A-Infos (en) Alert: MAI and IMF

["Shawn Ewald" <shawn@wilshire.net>]

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     A - I N F O S  N E W S  S E R V I C E
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TWO IMPORTANT POLICY ISSUES
February 9, 1998

1) National call-in day on the MAI on Tuesday, February 10 (U.S. Senate)
2) IMF Sign-On Letter (U.S. House)

NOTE: Although this alert focuses on U.S. activity around the MAI and the
IMF, these issues are important globally. For a Canadian perspective on the
MAI, you can write to Bob Olsen at <bobolsen@arcos.org> and ask to be put on
his email list. If you are not prepared to receive A LOT OF MESSAGES from
him, specify that you do not want to be on his email list but that you would
like him to recommend some web sites which provide information on the MAI
from a Canadian point of view.

1) MAI Call-In Day: Tuesday, February 10

REQUESTED ACTION: On February 10th, call both your Senators (Senate
telephone exchange: 202-224-3121) and ask for their trade staff.   Introduce
yourself and express your concerns about the Multilateral Agreement on
Investment (MAI). You might use the following as the basis for your
comments: "I am concerned that the Clinton Administration is rushing into
the MAI, a dangerous new investment treaty that will expand NAFTA-like
investment rules globally. I would like Senator [insert name] to call the
White House and the U.S. State Department to urge the Clinton Administration
to withdraw immediately from MAI negotiations. The MAI does not serve the
best interests of Americans and must be abandoned."

Talking points:
*  The MAI undermines state and local sovereignty by restricting
governments' ability to regulate foreign investment and corporate
accountability.
* Negotiations should not have reached such an advanced stage without public
knowledge or participation.
*  The MAI lacks protections for the environment, labor and human rights.

A LABOR PERSPECTIVE ON THE MAI (excerpted from an article by Jonathan
Tasini, President, UAW Local 19811 - National Writers Union):

This year, you may be hearing for the first time the term "Multilateral
Agreement on Investment" (MAI). It's likely that part of the discussion
around the MAI will suggest that we, in labor, can accept the MAI with labor
and environmental conditions grafted onto the main body of this trade
agreement. Or, alternatively, that having turned back fast-track legislation
in the Congress, we should give the Administration a pass on MAI.

The MAI is a world-wide agreement that would vastly limit government power
to restrict or regulate foreign investment. In plain English, local, state
or national governmental bodies in the U.S. (or in any other nation agreeing
to the MAI) could not pass laws that would stop corporations from doing
whatever they please. While there has been some talk of including labor and
environmental codes of conduct in the MAI, such codes will probably be
non-binding.

Gone would be many laws to protect workers. Under the MAI, worker protection
laws might be challenged as an obstacle to investment. For example, living
wage laws could be challenged by multi-national corporations as imposing a
cost of doing business that threatens investment. No longer would
governments be able to ban or restrict investments in countries that violate
human or workers' rights - giving a bigger boost to the spread of global
sweatshops and the suppression of labor unions around the world. Many laws
already on the books that contradict the MAI's provisions would have to be
eliminated.

The MAI will give corporations the right to sue governments and seek damages
over laws passed to restrict investment and capital movement. Just the mere
threat of such lawsuits will probably be enough to scare elected officials
into derailing or staying away from any planned legislation designed to
protect workers and their communities.

An elite club called the Organization for Economic Cooperation and
Development (OECD), which includes the 29 wealthiest countries, is
negotiating the MAI. In other words, the developing countries have no seat
at the table. 

Why is there no "good" MAI from a labor perspective? First, writing labor
and environmental conditions into the agreement (if that effort is
successful) does not change its basic nature: Its text is designed to
promote international investment. We already know from NAFTA that labor and
environment provisions do not work in a trade agreement whose basic
existence is to aid corporations.

Second, even if there was a plausibly acceptable MAI for U.S. labor, we must
defeat the MAI for global reasons. The truth is that the MAI is aimed
principally at the developing countries in Asia, Latin America and eastern
Europe. These are where corporations see piles of money to be made but are
anxious to obliterate any barriers to investment. Once protective barriers
are torn down, millions of people will be at the mercy of corporate
investment decisions. If you thought the recent financial chaos in South
Korea and Malaysia was raucous, the MAI would only fuel additional
speculation by forcing countries to do away with laws and regulations
designed to manage capital flows. MAI would no doubt spark new financial
debacles-leading to economic crisis and the rise of larger reservoirs of
desperate people willing to work for slave wages around the world.

