On free trade, the rights of multinationals and the dilemma of the State: Difference between revisions

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"By trying to win it all, large private companies are making class struggles reappear."
"By trying to win it all, large private companies are making class struggles reappear."


It is regrettable that the [[Peoples' Summit of the Americas]] ended in a kind of general rejection of [[free trade]]. Several of the participants had shown perspicacity in their study of the multiple facets of the [[Free Trade Area of the Americas]]. But, finally, all distinctions and nuances grew blurred to the profit of a dogmatic judgement. You do not condemn tides. You build dams, piers, in a word, you protect yourself. You cannot excommunicate the sea.
It is regrettable that the [[Wikipedia:Second Peoples' Summit of the Americas|Peoples' Summit of the Americas]] ended in a kind of general rejection of [[Wikipedia:free trade|free trade]]. Several of the participants had shown perspicacity in their study of the multiple facets of the [[Wikipedia:Free Trade Area of the Americas|Free Trade Area of the Americas]]. But, finally, all distinctions and nuances grew blurred to the profit of a dogmatic judgement. You do not condemn tides. You build dams, piers, in a word, you protect yourself. You cannot excommunicate the sea.


International free trade expends in the world as intranational free trade was established inside each country, a long time ago.
International free trade expends in the world as intranational free trade was established inside each country, a long time ago.
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==The role of the GATT==
==The role of the GATT==


The movement begins in 1947, with the creation of the [[GATT]]. The [[depression of the Thirties]] and the [[Second World War]] left us with very high barriers to trade; commercial reprisals had ?ransacked? commercial movements. The objective of the GATT is simple: to gradually lower [[tariff]]s and to gradually remove [[quota]]s on imports. The privileged instrument to reach these ends is also simple: the reduction to trade barriers given by a member State to another member State is automatically granted to all the other members. This is the clause of the [[most favoured nation]]. As nobody will authorize a reduction on a product without obtaining, on the other hand, a reduction on another product, the negotiations of the GATT become a kind of immense fair where its members exchange reductions which are automatically extended to all.
The movement begins in 1947, with the creation of the [[Wikipedia:GATT|GATT]]. The [[Wikipedia:Great Depression|depression of the Thirties]] and the [[Wikipedia:World War II|Second World War]] left us with very high barriers to trade; commercial reprisals had ?ransacked? commercial movements. The objective of the GATT is simple: to gradually lower [[Wikipedia:Tariff|tariff]]s and to gradually remove [[Wikipedia:Import quota|quota]]s on imports. The privileged instrument to reach these ends is also simple: the reduction to trade barriers given by a member State to another member State is automatically granted to all the other members. This is the clause of the [[most favoured nation]]. As nobody will authorize a reduction on a product without obtaining, on the other hand, a reduction on another product, the negotiations of the GATT become a kind of immense fair where its members exchange reductions which are automatically extended to all.


The instrument is powerful. At the beginning, there were only two dozen members. They are 140 today. Everyone wants to be part of it. Even, and especially, China.
The instrument is powerful. At the beginning, there were only two dozen members. They are 140 today. Everyone wants to be part of it. Even, and especially, China.
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The barriers are gradually reduced. The GATT obviously lives very well with the fact that some of its members are in a rush to organize free trade areas or customs unions.
The barriers are gradually reduced. The GATT obviously lives very well with the fact that some of its members are in a rush to organize free trade areas or customs unions.


And thus appeared the [[European Common Market]], the [[European Free Trade Area]], The [[Canado-American Agreement on Free Trade]], the [[NAFTA]], the [[Mercosur]], the FTAA (at least, the project...). These are the most known ones, but there are others.
And thus appeared the [[Wikipedia:European Community|European Common Market]], the [[Wikipedia:European Free Trade Area|European Free Trade Area]], The [[Wikipedia:Canada-United States Free Trade Agreement|Canado-American Agreement on Free Trade]], the [[Wikipedia:NAFTA|NAFTA]], the [[Wikipedia:Mercosur|Mercosur]], the FTAA (at least, the project...). These are the most known ones, but there are others.


