of investor rights of corporations by advancing a much broader definition of investment. By investment, the MAI means "every kind of asset owned or controlled ... by an investor ..." (p. 7). It extends to "an enterprise ... whether or not for profit," to "rights under contracts" and to "intellectual property rights," and to "rights conferred pursuant to law or contract" (e.g., concessions, licences, authorizations, and permits). (p. 8). It even covers "real estate or other property, tangible or intangible ... acquired in the expectation or used for the purpose of economic benefit or other business purposes." (p. 9). In other words, the investor rights of speculators are also to be enshrined in this treaty . Moreover, it includes "portfolio investment" (i.e., equity and debt shares and bonds of, and loans to, enterprises) which is precisely the type of investment that contributed to the Mexican peso crisis.

3. Under the "national treatment" and "most favoured nation" clauses of the MAI, foreign-based corporations or investors are to be accorded special rights and privileges. Not only will governments be required to provide corporations from other countries treatment that is "no less favourable" than that given to companies within their own countries, but that treatment must include "equality of competitive opportunity." (p. 139). Since the standard of "no less favourably" is being applied, countries may treat foreign-based corporations better than they do domestic companies. What's more, national governments will be forbidden from imposing performance requirements on the investments of foreign-based corporations (e.g., job content, export quotas, import quotas, technology transfers, local purchasing, etc.). Even if a national government imposes these performance requirements on domestic companies, it cannot apply them to foreign-based corporations.

4. In addition to codifying property rights ranging from the rights of petroleum corporations to hydro-carbon resources (p. 95, sec. 35), to all forms of intellectual property rights (e.g., patents, copyrights, industrial design, trade secrets, etc.), the MAI emphasizes the right to the free flow of capital. "All delegations agreed," the text says, "that the free transfers of returns was a critical element of the protection of the investors." (p. 117). No government, therefore, would be allowed to impose restrictions on the return of profits made on production in the host country to the parent corporation. It is also agreed that the MAI "should provide an absolute guarantee that an investor will be compensated for an expropriated investment ." (p. 122). This could include investments that consist of intellectual property rights (p. 114). Even non-conforming tax measures on corporations may be designated as "creeping expropriation" for which they could demand compensation.

5.These investor rights of corporations would be applied in all political jurisdictions by all levels of government in those countries that are party to the MAI. While the precise details of how the MAI is to apply to sub-national levels of government are not spelled out, it is clear throughout the text that important aspects of the investment rules are to be followed by all levels of government (i.e., provincial and municipal, as well as federal governments). Moreover, the MAI grants to corporations the right to sue governments or states and provides a binding investor-state dispute settlement mechanism (pp. 53-64) for these purposes (see below). While governments can also challenge other governments under the state-to-state dispute settlement procedure (pp. 44-52), governments are not granted reciprocal rights to sue corporations for damages on behalf of their people . Hence, the political rights of corporations are greatly enhanced by the inclusion of this investor-state dispute mechanism.

In effect, the draft MAI points to a massive transfer of "rights" from citizens to investors in the new global economy. At a time when peoples all over the world feel that their fundamental democratic rights as citizens (e.g., the Universal Declaration of Human Rights) and the ecological rights of the planet (e.g., the Earth Charter from the Rio Summit on the Environment) are not protected by governments, the rights and freedoms of transnational corporations are being guaranteed through trade and investment treaties (like the MAI) that have become the new global economic constitutions. This transfer of rights, in turn, is reinforced by radical shifts in the balance of power between governments and corporations.


Political Power

Once again, there is nothing new about the fact that transnational corporations wield tremendous political power when it comes to determining the economic, social and environmental policies of nation states. Armed with their own corporate think tanks and machinery for political lobbying and advertising, corporations can virtually call the shots when it comes to key policy issues. The formation of big business coalitions (e.g., the Business Round Table in the U.S. and the Business Council on National Issues here in Canada) has resulted in a much more systemic and coordinated approach to influencing political decisions in the capitals of nation states around the world.

Through these and related measures, such as privatization and deregulation, the balance of power between the public and private sectors has been drastically altered, with corporations increasingly gaining the upper hand over governments. The MAI includes a number of measures which serve to strengthen the political power of corporations:

1. Although the MAI does not require governments to privatize state-owned enterprises, it will certainly lay down new constraints on the conditions imposed when the ownership and control of public assets are privatized. The agreement will require, for example, that the "national treatment" and "most favoured nation" clauses apply to the initial stages of privatization, as well as to subsequent stages . This means in effect that, when a government decides to privatize a public enterprise, it must allow foreign-owned corporations as well as domestic companies to bid on the assets. While the commentary to the text indicates that there is still some dispute, the MAI could prevent governments from utilizing "special share arrangements" to encourage local workers and communities to buy the company or to distribute shares to the general public. It is also understood that these new obligations will apply to provincial and municipal governments, as well as the federal government.

