Foreign Affairs in Annapolis

By Fred Hiatt, Editorial Page Staff, The Washington Post

Rushern L. Baker III, a Maryland state legislator from Cheverly in Prince George's County, was "a little taken aback" when a former ambassador and a deputy assistant secretary of state showed up in Annapolis to lobby him last week. Their mission: to block a Baker proposal to impose sanctions against companies that do business in Nigeria, a wanton human-rights abuser in Africa.

State Department officials, like those from the U.S. Trade Representative's office, increasingly are finding that they have to negotiate with Americans as well as their foreign counterparts. From Massachusetts to California to New York City, local initiative and foreign policy are coming into conflict.

One reason is America's thickening connections with the world. "You have to go back to George Washington's day to find a time when the United States was as dependent on foreign trade and investment as it is today," says Alan Larson, assistant secretary of state for economic and business affairs and the boss of last week's emissaries to Annapolis. In 1970 imports and exports were equivalent to 13 percent of the U.S. gross domestic product; today they're up to 30 percent. U.S. investments overseas, and foreign investments here, also have soared.

But it's not just a question of volume. As ties grow, the United States increasingly is trying to shape other countries' societies. Trade talks used to focus on tariffs, duties, anti-dumping provisions and other matters that only trade lawyers understood.

Now U.S. officials focus on what they call "non-tariff barriers": corruption, inadequate antitrust law, even zoning-like regulations that may work against U.S. products. In Europe, the United States is fighting health laws that keep out U.S. beef. In Japan, the United States attacks laws that help preserve neighborhoods by shielding small shops from competition -- but also make life difficult for U.S. exporters. U.S. labor unions want the administration to pressure other nations to allow collective bargaining.

Not surprisingly, other nations don't always welcome these initiatives. Even less surprisingly, they have their own ideas about how the United States should organize itself. To win the right to challenge foreign barriers before international judges, America has had to subject itself to the same rules. Baker says he modeled his anti-Nigeria law on state laws that helped bring down apartheid in South Africa. But in the intervening years, the United States has signed on to treaties that preclude such laws -- and that give other nations the right to demand compensation from Washington if their firms are barred in Maryland.

There's no question, the State Department's Larson says, that the stuff of international negotiation today tends tend to "get into your living room" more than in the past. He should know; he's point man for a treaty-in-progress known as the Multilateral Agreement on Investments. Under negotiation for 2 1/2 years, this far-reaching pact would in most cases bind nations to treat foreign companies as they do their own, so that firms can invest across borders without fear of expropriation or unfair favoritism.

The MAI hasn't yet attracted much attention in Washington. But it's the object of fevered opposition on talk radio and in some corners of the Internet. In the preface to a recently published tract, "MAI and the Threat to American Freedom," Lori Wallach and Ralph Nader describe the proposed treaty as "enormously secretive and powerful" and "a slow-motion coup d'etat against democratic governance in the United States, Canada and abroad. . . . "

As to being secretive, the entire soporific text is available on the Web site of the Organization for Economic Cooperation and Development, under whose auspices the negotiations are taking place ( But opponents are more persuasive when they list decisions they say could be taken out of Americans' hands. Since MAI would forbid countries from demanding a certain level of investment, wouldn't the Community Reinvestment Act -- which says banks must invest in low-income neighborhoods -- be thrown out? Since the treaty bans anything "tantamount" to expropriation, couldn't a foreign tobacco company challenge advertising restrictions that reduce the value of its investment? What about state laws that limit hunting licenses or farmland ownership to locals, minority contractor set-asides, affirmative action, right-to-work laws?

U.S. officials say none of these would be affected. Government procurement would be exempted, all state and local laws would be grandfathered, the "tantamount" language would be amended to underscore the inviolability of legitimate health, environmental and safety regulation. Moreover, they argue that MAI would help American workers, because U.S. firms in today's economy need to operate effectively abroad to remain healthy at home.

But the Clinton administration, still smarting from the defeat of fast-track trade legislation, isn't pushing MAI too hard. The original plan was to wrap up talks by May; now U.S. officials say they need at least another year, and they'll oppose any firm deadline.

More to the point, they have learned from fast-track that they have to consult, while treaties are still being shaped, more than ever before -- with unions, local officials, environmentalists and others. The more the scope of trade talks goes beyond tariffs, the less they can be left exclusively to trade officials.

Of course, as State Department officials know from their work in foreign capitals, consultation doesn't guarantee agreement. "The State Department testimony only helped me more," says Baker. "They admitted that what's going on in Nigeria is terrible -- and they couldn't point to much that they are doing about it." Before it's over for U.S. diplomats, Annapolis may make Pyongyang look easy.

