Arguments Against the Multinational Agreement on
Investments
Without much public awareness, 29 of the richest countries
in the world, including the US, are considering an international investment
agreement, known as the Multilateral Agreement on Investment (MAI). If
adopted, the MAI will have adverse environmental impacts around the world.
It will empower foreign corporations with a new weapon to challenge environmental
laws, which will cause adverse environmental impacts and thereby restrain
sustainable development.
The MAI requires governments to give foreign corporations
equal or better treatment with respect to domestic companies.
The MAI means that local governments have to give foreign
companies the right to invest in any sector of an economy, including environmentally
sensitive areas. It gives foreign companies the right to sue governments
if they are denied equal opportunity to exploit the country’s natural resources.
For example, if a country allows domestic companies to mine or log, it
has to let foreign mining and timber companies do the same. Thus,
governments will not be able to ensure that any economic activity in the
environment produces the maximum benefits for local residents, who have
the most to lose from the overexploitation of their rights or natural resources.
The MAI constrains the governments’ ability to regulate
environmental laws because foreign investors have the right to sue for
"expropriation".
The MAI’s rules on expropriation and compensation restrict
the governments’ ability to protect the environment. The MAI requires governments
that expropriate (take over) an investor’s property to pay the market price
of that loss. However, MAI defines expropriation so broadly that
it allows foreign investors to challenge environmental laws as an expropriation
and require monetary compensation.
The danger of this right was demonstrated by the $350
million lawsuit filed by Ethyl Corporation against Canada, under the provisions
of the North American Free Trade Agreement (NAFTA). NAFTA adopted
a rule on expropriation that is similar to the one drafted on the MAI.
Ethyl Corporation filed a lawsuit because Canada restricted the use of
a gasoline additive in order to improve air quality. Ethyl Corporation
claimed that Canada’s actions interfered with the enjoyment of their property,
which is equivalent to expropriation.
This right could deter governments from adopting strong
environmental laws as foreign investors could sue for environmental laws
that impose costs on them. This right will also cost taxpayers millions
of dollars in legal fees when governments simply require foreign companies
to abide by local environmental laws.
The MAI forbids governments to require foreign corporations
to transfer technology.
This rule will deprive developing countries of an avenue
to access environmentally clean technology and reap economic benefits from
the foreign country’s economic activity.
The MAI prevents governments from screening out companies
with poor environmental records.
The MAI prohibits any special scrutiny of foreign investors.
For example, some timber companies have bad records of "cut and run" logging
that is illegal in some countries. Governments should be able to screen
out these companies to avoid the destruction of their natural resources.
The MAI obstructs efforts to structure the world’s economy
into a more environmentally friendly and sustainable direction.
It would pressure countries to reduce environmental protections
as they compete to attract capital in the global economy. Environmental
issues will also be in the hands of irresponsible international trade
bureaucracies and private sectors instead of accountable national governments.
Works Cited
Friends
of the Earth. License to Loot
Preamble
Collaborative, The. The Multilateral Agreement on Investment: Views
Pro and Con
Sierra
Club. Forging an Environmentally Responsible Trade Policy
Sierra
Club of Canada. MAI and the Environment
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