Molotov Cocktail.

An International Molotov Cocktail.

In Paris, the 29 wealthy nations of the OECD (Organisation for Economic Co-operation and Development) are preparing a legislative molotov cocktail which has the potential to undermine many of the rights that ordinary people in Pacific Island nations - or Australia for that matter - hold dear.

Everything from land rights for indigenous people and interna tional environment and labour legislation, through to rules reserv ing shares in newly-privatised government agencies for local investors, could become illegal.

Surprisingly perhaps, its all due to an international treaty on investment - an issue so important to the economic future of the region that it figures in this year’s South Pacific Forum theme; From Reform to Growth: The Private Sector and Investment as the Keys to Prosperity.

Lack of investment, both local and international, has been at heart of the region’s failure to achieve the sort of economic growth which would allow living standards to improve.

In the past few years many Pacific Island nations have been working hard to streamline foreign investment procedures and approvals, increase transparency in decision-making and stamp out those discretionary powers and corruption which make doing business a nightmare and turn-off foreign investors.

All these issues are addressed in the proposed Multilateral Agreement on Investment (MAI), which could replace scores of bi-lateral and regional agreements on investment and make over seas investment a great deal easier.

Where the problems arise, and where the Multilateral Agreement on Investment differs from the APEC Non-binding Investment Principles, is in the scope of the document.

The MAI is an all-encompassing Bill of Rights for International Capital with enforceable penalties.

Its two key provisions protect overseas corporations from hav ing their investments unreasonably expropriated by governments and insist that foreign companies are treated in the same way as local entities.

This second ‘non-discrimination’ provision looks harmless enough, but it is this provision which threatens to make illegal all government legislation reserving a portion of certain industries for locals.

This means that measures to promote local culture by insisting on local ownership of the media would not be possible, nor would provisions requiring that landowner’s have a shareholding in log

ging or fishing ventures on their land. Similarly, reserva tion of a potion of the shares in newly-privatised govern ment agencies for local investors would also be illegal.

Pat Ranald, an expert on international trade treaties at the Public Sector Research Centre at the University of New

South Wales goes further. She says the Multilateral Agreement on Investment, as it is formulated at the moment, is inconsistent with any concept of land rights.

In Australia, Prime Minister John Howard, not known as a huge supporter of land rights, has attempted to solve this problem by formally asking that legislation on indigenous issues be exempted from the MAI. So far the OECD has allowed permanent exemp tions from the non-discrimination’ provisions only for the defence and nuclear industries.

As the list of exemptions and reservations requested by the 29 OECD nations now runs to 600 pages, it is unlikely further per manent exemptions will be granted.

That means that once Australia signs up, the MAPs ‘standstill’ and ‘roll-back’ provisions would come into play. ‘Standstill ‘ means that no more rights could be enacted and Australian Aboriginal people could never do better than the much contested and paltry land rights offered by the Howard govern ment. Even these would be subjected to ‘roll-back’ over the twen ty-year period of the treaty.

Should Australians vote in a new government more willing to respond to Aboriginal demands, it would have to give 5 years notice before it could withdraw from the MAI and its original commitments would remain binding for a further 15 years.

Measures to protect the environment are also threatened by MAI ‘standstill’ provisions which could rule out new and innova tive legislation and severely reduce governments’ policy options.

Furthermore, Greenpeace says MAI is in conflict with some provisions of already ratified international environment treaties, such as the Kyoto Protocol, and fails to take account of others.

Much of the detail of MAI is still to be worked out and since April, negotiations have been suspended to give time for more consultation.

Now is not the time to be complacent. International business is determined not to allow too many exemptions as they would undermine the integrity of the agreement.

Groups such as the Australia Chamber of Commerce and Industry are arguing that the MAI should be moved from the OECD, which represents only the rich nations (and does not include the Pacific) to the WTO, which negotiated earlier agree ments on goods, services and agriculture.

Non-govemment and community groups want to see the nego tiations out in the open rather than behind closed doors, as they have been up until now.

Pat Ranald, from the University of New South Wales, says the whole framework of the MAI needs rethinking and that it should be structured like other trade agreements, which specify what is to be included rather than attempting to include everything and then allow a small number of exceptions.

The facilitation of investment is vital to the Pacific. So too are land rights and the environment. As yet there has been almost no public debate on MAI in the region.

Considering what is at stake this is a state of affairs that we can no longer afford. ■

Jemima Garrett

Sydney