Peoples rights are not for sale by ActionAid 4:49pm 15th Jun, 2003   10 June 2003    New global investment agreement must be stopped    A new global investment agreement proposed at the World Trade Organisation (WTO) carries huge risks for the world’s poorest people says leading development agency, ActionAid. In its new report, Unlimited Companies, the agency calls on the UK Government and the EU to drop their support for the agreement and stop putting the interests of big business before the needs of poor countries.    The report comes at a crucial time in trade negotiations, as the Working Group on Trade and Investment meets in Geneva for the last time before the WTO Cancun Ministerial in September.    “People’s rights should not be for sale. If the investment agreement is passed it is likely to strip away our ability to regulate foreign investors which is vital if poor people are really to benefit. Developing countries must not be short-changed – it is time to put people before profit,” says Adriano Campolina Soares from ActionAid Brazil.    Examining evidence from countries including Haiti, Uganda, India and Brazil, the report takes a comprehensive look at the impacts of foreign investment by companies, such as Coca Cola and Nestle, on developing countries. It explains how increased liberalisation through a WTO investment agreement could compromise the rights of poor people even further.    Foreign investment often leaves poor people vulnerable to the worst corporate abuses. It can only bring benefits if carefully managed. Governments in poor countries are keen to attract multinational investors – as they can bring much needed capital, jobs, new technology and managerial skills, helping to raise the standard of living for many poor people. However, all too often big business is allowed to trample on peoples’ rights, evicting them from their homes, squeezing them out of business and refusing to allow workers to join unions or make a decent wage.    In India, hundreds of ‘untouchable’ Dalit and tribal group members have been protesting outside a new Coca Cola bottling plant since April 2002. The protestors say the factory breaches India’s laws, has offered few local jobs and has contaminated water supplies to 1,000 families. “I used to pump water for 12 hours throughout the night for my farm. Ever since the Coke factory came up, I cannot run the pump even for one hour due to depletion of water in the well. As a result, there was total crop failure during the past two to three years,” says Shahul Hameed, a local farmer who used to grow rice, coconut, mango, and groundnut on land adjacent to the bottling plant.    In Brazil, thousands of local diary farmers have gone bust or been squeezed out of the market after the multinationals Nestle and Parmalat gained control of over 50% of the Brazilian dairy sector in the late 1990s. Prices fell by 50% for farmers in Minas Gerais state and 70,000 poor producers had to stop supplying the largest companies between 1996 and 2002. “Parmalat punished us for two years, paying lower and lower prices for our milk, so we had less and less to pay our bills,” says Renat Hildt, a family farmer from Rio Grande do Sul.    key statistics:    In 1973 global foreign direct investment flows totalled just $21.5 billion. In 2000 they reached $1,492 billion – almost 70 times the 1973 level.    Developing countries only attracted 30% of all foreign direct investment flows in 2001.    The top 20 developing countries got 90% of the total foreign investment, leaving the 100 other developing countries to share out the rest.    In 2001 44 sub-Saharan African countries received less that $3 billion between them.    In the same year, the world’s 49 least developed countries (excluding oil rich Angola) received just $2.7 billion.    The UK Government argues that an investment agreement will encourage multinational corporations to invest in poor countries by offering them greater protections. However, the fact that poorest countries do not attract foreign investment has more to do with the underdevelopment of their economies and infrastructure than with the investment climate that they offer to potential investors    “The World Bank and the United Nations have admitted that an investment agreement will not encourage foreign investment in poor countries. Even the UK Government has now told ActionAid it has no evidence to support its position. Dropping the investment agreement would allow more time to get agreement on the priority areas of agriculture and access to drugs,” says trade analyst, Tim Rice.    key recommendations:    The UK and EU should drop their support for an investment agreement at the WTO.    No trade offs. In the run up to the Cancun Ministerial, neither the UK nor any other developed nation should attempt to persuade developing countries to trade off their interests as regards investment negotiations in the hope of gains in other areas such as agriculture.    Regulation. The UK Government should support the establishment of a binding international regulatory framework on multinational corporations, outside the WTO, that will strengthen the ability of developing countries to manage foreign investment to the benefit of the poor.    Research. The UK should commission more research so that it can base its policy positions on a better understanding of the impacts of foreign investment, particularly in developing countries.    June 23, 2003    " NGOs Organize Against Proposed WTO Investment Agreement" by Jim Lobe published by OneWorld.net    WASHINGTON - Claims that a global agreement on foreign investment to be negotiated under the World Trade Organization (WTO) will be good for sustainable development in poor countries are highly suspect, according to a new report released Monday by Friends of the Earth International (FoEI) and the British-based World Development Movement.    The 27-page report, 'Investment and the WTO: Busting the Myths,' calls for developing countries and non-governmental organizations (NGOs) to resist efforts, pushed primarily by the European Union (EU), to promote such an agreement at the WTO Ministerial Conference in Cancun, Mexico, in September.    