NO GLOBALIZATION WITHOUT REPRESENTATION: THE MOBILIZATION OF
NORTH AMERICAN CIVIL SOCIETY AGAINST INTERNATIONAL TRADE AND
INVESTMENT LIBERALIZATION
by
NATHAN W. FREEMAN
(Under the Direction of Jeffrey D. Berejikian)
ABSTRACT
In recent years representatives of civil society—including environmental and public-interest oriented groups—have become involved in the politics of international trade and investment. Joined by labor, these groups have mobilized against trade and investment liberalization. How can the mobilization of civil society in this policy area be explained? I argue that civil society’s mobilization is a reaction to fundamental changes in the process by which liberalization is legalized through binding international commercial agreements and treaties. At its core, legalization refers to three components: obligation, precision, and delegation. During the past two decades, the process of legalization has undergone dramatic changes in terms of its scope, pace, and agenda at both the regional and global level. The most important change, which has elicited civil society opposition, is the shift in the objective of legalization from an emphasis on the liberalization of trade to an emphasis on the liberalization of investment.
INDEX WORDS: Canada-US Free Trade Agreement, Civil society, Globalization, Trade, Foreign direct investment, Liberalization, Legalization, Multilateral Agreement on Investment, World Trade Organization, North American Free Trade America, Free Trade Area of the Americas NO GLOBALIZATION WITHOUT REPRESENTATION: THE MOBILIZATION OF
NORTH AMERICAN CIVIL SOCIETY AGAINST INTERNATIONAL TRADE AND
INVESTMENT LIBERALIZATION
by
NATHAN W. FREEMAN
B.A., The University of South Alabama, 2001
A Thesis Submitted to the Graduate Faculty of The University of Georgia in Partial
Fulfillment of the Requirements for the Degree
MASTER OF ARTS
ATHENS, GEORGIA
2003
© 2003
Nathan W. Freeman
All Rights Reserved NO GLOBALIZATION WITHOUT REPRESENTATION: THE MOBILIZATION OF
NORTH AMERICAN CIVIL SOCIETY AGAINST INTERNATIONAL TRADE AND
INVESTMENT LIBERALIZATION
by
NATHAN W. FREEMAN
Major Professor: Jeffrey D. Berejikian
Committee: Christopher S. Allen Markus M. L. Crepaz
Electronic Version Approved:
Maureen Grasso Dean of the Graduate School The University of Georgia December 2003 iv
I dedicate this thesis to my parents whose ceaseless love, support, and encouragement have helped to sustain me in all of my professional endeavors, and without whom, I would not be where I am today. v
ACKNOWLEDGEMENTS
I would like to thank Jeffrey D. Berejikian, Christopher S. Allen, and Markus M.
L. Crepaz for the enormous assistance and critical feedback which they provided me with during this important endeavor. I would particularly like to acknowledge Ethan Fishman who originally sparked my interest in the field of political science and who encouraged me in my decision to pursue a career within the discipline. vi
TABLE OF CONTENTS
Page
ACKNOWLEDGEMENTS...... v
LIST OF ACRONYMS AND ABBREVIATIONS USED...... viii
CHAPTER
1 INTRODUCTION
The Battle at Seattle...... 1
Questions to be Answered ...... 4
The Puzzle...... 5
The Scarcity and Inadequacy of Alternative Explanations...... 9
Giving the Coalition a Name: Civil Society ...... 15
Organization of the Thesis...... 22
2 EXPLAINING THE MOBILIZATION OF NORTH AMERICAN CIVIL
SOCIETY AGAINST TRADE AND INVESTMENT LIBERALIZATION
Writing the Constitution for a Global Economy...... 24
Domestic Politics and International Economic Relations...... 26
Levels and Units of Analysis ...... 31
Mobilization: The Organized Application of Pressure ...... 35
The Legalization of Liberalization...... 44
The Core Dimensions of Legalization ...... 47
Changing Issues Areas: The Shift in the Object of Legalization...... 56
Additional Issues: The Increased Scope and Pace of Legalization...... 60 vii
The Argument: Re-aggregating the Concept of Legalization...... 62
3 FROM CUFTA TO NAFTA: THE ORIGINS OF CIVIL SOCIETY
OPPOSITION ...... 75
The Canada-U.S. Free Trade Agreement...... 77
The Opposition of Canadian Civil Society to CUFTA...... 85
The North American Free Trade Agreement...... 90
The Opposition of American Civil Society to NAFTA...... 93
Assessing Civil Society Mobilization Against CUFTA and NAFTA ...... 111
4 THE CONTINUING MOBILIZATION OF CIVIL SOCIETY: LESSONS
LEARNED AND APPLIED TO THE MAI, SEATTLE, AND THE FTAA.118
Chapter 11: NAFTA’s Dirty Little Secret ...... 121
The Multilateral Agreement on Investment...... 130
Seattle: Taking the Fight to the WTO...... 146
The Free Trade Area of the Americas...... 149
Assessing Civil Society Mobilization in a Post-Legalization Environment152
5 CONCLUSION...... 157
The Process of Legalization and the Mobilization of Civil Society ...... 161
Success or Failure: Does Civil Society Have a Chance of Achieving its
Goals ...... 169
Legalized Neoliberalism vs. the Public Good: Civil Society’s Options....170
APPENDICES ...... 176
SELECTED REFERENCES ...... 195 viii
LIST OF ACRONYMS AND ABBREVIATIONS USED IN THE TEXT
AFL-CIO American Federation of Labor and Congress of Industrial Organizations
BIT Bilateral Investment Treaty
CLC Canadian Labour Congress
COC Council of Canadians
CUFTA Canada—United States Free Trade Agreement
FDI Foreign Direct Investment
FoE Friends of the Earth
FTAA Free Trade Area of the Americas
GATS General Agreement on Trade in Services
GATT General Agreement on Trade and Tariffs
ICSID International Center for the Settlement of Investment Disputes
IPE International Political Economy
MAI Multilateral Agreement on Investment
MFN Most-Favored-Nation Treatment
NAFTA North American Free Trade Agreement
NGO Non-governmental Organization
OECD Organization for Economic Cooperation and Development
UNCITRAL United Nations Commission for International Trade and Law
USTR United States Trade Representative
WTO World Trade Organization 1
CHAPTER 1
INTRODUCTION
The Battle at Seattle
On Tuesday, November 30, 1999, more than 40,000 people filled the streets of
Seattle, Washington—one of the largest public demonstrations in the United States since
the end of the Vietnam War—to protest against the World Trade Organization (WTO)
and what protestors alleged to be the illegitimate domination of the global economic
policymaking process by unaccountable transnational corporate interests. Over 800 non-
governmental organizations (NGOs) from over 75 countries were represented at the
protests and inside the WTO’s ministerial meeting.1 Blocking and jamming-up major
downtown intersections, demonstrators conducted a massive sit-in, their sole purpose to
prevent trade ministers representing some 130 countries from attending the opening of
the economic summit. Forming a human chain around Seattle’s Paramount Theater, the
protesters succeeded in forcing a cancellation of the meeting’s opening ceremony.
The largely peaceful protests quickly degenerated into a violent (and, according to
many activists, brutal) confrontation between demonstrators and local law enforcement
shortly after a handful of self-proclaimed “anarchists” broke away from the mass of
predominately peaceful protesters and began vandalizing corporate chain stores such as
1 Bruner 2002, 25. Approximately 767 NGOs were officially registered as “observers” of the WTO’s ministerial meeting and were represented by 2089 delegates who were actually allowed inside the meetings (Smythe 2001, 159). Goldstein and Martin (2000, 611, n16) note that the number of groups who petitioned for observer status at the Seattle ministerial meeting was the largest in GATT/WTO history. Walter (2001, 51) claims that “thousands” of NGOs were represented at Seattle. While this may be an exaggerated estimate, there was clearly a substantial NGO presence inside the meeting as well as in the streets. 2
McDonalds, Starbucks, Old Navy, and Niketown. Police soon resorted to tear gas,
pepper-spray, and rubber bullets in their efforts to disperse the demonstrators. Seattle
mayor Paul Schell and Washington governor Gary Locke eventually declared a state of
emergency, and under pressure from federal authorities demanding a restoration of order,
Seattle police (joined by officers from the King County Sheriffs Department, the
Washington State Patrol, and other surrounding law enforcement agencies, as well as
National Guard troops) enforced a dawn to dusk curfew covering the entire downtown
area and imposed an “unprecedented ‘50 block protest free zone’.”2 The intensity of the
protests gradually dwindled over the course of the following two days as order was
eventually restored to the streets of Seattle. Yet, in the end, the representatives of civil
society had clearly made their presence felt at the WTO’s ministerial gathering.