The writer is a member of the editorial page staff.

Monday, March 30, 1998; Page A25

Copyright 1998 The Washington Post Company

The Corporate Carnies are playing a Shell Game!

by Mike Dolan, Field Director, Public Citizen's Global Trade Watch

You heard it here first! It's a shell game with several skills but one rotten pea. Take the MAI, please. You know why it's being negotiated in the Organization for Economic Cooperation and Development (OECD) -- an obscure forum of 29 rich countries, based in Paris -- don't you? Because the Big Bizness interests that will profit from the MAI were frustrated in the World Trade Organization! The less developed countries in that larger forum were rightfully anxious about a multinational pact to open global investment markets. Because they realized that the MAI's grant of corporate power would necessarily come at the expense of civil society and the sovereign powers and immunities of democratic governance. So the Fatcats packed it up and took it to the OECD to close the deal and then present it to the South as a condition for foreign direct investment. So far so bad.

Our efforts and those of our allies worldwide have put the MAI on the rocks (see below). An international NGO coalition (including many of you) has raised both public awareness about the MAI and the political stakes for support of its extreme provisions; and the MAI negotiators have conceded that it will not be signed in April. This is a victory, without question. But does that mean that the global greed-heads will pull the plug? Of course not! On the contrary, they will devise all manner of extreme technique to revive the MAI, spending lots of money to transplant its provisions into different venues and agreements.

The Africa Recolonization Act.

This week, Clinton is in Africa with an entourage of 600 political and corporate leaders. He thinks he's bearing a gift, the so-called "Africa Growth and Opportunity Act." We call it NAFTA for Africa. It contains provisions that will be bad for US and African workers and families, including (that's right) MAI-like deregulation of capital markets to reduce the power of governments to condition transnational investment in their communities and economies.

Last week, the bill (HR-1432) passed the House, although by a margin much narrower than its proponents had expected or hoped. For example, Charles Rangel of New York -- ranking Democrat on the Ways and Means Committee and a senior member of the Congressional Black Caucus -- predicted that once he was able to move this bill into action, would get 350 "Aye" votes and sail through the Senate. The political reality now is that thanks to all our rapid wake-up-Congress actions, this bad bill is damaged goods, limping to the other side of the Hill where Senators from both parties are considering it with considerable trepidation.

Trent Lott, the head guy in the Senate and an inveterate `free trader', has indicated that he would like to try again on the Carribean Basin Initiative by slapping it AND Fast Track on to the Senate version of the House bill. Rumor has it that Lott cut a deal with the House GOP leadership (specifically Rep. Phil Crane (R-IL) -- who showed his incredible diplomatic skills when he referred to African countries as "retards" -- and Bill Archer, Ways n Means Chair), whereby he won't allow changes to the basic House Africa bill in return for which the House conferees won't mess with the CBI and Fast Track amendments.

The Crane bill is a bad bill, as more and more trade analysts and African scholars are beginning to realize, even without GOP Amendments. The attached materials detail the several levels at which the legislation is worth our active opposition. We think we can derail this legislation in the Senate (though it may require a filibuster to do it), but only with all of us working together. During this upcoming long congressional recess -- beginning April 2nd and going all month, practically -- we urge you to work your grassroots Fair Trade magic on both of your Senators.

Among its odious provisions, the Crane-Lugar Africa Bill would cut off existing African trade and aid benefits unless African countries are certified to have met annually a long new list of --- conditions.

Provide MAI-style "national treatment" to foreign investors. "National treatment" is not limited to barring laws which attempt to restrict foreign investment relative to domestic investment. The concept is defined to bar also any law or regulation which has the effect of disadvantaging foreign investment, regardless of its language or intent.

Obey IMF structural adjustment programs, which typically include - and have included in Africa - cutting government spending, especially "human infrastructure" spending such as public health and education, privatization of public services and other publicly owned enterprises, cutting taxes on corporations, cutting subsidies for domestically-oriented food production and subsidies for basic consumption.

Join WTO - which many African countries have not because even OECD says WTO rules hurt Sub-Saharan countries and immediately...

Thus we see that the MAI is in the IMF, and the IMF is in the Africa Bill, and so is the MAI; and Fast Track and CBI will be attached to the Africa Bill, and it's all pegged to corporate salaries and campaign finance somehow.

IMF Expansion.