2) IMF Sign-On Letter

REQUESTED ACTION: Call your federal Representative (House telephone
exchange: 202-225-3121) and ask her or him to sign the letter drafted by
Rep. Bernie Sanders (I-Vermont). This letter, addressed to House Speaker
Newt Gingrich, requests that voting on the special $18 billion appropriation
for the IMF be delayed until there can be a full and open discussion of the
IMF. Meanwhile, Sanders and others are working on a comprehensive resolution.

THE CASE AGAINST THE IMF (by Soren Ambrose, 50 Years Is Enough):

The (at least temporary) defeat of Fast Track this fall was due to the
efforts of a coalition which included labor, environmentalists and community
activists. The Clinton administration's bid to pump yet more money into the
International Monetary Fund (IMF) deserves another groundswell of resistance.

While the IMF has been rushing over $100 billion to the governments of South
Korea, Indonesia and Thailand, many have questioned whether such bailouts
are a good idea and whether the U.S. should give more money - $18 billion,
to be precise - to the IMF.  

For some time now, the IMF has been the chief architect of the global
economy, using debt leverage to force governments around the world to give
big corporations and billionaires everything they want - low taxes, cheap
labor, loose regulations - so that they will locate in their countries. When
its recommendations have resulted in catastrophes like those in East Asia or
the "peso crisis" in Mexico in 1994-95, the IMF puts together bailout
packages that save foreign banks from losing money while shifting to the
poor and middle-class people of those countries the burden of paying off
these unwise loans.

The IMF is the lender of last resort for countries with financial problems.
It uses its power to force strict conditions in exchange for loans.  These
economic policy packages, called "structural adjustment programs" (SAPs),
have been imposed on over 90 countries around the world, including most of
Latin America, South Asia and Africa.  Other agencies, including the World
Bank, also require SAPs, but it is the IMF which sets the pace.

One of the main components of SAPs is the requirement that labor policies be
made more "flexible."  This obnoxious euphemism means that governments
around the world must erode protections for workers and union organizers and
encourage neglect of minimum wage laws. Countries that sign with the IMF
usually experience massive layoffs in short order. South Korea is now
bracing for a million layoffs, just as approximately two million Mexicans
lost their jobs in the wake of the IMF-led bailout of 1995.
 
In tandem with its cavalier philosophy on labor laws, the IMF also makes the
rules that foster the growth of free-trade zones (and maquila sectors)
around the world. They do this by pressuring governments to lower barriers
to outside investment and to eliminate rules limiting the ability of
corporations to move their profits out of the country.

The Clinton administration hopes to gain approval for an infusion of $18
billion for the IMF. Congress began holding a series of hearings on the
matter at the end of January. Forces from the right and the left -- strict
"free marketers" and advocates for labor, human, economic and environmental
rights -- have joined to denounce the IMF.  There is a very real chance that
the request will be defeated.

Representative Bernie Sanders (I-VT) has been pointing out that the
Indonesia bankers' bailout violates the 1994 Sanders-Frank amendment he
co-authored with Rep. Barney Frank (D-MA). That law requires U.S.
representatives to the IMF "to use the voice and vote of the United States
to urge borrowing countries to guarantee internationally recognized workers'
rights, and to include the status of such rights as an integral part of the
institution's policy dialogue with each borrowing country."

Sanders points to the case of Muchtar Pakpahan, who is in prison for
organizing workers in a free trade union. At no point in the bailout
negotiations was his case or any aspect of Indonesia's atrocious labor
abuses brought up. Sanders excoriated Treasury Secretary Rubin for
countenancing the violation of U.S. law when Rubin insisted that the bailout
negotiations were not the proper place to bring up repression of workers'
rights.  "So you're just going to let Pakpahan rot in jail?" asked Sanders,
to which Rubin replied that he wouldn't comment on that particular case.

It is vital that Congress hear that the IMF, rather than saving the world
economy, actually creates the conditions for these regular crises, and then
leaps in to shift any pain away from the rich and onto the backs of workers
and the poor.


Labor Alerts: a service of Campaign for Labor Rights
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[For more information, contact: 50 Years is Enough: U.S. Network for
Global Economic Justice, (202) 463-2265 or <wb50years@igc.org>]

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