Where did this enormous and dramatic mobilization of citizens come from? What
prompted labor unions, environmentalists, and other citizen groups to engage in
coordinated direct action? Was Seattle a fleeting, ephemeral occurrence, or was it a
climatic eruption, reflective of a more enduring and significant process? How can the
convergence of such a diverse array of groups—including unions, environmentalists,
church groups, human rights advocates, peace activists, and numerous other
organizations—around the issue of international trade policy be explained?3 To what
underlying causal factors can the origins of this phenomenon be attributed? The primary
2 Bruner 2002, 25. 3 As one eye-witness to the events in Seattle described them: “Big labor bosses like John Sweeney and Jimmy Hoffa, Jr. marched with people dressed like sea turtles” (comments of Krist Novoselic). Similarly, in an editorial in the Nation (12/20/99), Marc Cooper ponders the significance of a message contained in one protestor’s hand-painted sign: “Teamsters and Turtles—Together at Last.” 3
purpose of this thesis is to provide answers to these and other important and related
questions.4
While the so-called “Battle in Seattle” may have provided the general public with
its first visible glimpse of an emerging, transnational “anti-globalization” movement, the
origins of this important political phenomenon can be traced back to significant and
fundamental changes in the international political economy, the beginnings of which
occurred almost a decade and a half prior to the showdown between civil society and the
WTO which transpired at the close of 1999. Specifically, the global economy has witnessed a marked expansion and strengthening of the institutional infrastructure that governs international economic transactions, particularly with regard to rules governing
trade and foreign investment. At both the multilateral and regional level, the
institutionalization of economic liberalization has been necessarily accompanied by an
increase in the legalization of international economic relations—that is, the process
through which the liberalization of trade and investment is “locked-in” and “legalized,”
as nations (1) assume an increasing number of formal obligations, (2) delegate increasing
dispute resolution authority to centralized institutions (like the WTO), and (3) negotiated
rules governing economic interactions among nations are made increasingly precise.5 As
will be explained in this thesis, it is the advent of increased legalization as well as changes in the long-term process of legalization, in terms of its scope, pace, and
objectives, that has caused domestic groups—including labor, environmental, and other
citizen or advocacy groups—to mobilize against trade and investment liberalization.
4 To ensure that there is no confusion regarding this point, it should be noted from the outset that the purpose of this thesis is not to explain the events in Seattle per se, but rather (as will be explained below) to explain domestic group mobilization (of which the Seattle episode is merely a highly visible indication) in general. The opening summary of the events of Seattle in 1999 merely serves as an introductory vignette. 5 Goldstein et al. 2000, 387. 4
Nowhere are these changes more conspicuous than in the movement toward
greater regional economic integration which North America has experienced as a result of
the successful negotiation of comprehensive free trade and investor rights agreements.6
By examining the opposition of American and Canadian civil society groups toward trade
and investment liberalization—as embodied in agreements such as the North American
Free Trade Agreement (NAFTA) and the Multilateral Agreement on Investment (MAI)—
this thesis will attempt to delineate an explanation for the mobilization of civil society within the policy realm of international trade and investment governance. In doing so,
this thesis will place the “battle at Seattle” in its appropriate context by showing how this
dramatic event is actually representative of a larger, ongoing process in which civil
society groups across the globe have become increasingly mobilized against economic
liberalization—a process that is most clearly illustrated by the North American
experience. While the clash at Seattle may represent one of the most visible (and chaotic)
episodes of civil society’s opposition to liberal trade and investment policies, it is merely
one of the more sensational chapters in a continuing story that began several years earlier.
Questions To Be Answered
As Goldstein and Martin (2002, 603, n2) note, the number and variety of groups
participating in the politics of trade has grown significantly in the last decades. As they
point out, while classic models assumed that there were only three general kinds of
domestic groups with potential trade-related interests—namely, consumers, import-
competing groups, and exporters—numerous other kinds of domestic groups have come
to believe that their interests are significantly affected by international trade and
6 Namely, the Canada-United States Free Trade Agreement (CUFTA) concluded in 1988 and the North American Free Trade Agreement (NAFTA) concluded in 1994. 5
investment agreements. These newcomer groups, whose interests span from environmental protection to concerns about national sovereignty, have made trade and investment policy a permanent and central part of their often-times wide-ranging political agendas. The chief question which this thesis attempts to answer is this: How can the mobilization of these unique groups, in a policy area that until recently was the exclusive concern of business interests and governments, be explained?
In order to account for the mobilization of civil society groups within the realm of international trade and investment policy, it is necessary to address the following issues.
First, why have labor unions, environmentalists, and other groups come to believe that
their interests are affected by international trade and investment agreements? Moreover,
how do such groups define their interests in relation to trade and investment policy, and
what is it about these agreements that has caused such groups to believe that their
interests are threatened or will be hurt by them?
Second, how can we explain changes in the nature of group mobilization?
Specifically, how can the growth or intensification of domestic mobilization be
explained, and why has civil society’s mobilization remained at such high levels? Also,
what accounts for changes in the tactics adopted by groups? Furthermore, what accounts
for changes in the substance of the arguments against trade and investment agreements put forth by mobilized groups?
The Puzzles
This thesis essentially attempts to solve two puzzles. First, why have North
American civil society groups mobilized in the trade and investment policy arena now?
In light of the lengthy post-World War II experience with trade liberalization (largely 6
pursued within the framework of the General Agreement on Trade and Tariffs—GATT)
which many developed countries have participated in—especially the United States and
Canada (with whom we are primarily concerned here)—why did environmentalists, labor
unions, and other groups not mobilize to defend and protect their interests within this
policy area earlier? Moreover, why did they not join forces and form a coalition sooner?
Generally speaking, how can the temporal aspects of civil society mobilization be accounted for? Why did these groups wait until now (meaning within the last decade and a half) to mobilize in this policy area?
This first puzzle is, perhaps, in need of clarification. To begin with, one might wonder why the failure of domestic civil society groups (particularly, environmental and public-interest oriented groups) to mobilize in the trade and investment policy area until
recently is puzzling. Is there an existing theory that would lead us to believe that the
mobilization of civil society in this policy area should have, in fact, taken place sooner?
The short answer to this question is no. Yet, while there is no single, specific theory
predicting such mobilization, there are logical reasons for holding an expectation that
civil society should not have mobilized in this area. For one thing, given that the
underlying substance of the international trade regime—namely, its norms and principles
(e.g., national treatment, most-favored-nation, non-discrimination)—has largely remained
unchanged for over fifty years,7 why have civil society groups taken issue with the regime (and its essential principles) decades after its original advent?8 If the fundamental
7 Although it remains a rather underdeveloped and loose set of norms and principles (for the time being), the same can essentially be said for the international investment regime. 8 It might be suggested that this was largely an impossibility for environmentalists since environmental concerns did not become a prominent public issue until the 1970s, well after the establishment of the international trade regime in the late 1940s. Yet, the puzzle still applies to these groups as well: why after nearly two decades did environmentalists suddenly draw a connection between their interests and international trade policy? 7
norms and principles of trade and investment regimes remained largely static over the
past five decades, then something else about these regimes must have recently changed to
result in the sudden mobilization of groups who were previously dormant or indifferent
toward this policy area. This begs the question: What change did occur in the nature of
these regimes to provoke such an unforeseen response to them on the part of domestic
civil society groups during the late 1980s and early 1990s? While the answer to this
question has already been alluded to above, it is worth reemphasizing that the purpose of
this thesis is to locate and identify the exact changes within the international trade and
investment regimes which suddenly elicited the hostility and opposition of civil society.
The second puzzle which this thesis attempts to solve can be stated as follows:
Why have such a variety of domestic groups—labor, environmental, public-interest, and
other citizen groups—repeatedly mobilized in opposition to the same commercial
agreements and global economic institutions? In posing this question, I am implying another: Is there a general and common explanation for why different kinds of groups have mobilized in the same policy area? While there have been numerous scholarly analyses explaining why particular kinds of groups have mobilized against particular commercial agreements,9 this thesis attempts to develop a more generalized explanation for why different kinds of groups having different interests and different reasons for opposing liberalization have nonetheless reacted quite similarly to independent institutional changes in regional and multilateral trade and investment regimes. Instead of focusing on the narrow question of why a single kind of domestic interest group has
mobilized against a single, specific commercial agreement or institution, the theory
9 For instance, there is a sizeable literature dealing with the reasons behind American environmental groups’ mobilization both in support of and in opposition to NAFTA; examples include Audley 1997 and Vogel 2000. 8
developed in this thesis is intended to elucidate why many different kinds of groups with
different interests, motivations, goals and objectives have mobilized against the same
agreements and institutions. To the extent that this theory successfully accomplishes this
task, it represents a parsimonious explanation for the mobilization of a variety of groups.
In the chapter that follows, an explanation for the mobilization of civil society
which provides answers to the questions raised in the previous section, and which solves
the puzzles of civil society’s opposition to liberal trade and investment agreements just
described, will be carefully outlined. Subsequent chapters will offer detailed case studies
in support of this explanation. The analysis conducted in this thesis differs from most
treatments of domestic opposition to liberal economic institutions and policies in that it
takes a comprehensive approach, examining opposition to both trade and investment
liberalization.10 Ultimately, as I will show, it is impossible to explain civil society’s
mobilization within the one issue area without addressing mobilization within the other.
Also, (as mentioned above) this analysis also differs from previous work in that instead
of considering opposition to a single agreement or institution, it examines opposition to
several agreements and institutions in relation to each other. In other words, although the
case studies provide specific reasons for group mobilization against particular agreements
and institutions, the thesis as a whole attempts to explain why civil society groups have
mobilized in the trade and investment policy domain itself.
In the next chapter I will explain why labor, environmental, public-interest, and
other civil society groups within the United States and Canada have come to believe that
10 As Neumayer (2001) points out, the “vast majority of authors” dealing with topics in international political economy such as domestic opposition to liberalization concentrate their analyses on either trade or investment issues (mostly trade), keeping the two separate. Though his own research objectives differ from those of this thesis, in recognition of the important “interlinkages” between investment and trade, Neumayer also takes a comprehensive approach, considering trade and investment together (ix). 9
recent developments in the trade and investment policy sphere could have a long-term
detrimental impact on their collective interests. I will also explain why the number of
groups who have mobilized within this policy domain has grown over time and
moreover, why the intensity of their mobilization has increased within the past decade.