The negotiations became more sophisticated than the former bilateral exchanges. And the fields of application more numerous. Whereas the first negotiations normally had to do with products, we started to liberalize services (financial, transportation, data processing, commercial, etc). But one does not provide a service of insurance, financing, or consultation as one moves an oil barrel. One usually needs a local establishment. The company which sought to establish itself in a foreign country wanted to be treated like a local company. The clause of national treatment appeared.
The negotiations became more sophisticated than the former bilateral exchanges. And the fields of application more numerous. Whereas the first negotiations normally had to do with products, we started to liberalize services (financial, transportation, data processing, commercial, etc). But one does not provide a service of insurance, financing, or consultation as one moves an oil barrel. One usually needs a local establishment. The company which sought to establish itself in a foreign country wanted to be treated like a local company. The clause of national treatment appeared.
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If a conflict appears between a foreign investor and a government, how will it be regulated? For a long time, commercial conflicts were recognized only between governments, and an arbitration was established to decide the type of reprisals to which a country could resort with regards to the delinquents.
If a conflict appears between a foreign investor and a government, how will it be regulated? For a long time, commercial conflicts were recognized only between governments, and an arbitration was established to decide the type of reprisals to which a country could resort with regards to the delinquents.


How to regulate a conflict between a company and a government today? The conflicts are all the more likely to arise as the objectives of the private sector are increasingly demanding. In 1995, the [[president]] of the Dutch-Swedish company [[ABB]] (which is strongly established in Québec by the way) summarized the objective of multinationals and transnationals in a concise way:
How to regulate a conflict between a company and a government today? The conflicts are all the more likely to arise as the objectives of the private sector are increasingly demanding. In 1995, the [[president]] of the Dutch-Swedish company [[Wikipedia:ABB Group|ABB]] (which is strongly established in Québec by the way) summarized the objective of multinationals and transnationals in a concise way:


"I would define [[globalization]] as the freedom for my group to invest where it wants, when it wants, to produce what it wants, to get supply from or sell where it wants while having to support the least amount of constraints as possible with regards to labour laws and social conventions."
"I would define [[Wikipedia:globalization|globalization]] as the freedom for my group to invest where it wants, when it wants, to produce what it wants, to get supply from or sell where it wants while having to support the least amount of constraints as possible with regards to labour laws and social conventions."


The [[International Chamber of Commerce]] embraces this vision with enthusiasm and the pressures became increasingly strong so that, in the conflicts that such a vision would not fail to cause, a company could sue a government in front of an international court and obtain financial compensations from them for the profits lost because of the policies pursued by this government. Vast program!
The [[Wikipedia:International Chamber of Commerce|International Chamber of Commerce]] embraces this vision with enthusiasm and the pressures became increasingly strong so that, in the conflicts that such a vision would not fail to cause, a company could sue a government in front of an international court and obtain financial compensations from them for the profits lost because of the policies pursued by this government. Vast program!


==The Canado-American Treaty==
==The Canado-American Treaty==


At the end of the Eighties, the [[American Congress]] becomes very [[protectionist]]. The bills to limit the importation of such and such product multiplied. The list ended up reaching more than 200 proposals. As the principal supplier of the United States, Canada was directly aimed. That only a few of these projects be adopted and Canada would be exposed to a serious [[recession]]. The [[White House]], conscious of the danger, wins the Congress by proposing a free trade area to Canada. Mr. [[Mulroney]] accepts. [[Ontario]], which greatly benefited from the installation of American branches, sheltered by the Canadian tariff, is against. In Québec, the Prime Minister [[Robert Bourassa]] would be rather for but hesitates. The official opposition, the [[Parti Québécois]], would be rather against but hesitates. An agreement between the two political parties made it so that the non-partisan support of Québec to Mr. Mulroney gave him the political force to conclude. Under the influence of the [[Ontario labour unions]], the [[labour unions of Québec]] were against, but the most important labour union in the private sector, the Metal-workers, will refuse, in the name of the interest of its members, to align itself on Ontario's fears. The game was won.
At the end of the Eighties, the [[Wikipedia:United States Congress|American Congress]] becomes very [[Wikipedia:protectionism|protectionist]]. The bills to limit the importation of such and such product multiplied. The list ended up reaching more than 200 proposals. As the principal supplier of the United States, Canada was directly aimed. That only a few of these projects be adopted and Canada would be exposed to a serious [[Wikipedia:recession|recession]]. The [[Wikipedia:White House|White House]], conscious of the danger, wins the Congress by proposing a free trade area to Canada. Mr. [[Wikipedia:Mulroney|Mulroney]] accepts. [[Wikipedia:Ontario|Ontario]], which greatly benefited from the installation of American branches, sheltered by the Canadian tariff, is against. In Québec, the Prime Minister [[Robert Bourassa]] would be rather for but hesitates. The official opposition, the [[Wikipedia:Parti Québécois|Parti Québécois]], would be rather against but hesitates. An agreement between the two political parties made it so that the non-partisan support of Québec to Mr. Mulroney gave him the political force to conclude. Under the influence of the [[Ontario labour unions]], the [[labour unions of Québec]] were against, but the most important labour union in the private sector, the Metal-workers, will refuse, in the name of the interest of its members, to align itself on Ontario's fears. The game was won.


