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Nobody applied. The USA, like other countries, was on the point of ratifying an agreement that would have disastrous effects on employment, the environment, national sovereignty and democracy, and the legislators knew nothing about it. In the end, after the vote had been postponed for a month, one republican senator accepted Public Citizen's challenge, signed an affidavit and answered the questions. He then held a press conference to announce that he had intended to vote for this Agreement, as he had the year before for NAFTA, but he had changed his mind, horrified at what he had found on reading the text. The Agreement was approved by 235 votes to 200 in the House of Representatives and by 68 to 32 in the Senate. Did the 303 who voted in favour really know what they were voting for?
In France, only 17 deputies voted against the GATT Agreement. It is a safe bet that French members of parliament were as ignorant of its content as their American counterparts. In their defence it must be said that the text of the Agreement runs to several hundred pages, and is deliberately complex and abstruse, but it is binding on our countries and is causing the same havoc in France and in Europe as elsewhere.
The Globalization Observatory is holding this symposium today (6 May) in the hope of averting a similar failure of democracy. With our friends in the artistic world, we were among the first people in France to call attention to the existence of the Multilateral Agreement on Investment (MAI), at a colloquium held at the National Assembly on 3 December 1997. One-and-a-half years later, we can congratulate ourselves that the concerted efforts by the social movement, members of parliament, concerned intellectuals and after an initial heavy silence the mass media, have defeated the MAI.
By withdrawing from the MAI negotiations at the Organization for Economic Cooperation and Development (OECD), France torpedoed this Agreement, which was formally laid to rest on 3 December of last year, but new dangers have immediately arisen.
The interests which supported the MAI are still pursuing the same objective, namely, total liberalization of investment. Their strategy now is to deploy on several fronts and catch their opponents in a pincer movement. They plan:
In the case of the WTO and of the TEP, we are dealing with a series of highly technical
agreements, which are difficult to understand. Indeed, the content as a whole is accessible only
to the experts who are paid specially only for that. Monitoring by citizens is deliberately made
difficult; the task of the politicians practically impossible. If the MAI was opaque, the current
strategy sets out to be impenetrable.
When the OECD negotiations collapsed, governments had reached agreement on
approximately 90% of the content of the MAI. Having been unable to complete it because of
the unprecedented mobilization of their citizens, many of them are keen to add the field of
investment to the agenda of the WTO. Sir Leon Brittan, former heir-apparent to Mrs
Thatcher, as well as a former (and perhaps future) European Commissioner, is working
tirelessly in this direction. He maintains today that the WTO has always been his preferred
forum for the negotiations on investment, and travels the world recruiting allies. It should be
remembered that the member countries of the European Union do not vote at the WTO but
are represented by the Commission in this case, Sir Leon.
The WTO Ministerial Meeting will take place at the end of November in Seattle. The
"built-in agenda" includes agriculture, services (the General Agreement on Trade in Services -
GATS) and intellectual property (TRIPs). This agenda is heavy, worrying and laden with
unforeseeable consequences for all our countries. Liberalization of agriculture, for instance,
could reduce food safety in many countries in the South and ruin small farmers in the North;
TRIPs provides for the patenting of living entities plants animals, micro-organisms and
biological material, including genes.
Sir Leon's and hence the Commission's strategy is to add three new fields to this complex
and threatening agenda : investment, competition and public procurement. The whole
thing the old agenda plus the proposed new fields has been dubbed the "Millennium
Round". For the moment, the latter has no legitimacy.
For each of these new areas investment, competition, public procurement there is a
"Working Group" at the WTO. The mandate of the first two extended in November 1998
is restricted to examining relations between trade/investment and trade/competition policies;
they are in no way mandated to prepare new negotiations. The Working Group on "public
procurement", on the other hand, is working on an "interim agreement" on "transparency" in
public procurement markets, as a first stage on the way to complete liberalization which would
work on the basis of National Treatment and the Most-Favoured-Nation Clause, like all WTO
Agreements. If this Agreement went through, a government could no longer give priority to
national firms. All calls to tender would be published on the Internet and all the firms in the
world could bid.