2. At the same time, the MAI will impose constraints on governments in the operation of their state enterprises and monopolies. In the future, these public enterprises and monopolies will have to adhere to "national treatment" provisions in their regulatory functions and market activities. All purchases and sales of goods and services will have to be "non-discriminatory." Cross-subsidization and "anti-competitive" practices will be prohibited (p. 27). As in the case of NAFTA, state enterprises and monopolies will also be required to act "solely in accordance with commercial considerations." (p. 27). Hydro power and water utilities, for example, that provide discounted services to rural communities could be prevented from doing so under these provisions. The draft MAI even includes a proposal that even state monopolies based on "national standards" be prohibited . (p. 26, notes). Once again, these constraints and obligations are expected to be applied to state enterprises and monopolies in provincial and municipal jurisdictions, as well as those of national governments.

3. Under the MAI, all foreign-based corporations are to be assured of "fair and equitable treatment and full and constant security." "In no case" shall foreign investors be treated "less favourably than required by international law." Obviously, the rules on expropriation identified above apply here. No government will be allowed, by its regulatory measures, to "impair ... the operation, management, maintenance, use, enjoyment or disposal of investments in its territory" by corporations based in another country. (p. 40). The role of governments, in other words, is not only to ensure that the properties of foreign-based corporations are protected, but also to provide a safe haven for profitabletransnational investment and competition. All of this serves to entrench not only the economic but the political power base of foreign-owned corporations, in terms of the pressure they can exert on their host governments.

4. Governments would also be obligated to follow certain rules with respect to "investment incentives." This involves direct financial contributions such as grants, loans, equity infusions, and loan guarantees, as well as tax credits and foregone revenue. (p. 33). While there are differing views on how explicit this should be in the text, it has been agreed that the "national treatment" and "most favoured nation" requirements would be applied to all these "investment incentives." A more rigorous set of rules regarding the application of government investment incentives may be developed after further negotiations under the MAI.(p. 132). The most dramatic development here is the indication that tax measures may be included. (p. 132-3), including even payroll taxes such as social security provisions. This means that governments would be obligated under the MAI to follow the national treatment rules in applying tax measures and tax credits to all foreign-based corporations.

5. Perhaps the most powerful new weapon which the MAI gives the TNCs is the mechanism for investor-state dispute settlements. Unlike NAFTA, which grants corporations a much more limited scope for litigation, this mechanism provides corporations with the power to directly sue governments over any breach of MAI provisions "which causes [or is likely to cause] loss of damage to the investor or his investment." (p. 53). It is also understood that even "a lost opportunity to profit from a planned investment would be a type of loss sufficient to give an investor standing to bring an establishment dispute" under this section. (p. 53 footnote). If challenged by a corporation, governments are obligated ("unconditional consent") to go before the tribunal. The tribunal members are to make their judgments based not on the laws of the host country, but on the rules of the investment treaty itself (i.e., the MAI). (p. 60). All awards (which may provide for "compensatory monetary damages," restitution, or "any other form of relief") are "binding" and shall be enforced "as if it were a final judgment of its courts." (p. 63). According to a footnote, this is designed to ensure that no government denies enforcement of an award based on the claim that it would be "contrary to its public policy."

In these clauses, the MAI further expands the power of transnational corporations over that of nation states and national governments. This does not mean that national governments are to be rendered powerless, but rather that, in the new global economy, their power is to be used mainly to provide a favourable climate for profitable investment and competition. Political power is to be harnessed to serve the "rights" of investors, not the rights of citizens. As a treaty, the MAI will reinforce and constitutionalize this selective use of government power.

Political Security

One of the essential conditions for transnational corporations in developing their investment strategies is the assurance of political stability and security. Measures must be taken to provide favourable conditions and a safe haven for profitable transnational investment and competition. From the standpoint of the TNCs, it is the responsibility of the state to provide this kind of political security if corporations are going to be free to exercise their political rights and power in the new system of corporate rule.

