CAIS: Foreword

Most of us are concerned with making our lives more secure for ourselves andour loved ones. We live in a mostly peaceful country which hasn't seen wounded soldiers on the street since the Civil War. We have come to expect good schooling, good jobs, marriage if we choose, and safety. But in the last twenty-five years something has changed.

We are working harder and being entertained more than ever, but real income and the quality of life has slowly declined for most Americans. Meanwhile company downsizing, a bull market, and legislative reforms expand the wealth of the already wealthy. The Communist menace has disappeared, but US military action grows and millions of civilians are displaced, are maimed, or die.

The turning point was around 1973--after the Sixties and the Vietnam military defeat--when Big Business and Washington and other powerful governments reached a "consensus" that there had been "an excess of democracy" and that government should serve the needs of industry for growth, which "would benefit all." At that time computers and internet were taking over business operations while government lagged. Privatization of government operations was a major opportunity for new service industries, and congress members rallied to the suggestions of corporate lawyers and lobbyists to reduce corporate taxes and government supervision of banks, communications, labor practices, natural resources, and international trade.

The General Agreement on Tariffs and Trade (GATT) was crafted by specialists beyond public view. Its outgrowth, the World Trade Organization (WTO), was formed by the trade ministers of various countries and blessed by the President and Congress with powers exceeding those of the Supreme Court. WTO's principles favoring giant corporate growth but ignoring health, labor, environment, small and medium business, and local government went without discussion in the media or assessment by cabinet members concerned with those matters. The North American Free Trade Agreement (NAFTA), which has failed to meet its objectives, enacted those principles with Presidential pressure. The United States as a government of the people was yielding its sovereignty— its right to defend its people and resources.

Greatly encouraged by these transnational corporate successes, the International Chamber of Commerce— representing Wall Street and foreign banks and corporations rather than Main Street businesses— drafted a Multilateral Investment Agreement (MIA, later known as MAI). With lobbying by large corporations represented by the US Council on International Business (USCIB), the US Trade Representative and the Departments of State, Treasury, and Commerce supported the draft expanding the NAFTA and GATT provisions world-wide, encouraging closed-door negotiations in Switzerland about details.

WTO's chief boasted that they were crafting "a constitution of a single global economy" which promoted corporate and investor rights while ignoring human rights, labor rights, the environment, and local demo cracy. Because of objections from Third-World negotiators about basic provisions favoring banks and corporations based in the industrialized nations of the North, the negotiations were moved in 1996 to the Organization for Economic Cooperation and Development (OECD) in Paris, where only the richest nations' representatives sat. The Canadian delegation leaked the MAI draft to a citizen group which posted it on internet sites, and soon civil organizations in many countries were outraged at what they read. MAI was a free-trader's dream, limiting the powers of citizens and their governments but leaving the burden of support for industry-damaged resources, health, housing, livelihoods, etc., upon taxpayers.

The Alliance for Democracy (AfD) attracted 200 citizens to a conference on MAI at Boston College. Slowly a few newspapers published stories, but news traveled faster and wider by e-mail and MAI negotiators felt the heat. In the summer of 1998 France withdrew from negotiations fearing that MAI would destroy its film industry, its culture, and its environment. England threatened to leave, and negotiations collapsed. Now MAI principles may be moved back to the WTO trade ministers' agenda in Seattle on November 30, 1999.

The distressing principles of MAI, its very framework, are:

  • Most Favored Nation— We must treat investors and companies from authoritarian regimes just as well as those from humanistic democracies if they choose to do business inside our country, even if, in the case of South Africa under apartheid and Burma today, legitimate representatives the people call for economic sanctions on their own country.

  • National Treatment— We must give foreign speculators and companies the same or better rights as domestic or local companies, without regard to size.

  • Performance Requirements— Foreign companies would be exempt from labor laws, health laws, environmental laws, immigration laws, local and regional development laws, and other laws or regulations that might reduce planned profits. Foreign subsidiaries of US companies would qualify. Commercial value is the only operative value under MAI— environmental, social, and political costs would have no weight.

  • Dispute Settlement— The sovereign US government could, with no right to decline, be sued for damages, for lost or anticipated profits, if an investor or company complained about being mistreated under any principle listed above. The company could choose to have the government tried in an international tribunal of trade specialists, and could ignore US law and legal precedent and international agreements on labor, environment, local option, and human rights. The proceedings would be private and final— not appealable, though US taxpayers would pay judgments. Under similar investment provisions of NAFTA, the sovereign nations of Canada, the United States, and Mexico have already been sued for hundreds of millions of dollars, and no company has yet lost.

