Green warning over trade deal

Date: 12/03/1998

By Simon Coss

ENVIRONMENTAL groups are warning that a controversial international trade deal being drafted by the world's richest nations could undo much of what was achieved at last year's climate change talks in Kyoto.

They claim the Multilateral Agreement on Investment (MAI) being drawn up between the 29 members of the Paris-based Organisation for Economic Cooperation and Development (OECD) and the European Commission would prevent governments from pursuing any sort of 'discriminatory' trade policy unless their national security was directly threatened.

This would make it impossible for governments to stop companies from investing in other countries because of weak environmental rules.

Environmentalists say the MAI proposal appears to conflict directly with the principles of 'joint implementation' and 'clean development' which were central to the Kyoto agreement.

According to these two hotly-contested concepts, a rich country can pay a developing state not to increase its emissions of greenhouse gases and thus pursue a less stringent emissions reduction policy at home. “The MAI conflicts with the Kyoto protocol which obliges you to discriminate between the developed and developing world,” explained Charlie Arden-Clark of the World-Wide Fund for Nature (WWF).

The environmental lobby also claims the draft treaty's chapter on 'expropriation and compensation' - which gives corporations the right to sue governments if they feel national laws threaten their ability to maximise profits - could result in governments 'paying' to introduce environmental legislation.

Giving corporations a legal status on a par with elected governments is a new development in the multilateral trade sphere, say critics. The World Trade Organisation (WTO), for example, adheres to the principle that only governments should have rights in international agreements.

“The 'expropriation and compensation' rules are the MAI's most dangerous provisions. They arm every foreign investor with the power to challenge nearly any government action or policy - from taxes and environmental or labour rules to consumer protection - as a potential threat to their profits,” said Lori Wallach, a trade lawyer with US consumer group Public Citizens' Global Trade Watch, when she appeared before a congressional hearing in Washington last week.

Experts point to a case currently being brought by the US-based Ethly Corporation against the Canadian government under the terms of the North American Free Trade Area (NAFTA) agreement as a taste of things to come.

Ethyl is suing Ottawa for 230 million ecu on the grounds that a Canadian government ban on a petrol additive called MMT, of which Ethly is the world's only producer, damages their potential to do business. The Canadians introduced the ban following concerns that MMT could be a neurotoxin.

If the MAI - which has been described as 'NAFTA on steroids' - comes into force, campaigners say such actions could become commonplace.

At a high-level OECD meeting last month, delegates acknowledged it might be necessary to revise the MAI text to take account of environmental, social protection and labour issues. Nevertheless, campaigners are concerned that countries will rush through the negotiations in an effort to get a deal signed as soon as possible.

The MAI, which should have been concluded last May, is now scheduled for final agreement in April, although observers suggest even this target is unlikely to be met.