Finally, I will also explain how and why the arguments against trade and investment
liberalization offered by groups have come to increasingly center upon the legal aspects
of liberal commercial agreements and institutions. My explanation will account for the
temporal puzzle posed above and provide a generalized logic for the mobilization of
groups possessing different motivations and objectives which builds upon earlier
theoretical work by Goldstein and Martin (2000). This logic of mobilization is, perhaps,
similar to that which can be applied to other domestic interest groups who have traditionally been active in the trade and investment policy realm (namely, business lobbies representing exporting and import-competing interests), but it is also fundamentally different in that the mobilization of civil society has taken on the character of an ongoing adversarial struggle.
The Scarcity and Inadequacy of Alternative Explanations
Before proceeding to the argument developed in the next chapter, it is worth
asking whether there are any existing explanations for the mobilization of civil society
within the realm of foreign economic policy, and if so, whether these adequately account
for this phenomenon. To begin with, it should be noted that there is a noticeable and
significant deficiency of social science explanations for the mobilization of civil society
within the domain of trade and investment policy. Hardly any political scientists have
directly dealt with the phenomenon or tried to provide a broad, comprehensive 10
explanation for it. Those that have addressed the issue have tended to focus only on a
single, particular sub-set or class of groups (usually environmental-oriented groups to the
exclusion of others) or have examined mobilization against a single commercial agreement without looking at opposition to previous or subsequent agreements. Thus, an ulterior purpose of this thesis is to respond to the substantial scarcity of explanations for
the entry of civil society into the politics of trade and investment, and in doing so, put forth an account that will, if nothing else, provoke others to give this phenomenon further attention (and perhaps provide serious explanations of their own which may or may not compliment the one contained here).
Despite the sub-optimal supply of work that directly addresses civil society’s mobilization in the area of foreign economic policy, we can still look for oblique explanations of this phenomenon among existing political science literatures. Two potential explanations are worth entertaining. First, drawing upon the literature on postmaterialism11, it could be argued that a societal transformation of cultural values
among Western democracies helps explain the mobilization of civil society groups within
a policy area in which they had previously shown no interest. Berman summarizes the
basic argument of postmaterialism’s original and most vocal proponent, Ronald
Inglehart:
11 Ronald Inglehart is generally credited as the founder of postmaterialism and was the first scholar to coin the term. Among the numerous articles and books in which Inglehart has developed and elaborated his basic argument, see The Silent Revolution: Changing Values and Political Styles Among Western Publics (Princeton: Princeton University Press, 1977); Culture Shift in Advanced Industrial Society (Princeton: Princeton University Press, 1990); “The Silent Revolution in Europe: Intergenerational Change in Post- Industrial Societies,” American Political Science Review 65:4 (1971); “Postmaterialism in an Environment of Insecurity,” American Political Science Review 75:4 (1981); “Value Change in Industrial Societies,” American Political Science Review 81 (1987); and “Changing Values in Japan and the West,” Comparative Political Studies 14 (1992). 11
[I]n his early work, Inglehart relied on psychologist Abraham Maslow’s insight that “people work to fulfill a number of different needs, which are pursued in hierarchical order, according to their relative urgency for survival.” Applying this insight to the West’s postwar boom, [Inglehart] claimed that, as prosperity allowed western publics to fulfill their basic material needs, they began to pursue “postmaterialist” goals, such as increasing the role of citizens in the governing of their communities, creating more humane and less impersonal societies, and improving the quality of the environment…Generational replacement is seen as the basic mechanism for the advance of value change. Postmaterialism is gaining ground because “[o]lder Europeans with Materialist values are continuously leaving these societies through death, while younger cohorts with Postmaterialist values are coming of age.”12
Indeed, it is this “cultural shift” which is thought to largely account for the emergence of
the environmental and other social movements (for instance, the student-protests of the
1960s and early 1970s) as well as the proliferation of environmental and other public- interest oriented organizations over the course of the past quarter century.
The general shift from traditional class-based or “materialist” politics to a so- called “value-based” politics—what has come to be known (for better or for worse) as the rise of postmaterialism13—among Western populations is undoubtedly a necessary
component of any explanation for the mobilization of civil society in the realm of
international commercial politics. The point is quite simple but perhaps in need of an
explicit statement: Before individual citizens (and, hence, the interest groups or associations which they may form around various issues) can become aware of or perceive a threat to their “postmaterialist” interests (e.g., concern for the environment,
public health, etc.) emanating from their countries’ foreign economic policies, they must
12 Sheri Berman, “The Life of the Party,” Comparative Politics 30:1 (Oct. 1997), 102-103. 13 It is worth noting that Inglehart’s interpretation of these changes is not universally accepted among social scientists. 12
first care about postmaterialist issues.14 However, while the important societal changes
associated with the concept of postmaterialism may be a necessary component of any
explanation for the mobilization of civil society in the arena of trade and investment
policy, it is not a sufficient explanation. The puzzle (mentioned above) remains: Why
did environmental, public-interest, and other civil society groups possessing so-called postmaterialist concerns not mobilize in the foreign economic policy area earlier.
Public-interest groups (of the kind most commonly associated with public-interest advocates such as Ralph Nader) began forming in countries such as the United States and
Canada in the 1960s while environmental groups began emerging in the 1970s. Yet none of these groups became concerned about trade or investment policies until around the mid-1980s. Moreover, the mobilization of civil society groups in this policy area did not begin to significantly grow until the 1990s. Thus, we are left wondering why the cultural changes identified by Inglehart and others did not translate into a general mobilization of civil society in the area of foreign economic policy sooner. In other words, why was there a significant lag-time between the emergence of postmaterialism and the eventual mobilization of civil society groups within the arena of trade and investment politics?
It might be suggested that the exact timing of civil society’s entrance into the politics of foreign economic policy is not important—that regardless of when it took place, it was nevertheless inevitable given society’s “culture shift.” But this is nothing more than an assumption (which may or may not be warranted). In fact, there is every reason to believe that civil society groups should not have turned their attention to trade
14 I am not entirely convinced that such long-term concerns as environmental protection and maintaining public health are any less “material” than satisfying one’s immediate economic needs (i.e., feeding, housing, and clothing one’s self or one’s family). Nonetheless, this is largely a semantic issue and does not necessarily invalidate Inglehart’s argument. 13
and investment policy unless they had very good reasons to do so. For one thing, it is often exceedingly difficult and costly to engage in collective political action. Any civil society group must pick and choose the policy issues (whether they be domestic or foreign) which it will try to influence through the deployment of its resources
(mobilization). No group can efficiently scan the entire gamut or array of government policies that could potentially effect the interests which it represents, much less mobilize
on every issue; groups must respond instead to recognizable and significant problems that
emerge either independently of or as a result of government policy. Therefore, we would
not expect civil society groups to become concerned about their respective government’s
trade and investment policies unless some notable change occurred in these policies
causing these groups to recognize their suddenly new-found significance for the groups’
interests. The next chapter provides an account of significant changes occurring in the
international political economy and the foreign economic policies of governments who
have and continue to adhere to liberal economic regimes—changes which served to
awaken civil society to the possibility that such policies could detrimentally effect its
collective interests.
A second potential explanation for the mobilization of civil society in the trade
and investment policy area can be found in the comparative and international political
economy literatures on globalization. Over the past decade, numerous scholars have felt
compelled to address the possibility (or occurrence) of cross-national convergence of
domestic political institutions and policies (especially among developed countries).15
15 The existing literature on globalization is already enormous and extensive and continues to grow. Examples (some of which directly address the issues of institutional convergence, downward policy harmonization, and the future viability of the state, others of which tackle these issues indirectly) include Peter Evans, “The Eclipse of the State? Reflections on Stateness in an Era of Globalization,” World Politics 14
Some have argued that increasing capital mobility and the internationalization of
production could lead (or is leading) to “a race to the bottom” among nation-states. It can
be argued that the mobilization of civil society groups in the area of trade and investment
policy represents a response to these relatively recent changes in the international
economy. As will be shown in chapter three, this is in fact the case, at least in part.
Civil society groups have indeed voiced concerns about the potential for a race to the
bottom among states. Yet this is largely an incomplete and only partial explanation for
the mobilization of civil society in the realm of foreign economic policy.
For one thing, globalization (like postmaterialism) fails to explain the precise
timing of civil society’s mobilization. First, it is unclear when the new era of
globalization began. Depending upon which indicators one chooses to look at, the
definitive beginnings of globalization could be recognized as early as the 1970s or as late
as the early 1990s (certainly the term itself did not attain popular usage until the 1990s).
