Multilateral Agreement on Investment (MAI) Talking Points

"We are writing the constitution of a single global economy"
--Renato Ruggerio, World Trade Organization Director General
(WTO Singapore Ministerial, December 1996)

En Espa?ol

  • The MAI would forbid most remaining barriers to, and controls on international investment flows. If adopted, this agreement would dramatically undermine the ability of federal, state and local governments to shape economic and social policies that foster safe, healthy and equitable communities.
  • The current MAI text gives private corporations and foreign investors legal standing to directly sue sovereign governments. If a corporation or investor feels they are not getting everything promised by the investment pact, they can demand payment from a government using a special MAI tribunal. The international tribunals that would hear the dispute could impose monetary fines on governments. The only other forum under international law in which this kind of "private standing" exists is pursuant to limited provisions of the North American Free Trade Agreement (NAFTA). In 1997, the US-based
    Ethyl Corporation sued the Canadian government for $251 million dollars in damages over a public health and safety law that banned the known toxin MMT- a gasoline additive which Ethyl produces. According to Ethyl, the law constituted a measure "tantamount to expropriation" under the terms of NAFTA and thereby a violation. This pending case is a preview of coming attractions if the MAI goes into effect.
  • The MAI mandates "National Treatment" to ensure that foreign investors and companies are treated the same as domestic companies. Therefore, tax incentives for small business and laws that are designed to nurture home-grown companies could be challenged because they inherently discriminate against large foreign investors and corporations.
  • Corporations and investors from all member countries would also be granted "Most Favored Nation" status. Governments would no longer be allowed to distinguish between countries or companies based on human rights (e.g. MFN for China), labor, environmental or other "non-trade" criteria.
  • The MAI proposes a ban on "performance requirements" which are conditions or terms governments require of investors. Examples of performance requirements include: contributing to the investment needs of the local community (such as in the federal Community Reinvestment Act), utilizing domestic goods or services (domestic content), hiring local employees or "speed bumps" on capital flight. This ban on performance requirements often "hurts" U.S. companies. Without the ability to place conditions on investments, governments will have limited control over capital flight and corporate accountability.
  • There has been virtually no public or political scrutiny of the MAI, yet negotiations have already reached an advanced stage. MAI negotiations began in the OECD in 1995 and had an initial completion date of May 1997. Only a small handful of officials in the U.S. State Department, the Office of the U.S. Trade Representative, and financial and corporate lobbies (such as the U.S. Council for International Business) are involved in the negotiations. Until January 1997, the MAI text was entirely secret. The Clinton Administration has made little effort to inform or engage citizens, elected officials, non-governmental organizations or the media.
  • Contracting Parties are bound to the terms of the MAI for a minimum of 20 years. The MAI requires a commitment of 5 years before any member may withdraw. From that point, all then existing investments are still obliged to the terms of the agreement for 15 additional years.