Once again, let me say that investment is not yet on the WTO's agenda. These
"comprehensive negotiations" can still be avoided, but only if we act quickly. The balance of
power at the end of April 1999 is as follows:
Sir Leon, on behalf of the EU, concluded an agreement with the Japanese government
(7 January 1999) in which they speak of their "determination to place investment on the
agenda of negotiations at the WTO". According to the Director General for External
Economic Relations of the European Commission, the countries in favour of "comprehensive
negotiations" (besides the EU and Japan) are Canada, Australia, Mexico, Korea, Latin
America (except Brazil) and South-East Asia. Morocco and Tunisia "could come down for a
consensus" while India, Pakistan and Egypt remain "sceptical".2
The positions of the different governments will be decided in July at the latest. The
European ministers of trade will gather in Berlin on 10 May for a supposedly "informal"
meeting at which they will, however, be under pressure to endorse the "comprehensive"
negotiations. This requires the unanimous support of European countries.
Who decides the position of the European Union? In principle, the governments. In fact,
this is strongly influenced by a practically anonymous group called the "113 Committee",
appointed by the Council to assist the Commission.3
No sooner was the demise of the MAI official than a 113-document defined the strategy
for including "investment among the new issues for WTO negotiations". This document was
leaked and was found to recommend the same elements as led to the defeat of the MAI.
The document indicates that:
Complete liberalization of trade and investment - for whose benefit?
When France withdrew from the MAI negotiations it declared itself in favour of
transferring negotiations on investment to the WTO (on the pretext notably that the South is
represented there). This is the position of Sir Leon and the Commission.
The position of the United States is more complicated. Bill Clinton seemed to be coming
round to the European position in his State of the Union address last January, but the USA's
primary strategy is to conduct various negotiations simultaneously, starting with the easiest,
and conclude them as they go. This strategy is called "early intake", or sometimes "first
harvest". Less elegantly one might also say "tying up".
According to the business community, it would be desirable to work out an agreement on
investments in the WTO because there it would cover the largest possible number of
developed and developing countries and would also facilitate the effective application of
principles such as National Treatment, Most-favoured-nation status and settlement of
disputes, to issues of investment. Furthermore, an instrument on investments within the
WTO could be improved as it went along and adapted to the new conditions in the course
of future rounds of negotiations.4
Curiously enough, in the official version of this document (International Rules for
Investment and the WTO) published a month later, this wish expressed by the "business
community" no longer appears, nor do two whole sections explicitly setting out the elements
of "an ideal result which would open up markets to new investments and protect them" and
reiterating the clauses of the MAI a broad definition of investment, no obligation in regard to
results, possibility of a mechanism by which the investor could take legal action against a state,
and so on. The only reference to social or environmental norms notes that these will be
"contested by some developing countries". On this subject, "We must also strike a very
delicate balance between the conflicting aims of different constituencies within the EU".
poorly informed and not consulted (whereas) the large companies are well-informed and present in the pre-negotiation stages. As a general principle, the European Parliament must dispose of the same information... as the 113 Committee. The reform of Article 113... regularly called for by the European Parliament, is a priority object for the forthcoming institutional reform5.
Immediately after the WTO decision on bananas, the cabinet of the American Special Trade Representative took on a further eleven lawyers specialising in this type of business. The WTO will be piloted by law suits and not by politics and diplomacy. The US is delighted to get what it wants by this method which the Europeans not to mention the developing countries have not mastered. We have to fight this pre-empting of democracy.
With several hundred other organizations around the world, the Globalization Observatory has signed a "Declaration of Citizens' Organizations on the Millennium Round".
We refuse any extension of the powers of the WTO, in particular with regard to investment. We propose a thorough examination, with a view to sweeping reform, of the impact the WTO has had up till now on employment,
Since 1995, Sir Leon Brittan has been negotiating with the US, without any mandate to do
so, for a "new transatlantic agenda" (NTA). On 27 April 1998, France officially rejected this
free trade zone on the grounds of its anti-democratic character and the dangers it would
represent for the construction of Europe. Strange to say, just three weeks after this statement
by France, the Transatlantic Economic Partnership came into being at the EU-USA summit in
London on 18 May 1998, without prior notice and without any public discussion of the
content of TEP.