Second, how does one determine the threshold which globalization would have to surpass
before it raised the awareness and consciousness of domestic civil societies (with respect
to the significance of international economic developments in relation to the interests of
civil society groups) and evoked a response from these societal actors? In short, simply
50:1 (1997); Geoffrey Garrett, “Capital Mobility, Trade, and the Domestic Politics of Economic Policy,” International Organization 49:4 (1995) and “The Causes of Globalization,” Comparative Political Studies 33 (2000); Peter Hall & David Soskice (eds.), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (Oxford: Oxford University Press, 2001); Alexander Hicks, Social Democracy and Welfare Capitalism: A Century of Income Security Politics (Ithaca: Cornell University Press, 1999), chapters 6 & 7; Paul Hirst, “The Global Economy: Myths and Realities,” International Affairs 73:3 (1997); Paul Pierson (ed.), The New Politics of the Welfare State (Oxford: Oxford University Press, 2001); Marino Regini, “Between Deregulation and Social Pacts: Responses of European Economies to Globalization,” Politics and Society 28:1 (2000); Dani Rodrik, Has Globalization Gone Too Far? (Washington: Institute for International Economics, 1997); John Gerard Ruggie, “At Home Abroad, Abroad at Home: International Liberalization and Domestic Stability in the New World Economy,” Millennium: Journal of International Studies 24:3 (1994); Vivien Schmidt & Fritz Scharpf (eds.), Welfare and Work in the Open Economy, volumes I & II (Oxford: Oxford University Press, 2001); Jan Aart Scholte, “Global Capitalism and the State,” International Affairs 73:3 (1997); Kozo Yamamura & Wolfgang Streeck (eds.), The End of Diversity? Prospects for German and Japanese Capitalism (Ithaca: Cornell University Press, 2003); 15
evoking globalization as a catch-all explanation for the mobilization of civil society in the
area of international trade and investment politics fails to give us a complete causal
picture of how civil society groups suddenly became aware that their collective interests
were threatened by global economic liberalization when they did.
Ultimately, we are in need of a more precise explanation for the mobilization of
civil society within the domain of international political economy—an explanation that tells us precisely how and, perhaps most importantly, when civil society actors concerned themselves with their respective countries’ foreign economic policies. This objective will be pursued in the next chapter.
Giving the Coalition a Name: Civil Society
Finally, before concluding this introduction, it is necessary to briefly address a conceptual and terminological issue—namely, the concept of civil society. The transnational coalition of nongovernmental organizations (NGOs) and grassroots groups which have mobilized against international trade and investment liberalization has been described by many commentators (including both journalists and academics) as an “anti- globalization” movement. While this description is perhaps an apt characterization of certain elements comprising the amalgamation of groups who have collectively demonstrated their antagonism toward global economic institutions such as the WTO,
World Bank, and International Monetary Fund, it is, nonetheless, a problematic portrayal.
Many groups involved in this movement (including many North American groups) are not necessarily opposed to globalization per se (whatever that may be), but are instead,
opposed to the sweeping liberal character of the existing (and proposed) institutions 16
which constitute the institutional infrastructure that governs and manages the global
economic system.
With regard to trade and investment, in particular, many NGOs and grassroots
groups believe that the rules (and other institutions) which comprise the liberal trade
regime (as well as those of the emerging investment regime intended to be its
compliment) unduly favor the interests of transnational capital at the expense or neglect of other important social values or principles such as democracy, environmental protection, and national sovereignty. For many groups, international rules which would govern the global economy as well as the behavior of governments and private investors are not a problem in and of themselves; rather, it is the balance of interests which such rules are intended or designed to serve—as well as who is allowed to participate in the process by which these rules are created—which are the fundamental issues at stake.
The anti-globalization label is also problematic in so far as it connotes a solely negative, obstructionist posture for groups who oppose the current direction of trade and investment liberalization and the development of multilateral and regional institutions intended to facilitate liberalization. It neglects the (albeit, as yet untapped) potential for a more positive and constructive role, which at least some groups have attempted to articulate for themselves as well as the alternative policy proposals which many groups have put forth.16
16 Nonetheless, many overtly leftist groups which occupy the more radical margins of the coalition of groups opposed to liberalization can be accurately described as “anti-capitalist,” “anti-corporate,” or “anti- business”—labels which many ideologically driven groups whole-heartedly embrace, and indeed, occasionally use to describe themselves. At any rate, whether it is fringe or mainstream elements which one is interested in, the coalition as a whole can rightly be described as adversarial, even if all of its members are not “anti” trade or “anti” investment. 17
Ultimately, evaluating the accurateness of the suggestion that groups who oppose
the WTO or the proposed FTAA are also opposed to globalization depends on how one
defines this often-times hazy, messy, and ideologically-loaded concept. If globalization
is defined as an inevitable or even unstoppable process or if it is conceived in such a
manner as to include the legalization of economic liberalization (as this is currently
conceived of and pursued by business and state elites), then the opposition of labor
unions, environmentalists, and other groups toward “legalized” free trade and investor
rights agreements as well as other liberal institutions can rightly be understood as
indicative of a broader resistance against “globalization.”
Other commentators have employed the term civil society to refer to the kinds of
groups who have mobilized within the trade and investment policy sphere over the course
of the past decade, most of whom, aside from labor groups, do not have an economic
interest in these policy areas. For instance, in late 1998, when the French government
issued a report outlining its stance regarding the continued viability of the MAI
negotiations, it explicitly acknowledged the significant role which “civil society” had
played in calling the attention of participating governments to the potential impact which
the MAI could have on environmental and social standards and the regulatory
sovereignty of signatory states.17 Moreover, in much (if not all) of the publicly available
literature produced by NGOs and grassroots groups, in which such groups discuss or
address their self-designated role in the politics of trade and investment policy, many
groups describe themselves (whether in reference to the local, national, regional, or
global level) as members or representatives of “civil society.”
17 The opening paragraph of the report’s analysis reads as follows: “More than any other international economic agreement, the MAI has created opposition and tension within civil society” (my emphasis). Lalumiere & Landau 1998, 4. 18
In the past three or four decades both rich and poor countries have seen an
explosion in the growth of non-governmental organizations (NGOs)—a so-called
“associational revolution.” “As a term and concept,” Swift notes, “civil society has been
around for centuries, but it has been revitalized, almost reborn, in recent years. Long
familiar to political theorists and academics in sundry subspecialties, the notion of civil
society has recently seeped into mainstream political vocabulary.”18 The idea of civil
society has tended to have a culturally variable meaning. Because it has held many
different meanings for different people at different times and in different places, Indian
political theorist Neera Chandhoke has referred to civil society as “a conceptual
ragbag.”19 Swift offers a definition that at least provides some rudimentary boundaries
for thinking about the concept:
In essence civil society involves the activity of citizens in free association who lack the authority of the state, although the groupings or organizations may have gained access to state resources (and thereby bargained away some of their autonomy). Such activities are motivated by objectives other than profit-making, although citizens may undertake income-generating activity as a means of furthering their objectives…Civil society hints at voluntarism, charity, community organizing, grassroots activity. It means advocacy groups, representation, citizen engagement, and service delivery (original emphasis).
According to Swift, the term civil society is “capable of spreading its wings fully wide.”
It can take in a diverse array of actors such as the “organized labour movement and the organized corporate elite.”20
The kinds of groups who make up the broad coalition that has opposed trade and
investment liberalization fit within Swift’s broad but bounded definition. These groups
18 Swift 1999, 4. 19 Quoted in Swift 1999, 5. 20 Ibid., 4-6. 19 have collectively mobilized to ensure that their interests are represented in the global economic policymaking process. Although coalitions among fundamentally different kinds of groups (for instance, labor unions and environmentalists) can to some degree be considered strategic and pragmatic, these groups are largely bound together more by shared values, norms, and ideas than by self-interest. Thus, because of the problematic nature of the “anti-globalization” label and because these groups view themselves as
“representatives of civil society,” they will be referred to as such throughout this thesis.21
However, while the conceptual rubric of civil society will be utilized, it is primarily employed as a shorthand description for the loose coalition of groups who have opposed liberalization. The constituent partners of this coalition will also be treated as distinct kinds of interest groups, possessing their own unique sets of interests, goals, and motivations.22
There are three basic kinds of groups upon which this thesis will concentrate its focus: (1) environmental groups (e.g., Sierra Club, Friends of the Earth), (2) labor groups
(e.g., American Federation of Labor and Congress of Industrial Organizations, Canadian
Labour Congress), and (3) public-interest (or public advocacy) groups (e.g., Public
Citizen, Council of Canadians).23 Also, it is important to emphasize that this thesis is primarily concerned with civil society groups who have mobilized against liberal trade
21 References to NGOs throughout the thesis should be taken as a synonym for civil society groups. As Swift (1999, 11) points out, the term civil society has become, “rightly or wrongly, shorthand for NGOs.” 22 This is not to suggest that there is not a significant degree of overlap between the interests, goals, and motivations of different kinds of groups; the fact that different kinds of groups do, in fact, share many of the same interests, goals, and motivations (as well as values, norms, and beliefs) accounts for why such groups have increasingly joined forces in opposition to liberalization. Furthermore, it is the purpose of this thesis to demonstrate how institutional changes in the way trade and investment are managed at the multilateral and regional levels have affected the interests of different kinds of groups in essentially the same way. Nonetheless, there are clear qualitative differences in the interests, goals, and motivations of certain kinds of groups (as for instance, in the case of labor unions and environmentalists) which it may prove necessary or useful to highlight during the course of this analysis. 23 Some attention will also be given to other citizen groups which fall outside of these three general categories. 20
and investment agreements and institutions.24 Hence, I am not only concerned with explaining the mobilization of civil society but also civil society opposition.