For these reasons, it is important for a global investment treaty like the MAI to include built-in measures designed to provide political security for the investments of transnational corporations. While some of the components identified above (e.g., the Political Power section, item 3) serve this function, the MAI contains other features which perform this task as well. The following are some examples:

1. The MAI includes a set of " rollback clauses" designed to ensure that transnational corporations will have ongoing favourable conditions for investment. Any regulatory measures of nation states which do not conform with the principles and conditions of the MAI are to be reduced and eventually eliminated. The rollback provisions are designed to facilitate this process of liberalization. The contracting governments would agree to liberalize certain areas of their regulatory regimes when the MAI comes into force. Although each participating country has the right to exempt certain laws, policies and programs from the Agreement, the MAI will include restricted use of these exemptions to ensure that they do not apply to all the obligations under the MAI (p. 122), or that they are not used to avoid the main obligations of the MAI (p. 65). Unlike other international agreements, failure by a contracting government to list any reservations in the annex of the Agreement would result in all of that country's laws being subject to the MAI (p. 126). It is likely that only certain types of reservations will be acceptable and that contracting governments may be expected to set "sunset" dates for the termination of "non-conforming" laws, policies or programs.

2. These "rollback" provisions, in turn, are reinforced by what is known as the "standstill" measures in the Agreement. Under the "standstill" clauses, contracting governments would agree not to introduce any new non-conforming laws, policies or programs in the future. What this means, in effect, is that, if any future government wanted to take public ownership and control over a sector of the economy that had been previously privatized or reintroduce regulations that had been scrapped in the past, it would be forbidden to do so under the MAI. And when the "standstill" clauses are combined with the "rollback" clauses in the Agreement, they produce a "ratchet effect." (p. 127). "Any new liberalization measures," the draft Agreement states, "would be 'locked in' so they could not be rescinded or nullified over time." (p. 127). Through these measures, the MAI is designed to facilitate the continuous expansion of investor rights for corporations.

3. In addition to the obligations of governments to protect the future investments of corporations (see Political Power section above, item 3), the MAI could include provisions designed to protect existing investments. It is proposed that investments made before the MAI is signed will be protected under the Agreement. Disputes arising before the Agreement comes into force, however, may not be allowed access to the MAI's dispute settlement mechanism. Nevertheless, transnational corporations can use the MAI to enforce investor rights that derive from other investment agreements, including"a contract granting rights with respect to natural resources or other assets or economic activities controlled by the national authority." In effect, the MAI could be used to enforce contracts that have no binding arbitration channels in the first place. What's more, the MAI secures the rights and powers of absentee landlords by allowing, for example, a British corporation to lay a claim in Canada on behalf of its Canadian subsidiary. (p. 86).

4. The draft of the MAI also contains clauses protecting corporations from being targeted by governments for operations in other countries where they are seen to be violating labour, environmental and human rights standards . Application of the "most favoured nation" clauses would prevent any government from distinguishing between TNCs based on these standards. Similarly, existing bans, sanctions or embargoes that restrict investment in certain countries because of repressive human rights or labour practices could be challenged as a violation of the MAI rules and therefore revoked. For example, the U.S. and Canadian restrictions on investment in South Africa, which were instrumental in helping to dismantle apartheid, would be prohibited under the MAI rules if these countries were signatories to the Agreement. The sections dealing with "secondary investment boycotts" and "conflicting requirements" are designed to secure the rights and freedoms of corporations to operate in other countries, regardless of their labour, environmental and human rights records, unless there is a direct violation of international law.

5. Perhaps the most extraordinary measure proposed in the MAI draft to ensure political security for investors is the clause dealing with "withdrawal." Contracting governments will not be able to withdraw from the MAI until five years after it has come into force. On top of that, it is proposed that the MAI rules continue to cover existing investments in that country for an additional 15 years. (p. 71). In other words, once a country has ratified the Agreement, it is virtually locked-in for a 20-year period. Under this provision, all corporations based in the contracting countries will have an ironclad guarantee that the MAI's investment rules will remain in force for at least 20 years. Moreover, the accession clause will outline the terms and conditions for expanding the MAI to include non-OECD countries. One of the key terms, of course, will be unconditional acceptance of the investment rules ratified by the original OECD contracting governments. Any amendments to the MAI would have to be ratified by all the parties.

Viewed in terms of these three basic dimensions- political rights, political power, and political security -the MAI would consolidate and entrench the system of corporate rule that is emerging in the new global economy. If the MAI is ratified by the OECD countries, it will greatly strengthen the power of the transnational corporations, while correspondingly weakening the power of nation states. Increasingly, the role of democratically elected governments will be confined to developing and implementing economic, social and environmental policies that serve the interests of transnational corporations, rather than the broader interests of their own citizens.