And yet, the interest of Québec was clear. What creates jobs here, are less the branches of American companies than indigenous small to medium businesses. For them, the lifting of the American tariffs was a gift from heaven. Their exports to the South were going to explode. Never again could English Canada blackmail the [[sovereignist]]s as it had done since so many years: if you leave, we will no longer buy your products. Canada ceased to be the largest market for Québec; it was now the United States. To remove a sovereign Québec from the recently created free trade area? Difficult, very difficult, since, after the extension to Mexico, the United States were aiming for the FTAA.
And yet, the interest of Québec was clear. What creates jobs here, are less the branches of American companies than indigenous small to medium businesses. For them, the lifting of the American tariffs was a gift from heaven. Their exports to the South were going to explode. Never again could English Canada blackmail the [[sovereignist]]s as it had done since so many years: if you leave, we will no longer buy your products. Canada ceased to be the largest market for Québec; it was now the United States. To remove a sovereign Québec from the recently created free trade area? Difficult, very difficult, since, after the extension to Mexico, the United States were aiming for the FTAA.
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==NAFTA==
==NAFTA==


The slip began with NAFTA. The Canado-American Agreement had come into effect in 1989. For NAFTA, it was 1994. American investors are wary of the behaviour of Latin American governments. They want rock-solid protections. [[Neoliberalism]] is raging. The governments of the [[Soviet]] kind are gone. The great search for foreign investment is everywhere. Governments will yield. Investors will have their obligatory international arbitration for governments.
The slip began with NAFTA. The Canado-American Agreement had come into effect in 1989. For NAFTA, it was 1994. American investors are wary of the behaviour of Latin American governments. They want rock-solid protections. [[Wikipedia:Neoliberalism|Neoliberalism]] is raging. The governments of the [[Wikipedia:Soviet Union|Soviet]] kind are gone. The great search for foreign investment is everywhere. Governments will yield. Investors will have their obligatory international arbitration for governments.


It is not obvious if the Canadian government saw the extent of what it signed. It is true that the Mexican government caused a lot of mistrust. And the arbitration clause seemed so logical in order to encourage foreign investment in Latin America. When the American company [[Ethyl]] sued Canada on the basis of the NAFTA provisions, the alarm clock was brutal.
It is not obvious if the Canadian government saw the extent of what it signed. It is true that the Mexican government caused a lot of mistrust. And the arbitration clause seemed so logical in order to encourage foreign investment in Latin America. When the American company [[Wikipedia:Ethyl Corporation|Ethyl]] sued Canada on the basis of the NAFTA provisions, the alarm clock was brutal.


For the remainder, however, and particularly for the general exceptions, the clauses of the Canado-American agreement, as a whole, were maintained. The cultural exemption remained, but as a clause of the American agreement rather than as a clause of NAFTA. It is not indifferent to what followed.
For the remainder, however, and particularly for the general exceptions, the clauses of the Canado-American agreement, as a whole, were maintained. The cultural exemption remained, but as a clause of the American agreement rather than as a clause of NAFTA. It is not indifferent to what followed.
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==The MAI==
==The MAI==


What followed was, for our matter, a kind of detour outside of the Americas. It is the draft treaty of the MAI ([[Multilateral Agreement on Investment]]). It is an initiative of the [[OECD]], which gathers, as we know, only modern industrialized countries, of which Canada and the United States.
What followed was, for our matter, a kind of detour outside of the Americas. It is the draft treaty of the MAI ([[Wikipedia:Multilateral Agreement on Investment|Multilateral Agreement on Investment]]). It is an initiative of the [[OECD]], which gathers, as we know, only modern industrialized countries, of which Canada and the United States.