This new abbreviation TEP, replacing NTA, allowed France to save face. But as regards
the contents of the agreement itself, it is six of one and half a dozen of the other. The NTA is
dead, long live the TEP, which is both multilateral and bilateral in its objectives. The content
of TEP is elastic and has never stopped expanding since it saw the light of day on 18 May last
year. It is heavily influenced by the Transatlantic Business Dialogue (TABD), which was set
up in 1995 at the same time as the NTA to advance "Trade Facilitation", in other words, the
dismantling of "non-tariff trade barriers" such as health and environmental regulations,
standards, inspection procedures, etc. The TABD's big annual conference is attended by the
directors of the top transnational companies on both sides of the Atlantic, and officials such as
Al Gore and Renato Ruggiero, Director General of the WTO.
While coalitions all around the world were fighting against the MAI, the European
Commission was preparing a long document intended to influence the Council's decision in
favour of the TEP. You have to pick your way through its 27 pages in order to grasp the full
scope of it.6 The Commission states that EU-US relations "in the fields of trade and
investment... are still hampered by a large number of barriers"; hence these "negotiating
guidelines" according to which the "Commission is authorized on behalf of the European
Community and its member states to enter into negotiations (with the USA)" in a large
number of fields.
On the multilateral level, the TEP and the TABD work hand in hand with the WTO for,
once again, it is a question of endorsing the Millennium Round at the WTO. The
Commission's document affirms its intention to add the fields of investment, competition,
electronic trading and public procurement to those already foreseen , i.e. agriculture, services,
intellectual property, "at all levels of government" of the member countries.
The Commission notes the "usefulness of establishing multilateral rules on investment" and
undertakes to "put investment on the agenda of the new multilateral negotiations (of the
WTO)". This is MAI model 2.
Although the term "investment" is never defined, it does seem to include at least direct
investment and financial investments, the volatility of which has sparked the crises we all know
about. The determination to liberalise everything goods, services and capital is obvious in
the TEP as a whole.
As one expert has commented, it is extremely difficult in the run-up to the Millennium
Round to know what questions have been discussed and decided so far within the TEP. There
are no written reports. However, from their statements it appears that the TEP is a very
important tool for the USA and the EU in preparing for the forthcoming negotiations.7 Clearly, the multilateral content of the TEP is consolidating and institutionalizing an informal
process that already existed.
On the bilateral level, the Commission's document explicitly invokes the principle of
"National Treatment" for all sectors in order to guarantee "effective access to markets". An
American investor will therefore receive the same treatment as a European one and benefit
from "increased possibilities of access to markets at all levels of government", including public
procurement. Invitations to tender must be issued electronically. The harmonizing of EU/US
patenting procedures is also foreseen.
Still according to the Commission document, the bilateral scope of the TEP will aim,
through a series of apparently technical but actually highly political agreements, to dismantle
the food safety, environmental and health safeguards introduced by Europe. By way of
"Mutual Recognition Agreements" (MRA) in a dozen fields, it will be possible to "align
standards and regulations". The result would be to legalize on both sides any product which
can legally be sold on the territory of either one of the parties. Upon signing these MRAs,
governments would be required to dismantle any provision of their national legislation not in
conformity with the agreement.
Food safety and plant and animal health measures will be under severe pressure,
particularly in areas like hormone-treated beef or genetically modified organisms. You should
be aware that the TABD group on bio-technologies is chaired by UNILEVER and
MONSANTO. The Grocery Manufacturers of America (GMA) has already decided to attack
European laws on "eco-labelling", the German law on packaging or other laws which "reflect
local cultural values and are discriminatory in terms of international competition". The GMA
will use the TEP to tackle the European authorities "who have a very restrictive approach to food additives. 8
In order to "enhance the dialogue between the regulatory authorities" the two parties
EU-USA undertake to sound out "the opinion of the business community, notably in the
framework of the Transatlantic Business Dialogue (TABD)"; they will also endeavour to
"reach one or several levels of mutual recognition, especially on the basis of recommendations
from industry". The Commission realized belatedly that others besides industry might have an
opinion on all these issues, which is no doubt why it has recently and hastily started to set up
Transatlantic Environment, Consumer and Labour Dialogues. These different dialogues for
environmentalists, consumers and trade unionists are meant to "underpin the TEP process"
and will be essentially "consultative", study and discussion groups.
