By Luke Eric Peterson
The Toronto Star
July 22, 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
Front and centre 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
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
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
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
favour of the major trading powers that dominate
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
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
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
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