So what does this mean for Canada? It is true that we have already been burdened with the equivalent of many of the MAI provisions under the FTA and NAFTA. But the MAI will include several additional measures that will tighten the stranglehold corporations already have gained over public policy-making in this country. What's more, the new MAI regime will establish investment rules favouring corporations not only in the U.S. and Mexico, but in 26 other OECD countries as well. And this is only the beginning. The MAI is meant to set the stage for the establishment of a world-wide investment treaty under the WTO.

There has been talk recently in Washington circles that the U.S. might be contemplating the addition of side-bar agreements to the MAI on labour and the environment. But the main big business lobby coalition behind the MAI, the U.S. Council for International Business, has issued a stern warning to the Clinton Administration against such a move.

"The MAI is an agreement by governments to protect international investors and their investments and to liberalize investment regimes," said the USCIB President in a letter to senior U.S. officials on March 21, 1997. "We will oppose any and all measures to create or even imply binding obligations for governments or business related to environment or labor."

What is perhaps most disturbing in the forging of the MAI is the complete lack of any public discussion and debate. If there is even a sliver of truth in our claim that the MAI is an instrument for making global corporate rule absolute, then this should be a major topic for debate both inside and outside the legislatures of the OECD countries. Instead, the MAI has drawn virtually no attention. Most politicians, let alone citizens in general, have never even heard of it.

For Canadians, the real danger is that the MAI, like the WTO, will be swept under the rug and ratified without anyone being aware of its harmful implications and consequences. If any semblance of democracy is to be salvaged in Canada, concerted steps must be taken to forestall this surrender to corporate tyranny. The forthcoming federal election offers an opportunity to focus the public spotlight on the MAI and demand a full-scale public debate about Canada's future in the global economy.

What follows is a set of Canadian flashpoints in the MAI related to policy issues that are bound to surface during the federal election.

Canadian Flash-Points

There are nearly a dozen major sets of public policy issues that will be directly affected by the MAI in Canada. With a federal election looming, however, five policy flash-points stand out above the others.* The fact that the MAI is being negotiated by high-level senior bureaucrats under top-secret conditions raises the question of who in Ottawa is really aware of what is going on in Paris around the MAI. Presumably Paul Martin (Finance) and Art Eggleton (Trade) are well aware of the MAI negotiations and are staying close to them. Beyond them, however, it is at least questionable whether any other cabinet minister is being kept abreast of the negotiations and the implications for their portfolios.

If this is a reasonably accurate reading of what is going on in Ottawa on the MAI front, then it may be possible to pry open some strategic opportunities around the following five policy flashpoints in this election climate.

1. JOB CREATION

The failure of the Chrétien government to live up to its 1993 election promise of "jobs! jobs! jobs!" continues to be a sensitive issue leading up to the 1997 federal election. The MAI will further tie the hands of existing and future governments in Ottawa and the provinces when it comes to developing a comprehensive job creation strategy:

* Forbidden to apply performance requirements on the operations of foreign-based corporations, governments are prohibited from levering employment and other economic benefits from investors.
* The commentary states that "the MAI should prevent the application of national employment quotas or labour market (economic needs) tests." (p. 105)
* Even if the Bank Act were to be amended to ensure that the big five national banks invest more in loans for local economic development, this could be struck down under the MAI.
* What remains of Ottawa's policy tools for redirecting investment to impoverished regions will likely be eliminated (p. 34).
* The technology transfer restrictions in the MAI place severe limitations on Ottawa's ability to ensure adequate R&D is done to advance Canada's economic development.
While we have seen some of these restrictions before through NAFTA, the expansion of these investment rules to include all the other industrialized countries will multiply the constraints on Ottawa's future options.

2. CULTURAL PROTECTION

The flap provoked by the WTO ruling on the split-run Sports Illustrated issue in Ottawa could be reactivated again in terms of the MAI implications for culture. Given the performance by Heritage Minister Sheila Copps in response to the WTO decision, it is unlikely that the minister has been kept adequately informed about the implications of the MAI. Yet the MAI could have more serious consequences for cultural protection in Canada.

