Hi,
In issue 10 of his 'Facts
from the Fringe' series ("an irregular and irreverent serving of
economic tidbits") Jim Stanford recounted his experience of being odd man
out at a conference on free trade. In "The CEOs and I" Jim
described his sense of the incongruousness of his presence
at the recent McGill University symposium : apart from union economist
Stanford, only lords of commerce were afforded the opportunity to air
their views, and the audience was comprised of inveterate neoliberals.
I found myself thinking that I might be in for something of the same upon
receiving an invitation from the Department of Foreign Affairs and
International Trade (DFAIT) to participate in a colloquium on Canadian
investment policy. An examination of the accompanying briefing paper only
reinforced my misgivings as the material evinced a preoccupation with the
promotion of investment to the exclusion of all other interests. When, in
a supplementary telephone conversation, I was told that many of the
invited participants were senior members of the Nova Scotian business
community - and that my presence was desired to ensure that the discussion
would not be flavorless - I concluded that I had been selected to provide
some sport for the heavy hitters.
The enclosure sent with my invitation indicated that the Government of
Canada was in the process of elaborating investment policies informed by
the opinions of a broad cross-section of Canadians; these policies are to
be propounded at the upcoming WTO (World Trade Organization) Ministerial
in Seattle, and in future FTAA (Free Trade Area of the Americas) parleys.
I have previously indicated my skepticism about the government's newfound
interest in consulting the public about pending multilateral trade and
investment negotiations but, in fairness, it is unclear what more Ottawa
could have done, with the purest of intentions, to solicit citizens' input
on these matters. One reflection of this unwonted transparency is the
series of open hearings on the WTO and FTAA held by the Standing Committee
on Foreign Affairs and International Trade, this past spring, in cities
across Canada. This is in sharp contrast to the federal government's
grudging decision, under intense pressure from public interest groups, to
conduct a few days of public hearings - in Ottawa only - on the MAI
(Multilateral Agreement on Investment).
Apparently though, the general call for submissions (including written
depositions, to accomodate those unable to make a presentation viva voce
at one of the public hearings) sent out earlier this year by DFAIT, was
deemed insufficient; for the department has also organized a number of
"focus groups," such as the one in which I participated last week. These
colloquies, being closed, are inherently suspect. One might suggest that
the intent of such sessions is to ensure that members of civil society -
who, dismissing the public hearings as an exercise in crowd control, may
have refrained from making depositions - do ultimately put forward their
ideas. Charitably, this could be understood as an effort to elicit points
of view other than those of business people; less kindly, it might be
perceived as an attempt to co-opt potential critics.
Sensible of the pitfalls in posse I nonetheless found the
prospect of having a go at leading executives too tempting to resist.
Moreover, incorrigibly rasorial as I am, I could not lightly turn down the
associated offer of a free meal...Less facetiously, I reasoned that my
attendance offered scant propaganda value - representing, as I was, a
defunct body (the NS MAI-Alert) - and that even if there was little hope
that my views would materially shape Canadian policy, perhaps my comments
might prove stimulating to one or other of my interlocutors at the
meeting.
Wednesday, June 23 at 08h30 I reported to the Canada/Nova Scotia Trade
Centre, which occupies the 5th floor of Halifax's grandiloquently titled
and poshly appointed World Trade and Convention Centre. My initial
impressions seemed to justify my suspicions : if Jim Stanford, in his one
good suit, had felt sartorially challenged amidst the Armani/Gucci set at
McGill, I - bald, bearded, and deshabille as usual - must have cut a still
more curious figure beside my well-coiffed and nattily attired confreres
at the Trade Centre.
For all that, when introductions were made the party turned out to be
somewhat less corporate than vaticination had indicated. My fellow
participants were revealed to be :
Our identities having been established, one of the DFAIT staff
capitulated, swiftly and unceremoniously, the program for the day.
Briefly, a number of questions about investment issues had been drafted by
DFAIT; taken seriatim, these would lend structure to our discussion. The
DFAIT people were to act principally as rapporteurs, leaving the task of
deliberation to the "guests."