While civil society groups have surfaced all over the world to demonstrate their
collective hostility toward the legalization of trade and investment liberalization (either
individually or cooperatively), giving rise to speculation about the possible emergence of
a “global” or “transnational civil society,”25 it would appear that the mobilization of such
groups is at its most intense in North America. Though it may or may not be entirely
accurate to view North America as the sole focal point of this global-wide mobilization,
this thesis concentrates on the mobilization of civil society groups within the United
States and Canada. One good reason to restrict the scope of the thesis to these two
countries is the fact that both the United States and Canada have had extensive historical
experience with international trade and investment agreements (the purposes of which are
to promote regional economic integration). This history stretches back to the late 1980s,
beginning with the bilateral Canada-United States Free Trade Agreement (CUFTA) and
continuing with its expansion into the trilateral North American Free Trade Agreement
(NAFTA) and, prospectively, the multilateral extension of NAFTA to the entire Western
hemisphere through the proposed Free Trade Area of the Americas (FTAA), which is
currently being negotiated (with a target date of completion sometime in 2005). Thus,
studying the North American experience allows me to not only examine the response of
civil society to changes in the multilateral trade and investment regime, but also civil
society’s reaction to the establishment of regional regimes such as NAFTA. Ultimately,
24 Where appropriate (as in the NAFTA case, for instance), I will devote some attention to civil society groups who have mobilized in support of liberal commercial agreements in exchange for concessions relating to their interests. 25 See, for instance, Deibert 2000, Edwards & Gaventa 2001, Florini 2000, Warkentin & Mingst 2000, and Lalumiere & Landau 1998. 21 focusing on these two countries provides me with a greater number of instances (cases) of mobilization with which to test my explanation for civil society mobilization in the policy area of trade and investment. Finally, another reason to focus on Canada and the United
States lies in the fact that many of the groups who have taken the lead in “transnational” civil society’s struggle against liberalization are based in Canada and the United States and have now been involved in the politics of trade and investment policymaking for quite some time.
Before outlining the organization of the thesis, two final points regarding the concept of civil society are warranted. Although the argument developed in this thesis may have significant implications for explaining the mobilization of civil society groups in other policy domains and issue areas (which I will briefly discuss in the concluding chapter), it is not the primary intention of this thesis to make a direct contribution to the existing theory and literature dealing with the broader concept of civil society itself. The research presented here should be appreciated for the implications it raises within the sub-field of international political economy (IPE), specifically with regard to the way in which domestic politics is influenced and affected by international interactions, processes, and outcomes.26
Finally, while the focus of my analysis is on individual domestic group behavior within a specific policy domain, to some extent, I also want to treat North American civil society as a collective or corporate entity. “One way of gaining an understanding of civil society,” suggests Swift, “is to see the concept not just as a matter of individual citizens
26 This thesis essentially tries to contribute to the research program outlined in a special issue of International Organization (volume 54, issue 3) on the legalization of international relations; specifically, it builds upon the logic of domestic interest group mobilization (resulting from increased legalization) developed by Goldstein and Martin (2000), applying it to domestic civil society groups (as opposed to domestic economic actors). 22 or organizations but as a space between official public life (government) and private life
(especially the market).”27 According to Antonio Gramsci, between “the economic structure and the State with its legislation and coercion stands civil society.”28
Organization of the Thesis
The organization of the thesis is as follows: In chapter two, I lay out my explanation for why North American civil society has mobilized against liberal trade and investment policies. After a brief literature review, I provide a thorough and detailed exposition of the unit of analysis and key concepts upon which my argument rests— mobilization and legalization; I then explain how these conceptual variables are related. I conclude this chapter with a discussion of the specific hypotheses that arise from the logic of my argument, describing the evidence that will be necessary to confirm or disconfirm them.
Chapters three and four provide detailed (chronologically ordered) case studies in support of the argument developed in chapter two. Collectively, these two chapters trace the process by which North American civil society has mobilized in response to the legalization of liberalization. Chapter three examines civil society opposition to both
CUFTA and NAFTA. It paints a picture of civil society mobilization within the context of a low-information, pre-legalization environment. Chapter four offers an analysis of civil society’s campaign against the MAI, placing it within the relevant context of opposition to NAFTA’s investment chapter and focusing on the arguments put forth by
27 Swift 1999, 15. 28 Quoted in ibid. In the concluding chapters of the thesis I will return to this point and give it further consideration. 23 civil society against this important agreement. 29 The chapter concludes with an explanation for civil society’s ongoing opposition to the WTO and the FTAA, putting the
“battles” in Seattle and Quebec in perspective by placing them within the larger context of resistance to the MAI, and demonstrating how civil society has applied the lessons learned from NAFTA and the MAI. Finally, chapter five provides a summary of the argument of the thesis and the evidence that supports it. It also raises additional issues, particularly addressing the long-term goals of civil society as well as their feasibility. I conclude by offering some final thoughts within a prospective orientation.
29 For reasons that will be explained in subsequent chapters, civil society’s attack on the MAI represents the most important case of the thesis. 24
CHAPTER 2
EXPLAINING THE MOBILIZATION OF NORTH AMERICAN CIVIL SOCIETY
AGAINST TRADE AND INVESTMENT LIBERALIZATION
Writing the Constitution for a Global Economy
In a speech before the Trade and Development Board of the United Nations
Conference on Trade and Development (UNCTAD) in October of 1996, Renato
Ruggiero, former Director-General for the World Trade Organization (WTO) from 1995-
1999, offered his thoughts on the evolution of the multilateral trading regime and its continuing significance:
Today, the WTO rules also encompass standards, services, intellectual property, trade related investment and a host of other economic activities that would not have been conceivable even a decade ago…in moving from shallow to deeper integration and from a narrow to far broader participation we have done much more than add a new rule here or a new member there. We have transformed the nature of the system itself. We have created a global trade architecture which is greater than the sum of its parts—a seamless web of interlocking interests and responsibilities, interdependent and indivisible…We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy.30
Ruggiero’s comment about a “constitution” for the “global economy” would eventually arouse enormous suspicion among civil society groups across the globe, exacerbating their anxieties about the implications of legalized trade and investment liberalization.
Drawing a direct connection between Ruggiero’s controversial statement and efforts at the Organization of Economic Cooperation and Development (OECD) to negotiate a
30 My emphasis; quoted in Chakravarthi Raghavan, “MAI Not Dead Yet,” Third World Network Online (www.twnside.org). 25
Multilateral Agreement on Investment (MAI) (negotiations were in full swing at the time
of Ruggiero’s comments), civil society groups opposed to the MAI responded to
Ruggiero’s contentious proclamation with intense hostility.
Ruggiero’s remarks are actually indicative of the important institutional changes
which the international political economy has experienced over the course of the past
decade and a half. As was mentioned in the previous chapter, there has been a marked
expansion in the institutional infrastructure governing international trade and investment
flows. Many of these significant institutional changes can be classified and grouped
under the concept of “legalization.” The multilateral trade regime31 has become more legalized (i.e., more binding and precise in terms of the explicit rights and obligations it
prescribes) than ever before as a result of the successful conclusion of the Uruguay
Round of trade talks among the GATT countries and the creation of the WTO. At the
same time, North America has experienced a steady movement toward a deepening
regional economic integration that has been facilitated by two successive, highly
legalized, commercial agreements, first among the United States and Canada, and later
among the U.S., Canada, and Mexico. In addition, there has been a pronounced effort
both multilaterally and in North America to provide a firmer international legal
foundation for the treatment of foreign investments.
In short, it is the legalization of economic liberalization at the international level as well as specific changes in the larger, long-term process of legalization—in terms of
31 Throughout this thesis, I refer to regional and multilateral trade and investment regimes. I accept Krasner’s (1982, 186) definition of regime: “Regimes can be defined as sets of implicit or explicit principles, norms, rules, and decision-making procedures around which actors’ expectations converge in a given area of international relations. Principles are beliefs of fact, causation, and rectitude. Norms are standards of behavior defined in terms of rights and obligations. Rules are specific prescriptions or proscriptions for action. Decision-making procedures are prevailing practices for making and implementing collective choice.” 26
its pace, scope, and objectives—which help to explain why civil society groups have
mobilized within the trade and investment policy sphere. This chapter explains how the
increased legalization of international trade and investment at both the regional and
multilateral level has resulted in the mobilization of North American civil society,
engendering intense domestic opposition to liberalization. In the sections that follow, I
will explain more clearly what I mean by mobilization, the phenomenon that this thesis
tries to explain. I will also define and disaggregate the concept of legalization which
encompasses the key explanatory factors that I intend to argue have led to the
mobilization of civil society. Finally, I will attempt to operationalize these two concepts
and delineate their relationship with each other. However, before addressing issues of
conceptualization and operationalization, I present a brief review of the existing literature
dealing with the intersection between domestic politics and international economic
relations followed by a discussion of the levels and units of analyses employed in this
thesis.
Domestic Politics and International Economic Relations
Within the IPE literature dealing with the relationship between domestic political
actors and international economic relations, there has been little, if any, work which has
tried to provide a general explanation for why various different civil society groups
mobilize within the trade and investment policy sphere. The vast majority of existing
studies addressing why domestic political actors mobilize within the trade policy arena
focuses almost exclusively on central economic actors (i.e., capital and labor).
Nonetheless, it is perhaps worth taking a look at some of the basic insights of this 27 literature, for it is in this area that the conclusions reached in this thesis can potentially contribute the most.
The literature on domestic politics and international economic relations tends to concern itself with explaining how the former effects the latter—that is, how domestic politics effect or influence national policy outcomes which have important implications for international economic interaction—particularly, the decision of governments to adopt protectionist policies or, alternatively, pursue free trade. The classic explanation for why governments adopt protectionist policies was put forth by E. E. Schattschneider
(1935). While the benefits of free trade are diffuse, Schattschneider observed, the costs associated with liberal trade policies are concentrated. Hence, because concentrated interests face less of a collective action problem than diffuse interests when confronted with the need to mobilize in an effort to influence policy, the interests of import- competing business interests tend to outweigh the more diffuse and general interest (of both consumers and exporting business interests) in free trade. The mainstream literature on trade policymaking has largely explicated and elaborated upon Schattschneider’s key observation. In explaining the advantage of comprehensive commercial agreements,
Mayer (1998, 95) provides a recent example. As he explains:
[T]he core problem in international trade is overcoming the tendency of concentrated interests in protection to overwhelm the more general interest in free trade…Given the much greater problem of collective action for [consumers and exporters], the concentrated protectionist interests will be much more successful in bringing political pressure to bear on trade policy makers…Concentrated protectionist interests are more politically powerful than diffuse free trade interests and thus are often able to prevent international agreement. Comprehensive trade negotiations, those that deal with many sectors simultaneously, help balance the contest of interests by adding together the many small benefits from each sectoral liberalization.
