Fast Track or Fast One?

Fast track or fast one? President Bill Clinton's Sept. 10 request to renew "fast-track" authority to negotiate trade agreements may be notable as much for what he didn't request as for what he did. He didn't directly request fast-track authority for something called the Multilateral Agreement on Investment (MAI). Public interest activists charge that the Clinton administration is trying to slick-willy a major economic pact past Congress and the American people under a veil of secrecy. The fast-track negotiating authority Clinton wants would limit Congressional debate, forbid amendments and require a straight yes or no vote on any deal. Critics are concerned not just with expanding the North America Free Trade Agreement (NAFTA), which Clinton does mention in public statements, but with MAI. However, it appears that his affection for MAI is not for public consumption. If you haven't heard of MAI, you're not alone. The draft agreement has been the subject of closed-door negotiations among the 29 member countries of the Organization for Economic Cooperation and Development (OECD) since May 1995. It could be concluded by next May at the earliest. But there has been next to no public discussion of it. Nonetheless, MAI could portend a cosmic shift in power to multinational corporations. The proposed treaty has been kept under wraps but those wraps may now be slipping off. Language from MAI--but not the name of the pact itself--is included under the heading "Principle Trade Negotiating Objectives" in the preamble of the fast-track bill Clinton submitted to Congress. And in the first congressional debate and vote related to the treaty, in the House of Representatives on Sept. 25, supporters of the agreement fared badly. Critics contend the agreement would grant transnational corporations wide latitude to block or overturn environmental, consumer, labor and human rights legislation at all levels of government. Supporters of MAI, such as the U.S. Council for International Business (USCIB), say it will "significantly facilitate the flow of international investment" by "providing investors with a set of internationally agreed rules" and with mechanisms to settle disputes. The administration supports MAI because this is the one huge hole in the international trading system," says Jay Ziegler, spokesman for the United States Trade Representative. "The record clearly shows that when we have investment terms spelled out, investors win, and that's good for the domestic economy as well as for long-term certainty for investors." As proposed, the treaty is designed to spur the global movement of money and production by setting strict limits on governments' ability to regulate investment. It would prohibit discrimination against foreign investors in favor of domestic ones and would foreclose the use of economic sanctions to punish human rights violations. It would require full compensation for "expropriation" of assets, which in practice might include the economic effects of things like environmental laws, a position akin to the "takings" argument the U.S. right wing has used with limited success, so far to undo regulations. Critics says it could overturn living wage and community reinvestment laws. "This treaty is completely undemocratic and goes way beyond any existing trade agreements we have so far," says Chantell Taylor, field coordinator for the MAI campaign of Public Citizen's Global Trade Watch. "One of the biggest problems we have is how stealthy and secret and undemocratic the entire negotiating process has been." While the protections for corporations under MAI would be wide-ranging, binding and enforceable, provisions upholding environmental and labor standards and human rights if they are included at all would likely be voluntary and nonbinding. Tim Deal, a senior vice president with USCIB, says the group would accept language in the preamble making reference to "the desirability of investment contributing to sustainable development and the avoidance of pollution havens." But he says more binding provisions under consideration by the Clinton administration, such as requiring environmental impact statements, "go against the grain of what it's supposed to be: an investment agreement." Jay Ziegler refuses to comment on the administration's proposals on environmental and labor standards, saying they are the subject of negotiations. "The record reflects the administration has made unprecedented progress on labor and environmental issues in the context of trade and outside trade in international arenas and would continue to press for feasible progress," says Ziegler. The provision that most concerns critics is "investor-to-state dispute resolution," or granting corporations the right to sue governments if they feel a law violates the agreement's rules. The disputes would be heard by international tribunals, not domestic courts. Many bilateral agreements and NAFTA, a multilateral agreement, have similar terms but on a much more limited and strictly defined basis. MAI would give corporations a broad ability to challenge governments under all the provisions of the agreement. "This is an agreement enforceable by the corporations themselves," says Scott Nova, director of the Preamble Center, a progressive Washington think tank. "The concern critics have over MAI is that when you take the corporate right to sue that exists in limited terms under NAFTA and apply it to a much broader treaty that applies to a far larger number of countries, over time you will see once corporations learn the power of this mechanism a proliferation of lawsuits, whether legitimate or illegitimate, designed to attack public safety laws, or to make it so expensive to pass these laws, because of the damages they may have to pay, that [the countries] give up doing so." As a "sneak preview of what life might be like under MAI," Nova cites a lawsuit brought this year against Canada by the U.S.