* The intellectual property rights provisions (e.g., copyright laws) are bound to have implications for the cultural sector (even though we have this restriction with NAFTA, we are talking here about all the industrialized countries) (p. 94-5).
* Under MAI, Ottawa would not be able to use tax credits to promote Canadian cultural industries (p. 33, 1.1).
* France (perhaps supported by Canada) has proposed that "literary and artistic works" be exempted from the MAI obligations (which is not likely to be acceptable to the U.S.)
*If there is no cultural exemption, then Canadian "educational products" cannot be protected. (p. 16).
* Under the "rollback" provisions, Canada may attempt to reserve laws that restrict foreign investment in Canadian magazines but may be required to lay out a time table for allowing more foreign ownership, if not removing its restrictions altogether. (re. ratchet effect).

3. PUBLIC HEALTH CARE

It is clear that the future of Canada's public health care system remains a highly sensitive issue leading up to the federal election. Given Health Minister David Dingwall's recent response to Commons committee questions over the implications of NAFTA and GATT for drug patent legislation (C-91), it is unlikely that the minister is aware of the consequences of the MAI. Yet Canada's $72 billion public health care industry is bound to be more threatened under the MAI investment rules than it has been under NAFTA.

* The MAI could circumvent any of the very limited ("fig-leaf") reservations or exemptions for public health care that were written into the NAFTA and the GATT (the only really allowable exemption under the MAI is for "national security" purposes).
* The MAI clauses dealing with restrictions imposed on governments regarding "privatization rights" and "monopoly/ state enterprises" could have major implications in setting the stage for a two-tiered health care system in this country
* The fact that payroll taxes and social security contributions are to be included in the definition of taxation under the MAI (p. 77), in terms of investment rules in the future, could also have serious implications for health care.

4. ENVIRONMENTAL SAFEGUARDS

The current process of environmental deregulation and the weakening of environmental standards and protection that is taking place in this country will very likely accelerate under the MAI investment rules. Once again, it is unlikely that Environment Minister Sergio Marchi has any real idea of what constraints the MAI will put on him and future ministers of the environment.

* The NAFTA provisions insisting that governments not apply environmental measures in an arbitrary or unjustifiable manner and not constitute a disguised restriction on trade and investment, will be expanded to include all the OECD countries under the MAI.
* Under the investment products provisions, corporate challenges to the environmental regulation of production will likely accelerate, as witnessed by the case brought by theEthyl Corp. Canada against Ottawa over the banning of MMT (manganese fuel additive).
* The intellectual property rights provisions giving patents full protection are likely to conflict with the provisions of the bio-diversity convention.
* Under the MAI, acquiring land for preservation and conservation is not protected, whereas a logging corporation that buys up a rain-forest for commercial purposes is protected.
* Sections dealing with rights from concessions, licences, and permits have serious implications for governments which attempt to regulate corporations developing natural resources in their jurisdictions.

5. CONSTITUTIONAL POLITICS

While this may not emerge as a real issue during the federal election campaign, the fact remains that the investment rules being laid down under the MAI do have serious implications for both the sovereignist and federalist positions in the current constitutional debate, as well as First Nations and the provinces themselves. There is no indication, however, that either Québec Premier Lucien Bouchard or federal Constitutional Affairs Minister Stéphane Dion is aware of the MAI and its implications. So, too, for First Nations leaders and the provincial premiers.

* Sovereignists should be wary of the ways in which the MAI (which, by the way, they have no role to play in negotiating) will tie the hands of any future national government in developing policy for the transition towards an independent Québec.
*Federalists should be equally wary that virtually all the provisions being negotiated under the MAI will be applicable to sub-national governments (which, in turn, have not been party to the negotiations that have been taking place).
* First Nations should also beware that their rights to self-government and control of their lands and resources could be threatened by corporations more than by governments under the MAI.

Tony Clarke is the director of the Polaris Institute, which is designed to provide citizens' movements with new tools for democratic change in an age of economic globalization. In the past, he has served as the national chair of the Action Canada Network, and was social policy director for the Canadian Conference of Catholic Bishops from 1975 to 1994. He is the author of "Behind The Mitre: The Moral Leadership Crisis in the Canadian Catholic Church" (Harper-Collins 1995) and the forthcoming "Silent Coup: The Business Takeover of Canada," to be co-published later this year by the Canadian Centre for Policy Alternatives and James Lorimer & Co., Ltd.

This analysis of the MAI was prepared in consultation with Maude Barlow, Jim Grieshaber-Otto, Ed Finn, and several U.S. colleagues. It was initially prepared for the Common Front on the World Trade Organization in Ottawa, coordinated by the Sierra Club of Canada, April 1997.

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