28
Thus, comprehensive free trade agreements like GATT and NAFTA “serve as vehicles”
for solving the problem of protectionism by “bundling together” numerous economic
sectors at once and by “bringing international pressure to bear on domestic politics.”32
The mobilization of environmental, public-interest, and other kinds of civil
society groups, however, turns Schattschneider’s insight on its head. While none of these groups have a concentrated economic interest in purely protectionist policies, they do have a diffusely shared interest in making sure that their governments retain the regulatory autonomy necessary to protect their various interests in domestic policy areas such as public health and safety or environmental protection. In so far as they have perceived comprehensive commercial agreements and institutions like the WTO or MAI as threats to this general interest, civil society groups have mobilized against them and have pressured their governments to refrain from signing on to such agreements.
The question which remains is this: How do these groups overcome their collective action dilemma? In a discussion of class interests and government intervention, Karl Polanyi indirectly addresses and provides an answer to this very
question in his famous work The Great Transformation (1944):
Once we are rid of the obsession that only sectional, never general, interests can become effective, as well as the twin prejudice of restricting the interests of human groups to their monetary income, the breadth and comprehensiveness of the protectionist33 [substitute civil society] movement lose their mystery. While monetary interests are necessarily voiced solely by the persons to whom they pertain, other interests have a wider constituency. They affect individuals in
32 Mayer 1998, 62. Also, it should be explicitly noted, that comprehensive agreements are more likely to provide a broader base of political support for politicians considering whether or not to oppose or pursue liberal trade policies. 33 It is worth emphasizing that Polanyi’s use of the term “protectionist,” while still encompassing the same kind of narrow economic interests normally associated with the term (as it is used in reference to domestic trade policy), is rather broad and applies nicely to the civil society movements considered in this work, especially in so far as these groups seek to “protect” their own unique interests. 29
innumerable ways…and are accordingly capable of representation by almost any type of territorial or functional association…An all too narrow conception of interest must in effect lead to a warped vision of social and political history, and no purely monetary definition of interests can leave room for that vital need for social protection…Precisely because not the economic but the social interests of different [interest groups] were threatened by the [liberalization of trade and investment], persons belonging to various [different kinds of groups consciously] joined forces to meet the danger (154-155).34
If we accept Polanyi’s famed assertion, then we can quickly dismiss the issue of
collective action. Nonetheless, our original puzzle remains: Why have civil society
groups mobilized in the area of trade and investment policy now? Why did they not
perceive any dangers to their various and common interests in this policy area earlier?
Conversely, why have they recently sought “protection” from the state in this policy domain? Furthermore, is there a general explanation that can account for the mobilization of such a diverse array of groups?
Finally, in concluding this cursory review of the literature on domestic politics and international economic relations, it may prove worthwhile to explicate the relationship between the existing work in this area and the argument that will be put forth in this thesis. In their efforts to explain national policy outcomes, some IPE scholars have in recent years begun applying the logic of two-level games first developed by
Putnam (1988) to the relationship between political bargaining at the domestic and international levels in the context of trade negotiations.35 The two-level game
framework, according to Avery and Friman (1999, 90), “moves beyond systemic theories
[i.e., realism, neo-realism, liberal institutionalism, etc.] that assume states as unitary
34 I have taken some liberty in altering Polanyi’s words so that they more closely fit the phenomenon which I am interested in. The last line actually reads as follows: “Precisely because not the economic but the social interests of different cross sections of the population were threatened by the market, persons belonging to various economic strata unconsciously joined forces to meet the danger.” 35 See for instance Mayer 1998 and Avery and Friman 1999. 30 actors as well as ‘additive approaches’ that explore domestic politics…as a secondary influence on state preferences and actions.” As they explain:
The two-level game framework explores the interactive nature of bargaining on the international and domestic stage. At the international level (Level I), state representatives forge a draft agreement. The document is tentative in the sense that it must be acceptable to important domestic constituencies (Level II), whose concurrence is needed to win ratification. The dynamics of the two-level game are such that what occurs at Level I may echo across the Level II political landscape, sometimes increasing the prospects for ratification and other times diminishing them. Conversely, the particular configuration of coalitions and preferences at Level II helps mold the bargaining positions and strategies of negotiators at Level I.
As stated above, for the most part, IPE scholars exploring the relationship between domestic politics (Level II) and international economic relations (Level I) have been primarily interested in policy outcomes at Level I (i.e., whether states can successfully negotiate a liberal commercial agreement). While it is not the intention of this thesis to directly contribute to the literature on two-level games, it is worth pointing out that Level
II—domestic politics—is its dependent variable. Thus, rather than explaining how domestic politics effects outcomes among nation-states at the international level, it is my intention to show how changes at the international level effect domestic politics— specifically, how developments in international economic relations such as the increased legalization of trade and investment regimes alter the incentives of domestic actors to mobilize in the domain of trade and investment policy. Thus, I hope to indirectly contribute to the IPE literature on domestic politics and international economic relations by demonstrating how the latter effects the former.
31
Levels and Units of analysis
Before explaining what I mean by mobilization and how I intend to gauge it empirically, a discussion of the units and levels of analyses adopted in this thesis is in order. First, this thesis examines phenomena at both the domestic and international level, analyzing interaction between them in an effort to demonstrate the impact which institutional developments in the international political economy have had upon domestic politics (specifically the mobilization of North American civil society groups in the realm of trade and investment policy). Second, this thesis essentially employs two units of analysis: a micro-unit and a macro-unit. For the most part, I explicitly focus my attention on the behavior of individual civil society groups (the micro-unit), specifically their reactions to institutional change at the international level. At the same time, however, my analysis also implicitly considers changes in civil society itself as a corporate entity (the macro-unit) resulting from these important institutional changes.
The significance of my micro and macro-units of analysis warrants further discussion.
With regard to the micro-unit, I consider the question of why individual civil society groups mobilize against trade and investment liberalization. In doing so, I treat these domestically organized interest groups as unitary political actors. This is an important assumption and warrants two major qualifications. First, by assuming civil society groups to be unitary actors, I am essentially treating complex groups of individuals as singular, self-contained entities, which they obviously are not. By employing the unitary assumption, it is not my intention to imply that groups are necessarily rational maximizing actors or that they possess any of the other attributes commonly associated with the concept of “rationality” (as it is ordinarily conceived by 32 rational-choice theorists in the social sciences), but merely that groups are collective actors who ultimately influence public policy as collectivities, not as individuals.36
Second, the unitary actor assumption has at least one major consequence for the explanatory scope of the argument put forward in this thesis: It means that my explanation for the mobilization of civil society groups cannot directly reveal how the exogenous causal mechanisms identified in this thesis (and discussed below) operate at the individual level of analysis—that is, among an individual group’s members, activists, and leaders. For instance, my theory of legalization (developed below) does not directly tell us anything about the precise reasons why a particular individual (e.g., a US steelworker or a Canadian environmental activist) who is a member of a civil society group might oppose the liberalization of domestic rules involving the treatment of foreign investment.37 The theory can, on the other hand, explain why a particular group (e.g., the
United Steelworkers of America or the Sierra Club of Canada) would turn its attention to investment liberalization and mobilize against it (given that group’s publicly stated policy preferences).
36 Indeed, groups may behave “irrationally” precisely because they are composed of numerous individuals, many of whom may not always unanimously agree on what is the most appropriate course of action to take in pursuit of the group’s immediate or long-term goals. A group’s actions or its policy stance is probably, more often than not, a reflection of its resources, its internal organization (e.g., how decision-making power is distributed among group members or how much power is invested in the group’s leadership) and its internal divisions. By assuming civil society groups to be unitary political actors, all I assume is that, whatever unique processes may explain how a group reaches collective decisions, once the leadership, activists, and rank-and-file membership of an organization have agreed upon a course of action, the group tends to act (and, thus, influence political or policy outcomes) as a unitary actor. Hence, the argument developed in this thesis is not meant to imply or suggest that the actual individuals who make up civil society groups are insignificant. People do matter. 37 A particular individual’s reasons for opposing trade or investment liberalization probably encompass numerous factors which my theory cannot account or control for, including the individual’s world view and/or political ideology (for instance, the researcher who would seek to understand a particular individual’s reasons for opposing liberalization might inquire into that person’s opinions regarding the legitimacy of multinational corporations or perceptions about the consequences of free trade). 33
In sum, by treating civil society groups as unitary political actors, it is not my
intention to ignore the importance of individuals (whether they be group leaders or
ordinary rank-and-file members) nor neglect the significant role which they play in group
mobilization. Nonetheless, there are essentially three reasons why I have chosen to
confine my argument to a level of analysis (i.e., domestic interest group politics) that lies
just above that of the individual. First, it is enormously difficult to directly observe group
behavior at the individual level—that is, it is difficult to observe interactions among
group members and group elites.38 Thus, for the most part, groups remain largely
opaque.