As you will recall from a previous mailing, the issue here is whether U.S. taxpayers will be required to pony up $18 Billion to expand the role and increase the power of the International Monetary Fund, which has concocted a plan to bail-out international investors who made some bad deals along the Pacific Rim (these investors are actually in danger of losing money unless their loss is promptly socialized).

The situation is complicated, according to everybody who works on this issue, although the appropriation may actually be a done deal by the time you read this, with just a few wrinkles to be ironed out. The Senate has already approved the full appropriation. The House has marked up its version of this IMF expansion and, according to crack CTC lobbyists, the floor vote may come up before the end of the month, which is next week.

The Bad News is that several usual congressional stalwarts, trying not to appear `isolationist,' have agreed in principle to the IMF expansion so long as the US representatives to the IMF use their `voice and vote' (an IMF procedural nicety which reflects the opaque and undemocratic nature of the institution) to `endeavor to support' labor rights and environmental protection. The non-binding `hortatory' language is just earrings on a pig, an absurd and craven cover for more corporate-driven international development policy and bad trade scams.

The Good News is that the anti-abortion zealots are threatening to hold the appropriation hostage to the Mexico City funding language (it has something to do with dollars not underwriting family planning in the developing world), to which the Administration would never agree. Well, never say `never' with reference to this Administration; but if the right-wingers can get an anti-abortion amendment to stick, the process of IMF expansion will be delayed at worst and beaten at best. You will recall that GOP firebrands tried to tie this non-pertinent and controversial policy to Fast Track last fall.

Meanwhile, as noted above, apparently the IMF is trying to change its charter to incorporate the deregulated investment policies which have been frustrated in the OECD negotiations around the MAI. Reasonable minds could conclude that the IMF has outlived its usefulness and should be dismantled -- that, indeed, fifty years is enough.

We need to educate ourselves and our congressional allies on the IMF. Even if the amendments to the IMF charter fail, a victory for the IMF is a victory for the forces of corporate globalization, and a defeat for the IMF is a victory for the opposition. That's because even without the explicit authority to do so the IMF has been using its leverage to force the free trade/corporate globalization/trickle down economics model down the throats of every government it could get its hands on through its "structural adjustment" plans. And those "structural adjustment" or austerity programs, by driving down living standards and labor and environmental standards, have a pernicious spillover effect even on countries which are not directly subject to them, like the United States. It's all part of the "race to the bottom" that the forces of Fair Trade have been opposing around the world.

MAI: Bloodied but Unbowed.

[This section contributed by Chantell Taylor, Organizer - ed]

By now you've probably figured out that you have given the MAI a pretty bad beating and for a moment, you should put this memo down, stand up and do a brief victory dance - we've successfully plagued the MAI with enough public and political opposition that the negotiators have now declared they will not be able to sign on time! In fact, the game gets a lot trickier now as the MAI may duck under a new "shell" for further negotiations (more on that later).


This time last year hardly anybody knew what the MAI was. Today, this corporate bill of rights is plagued with lethal substantive and procedural problems -- a fire-storm of citizen opposition, unanticipated political opposition, turf-wars over country-specific reservations, and criticism from hungry corporate fat-cats who claim the agreement is getting diluted by social and environmental pressures.

Public Opposition: Grassroots campaigns against the MAI have exerted tremendous pressure on negotiating governments of the OECD. In response to US groups demanding greater protections for labor and the environment, US negotiators have stated that such protections have become "essential... for public perception of the MAI." Of course, the proposed "protections" are hortatory, non- enforceable, preambular language which are totally inadequate - but you get the idea. In a February week of action, you bombed Senate offices with calls against the MAI and flooded US negotiators with similar calls demanding that the US withdraw from negotiations. MAI working groups are forming all over the country where local activists are coordinating "MAI-Free Zones", grassroots lobbying, press and outreach strategies.

There has also been a flurry of action abroad. Over 600 international NGOs have now signed the joint statement against the MAI and national campaigns have been launched in dozens of OECD member and non-member countries. A Dutch NGO reported: "It appears that all hell has broken loose in some European Union member countries, with a combination of street protests, NGO critiques, outraged parliamentarians and inter-agency fights within governments on key issues. The word `war' has even been applied to the situation in both Finland and Sweden. Things are also moving fast in Italy, Denmark, the Netherlands and the UK." In the Netherlands, activists occupied the entrance of the office of the Chairman of the OECD's MAI negotiation group, Mr Engering, and constructed a 'factory' of cardboard boxes in the main hall of the building, to indicate that investments would be out of control under the MAI. And thanks to a dynamic campaign against the MAI, half of Canadian provinces and numerous municipalities have released statements against the MAI. Meanwhile France joins Canada as anti-MAI central. Their MAI attacks are front page all over the press and the Prime Minister was forced to declare that France would not sign.

