File spoon-archives/marxism-international.archive/marxism-international_1997/current, message 36


Date: Thu, 15 May 1997 21:50:59 +0100
From: Joćo Paulo Monteiro <jpmonteiro-AT-mail.telepac.pt>
Subject: M-I: Free trade and MAI


This post got lost somewhere in cyberspace. Here's a replay. To this you
should add the Erratum sent later but already distributed.

Jo=E3o
------------------------------------------------------------------




This is how Marx concluded is famous free trade speach in Brussels
(1848):




=AB  Gentlemen! Do not allow yourselves to be deluded by the abstract word
_freedom_.  Whose freedom? It is not the freedom of one individual in
relation to another, but the freedom of capital to crush the worker. 

Why should you desire to go on sanctioning free competition with this
idea of freedom, when this freedom is only the product of a state of
things based upon free competition?

We have shown what sort of brotherhood free trade begets between the
different classes of one and the same nation.  The brotherhood which
free trade would establish between the nations of the Earth would hardly
be more fraternal.  To call cosmopolitan exploitation universal
brotherhood is an idea that could only be engendered in the brain of the
bourgeoisie.  All the destructive phenomena which unlimited competition
gives rise to within one country are reproduced in more gigantic
proportions on the world market.  We need not dwell any longer upon free
trade sophisms on this subject, which are worth just as much as the
arguments of our prize-winners Messrs. Hope, Morse, and Greg. 

For instance, we are told that free trade would create an international
division of labor, and thereby give to each country the production which
is most in harmony with its natural advantage. 

You believe, perhaps, gentlemen, that the production of coffee and sugar
is the natural destiny of the West Indies. 

Two centuries ago, nature, which does not trouble herself about
commerce, had planted neither sugar-cane nor coffee trees there. 

And it may be that in less than half a century you will find there
neither coffee nor sugar, for the East Indies, by means of cheaper
production, have already successfully combatted his alleged natural
destiny of the West Indies.  And the West Indies, with their natural
wealth, are already as heavy a burden for England as the weavers of
Dacca, who also were destined from the beginning of time to weave by
hand. 

One other thing must never be forgotten, namely, that, just as
everything has become a monopoly, there are also nowadays some branches
of industry which dominate all others, and secure to the nations which
most largely cultivate them the command of the world market.  Thus in
international commerce cotton alone has much greater commercial than all
the other raw materials used in the manufacture of clothing put
together.  It is truly ridiculous to see the free-traders stress the few
specialities in each branch of industry,throwing them into the balance
against the products used in everyday consumption and produced most
cheaply in those countries in which manufacture is most highly
developed. 

If the free-traders cannot understand how one nation can grow rich at
the expense of another, we need not wonder, since these same gentlemen
also refuse to understand how within one country one class can enrich
itself at the expense of another. 

Do not imagine, gentlemen, that in criticizing freedom of trade we have
the least intention of defending the system of protection. 

One may declare oneself an enemy of the constitutional regime without
declaring oneself a friend of the ancient regime. 

Moreover, the protectionist system is nothing but a means of
establishing large-scale industry in any given country, that is to say,
of making it dependent upon the world market, and from the moment that
dependence upon the world market is established, there is already more
or less dependence upon free trade.  Besides this, the protective system
helps to develop free trade competition within a country.  Hence we see
that in countries where the bourgeoisie is beginning to make itself felt
as a class, in Germany for example, it makes great efforts to obtain
protective duties.  They serve the bourgeoisie as weapons against
feudalism and absolute government, as a means for the concentration of
its own powers and for the realization of free trade within the same
country. 

But, in general, the protective system of our day is conservative, while
the free trade system is destructive.  It breaks up old nationalities
and pushes the antagonism of the proletariat and the bourgeoisie to the
extreme point.  In a word, the free trade system hastens the social
revolution.  It is in this revolutionary sense alone, gentlemen, that I
vote in favor of free trade.  =BB



I have been adering to this view, much against the bulk of present days
C.P.s, trade-unionism and, it must be said, the workers "spontaneous"
allegiances themselves.
I must say, however, that the concrete process (that is more one of
monopolistic bullying than of classic free trade) revolves my liver.

