Published: 18/06/2001

In 1998, attempts to push a Multilateral Agreement on Investment (MAI) through the OECD failed when the text of the hitherto secret document was made available on the internet. Confronted with a public backlash against this sweeping charter of global investor rights, several key governments withdrew their support from the project. Corporate appetites, however, are boundless, and the MAI has resurfaced in the proposed investment provisions of the Free Trade Area of the Americas (FTAA).

Before the tear gas had time to clear in Quebec City, where the April Summit of the Americas agreed to move towards a hemispheric ‘free trade zone’ by 2005, the report of the Negotiating Group on Investment − a corporate-dominated body operating in strict secrecy − was leaked by an NGO. The guidelines precisely follow the investment guarantees set out in the notorious Chapter 11 of the North American Free Trade Agreement (NAFTA), the inspiration behind the MAI.

NAFTA’s Chapter 11 − the mother of all investment charters − expresses in concentrated form global capital’s drive to free itself from all restrictions on the terms and conditions of cross-border investments. Chapter 11 sets out a series of investor ‘rights’ and protections culminating in the right of corporations to directly challenge the laws, regulations and practices of a signatory country if these impinge on the investor’s ability to extract maximum profit. Under Chapter 11, it is illegal to impose local content, technology transfer, or profit repatriation requirements on investments. Investor-to-state lawsuits can be initiated by corporations demanding compensation for potential future loss of earnings (the corporation in such cases is deemed to be the victim of an act ‘tantamount to expropriation’). The disputes are heard in closed tribunals staffed by arbitration ‘experts’. Needless to say, the treaty provides for no reciprocal right of governments to take action against corporations for current or future social, economic or environmental damage.

The implications of Chapter 11 were spelled out when a NAFTA tribunal last year ordered the government of Mexico to pay USD 16.7 million to the US waste-disposal company Metalclad. The company had argued that the refusal of the state government of San Luis Potosi to authorize the reopening of a waste dump it operated was an act ‘tantamount to expropriation’. The site had been closed when a local citizens’ movement provided evidence that the facility posed a menace to local water supplies. Similar suits have seen governments willingly capitulate before the cases even reach the tribunal. The US Ethyl Corporation forced the government of Canada to reverse its ban on the nerve toxin MMT, a gasoline additive manufactured by the company. In the largest Chapter 11 suit to date, the Canadian Methanex corporation is suing the US government for USD 970 million over a California state regulation phasing out the use of a toxic Methanex-made fuel additive.

Under NAFTA’s investment provisions, investor ‘rights’ extend equally to the (formerly) public sector. United Parcel Service is suing the government of Canada for USD 160 million for… favouring its public postal service. Under FTAA, it is not inconceivable that an ‘education services’ corporation could one day take action against governments which ‘favour’ public education.

FTAA, which takes in all countries in the Caribbean, Central and South America with the exception of Cuba, would extend NAFTA’s destructive work to an entire hemisphere with a population of 800 million. The agreement locks signatory countries into an investment regime which is unprecedented in its scale and scope. The services proposals abolish all constraints on surrendering the public sector to corporate purchase. The proposed rules on intellectual property rights would reinforce corporate patent monopoly and encourage the patenting of life forms.

FTAA will bring with it more poverty, more unemployment, more environmental degradation, more GMOs and the accelerated destruction of public services. It will strengthen corporate power at the expense of democracy. And it will radically circumscribe our space to act in defence of our living standards, our working conditions, our environment and our rights as workers and citizens by stripping governments of their capacity to take regulatory action in the public interest.

No ‘side agreements’ and no ‘social clause’ could effectively diminish the impact of such a sweeping charter of corporate rights. FTAA poses a direct threat to the international labour movement, and labour must mobilize on a global scale to ensure its defeat.