-based Ethyl Corp. under NAFTA rules. In April, the Canadian Parliament banned the importation and transportation of Ethyl's gasoline additive MMT because of health concerns. The Ethyl Corp. is suing for $25' million in damages, arguing the legislation was an "expropriation" and damaged its "good reputation." A Preamble briefing paper says the case could set a precedent for governments having to "compensate investors when it wishes to regulate them or their products for public health or environmental reasons." "It's an exaggerated fear," says USCIB's Deal of the possibility of a rash of lawsuits. "The fact that the only example either labor or the environmentalists can come up with is this Ethyl case perhaps says enough. It's an exaggerated concern. It just doesn't happen." Chantell Taylor replies that the Ethyl suit is merely the most timely and dramatic such case. Critics of MAI are almost as infuriated by the extent to which the Administration is trying to avoid public discussion of MAI as they are by the details of the pact itself. Earlier in the year, administration officials indicated they would include MAI in their fast-track request. In a March 21, 1997, letter to several administration trade negotiators, Abraham Katz of USCIB wrote that "MAI should be covered in the Administration's submission for fast track authority." But Clinton, did not mention the proposed pact in his remarks on Sept. '0. Trade watchdogs in Washington have been left to puzzle out the Administration's intent in a perversely undemocratic game of cat-and-mouse. However, on Sept. 29, Clinton's Chief of Staff Erskine Bowles provided a definitive "yes" when asked if MAI could be included in any Free Trade Agreement based on the wording of the Fast Track authority bill currently being considered by congress. Fast-track legislation makes it easier for the administration to pass controversial trade initiatives such as expanding NAFTA to Chile. It already faces resistance in Congress from pro-labor and environmentalist Democrats as well as some Republican economic nationalists. And explicitly including the far-reaching MAI in the fast-track request would likely doom the proposal. Four days before Bowles confirmed that MAI was part of the fast-track request, the first congressional skirmish over MAI resulted in a resounding setback for the Administration. MAI wasn't voted on directly. Rather, critics forced the first debate on the pact by sponsoring an amendment to an appropriations bill, calling for the transfer of $1 million from the Commerce Department budget to the U.S. Trade Representative's budget. The money, according to amendment sponsor Rep. Bernie Sanders (I-VT), would be earmarked to help inform Congress about threats to U.S. laws arising from trade and investment agreements and defend existing laws under challenge before international organizations like the World Trade Organization (WTO). After a brief 20-minute debate, Sanders' amendment--which was co-sponsored by a coalition of some of the most progressive and conservative representatives in Congress--passed overwhelmingly, 356-64. "The Members of Congress who are co-sponsoring this legislation have different political points of view. We disagree on everything, but we agree that it is the people of the Unites States of America who should decide the important issues and not people in the World Trade Organization behind closed doors in Switzerland," Sanders said in debate. Bill Goold, a Sanders spokesperson on trade issues, says the vote was viewed on the House floor as the opening shot of the battle over the Clinton Administration's request for "fast-track" negotiating authority. Goold says that when Sanders's office first started circulating its "Dear Colleague" letter soliciting support for the amendment, they found a widespread ignorance of the pact's existence among legislators. "They've tried to keep MAI under wraps to a degree to which most congressional offices weren't aware of what MAI is," says Goold, who characterizes the Administration's strategy as "duplicitous." "This is a clarion call, a wake-up call, to the trade-investment policymaking apparatus here and at the the WTO," says Goold, "that there is a populist rebellion brewing here and in other countries against the WTO and the new rules of international trade." But it's far too early to write off either MAI or fast-track, both of which have deep support among policy elites (the New York Times, doing its bit to keep MAI out of the public eye, has yet to mention the treaty in its articles on the fast-track issue). On October 1, the Senate Finance Committee voted almost unanimously and with little debate to support fast-track. The text of the treaty's draft is available on the Internet at Global Trade Watch's website is located at pctrade/tradehome.html. The Preamble Center's website is located at


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