It took very little time for an interesting colloquy to develop, a
striking feature of which was that there was no discernible correspondence
between participants' sectoral affiliations and the way they lined up on a
given issue. Thus the inquiry, "Should the federal government work to
break down barriers to Canadian investment abroad, and to reduce domestic
impediments to foreign direct investment (FDI)?" was answered
substantially in the negative by businessman Gordon; but got the thumbs up
from John, a trade union activist for 20 years. Similarly, Gordon was not
persuaded that the Canadian government should accord the same standard of
treatment to investors irrespective of nationality; but John was emphatic
in his support for such a policy. Meanwhile, Greg and Bryan - both civil
servants of some description - opined that government ought to
discriminate between domestic and foreign enterprise...to the benefit of
the latter!
For the most part, John, Greg and Darryl wanted to see Canada vigorously
pursue enhanced investment protocols. John's interest in such an approach
was in large part predicated on the belief that this would increase the
public sector's ability to regulate private enterprise (the national
origin of which he deems immaterial.) Greg and Darryl, though, advocated
this course for the more orthodox reason that razing of obstructions to
FDI and codification of multilateral investment rules would, they thought,
encourage the efficient use of capital.
These divergent motivations led to John and Darryl taking different sides
on the question of whether Canada ought to press for an investor-state
dispute settlement mechanism (a la Chapter 11 of the North American Free
Trade Agreement) in other fora. John, I was surprised to hear, supports
the establishment of such tribunals; Darryl - likewise, contrary to my
expectations - expressed opposition.
John argued for binding arbitration outside the ambit of the regular court
system on the ground that commercial pleadings, being typically of a
technical nature, place an unnecssary strain on our already overburdened
judiciary. He added that there was no reason to fear that citizens would
be injured by the decisions of dispute panels so long as governments
passed equitable and transparent laws, rather than using legislation to
advance the interests of domestic corporations controlled by friends of
the Cabinet. Darryl, for his part, subscribes to the classical view that
the sine qua non of capitalism is risk-taking, and that to
provide capitalists with a dispute settlement mechanism was to invite them
to become undiscriminating in their investments, to the detriment of the
economy (a concept commonly termed "moral hazard").
Moira, Gordon and I were agreed that to bind elected officials to the
decisions of secret and unaccountable panels offends democracy;
accordingly, we joined Darryl in decrying Chapter 11 succedanea in any and
all fora. Bryan (who had not previously heard of investor-state dispute
settlement mechanisms) reserved judgement, and Greg was equivocal (he
seemed to favor such measures in principle but regarded them as
politically unfeasible at the present time.)
While on the topic of the politically possible, Moira wondered if it
wasn't idle to discuss investment at all, since she understood that the
Clinton administration had not advanced it as an agendum for the WTO
Ministerial in Seattle. Reasonably enough, the DFAIT staff replied that
other important entities, such as the European Union and Japan, were
likely to raise the subject in Seattle; and that Canada had sufficient
clout at the WTO that it could make proposals on its own account.
Additionally, I noted that the US has a history of byzantine conduct in
negotiations, so it would be inadvisable to place much store in
communiques coming out of Washington.
However, though I defended the appropriateness of our deliberations at the
Trade Centre, I voiced my decided opposition to Canada dealing with
investment at the WTO Ministerial. I asserted that it was unjust for
developed countries to pursue the issue when the majority of Third World
polities had clearly indicated that they did not want investment to be
dealt with at the WTO. I mentioned supplementarily that an
inter-governmental expert group meeting (hosted in May/97 by UNCTAD, the
United Nations Conference on Trade and Development), had concluded that
investment treaties were only a minor determinant of FDI flows; access to
markets and socio-political conditions were cited as the most significant
factors.
Moira and I having registered our demurrals, the session proceeded on the
plausible assumption that Ottawa would be apt to disregard the desiderata
of developing countries, hence might make investment policy a priority at
the WTO all the same. In this event, it was then asked, would multilateral
negotiations with a view to producing a treaty be the best way to move
forward, or would some other approach be more advisable?