The members of the OECD will name negotiators who, without the Parliaments being really informed, will work out a charter of investments which came close to what the president of ABB desired.
The members of the OECD will name negotiators who, without the Parliaments being really informed, will work out a charter of investments which came close to what the president of ABB desired.
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The text of the draft agreement is made public on Internet by an American association of consumers. Protests take place a little everywhere (of which that of the [[SalAMI]] in Montréal). In all parts of society, we begin to realize that governments are about to give up some their essential responsibilities. Free trade overflows on a resignation of the State.
The text of the draft agreement is made public on Internet by an American association of consumers. Protests take place a little everywhere (of which that of the [[SalAMI]] in Montréal). In all parts of society, we begin to realize that governments are about to give up some their essential responsibilities. Free trade overflows on a resignation of the State.


The last negotiations of the MAI are to begin in Paris, on October 20, 1998. October 13, [[Lionel Jospin]] (PM of France) declares that if it is normal for a country to transfer some elements of its sovereignty to an international organization, it should not transfer some elements of its sovereignty to private interests. And he asks the French delegation to withdraw from the negotiations. That was enough for the the project to collapses.
The last negotiations of the MAI are to begin in Paris, on October 20, 1998. October 13, [[Wikipedia:Lionel Jospin|Lionel Jospin]] (PM of France) declares that if it is normal for a country to transfer some elements of its sovereignty to an international organization, it should not transfer some elements of its sovereignty to private interests. And he asks the French delegation to withdraw from the negotiations. That was enough for the the project to collapses.


Québec escaped it by luck. The federal government informed us very badly on what was happening. It gave up the general cultural exception without stating it. And if the project had passed, a good chunk of what we call the Quebec Model of Development would have become illegal. Since this episode, Québec requires to be present at international negotiations crucial for its future.
Québec escaped it by luck. The federal government informed us very badly on what was happening. It gave up the general cultural exception without stating it. And if the project had passed, a good chunk of what we call the Quebec Model of Development would have become illegal. Since this episode, Québec requires to be present at international negotiations crucial for its future.


Another attempt will come with the [[meeting of WTO in Seattle]] but demonstrators will prevent the meeting from taking place.
Another attempt will come with the [[Wikipedia:WTO Ministerial Conference of 1999|meeting of WTO in Seattle]] but demonstrators will prevent the meeting from taking place.


==The FTAA==
==The FTAA==


The next occasion was the meeting on the FTAA in Quebec. In this case still, a leak on the Internet revealed the content of the chapter of the FTAA which deals with foreign investment. The responsibility, this time, is that of the [[Institute for Agriculture and Trade Policy]].
The next occasion was the meeting on the FTAA in Quebec. In this case still, a leak on the Internet revealed the content of the chapter of the FTAA which deals with foreign investment. The responsibility, this time, is that of the [http://www.iatp.org/ Institute for Agriculture and Trade Policy].


Reading this text, we soon realize that it is a new attempt at writing, for the three Americas, a great charter of the rights of multinationals. It is a stronger MAI, if that is possible. The rights of the governments are even more reduced, more diluted than they already were in the MAI.
Reading this text, we soon realize that it is a new attempt at writing, for the three Americas, a great charter of the rights of multinationals. It is a stronger MAI, if that is possible. The rights of the governments are even more reduced, more diluted than they already were in the MAI.


The negotiation was secret. The Group of negotiations on investment sat on five occasions during the year 2000. It submitted a report to the ministers responsible for trade after their meeting of November 27 to 29. It is the text of their report that we have. It was discussed again during the Committee of trade negotiations held in [[Lima]], Peru, in January 2001. We do not know what occurred there. All that we know, it is that the Quebec Summit, which was supposed to deal with the free trade agreement, dealt with democracy instead; it is interesting, but it is not what the initial objective of the conference was supposed to be.
The negotiation was secret. The Group of negotiations on investment sat on five occasions during the year 2000. It submitted a report to the ministers responsible for trade after their meeting of November 27 to 29. It is the text of their report that we have. It was discussed again during the [[Committee of trade negotiations]] held in [[Wikipedia:Lima|Lima]], Peru, in January 2001. We do not know what occurred there. All that we know, it is that the Quebec Summit, which was supposed to deal with the free trade agreement, dealt with democracy instead; it is interesting, but it is not what the initial objective of the conference was supposed to be.