The Commission "recognizes that voluntary codes of conduct are an effective tool for
strengthening the capacity of the business community to improve working conditions
throughout the world". But this remains voluntary. Nothing obligatory is envisaged either in
this field, or in that of the environment. There will be "cabinet-level meetings to maintain the
political drive" and "senior officials assisted as needed by ad hoc or expert working groups"
who (with the business community) will look after everything.
The "Mutual Recognition Agreements" should lead to "the elimination or reduction of
technical rules and regulations; public procurement markets will be open "throughout the
territory of the parties", "at all levels of government". Investment will be set within a
framework of rules worked out at the WTO.
This long Commission document led to a much more succinct Plan of Action, approved by
the Ministers in September and ratified by the European Parliament in November 1998, with
only 71 votes against. Yet this Plan contains complex provisions designed to weaken
safeguards to protect health, environment, employment, public services and democracy.
The Globalization Observatory calls for an immediate moratorium on the
Transatlantic Economic Partnership, transparency on all concerning it and the opening
of a public debate to enable citizens to assess its impact on public well-being and
democracy.
* Dr Susan George, a researcher and the author of several books, was born in the US, has lived
in France for many years and is now a US/French citizen living near Paris. She is Associate
Director of the Transnational Institute in Amsterdam, a decentralized fellowship of scholars
living throughout the world whose work is intended to contribute to social change. She is also
President of the Observatoire de la Mondialisation [Globalisation Observatory] in Paris.
(Text taken from the introductory report on the state of negotiations at the World Trade
Organization and on the Transatlantic Economic Partnership (TEP) to the US Senate on 6
May 1999 at the occasion of the Symposium of the "Globalization Observatory".)
Notes
"The agreements negotiated within the framework of the Transatlantic Economic
Partnership shall apply throughout the territory of the parties, regardless of their
constitutional structure, at all levels of government and on the conditions laid down
therein."
This specification is probably directed at the USA which had filed numerous exceptions to
the MAI based on the laws of its different states or municipalities. It also seems to give the
TEP treaty status (i.e. setting it above national law). The legal status of this set of agreements
is not quite clear.
1. cf. Letter from presidents Philippe Herzog and Biagio De Giovanni of the Commission on External Economic Relations of the European Parliament, concerning the preparation of the Council meeting on 10 May. Addressed to Mr Werner Müller, serving president of the Council, commissioners Brittan and Oreja and the president of the parliament Gil-Robles, on 25 March 1999.
2. This is the "balance of power" as described by Agence Europe (23/4/99), "European Commission reviews preparation of Millennium Round", including the report of the European director general for external economic relations, Hans-Friedrich Beseler.
3. From Article 113 of the Treaty of Maastricht: "...The Commission shall submit proposals to the Council for implementing the common commercial policy... (The Council) shall authorize the Commission to open the necessary negotions. The Commission shall conduct these negociations in consultation with a Special Committee appointed by the Council to assist the Commission in this task..."
4. European Commission Directorate General, 113 Committee M.D.642/98, date received 15.12.98. Subject: WTO New Round: Trade and Investment, para.6
5. Idem, note 1, underlined in the original.
6. "Recommendation of a Council decision concerning the negociation of agreements in the field of technical trade barriers... presented by the Commission", SEC (98). The copy in our possession is not numbered nor dated.
7. Myriam van der Stichele, "The TEP and Millennium Round in the WTO", paper for the conference "From the MAI to the Millennium Round", European Parliament, 27-28 April 1999.
8. Testimony of Mary C. Sophos, senior vice-president, Government Affairs, Grocery Manufacturers of America, before the Trade Sub-Committee of the American Congress, Hearings on the Transatlantic Ecvonomic Partnership, 28 July 1998.