Instead, NGOs and poor countries should push for the United Nations to adopt binding rules on the conduct of multinational corporations that invest in poor countries as the best way to ensure that their foreign direct investment (FDI) promotes indigenous strategies for sustainable development, particularly those that alleviate poverty and protect local communities and the environment, according to the two groups.    "Corporate lobbyists and our government want to spin proposals for a WTO investment agreement into a pot of honey for the developing world, but nothing could be further from the truth," said Liana Stupples of the British section of Friends of the Earth (FoE).    "Without binding rules for multinational corporations under the UN, the developing world will have everything to lose and big companies will have everything to gain," she said. "This WTO agreement must not be allowed to go through."    FDI in developing countries rose to record levels of several hundred billion dollars annually during most of the 1990s, although almost all of it was concentrated on only a dozen countries, particularly China. FDI from western multinational corporations far exceeded the $50 billion or so that was provided in loans and credits from bilateral aid agencies and multilateral institutions, like the World Bank and the International Monetary Fund.    The new report, which addresses 13 main arguments made by the EU in support of a WTO investment agreement, comes five years after the collapse of negotiations by the Organization for Economic Cooperation and Development (OECD)--the club of the world's wealthiest countries--for a Multilateral Agreement on Investment (MAI), a proposed global accord that, according to its critics, amounted to a "corporate bill of rights" that would have given multinationals sweeping powers in countries where they invested, including the ability to challenge national and local social and environmental laws and regulations.    Pressure exerted by consumer, environmental, and other activist groups in western countries who saw the MAI as a major challenge to the powers of democratically elected local and national governments eventually forced governments to drop the effort.    But the EU has persisted, using the WTO, instead of the OECD, as the favored forum. At the 2001 WTO Ministerial Conference in Doha, Qatar, it pressed for such an investment agreement to be included in the round of global trade negotiations that was launched there. To get its way with reluctant developing countries, the EU's representatives even suggested that it would veto changes in international patent law that would permit poor countries to import cheaper generic drugs to fight diseases like AIDS.    Talks on how an investment accord might be organized have proceeded slowly, however, as poor countries have shown little enthusiasm for a deal. If an agreement is not reached in Cancun, the initiative could suffer the same fate as the MAI, according to the new report.    It is in this context that the EU, and particularly the British and Japanese governments, have been touting the alleged benefits of both FDI and an agreement to promote it. And it is those arguments to which the new report is addressed.    Promoters of an investment accord, for example, have argued that FDI helps poor countries not only by bringing capital to the country, but also by providing additional benefits, such as more jobs and the transfer of sophisticated technology. They also contend that, by providing greater predictability for investors, an investment agreement will attract more FDI, even to those countries that currently receive little or none.    They have also argued that FDI by itself is a major factor in providing sustainable development for poor countries and that a WTO agreement would be better for developing countries than negotiating bilateral treaties with rich nations because they can use their collective power more effectively to gain better terms.    All of these arguments are suspect, according to FoEI and WDM, however. While they concede that FDI can play an important role in sustainable development, the indispensable factor to achieving the latter is ensuring that such investment is regulated or channeled in appropriate ways.    But such an approach would actually be made more difficult by an agreement that provides greater protections and powers to corporate investors, according to the report. The authors argue that such an agreement would actually tend to further the "race to the bottom" by developing countries that are forced to relax labor or environmental laws in order attract investment.    The report points to the experience of Latin America and the Caribbean in the 1990s compared with the 1970s to argue that "there is no automatic link between increased FDI and (economic) growth." FDI in the region was 13 times greater in the 1990s than in the previous period, while growth in the region's gross domestic product was 50 percent lower. The reason was that FDI was concentrated in buying state-owned assets, such as mines or telecommunications companies, rather than creating new industries that provided new jobs and technology.    "The key point is that FDI is not inherently good or bad -- there are trade-offs between the risks and returns," according to the report, which criticizes proponents for arguing that FDI should be sought as an end in itself.    The notion that a WTO investment agreement will also attract FDI to countries that to date have received little or none also amounts to a myth, according to the report, which noted that almost all of Africa, for example, has been excluded from the huge expansion of FDI in the 1990s.    Even the World Bank, which has tried to encourage FDI in its lending programs, has raised questions about the value of an investment agreement. "[A]n international agreement that seeks to substantially increase investment flows by increasing investor protections seems destined, on the basis of available evidence, to fall short of expectations," it concluded in a recent report.    Copyright 2003 The Associated Press Visit the related web page
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