Following the Boston College conference, AfD formed a citizens' panel to draft a people's alternative to the MAI. It would not simply block MAI's principles, but in a new framework would encourage a democratic world economy. That alternative agreement or treaty is the document below— A Common Agreement on Investment and Society (CAIS). It proposes a new system of economic arrangements to ensure that human rights, livelihoods, environment, competitive fairness, democracy, and sovereignty come before investor and corporate rights or privileges.

You can get an overview by reading the opening paragraph, in small capitals,of each Article.

Business Persons: The interests of independent businesses— small or mediumbusinesses, fam-ily farms, and professionals— are not the same as those of giant corporations (usually traded on stock markets) which profit most from foreign ownership, borrowing, manufacturing, service provision, and trade. Local businesses, especially if they are start-up or minority-owned or woman-owned businesses, may profit from contracts with public agencies as well as other businesses, and repay the state and community not only commercially but also by being considerate of their employees, suppliers, and other customers as com munity members. Local businesses, even if they sell abroad, usually approve of US and state regulations (banking, health & safety, community development, etc.) and tax laws fairly applied, and enjoy the considerations of US and state courts, operating under laws which their known, elected representatives helped to create. MAI would threaten these interests.

Beyond these considerations, small and medium businesses are vulnerable to unfair competitive practices which MAI would encourage, which can drive smaller firms out of business. Big businesses can often dictate terms of collaboration and dependency, and foreign businesses operating in the US are usually big. Foreign companies are not usually concerned with the integrity of the communities in which they operate, in contrast to independent businesses which depend on local prosperity and stability. MAI thus encourages consolidation, meaning that even bigger and more impersonal and rootless companies make smaller companies even more vulnerable. On the other hand, independent businesses can and do form associations which not only can strengthen individual businesses, but can analyze system practices and laws, including foreign trade and investment laws, and with labor, environmental, and other civil groups support pro- community systems. CAIS addresses such local system needs.

Public Officials: Conflicting pressures from big business, independent business, federal and state authorities, and civil society organizations are the daily bread of federal, state, county, and municipal elected officials.  As pressures increase from all these sources— especially from big business, fairness becomes more and more difficult. But MAI goes a step further. It would limit regulatory authority in a wide and uncertain range of business activity, and turn over legislative and court functions to international bodies beyond the reach of domestic court systems. Why would elected officials want to give away their powers? For some there may be relief from pressures or help for their next campaign, but in many cases those considerations just put off the inevitable— how to improve the system for all. By thinking system ically CAIS tries to address this question.

All Citizens: Employees of big corporations— professionals, managers, technical specialists, clerks, operators— have interests more similar to employees of smaller companies or to independent contractors or practitioners than to corporate officers and shareholders. Thirty or even ten years ago this was not true, but today big-corporate decisions are usually driven by quarterly earnings for shareholders, and disregard longer term investment in employees or their communities. Thus companies, including contractors or subsidiaries, are summarily downsized, dissolved, or move abroad, and abandon employees. MAI blocks any law holding a foreign company liable in such cases..

Employees of smaller companies may be paid less but be more confident of continuing, satisfying employment, until or unless the company fails or sells out to a larger company, now more likely to be transnational.  Government workers, often protected as civil servants, would face unknown threats from privatization and downsizing fostered by MAI. On the other hand, small companies may combine or associate or relate under a community plan, still independent of giant corporations, to provide even more scope and benefit to employees. CAIS would foster such positive solutions.

Independent practitioners know how difficult it is to maintain a customer or client base, especially when big companies offer deals— however temporary or conditioned—that siphon off clients. MAI would provide easy access by even more giant companies and their subsidiaries, in retail, health care, real estate, education, water supply, waste processing, and every other service.  Licensing laws could be invalidated as restraint of trade or investment.  CAIS stresses business-system adaptation without loss of responsible, democratically crafted regulation.

Retired persons usually depend on investments of their pension funds or on personal investments as a major or minor part of their income. Not many would choose socially irresponsible companies for their stock portfolios or their pension funds if they had a say. In fact, socially responsible firms— those with good labor and environmental practices which may well be forced out under MAI— yield about as much as the others. The difference in many cases may be the amounts unavailable to shareholders because they are drained by huge advertising budgets and special financial benefits to officers. Such practices are unaddressed by MAI except where national and local laws restricting such practices or requiring careful accounting may be seen as standing in the way of profits. By protecting national and local laws CAIS fosters security in retirement.