I think this is certainly one of the more decisive subjects to be
discussed nowadays among marxists. Any taker?


Jo=E3o Paulo Monteiro

Porto


NOTE: To give an idea of things to come, here's an interesting piece on
the next deregulation offensive being prepared on the World Trade
Organization:



The Multilateral Agreement on Investment: A
    "Bill of Rights" for International Investors?

What is the Multilateral Agreement on Investment (MAI)?

The MAI is a new international economic agreement being negotiated
within the Organization for
Economic Cooperation and Development (OECD), an international body
comprised of 29 rich
countries. The MAI consists of a set of rules restricting what
governments can do to regulate
international investment and corporate behavior. These rules are
designed to protect and expand the
power of corporations and other large international investors =96
guaranteeing them a stable
investment climate, easy repatriation of profits, open market access,
and freedom from any
obligation to serve local economic needs =96 wherever they choose to
invest. The United States and
the European Union, who are the primary backers of the agreement, intend
to extend the agreement
to developing countries after it is approved by the OECD.

The proposed agreement could have an array of negative effects. As
drafted, the
MAI could:

Make it easier for investors to move assets (whether financial
instruments or production facilities)
across international borders. This could hasten job flight from
industrialized countries and increase
the pressure on all nations to compete for investment capital by
lowering wages and labor,
environmental and consumer-safety standards.

Prevent countries from limiting what foreign investors can own (whether
agricultural land or strategic
industries) or from imposing any obligations on foreign investors (like
hiring local managers or
sharing technological know-how). These provisions would be particularly
burdensome for
developing countries, preventing them from wresting local benefits from
foreign investment.

Prohibit restrictions on the movement of capital, like the "speeds
bumps" some countries put in place
to require that certain types of investment are held for a set period of
time. This would make it more
difficult for governments to stabilize international fi nancial markets
to avoid future meltdowns like
the Mexican peso crisis. It could also prevent countries from placing
any restrictions on the ability of
corporations to close or move production facilities. Restrict efforts by
governments in all signatory
countries to condition receipt of public benefits on a corporation's
behavior. This provision could
undermine a variety of important corporate accountability laws.

Allow corporations a direct role in enforcing the agreement's terms
against countries. This could
invite widespread challenges to existing and future regulations that
corporations view as a violation
of their "rights" as investors.

The MAI incorporates a variety of legal mechanisms to achieve its
purposes. These
include:

National Treatment, which requires countries to treat foreign investors
at least as well as domestic
firms (whether or not this is in the interest of the local economy).

Most Favored Nation (MFN), which requires countries to treat foreign
investors from all countries
as well as it treats investors from its most favored investment partner
(even if one of the countries is,
for example, a gross violator of human rights).

Banning performance requirements, which are any laws that require
investors to invest in the local
economy or to behave responsibly in exchange for market access.

Banning any restriction on repatriation of profits and the movement of
capital, thus ensuring that
corporations and individuals can pick up their money or their factories
and move, whenever they
want, with no limitations.

Private legal standing, whereby corporations themselves will have the
right to sue countries to
overturn laws they believe violate the agreement.

What will be the MAI's practical effects?

In addition to promoting further job flight from industrial countries
and speeding the inter- national
"race-to-the-bottom" in terms of living standards and environmental
safeguards, the MAI could
undermine a variety of key regulations in both developed and developing
nations.

Key laws governments use to hold corporations accountable to their
employees and the broader
community could be challenged. Living wage laws that require public
contractors or companies that
receive government subsidies to pay workers a decent income could be
struck down under the
MAI as performance requirements. Laws requiring that recipients of
government subsidies commit
to creating a certain number of jobs could be barred. Laws providing tax
and regulatory incentives
to responsible corporations could be prohibited.