John, Greg, Gordon and Darryl were all well-disposed towards some form of
international concordat, though not for the same reasons. Greg and Darryl
accepted the standard neoliberal line that government oversight of
business has inherently distortionary effects; thus any instrument that
restricts political intervention in the economy is good. John, while
perhaps also viewing an investment treaty as a potential stimulus to
industry, was more interested in the possibility it afforded of
establishing a set of ethical guidelines that would be binding on all
parties to the compact.
Moira evaluated John's suggestion sympathetically, but at the same time
pointed out that the WTO does not inspire confidence as a guarantor of
sterling labor and environmental standards. She posited UNCTAD as a
superior choice on the basis of its record as an agency concerned with
development issues; and a natural one given UNCTAD's longstanding
commitment to designing a multilateral framework on investment (MFI). In
keeping with UNCTAD's MFI concept, Moira further proposed that
negotiations could be expanded to include such measures as the creation of
a levy on international financial transactions (a "Tobin tax").
Gordon, who did not seem terribly keen on the idea of a global investment
treaty, here observed that no new negotiations would be required to draft
suitable environmental codes : annexing existing multilateral
environmental agreements (e.g. the Kyoto Accord) would suffice. John
concurred and added that the International Labour Organization has drawn
up a complementary charter on workers' rights.
Greg was warm to the idea of multilateral negotiations on investment but
chary of embarking on such a project given its unpopularity with
developing countries and many non-governmental organizations. In
consequence, he could see merit in the formula proposed by Moira and the
others, provided that governments simultaneously undertook at least some
investor-friendly reforms. I, however, spoke against the proposition.
I cautioned first of all that selecting an acceptable forum was likely to
be a more intractable problem than was apparently supposed. If it was
consentaneous that the WTO would not do because of its regressive
operating creed and marginalization of the developing world, UNCTAD could
hardly be thought better. For one, the very fact that historically it had
been responsive to Third World concerns means that it is generally
vilipended by the rich nations. For another, UNCTAD has increasingly
acceded to the corporate agenda - including by making overt alliances with
transnational firms through its "Partners for Development" program - and
this has led to a deterioration of the agency's traditional support for
developing countries; a trend likely to continue. I argued further that,
under the current world order, no genuinely democratic college of states
could exist because :
Following from the above considerations, I labelled as misguided or worse
attempts to tame globalisation through the erection of worldwide labor and
environmental standards. The rich countries, acting through multilateral
agencies and transnational corporations, have captured the Third World in
iron pincers of indebtedness, and as a result the developing countries
have had to completely re-orient their societies to maximize exports, the
source of the valuta necessary for the remittance of external debt
payments.
The citizens of these countries have been doubly emiserated : first,
through the "dollarization" of costs (i.e. the raising of prices -
including those of basic necessities - to world levels, while remuneration
remains static); second, by the slashing of social services by governments
to free up monies for debt service. Likewise, this process has exacted a
terrible toll on ecosystems : as e.g., when forests are felled to create
rangeland for beef cattle, which are slaughtered and shipped to North
America. At the same time, the US in particular has long sponsored brutal,
right-wing military and paramilitary elements abroad, so as to keep
populist leaders from actually trying to ameliorate conditions in these
countries.
When it is the wealthy states and the international institutions they
dominate - the WTO, the International Monetary Fund, and so on - that have
brought the Third World to such a pass, surely, I said, we have no right
to load developing countries with additional obligations. Before we indict
poor nations for unethical labor practices or lax environmental regulation
we should make sure that we have left them better alternatives. As a first
move and an earnest of good will the Jubilee 2000 proposal to write off
Third World debt could be implemented.
In the end, the Trade Centre meeting was a far cry from what I had
anticipated. I was pleasantly surprised by the absence of doctrinaire
neoliberalism and the general willingness to constructively engage with
other participants. I am not at all convinced that the Canadian
government will actually take any of our advice, but I feel the exchange
of ideas was valuable nonetheless (and certainly stimulating.) Moreover,
while Trade Minister Sergio Marchi will likely brush aside the musings of
our group, it seemed to me that the DFAIT staff did take some of what we
had to say to heart - and since one of their number will be amongst
Canada's negotiating team in Seattle, perhaps there is a small chance that
our deliberations may yet have some effect. If not...oh well, the
sandwiches were tasty.
---Antoni