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Anxiety about the Multilateral Agreement on Investments

The quietly negotiated Multilateral Agreement on Investments (MAI) has been getting some noisy attention of late. Early in the winter, a confidential draft text was released. Intended for a restricted audience, it has slowly filtered out to a wider group of concerned people, organizations and institutions, in part through the dissemination of information via the Internet.

As part of global "free trade" efforts, the 29 nations of the Organization for Economic Cooperation and Development (OECD) have been developing a treaty to give foreign corporations, and in particular Transnational Corporations (TNC), what they call a "level playing field" for investment.

Critics, however, believe that the MAI continues the trend of the last few decades to grant economic and political authority to corporations at the expense of national governments. They believe that the agreement will severely limit the ability of governments to "use investment policy as a tool to promote social, economic and environmental objectives"1. This means, according to critics, that governments would be unable to favour domestic companies over international ones, support impoverished regions with investment, require of foreign companies that they meet research and development performance standards in Canada, and enforce certain environmental regulations and policies.

The draft MAI "grants to corporations the right to sue governments or states and provides a binding investor-state dispute settlement mechanism ... governments are not granted reciprocal rights to sue corporations for damages on behalf of their people"2

In other words, the agreement would dramatically increase the authority of TNCs and effectively grant them greater capacity to determine domestic policy.

This is a particular concern in the Canadian food and agriculture sector because there is already a high proportion of foreign ownership, along with the highest level of corporate concentration in the food economy in the Western world.

In most sectors of the Canadian food economy, four firms control more than 40% of the market (the generally accepted indicator of excessive corporate concentration). There is evidence that corporate concentration creates higher prices for consumers and lowers prices for farmers3.

The gap between farm gate and retail food prices in Canada increased in the 80s at about four times the rate that it did in the United States4. Higher retail food prices create hardships for low-income people, already spending approximately 30% of their disposable income on food eaten at home (compared to about 10% for the rest of the population). Lower prices for farmers mean investments in sustainability are more difficult. Greater TNC control of economic resources usually means that smaller communities suffer economically. In contrast, there is mounting evidence that investing in sustainable agriculture and local economic capacity can contribute to rural community revitalization5.

What can concerned citizens do? The first task is to make the negotiations more visible. The federal government has tried to hide its role in discussions to date. Only the federal NDP tried to raise the issue during the recent election campaign, and with their restored official party status, they promise to pursue the government vigorously on this issue. The government seems anxious to avoid debate.

Those with Internet access can get more information from the following sites:



1 Clarke, T. 1997:1. The Corporate Rule Treaty: a preliminary analysis of the Multilaterial Agreement on Investments (MAI) which seeks to consolidate global corporate rule. Canadian Centre for Policy Alternatives, Ottawa.

2 Clarke, 1997: 4, see also the Toronto Food Policy Council’s paper on free trade and food security. Available from Toronto Food Policy Council, 277 Victoria St. Rm 203, Toronto, ON M5B 1W1.

3 MacRae, R.J., J. Henning and S.B. Hill. 1993. Strategies to overcome barriers to the development of sustainable agriculture in Canada: the role of agribusiness. J. Agricultural & Environmental Ethics 6:21-53.

4 For more, order the Toronto Food Policy Council's 1997 report on food retail structure and food security. For address, see note 2.

5 See MacRae, R.J. 1996. What does the research evidence say about the value of sustainable agriculture to communities? Sustainable Farming 6(3):5.

Copyright 1997. Ecological Agriculture Projects

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