Second, if we are primarily concerned with the political consequences of group
mobilization, then it is essential to remember that the effect interest groups have on
politics or political outcomes is ultimately the result of collective action. No single
individual belonging to a group is likely to have a substantial influence on the political process by himself. Groups have their impact in the aggregate—that is, when a group’s individual members act as one collective unit. Moreover, understanding the political consequences of group mobilization does not depend upon knowing how a group reached the decision to mobilize, but instead, on knowing why a group felt compelled to mobilize.
Finally, given the puzzle presented in the previous chapter, it bears emphasizing that I am not interested in explaining the variability of mobilization among different civil society groups—whether they be of the same kind (e.g., labor, environmental, etc.) or not. That is, I am not concerned with explaining why some groups mobilized and others did not. Instead, I am solely concerned with explaining why those groups who have, in
38 What is more, the large number of groups whose mobilization is analyzed in this work (specifically in chapters three and four) makes an examination of group dynamics at the individual level prohibitively costly in terms of the amount of research that it would require. 34 fact, mobilized on trade and investment policy issues, have done so now, and why they did not mobilize in this policy area sooner.39
Thus, with the exception of groups who actually formed in response to the increasing globalization of the world economy (and the aforementioned institutional changes which accompanied this phenomenon), I treat American and Canadian civil society groups as pre-existing domestic political actors—that is, groups who have previously formed as a result of the coming together of like-minded individuals desiring to shape public policy through collective action, and who have subsequently become concerned with the content of their respective governments’ foreign economic policy.
My purpose is to explain why they have suddenly concerned themselves with developments in this policy domain.
Finally, a few points regarding the macro-unit of analysis are in order. In this thesis, I also consider civil society itself as a collective or corporate entity, of which the actual civil society groups whose behavior we observe are the constituent elements.
Although this is a contrived fiction, it enables me to consider the collective mobilization of civil society groups as a whole (as well as a social and political movement against globalization), allowing me to make statements such as “the mobilization of civil society
39 The puzzle bears reemphasis: North American civil society groups (with the exception of labor groups) did not suddenly decide without reason that they were opposed to their governments’ foreign economic policies—particularly, their acceptance of and adherence to international economic regimes—some four decades after these policies were first adopted. Something had to change within these regimes to provoke these actors into paying closer attention to developments in this general policy sphere. As I will explain more precisely below, since many groups are apparently not opposed to the underlying principles and norms of these regimes (e.g., free trade, MFN, national treatment, etc.), then there must be something else which groups find objectionable about them. As I will argue, it is the specific rules and decision-making procedures (as these have developed over time up until the last decade and a half) which changed, and this has caused groups to become deeply concerned over the direction and orientation of foreign economic policy in their respective countries. 35
has grown over time.”40 At times my analysis will oscillate between the micro-unit
(groups as unitary actors) and the macro-unit (civil society as corporate entity); however, the logic of mobilization I present below emphasizes the former over the latter.
Mobilization: The Organized Application of Pressure
In this section I will elaborate upon the meaning of mobilization and explain how
I intend to measure it as a concept. As stated in the previous chapter, the research
question which this thesis attempts to answer is this: What factors help explain the
mobilization of American and Canadian civil society groups within the realm of international trade and investment policy over the course of the past decade and a half?
In light of the temporal puzzle mentioned in the previous chapter, this thesis is primarily
concerned with explaining why existing groups, who have already previously formed for
the purpose of engaging in collective action (so as to influence various different aspects
of public policy), have suddenly turned their attention to their respective governments’
foreign economic policy, an area in which they previously had taken no noticeable
interest.41 Therefore, my dependent variable—the phenomenon which I am trying to explain—is the mobilization of civil society groups.
The Merriam-Webster Dictionary42 defines the word mobilize in the following
manner: “To assemble and make ready for action.” Funk & Wagnalls’ Standard
Dictionary43 provides another definition for the word: “To get ready for war.” Both of
these definitions give some meaning to the phenomenon which this thesis attempts to
40 Civil society can be considered as a corporate or collective entity at various levels of aggregation—that is, as American or Canadian (national) civil society, North American (regionally-based international) civil society, or as global civil society. 41 Of secondary interest is why new groups have formed in response to the institutional changes in the international political economy (detailed below). 42 Home and Office edition, 1998. 43 International edition, 1970. 36
explain. Over the past decade and a half civil society groups in the United States and in
Canada have organized for political action in order to protect their perceived interests
within the trade and investment policy spheres. What is more, these groups have come to
see themselves as participants in a prolonged struggle—indeed, a “war”—against transnational corporations and other proponents of the legalization of trade and investment liberalization—a conflict in which the stakes are nothing less than the preservation of the environment, national sovereignty, democracy, and the public good.
For the purposes of this thesis, mobilization is defined in the following manner:
An organized political interest group can be said to be mobilized within a specific issue or policy area (such as international trade and investment) when it has demonstrably deployed a significant amount of its resources in a purposive and systematic effort so as to effect the outcome of some short-term or long-term political process or some immediate or future political decision. Mobilization can essentially be understood as the
strategic deployment of an organized group’s resources in an attempt to apply effective
pressure on domestic political authorities or decision-makers so as to compel these individuals to consider or attend to the interests of the group. Among the resources which a group can wield in its attempt to pressure political authorities, the group’s size
(in terms of membership), its financial assets, and its ability to effectively disseminate and manipulate information are perhaps the most important resources that can be employed in the pursuit of the group’s goals and objectives.
The public activities which groups engage in constitute and reveal their mobilization within an issue or policy area. The common denominator for all of these various activities is their ultimate purpose—namely, to place significant pressure on 37 governments or on specific politicians or ministers, and to persuade or convince these public authorities that it is in their interest to attend to the group’s demands. In their efforts to affect international trade and investment policy, American and Canadian civil society groups have engaged in many conventional interest group activities, including grassroots lobbying campaigns (often involving letter-writing, phone-calls, and electronic mail) targeted at members of Congress or Parliament, as well as efforts to educate the general public with regard to the potential consequences of specific free trade and investor rights agreements (particularly through the use of public advertising as well as the internet) so as to sway public opinion and thus, create and direct more pressure toward governments. Many of these groups have also employed unconventional means in their struggle against liberal trade and investment policies, organizing or participating in public demonstrations, street protests, and other forms of direct action (as evidenced by the protests at Seattle and Quebec, to name but a few such incidents).44 A list of activities which American and Canadian civil society groups have engaged in as a means of affecting their respective government’s trade and investment policy is provided in
Table 2.1.45 These activities function as indicators of mobilization.
Having now defined what I mean by mobilization, I am now confronted with the question of how to measure it as a dependent variable. There are two basic approaches which can be adopted. On the one hand, mobilization can be treated broadly as a simple binary or dichotomous variable—meaning civil society groups are either mobilized
44 A statement found on the website of the Council of Canadians provides a concise picture of the activities which many civil society groups engage in: “To raise awareness and create change, chapters [of the Council of Canadians] organize demonstrations, host public events, lobby their members of parliament, facilitate discussion groups, work in local coalitions, share Council campaign information, write letters to the editors of their local papers, and do anything else that will help the struggle!” See www.canadians.org. 45 This list is by no means comprehensive or exhaustive. 38
TABLE 2.1 Indicators of Mobilization: Civil Society Group Activities
• Testifying at Congressional or Parliamentary committee hearings • Contacting government officials directly to present the group’s point of view • Publishing research results, technical information, or policy analyses • Contacting members of the group to inform them about its activities • Entering into coalitions with other groups • Talking with people from the media • Inspiring or organizing letter-writing, telephone, or electronic mail campaigns directed at Congressmen and members of Parliament • Mounting grassroots lobbying efforts • Filing legal suits or otherwise engaging in litigation • Running advertisements in the media about the group’s policy positions • Employing the internet as a tool for organizing and disseminating information for consumption by members and the general public • Engaging in protest demonstrations
within a policy or issue area or against a particular commercial agreement or they are not.
On the other hand, we can attempt to gauge the degree or extent of civil society
mobilization. Each of these approaches has its own inherent advantages and
disadvantages. The primary advantage of adopting a binary or dichotomous approach
lies in its simplicity. However, the disadvantage of such an approach is that it is necessarily imprecise and does not allow for a detailed or exact analysis of how changes in my independent variable (legalization) cause changes in mobilization. The advantage of trying to measure the degree or extent of mobilization is that such an approach does allow for increased detail and precision. Nonetheless, this approach presents its own difficulties, as I will now explain.
In trying to determine the actual degree or extent of mobilization, there are three basic dimensions which can be measured, depending on whether we are concerned with explaining the mobilization of individual groups or civil society as a whole. First, we can measure the actual number of known groups who have mobilized in the trade and 39 investment policy domain (or, in terms of specific cases, who mobilized against the ratification of a particular commercial agreement). Measuring changes in this dimension enables us to determine whether the level of civil society mobilization has grown or diminished over time. In other words, if the number of groups who become mobilized increases with each successive case (i.e., the negotiation of either a new commercial agreement or the extension of or changes to an existing agreement), then we can say that the level of civil society mobilization has grown over time. However, measuring this dimension of civil society mobilization presents two difficulties. On the one hand, while it is relatively easy to provide a rough approximation of the number of groups who are mobilized (particularly, within a specific case)—that is, whether there is a large and substantial amount of groups who are mobilized or a miniscule number—it is sometimes difficult to provide an accurate or precise numerical estimation. On the other hand, even if we are able to acquire an accurate and precise approximation of the number of mobilized groups, such an estimation does not take into account the variable amount of resources available to individual groups. Hence, a large number of mobilized groups may not necessarily indicate a significant growth in civil society mobilization if that number includes several groups whose membership is small or whose financial resources are limited. In other words, simply counting the number of groups who are mobilized may not give a clear indication of the actual degree or extent of civil society mobilization if we have no way of distinguishing between large, resource-rich, nationally-based organizations and small, resource-poor, grassroots groups, and controlling for these differences.
