April 1998
The MAI would impose IMF rules on U.S. and Canada
By Chantell Taylor The ugly results in Asia and Mexico of this model should give U.S. and Canadian policy-makers, voters and the press pause about whether a treaty imposing these failed policies in North America should be rushed to completion as planned.
The Multilateral Agreement on Investment (MAI) will impose the same rules on the United States and Canada that the International Monetary Fund (IMF) is now imposing on countries in Southeast Asia.
The IMF was originally designed to help countries with short-term balance of payment problems with bridge loans. It also was to provide expertise to help such countries maximize growth, build middle classes, and thus consumer markets.
Over time, Instead, the IMF has developed Into a governmentally-funded enforcer for private banks.
As a condition for loans, it compels countries to
permanently redesign their economies, laws and governments to prioritize servicing the private banks' hard currency loans. For instance, countries are required to switch farm production from staple foods into fruit and vegetables for export.
While in IMF-"restructured" countries citizens go hungry, the exotic produce that replaced their staple foods floods into countries where it can earn hard currency, which is then used to service bank loans, often in the same wealthy country.
The effect of the IMF conditions in Asia and Latin America has been expanded debt, destabalizing quick in-and-out flows of investment, lower currency values, slower economic growth, worse income distribution and elimination of middle classes, reduction of education and health services, weakening of labour laws, and increased hunger.
Now the same folks who designed the IMF rules which worsened the Mexican, Philippine, Korean, Indonesian and Thai meltdowns have a plan for the world's rich countries. It's called the Multilateral Agreement on Investment, or MAI.
The MAI is a powerful treaty containing many of the exact same rules that the IMF Imposes. It has been negotiated in tight secrecy since
1995 at the Paris Organization for Economic Cooperation and Development (OECD).
The ugly results in Asia and Mexico of this model should give U.S. and Canadian policy-makers, voters
and the press pause about whether a treaty imposing these failed policies in North America should be rushed to completion as planned this May.
Key among both the IMF's required "structural adjustments" and the MAI's core terms are:
Guarantee all foreign investors the right to establish investments in all economic sectors, including services such as banking, communication and construction.
remove safeguards in stock markets that limit flash sell-offs.
Bar countries from adopting regulations which would restrict or control foreign investment in their countries.
What happens when countries strictly follow these IMF-MAI rules? We do not want to test out MAI on ourselves to know. Now that we can see that the 1995 Mexican meltdown and bailout of banks invested there was not a fluke. Rather, as we can observe now with the demise of the Korean and other IMF poster-children economies, the IMF-MAI casino economy model is a failure that only avoids sinking altogether through regular bailouts.
Nevertheless, the Clinton administration in the U.S. and the Chratien government in Canada want taxpayer dollars for IMF bailouts in Southeast Asia and a treaty to bring the IMF rules to North America.
CCPA Monitor; April 1998
(Chantell Taylor works with The Public Citizen's Global Trade Watch - ctaylor@citizen.orq)