The majority of governments on our continent seek to get as much investment as possible. They look at what Mexico obtain with NAFTA and they drool. [[Brazil]], whose population is close to 180 million inhabitants, whose industrial development makes it the leader of Latin America and created the Mercosur, is nevertheless hesitant even though its economy develops quickly. [[Argentina]], which is going through a serious economic crisis, is ready to accept anything.
The majority of governments on our continent seek to get as much investment as possible. They look at what Mexico obtain with NAFTA and they drool. [[Wikipedia:Brazil|Brazil]], whose population is close to 180 million inhabitants, whose industrial development makes it the leader of Latin America and created the Mercosur, is nevertheless hesitant even though its economy develops quickly. [[Wikipedia:Argentina|Argentina]], which is going through a serious economic crisis, is ready to accept anything.


Mr. [[Pettigrew]], Canadian [[Minister of International Trade]], promised that the FTAA agreement did not contain the most controversial clauses of the NAFTA agreement and that, in particular, that of the obligated arbitration imposed to private corporations. He is not denying that the object of the leak in the media is authentic. He only tries to indicate that this document was a draft and that Canada has not yet taken its decision on the matter. After the five meetings of the Group of negotiations on investment in 2000? Not even after the meeting of Lima? You have to take people for imbeciles to declare something like that. In fact, as with the case of the MAI, Canada was impressed by the importance of the issue and decided to let it pass. "Laisser faire, laisser passer." Not only do we give no opposition to the sea, we are not even trying of building dams.
Mr. [[Wikipedia:Pettigrew|Pettigrew]], Canadian [[Minister of International Trade]], promised that the FTAA agreement did not contain the most controversial clauses of the NAFTA agreement and that, in particular, that of the obligated arbitration imposed to private corporations. He is not denying that the object of the leak in the media is authentic. He only tries to indicate that this document was a draft and that Canada has not yet taken its decision on the matter. After the five meetings of the Group of negotiations on investment in 2000? Not even after the meeting of Lima? You have to take people for imbeciles to declare something like that. In fact, as with the case of the MAI, Canada was impressed by the importance of the issue and decided to let it pass. "Laisser faire, laisser passer." Not only do we give no opposition to the sea, we are not even trying of building dams.


And the Government of Québec can't do anything to proclaim the presence of Québec, its existence, and the nature of its interests. It is doing that quite well.
And the Government of Québec can't do anything to proclaim the presence of Québec, its existence, and the nature of its interests. It is doing that quite well.
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I conclude with some observations on the debates concerning the Québec Summit.
I conclude with some observations on the debates concerning the Québec Summit.


* Had it not been for the finale declaration of the Peoples Summit of the Americas, we should salute one more time the revealing role of those who call themselves, pompously, civil society. Some claimed their method of action was undemocratic. It certainly is not less democratic than that of the [[Americas Business Forum]], which was granted an official consultative status by the head of states and governments; neither less democratic than the admission of business people to the negotiation tables. We have no access to the meetings rooms nor to the reports, the only place left is the street.
* Had it not been for the finale declaration of the Peoples Summit of the Americas, we should salute one more time the revealing role of those who call themselves, pompously, civil society. Some claimed their method of action was undemocratic. It certainly is not less democratic than that of the [[Wikipedia:Americas Business Forum|Americas Business Forum]], which was granted an official consultative status by the head of states and governments; neither less democratic than the admission of business people to the negotiation tables. We have no access to the meetings rooms nor to the reports, the only place left is the street.


* Québec is in a delicate situation and a potentially dangerous one. Kept aside from the negotiations, it is not truly aware of what is going on. To erect a public sign in front of the meeting place to signal who we are has something pathetic to it. It probably had to be done, no doubt, but we can't escape the thought that short of [[52 000 votes]], Québec would have participated to the meetings along with other countries much smaller than itself.
* Québec is in a delicate situation and a potentially dangerous one. Kept aside from the negotiations, it is not truly aware of what is going on. To erect a public sign in front of the meeting place to signal who we are has something pathetic to it. It probably had to be done, no doubt, but we can't escape the thought that short of [[52 000 votes]], Québec would have participated to the meetings along with other countries much smaller than itself.
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