Globalization Fight Continues
By
Luke Eric Peterson
Toronto
Star
23 July, 2003
Exactly when is a victory a "victory"
in the campaign against unfettered economic globalization?
As protesters gather
next week in Montreal at a meeting of world trade ministers, they can
be forgiven for feeling more than a vague sense of déjà
vu.
Front and center
on the World Trade Organization's agenda will be a proposal for a new
Multilateral Agreement on Investment (or MAI).
An earlier incarnation
of the MAI was aborted in 1998 thanks to concerted global protests.
The MAI would have
set out a series of rights and protections for global businesses operating
beyond their borders, without imposing any corresponding social or environmental
responsibilities.
And Naomi Klein,
in her influential book No Logo, hailed the defeat of the MAI as the
first "major victory" of an emerging global movement.
But five years later,
the MAI is back on the global agenda and is now being touted by some
proponents as a potential boon for poor developing countries.
More puzzling, it's
not even clear that the MAI ever went away.
When the MAI talks
collapsed in 1998, Western governments simply went on to negotiate mini
versions of the MAI on a bilateral basis. In many respects these treaties
look just like the investment rules in the notorious Chapter 11 of NAFTA,
which permit foreign firms to sue governments when regulations squeeze
their bottom line.
U.N. figures show
that a staggering 450 of these bilateral investment treaties were quietly
signed after the MAI was declared dead in 1998.
Viewed in hindsight,
crafty governments seem to have mounted an end run around anti-MAI forces.
Increasingly, this
is how economic globalization works these days. When liberalization
runs into stiff public opposition, proponents simply shift venues
switching from the Paris-based OECD to the Geneva-based WTO, as MAI
advocates are now proposing, or from the spotlit multilateral arena
to quieter bilateral pathways.
Major trading powers
like Canada, the U.S., Japan and Europe now pursue economic agreements
on several stages simultaneously.
One effect has been
to sap strength from multilateral efforts under the aegis of the World
Trade Organization which is part of the reason why the Doha round
of trade negotiations is faltering.
While the WTO's
ill health may sound like good news to activists gathering in Montreal
some of whom have vowed to "bring the organization to its
knees" they might want to think twice about their objective.
In fact, they might
want to consider a lesson from the first battle against an MAI: Even
if you stop negotiations at one venue, the liberalization beat goes
on it simply switches channels.
A complete collapse
of the WTO would simply occasion a wholesale shift to less visible bilateral
byways, where hundreds of deals on trade, investment and intellectual
property rights would proliferate. And typically these deals are even
more lopsided in favor of the major trading powers that dominate one-on-one
negotiations.
Mind you, even if
we should think twice before wishing the WTO out of existence, this
is no argument for writing the organization a blank negotiating mandate,
particularly on the topic of investment.
Claims made by our
federal government that a global investment treaty would be to the benefit
of the poorer developing countries many of whom do yearn for
foreign direct investment are deeply disingenuous.
One need only glance
at the new MAI's suspiciously well-heeled group of boosters. Our government,
along with Japan, Europe and a handful of global business lobbies, are
some of its most vocal cheerleaders.
Meanwhile, most
developing countries are either opposed to an MAI or remain highly suspicious.
And with good reason.
A recent World Bank report confirms what many of them already knew
the rafts of bilateral investment treaties already signed rarely translate
into new flows of investment for the poorest nations.
As things stand,
the bulk of foreign investment into the developing world is concentrated
in a tiny number of countries large ones like China and Brazil,
or those rich in natural resources while bypassing dozens of
the poorest countries.
And a new set of
WTO investment rules binding on more than 140 countries
would do little to change this pattern of investment flows.
If the big trading
powers were genuinely preoccupied with the needs of developing countries,
they wouldn't be forcing them into time-consuming negotiations on a
futile new MAI. Nor would they be pushing similarly flawed templates
at the bilateral level.
The developing world
craves new foreign investment; it represents a crucial source of capital
for building its economies. But as the recent U.N. Human Development
Report has made clear, many of the world's poorest nations first require
massive assistance to finance basic public goods such as clean
water, hunger alleviation and disease eradication before they
will ever be candidates for serious private sector investment.
The only MAI that
these countries really need is a Massive Aid Influx serious new
flows of public monies from the West to support basic public goods in
the developing world.
Only when these
basic needs as spelled out in the United Nations' Millennium
Development Goals are met, should we consider further international
rules on foreign investment.
Luke Eric Peterson
is a Canadian
writer and researcher on international affairs. He is based in Boston.
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