Matthew Townsend is a Melbourne barrister.
Matthew Townsend warns that the MAI may hurt the environment, labour standards and the independence of developing nations.
A BILL OF RIGHTS for transnational corporations is being developed in the boardrooms of Paris.
Known as the Multilateral Agreement on Investment (MAI), the treaty is being developed by the 29 OECD nations.
The Australian Government is a party to the discussions, but is keeping quiet about it for the moment. This is remarkable, for the MAI could have a dramatic effect on Australia's laws.
The Director General of the World Trade Organisation, Renato Ruggerio, says that the OECD is doing nothing less than "writing the constitution of a single global economy."
The confidential negotiations have been underway since May 1995. An agreement may be reached within months.
Under the agreement, signatory nations agree to: open all economic sectors to foreign ownership; treat foreign investors no less favourably than domestic firms; and remove requirements that investors have certain obligations in exchange for market access.
The agreement's proponents say it will provide protection for investors, open new markets and improve the efficiency of the global economy. The Trade Minister, Mr Tim Fischer, says it will encourage cross-border capital flows so helping to create non-inflationary growth and more jobs.
But critics say the agreement will accelerate an industrial and environmental "race to the bottom" as countries compete for increasingly mobile capital.
For example, an initiative which links fishing licences or quotas to local job creation could be banned under the agreement.
Unions are also concerned that the agreement contains no enforceable obligations for corporate conduct concerning labour standards.
This may be why the Australian Government is keeping a low profile on the issue: it is reportedly taking a hard line on keeping protections for labour and the environment out of the agreement.
Nations are permitted to make 'reservations' to the agreement and the Australian Government intends to use this procedure to exclude certain laws from the treaty's operation - acts that protect majority Australian ownership of QANTAS, Telstra and certain media, for example.
But parties will not be entitled to add non-conforming measures once the agreement has been signed and reservations should be rolled back over time.
Backing out of the MAI will not be easy. A country cannot withdraw for five years and investments commenced under the agreement would remain protected for a further 15 years.
Australia's judicial system is also being bypassed. Corporations challenging Australian laws under the agreement would go before an international panel of industry experts (not judges) that would interpret the treaty and issue binding rulings.
This mechanism is similar to a provision of the North American Free Trade Agreement in which corporations are permitted to sue governments for the expropriation of property.
The developing world will be the biggest loser.
As the United States Council of Business acknowledged "[g]iven the current competition for capital, accession to MAI, particularly for developing countries, will serve as a 'seal of approval'."
Signing the agreement may become a precondition for aid or International Monetary Fund assistance.
This alarms developing nations who see the agreement as the new face of colonialism.
Yet perhaps the most troubling aspect of the treaty is the silence surrounding its negotiation.
The Australian Government should explain its position on the agreement, set out which reservations it is seeking and explain how it intends to ratify the treaty.
Better still, it should try to move the negotiations to the UN where all nations can be involved.
As British MP David Chaytor has said "Surely... at the end of this century, we should look for some form of global arrangement that provides for democracy and the transfer of wealth from the richest to the poorest rather than vice versa.
"Surely we should not sign a charter that gives multinational corporations everything they want, and diminishes the power of democratically elected Governments to control companies exploiting and damaging the environment."
Yet this appears to be the way we are heading.