Rising Political Awareness: Until early last year when the MAI draft text was liberated from secrecy, virtually no members of Congress were aware that a draft existed or that negotiations had commenced two years prior. Thanks to the high-profile fast-track debate and the Clinton Administration's pathetic attempt to slip the MAI into the bill, the MAI surfaced as a possible "fast- track" killer. Suddenly a flurry of angry inquiries came from confused Congress Members, who had never heard of the MAI before! Now, many members already positioned against the pact. The European Parliament (although with limited power) passed 488 to 8 in favor of a resolution rejecting the MAI calling the agreement "too-far reaching." Germany, Australia and New Zealand have informally stated that they are not ready to sign and in France, the outraged Finance Minister described the MAI's corporate privileges to manipulate competition between countries as "blackmail" and declared that the French Parliament will not sign the MAI in April.

Bottoms-up! Unlike the GATT and NAFTA, the MAI is negotiated from a top-down, not a bottom-up approach. In a bottom-up approach, only the sectors and activities explicitly defined in the text fall under the obligations of the agreement. In the top-down MAI, everything counts unless explicitly omitted -- a revolutionary and far-reaching approach! As a result, anxious negotiators are piling on country-specific reservations, and turf-wars are bogging down the deadline. Remember, submitted reservations are merely a wish list that is subject to the approval (or not) of all member countries. The US has the biggest wish list of them all -- 200 exceptions and an overall exemption for all existing state and local laws. Of course, the EU entered MAI talks with the specific hopes of dismantling state and local laws perceived as a tremendous disadvantage to EU corporations, so they are not about to let that one through. On the other hand, EU wants a broad carve-out for the Regional Economic Integration Organization -- exactly the exemption the US proposed but for EU countries not states. Canada and France are drawing a line in the sand. They refuse to sign without a general exception for culture, strongly opposed by the US.

Each of these have aggravated conflict, and in some cases a direct stand-still, of further MAI talks.


Clearly the MAI is troubled at the OECD -- we know it, the fat cats know it and so do the negotiators. So here's where they shuffle the deck. Already, talks have begun to figure out where the MAI could be buried from public scrutiny and charged forward. Visualize the old shell game, where the challenge is to figure out which shell the pea is hiding under. Now visualize those shells labeled OECD, IMF, WTO, and NTM. The pea is the MAI agenda, and we're going to find it!!

IMF: Next month the IMF is proposing a change in their charter that would effectively force the fund's member nations to adopt MAI-like rules; "It picks up the baton dropped last month by negotiators of the (MAI)." (Washington Times, 3/21/98) This backdoor MAI exemplifies the devious determination to force MAI rules no matter where, no matter how.

WTO: MAI talks actually originated in the WTO but developing countries immediately opposed the MAI's dramatic liberalization and investor standing.

According to The Economist (3/14/98); "...governments of developing countries increasingly see the MAI as an exercise in neo-colonialism, designed to give rich-world investors the upper hand." Even still, OECD member countries may retreat back to the WTO in a last-ditch effort to close some MAI rules. Already a working group on investment has begun talks, and is expected to be on the agenda at their annual ministerial meeting this May -- where our campaign will focus immediately after the April OECD deadline (MAI? Don't Even Try!).


Most countries are aggravated by public opposition and seemingly endless conflict over country- specific reservations. As a result, the first two options seem the most probable.

Cooling-off period: A personal favorite of the Clinton Administration, who recognize that the MAI would not be politically popular in this, an election year. This option would allow a suspension of negotiations with no immediate schedule set to resume talks. We hear the thinking is that reviving fast track is a bigger priority than finishing the MAI, so the U.S. is ready to shelve MAI for a while. The Europeans, FYI, are still calling for an April lock-down of key provisions.

Political Commitment: A political commitment to achieve closure on the MAI over some set time period -- possibly 6 months but likely the next Ministerial in 1999.

Partial Lock-in: The EU and the OECD Chair of negotiations are pushing this option -- signing on to the parts of the MAI that are actually agreed on and then ironing out all the other wrinkles over the following months.

Chantell Taylor
Field Organizer
Public Citizen's Global Trade Watch
215 Pennsylvania Avenue SE
Washington, D.C. 20003
phone: (202)546-4996
fax: (202)547-7392

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