Measures to promote economic development in underserved communities
could be barred or
weakened. Programs earmarking economic development funds for local
businesses could be
banned. Community reinvestment laws requiring banks to invest in
economically deprived areas
could be prohibited. Set-asides for minority- and women-owned businesses
could be deemed an
unacceptable attempt to favor domestic firms at the expense of
foreign-based firms.

Countries could be prevented from limiting foreign ownership of key
assets and resources. Foreign
corporations would be allowed to acquire domestic businesses in almost
every economic sector.
Laws restricting foreign ownership real estate could be banned.

Laws designed to protect public health and safety and public resources
could be challenged as
discriminatory against foreign-based businesses. Marketing restrictions
on dangerous products (like
cigarettes or alcohol) could be attacked on the grounds that they
prevent a foreign company from
competing with a well-recognized domestic brand. Laws designed to
conserve valuable resources
or land could be accused of blocking foreign access and unfairly
protecting domestic companies
from competition. Contract preferences for environmentally responsible
firms could be eliminated on
the grounds that these favor investment in certain industries, like
recycling, that some countries like
the U.S. have developed at the expense of others. The MAI does not
include many of the
exceptions usually included in trade agreements that subordinate some
corporate rights to certain
key public health and safety concerns.

Local economic development programs could be restricted. State and
municipal programs
earmarking loans and subsidies to home-grown businesses could be
prohibited as discriminatory
against foreign investors. Rules promoting the investment of public
pension funds in local businesses
and/or in socially responsible businesses could be barred as performance
requirements.

Protections and assistance for small businesses could restricted.
Set-asides and special loan and
grant programs for small businesses may be ruled to discriminate against
foreign investors, who,
given the high costs of entering a foreign market, are most likely large
corporations,. Regulatory
relief for small businesses could be challenged on the grounds that it
discriminates against larger,
transnational corporations who want the same advantage.

Unilateral sanctions against oppressive regimes or irresponsible
corporations could be banned.
Laws that block investment by companies based in countries that
routinely violate labor, worker
safety or environmental norms could be struck down. Laws prohibiting
U.S. firms from investing in
countries with poor records on human rights, labor rights and the
environment could be prohibited.
Laws that require a review of the human rights records of national
governments before businesses
based in those countries are allowed to invest could be struck down.

Laws discouraging capital flight, directly or indirectly, could be
prohibited. Laws requiring
corporations that move jobs out of the country to pay tax penalties
could be banned as an
unacceptable restriction on the movement of capital. Any future attempt
to place outright limits on
the ability of investors to move assets, including production
facilities, could be pre-empted.

The MAI could override laws at the local, state and national levels. The
MAI targets laws at every
level of government. Thus, every existing and future federal, state and
local laws would be required
to comport with MAI terms.

The MAI does nothing to protect workers, consumers, small businesses or
the environment. The
MAI will allow corporations to sue governments to overturn laws that
they argue are a violation of
their rights. Unlike the NAFTA, where corporate right of action applies
to a narrow set of
provisions within the agreement, the MAI will enable corporations to sue
to enforce any and every
MAI provision. No binding statement of corporate responsibilities
concerning working conditions,
neutrality with respect to union organizing, product safety, human
rights, or fair business practices
has been incorporated into the MAI. The MAI does not establish a forum
for governments,
communities or individuals to sue transnational corporate violators of
local environmental, labor or
other standards.

What is the status of the MAI?

Confidential negotiations have been underway since May 1995 within the
OECD. Business and
industry groups represented by the US Council for International Business
(USCIB), among other
lobbies, convinced the Office of the US Trade Representative (USTR) and
the State Department to
initiate negotiations. Industry groups have an ongoing role in crafting
the agreement, and unlike other
interest groups, are regularly briefed by U.S. negotiators. Until
recently, the target date for the
completion of negotiations was May 1997; in late March 1997, the OECD
announced the MAI
deadline would be pushed back several months. Upon completion, the
agreement will be introduced
in the U.S. Congress in one of two ways: as a treaty, requiring 2/3
Senate ratification, or as an
executive agreement, requiring a simple majority vote in the House and
Senate. Other OECD
countries, and ultimately developing nations, will be asked to sign.

                            

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