40
A second dimension that can be examined if one wants to gauge the extent of civil society mobilization is the kinds of groups who are mobilized. For a particular case (i.e., a specific commercial agreement) we can ask how many different kinds of groups are mobilized. For instance, are labor groups alone in their mobilization against a particular commercial agreement or are they joined by other types of groups, such as environmental groups. The basic question boils down to this: For a particular case, is there only one kind of group that is mobilized, a few, or several?
Finally, there is a third dimension that can be analyzed if we want to measure the degree of mobilization of a single individual group: We can survey the range of activities which a mobilized group is engaged in.46 For each specific case, we can ask whether a group is engaged in one or a few main activities, or whether it is engaged in a broad range of synchronized activities. Measuring the amount of activities a group is engaged in can function as a proxy estimation of the amount of resources a group has invested in its mobilization. In other words, we can determine whether a group has deployed only a fraction or a substantial amount of its resources in its efforts to affect the political process. Thus, a low or moderate degree of mobilization can be typified by a group engaging in only one or a few activities, indicating the deployment of a few key resources
(which either the group deems sufficient to effect the targeted outcome or which are perhaps the most appropriate means for the situation at hand). A high degree of mobilization, on the other hand, will be characterized by a group engaging in numerous coordinated activities, indicating the deployment of the group’s full array of resources.
Involvement in a large number of activities suggests that a group has brought the full
46 See Table 2.1. 41
weight of its pressure and organizational capital to bear on a policy issue in order to
effect the political outcome in a way that is favorable to its interests or objectives.
Like the first dimension identified above, measuring the number of activities groups are engaged in (as a proxy for determining whether groups have deployed a small or large amount of their resources) is problematic for two basic reasons. First, we cannot
always know whether a small number of activities actually indicates a minimal
deployment of resources or whether it, in fact, indicates that a group’s resources are
limited (meaning that the small number of activities in which a group with limited
resources is engaged in may actually represent a high degree of mobilization on the group’s part if these are the only activities in which it can afford to participate).
Likewise, although a group may be involved in many different activities, this may not necessarily indicate a high level of mobilization on the group’s part if it has a substantial amount of resources to devote to its mobilization efforts (in other words, some groups may simply be able to afford engaging in a large range of activities, but this may not
mean that these groups have deployed all of their resources).47
The first problem indirectly points to the second. Establishing an accurate connection between the number of activities groups are engaged in and the level of
resource deployment underlying these activities requires an in-depth analysis of
individual groups (particularly in regard to the resources a group has at its deposal).
While there is some data available on individual group characteristics, particularly the
47 An example of this is provided by the case of the AFL-CIO during the pre-ratification phase of NAFTA. While the AFL-CIO engaged in a number of anti-NAFTA activities (for instance, it used billboards, radio ads, posters, and other media to wage its campaign against NAFTA), it did not deploy the full weight of its organizational resources in its “Not this NAFTA” campaign (frustrating many constituent unions that desired adopting an even harder line against NAFTA). See the discussion in Mayer 1998, 224-226. 42 resources which individual groups possess48 (as concerns us here), providing a detailed analysis of all the civil society groups that have mobilized in the trade and investment policy sphere over the course of the past decade and a half is a project that is beyond the scope of this thesis. Furthermore, gaps in the available data on the resources possessed by individual groups seriously militates against a systematic treatment of this dimension of mobilization. Nevertheless, in the case studies that follow I will focus on a small sample of individual groups in order to provide a rough but reliable measure of this dimension of mobilization.
To summarize, the three dimensions which can be employed to gauge the degree or extent of mobilization include: (1) the actual number of groups who are mobilized, (2) the kinds of groups who are mobilized, and (3) the range of activities mobilized groups are engaged in. The first two dimensions are measures of the mobilization of civil society itself, as a macro-concept—a corporate entity. The last dimension is a measure of the mobilization of individual civil society groups treated as unitary political actors
(interest groups).
In attempting to measure changes in the mobilization of civil society and civil society groups, I try to avoid as much as possible treating mobilization as a simple binary variable. Ultimately, it is my intention to demonstrate that the mobilization of North
American civil society has grown over time, one of the primary purposes of this thesis being to explain this growth. Therefore, with regard to the first and second dimension of mobilization, I will show that the number of American and Canadian civil society groups who have mobilized in the trade and investment policy realm has grown over time and
48 Audley (1997, 155-163), for instance, provides an excellent collection of key characteristics (including available resources) for eleven American environmental organizations who mobilized around NAFTA. 43
that the number of different kinds of groups who have mobilized has also increased over time. However, I also want to try and demonstrate that the intensity of at least some groups’ mobilization has increased over time. To do this, I will rely on data collected by myself and others regarding individual groups, the resources possessed by these groups,
and the activities these groups have engaged in. Thus, in the case studies that follow, I will try to give attention to each of the three dimensions of mobilization I have identified,
remaining aware of and trying to correct for the limitations of each. Nonetheless, the
simple dichotomous (or binary) approach to mobilization remains important as well.
Given the puzzle which this thesis tries to solve—namely, why groups who previously did not concern themselves with trade and investment issues have suddenly (within the past decade and a half) mobilized in this policy domain—the variation in my dependent variable should also be conceived rather broadly as consisting of a change from the absence of mobilization (lasting roughly four decades after the GATT was established following World War II) to a situation of significant mobilization (beginning in the late
1980s with the advent of CUFTA and NAFTA, and extending through the 1990s to the present).
Before concluding this discussion of mobilization, it is necessary to address one final dimension of mobilization. In addition to asking what factors might explain the growth or intensification of civil society mobilization, in the previous chapter I also posed the following question: How can we account for substantive changes in the arguments against trade and investment agreements put forth publicly by mobilized groups? The discussion of my independent variable—legalization—in the following section will serve to answer this question. However, it is worth noting here that in order 44
to clearly show how increased legalization has resulted in a growth in the mobilization of
civil society groups, it will be necessary to examine the arguments offered by groups
against particular commercial agreements. In other words, I will need to pay close
attention to changes (over time) in the reasons groups give for why they have mobilized.
This can be done by analyzing the content of statements, advertisements, books, articles,
reports, and other publications which civil society groups (or group elites) have made
publicly available. In trying to demonstrate the effects of legalization on civil society
mobilization, this is perhaps the most important dimension which can be analyzed. I will discuss this dimension further toward the end of this chapter.
The Legalization of Liberalization
In the context of international political economy, legalization refers to the process
by which liberalization of international trade and investment has been and continues to be
“locked-in” (bilaterally or multilaterally) through the negotiation and conclusion of
legally binding commercial agreements among nations. Essentially speaking, the trade
regime instituted immediately after World War II (i.e., the framework created by the
GATT) has become significantly more legalized over the past two decades. At the same
time, a highly legalized (yet fragmentary and less fully instituted) investment regime has
emerged as a potential compliment to the trade regime. Though it is a highly complex
international political process, the essence of legalization can be described simply as
“putting liberalization in writing;” it is the process by which liberalization is given a
stronger, firmer, and more formal institutionalized foundation. The concept of
legalization encompasses the key explanatory factors which account for the mobilization of North American civil society within the area of trade and investment policy. 45
As Goldstein and company point out, in “many issue-areas, the world is
witnessing a move to law… [as] some international institutions are becoming
increasingly legalized [and the] discourse and institutions normally associated with
domestic legal systems have become [more] common in world politics.”49 This
movement is especially apparent within the domain of international trade and investment
regimes. At its core, legalization should be understood as a “particular form of
institutionalization characterized by three components: obligation, precision, and delegation”—“characteristics that [international] institutions may (or may not) possess”.50 According to Abbott and company:
Obligation means that states or other actors are bound by a rule or commitment or by a set of rules or commitments. Specifically, it means that they are legally bound by a rule or commitment in the sense that their behavior thereunder is subject to scrutiny under the general rules, procedures, and discourse of international law, and often of domestic law as well. Precision means that rules unambiguously define the conduct they require, authorize, or proscribe. Delegation means that third parties have been granted authority to implement, interpret, and apply rules; to resolve disputes; and (possibly) to make further rules (original emphasis, 401).
As Goldstein and her colleagues note, legalization “represents the decision in different issue-areas to impose international legal constraints on governments.”
In the case studies that follow this chapter I will try to show how changes (i.e., increases) in the legalization of multilateral and regional trade and investment regimes affect the incentives domestic civil society groups have to mobilize in this policy area..
Many civil society groups have regarded the increased legalization of international trade and investment regimes as reflective of a larger effort to cement liberalization and have
49 Goldstein et al 2000, 385-6. 50 Abbott et al 2000, 401. According to Goldstein et al (2000, 396) all “legalized regimes are institutionalized (they have durable rules); but not all institutionalized regimes are legalized.” 46 pointed to changes in legalization as evidence of “constitutionalism” in the global economic policy-making process.51 But, as Goldstein et al (2000, 389) suggest, while the
“world trading system” is “now increasingly understood as the emergence of an international economic constitution…Constitutionalization…is a very broad brush”—in contrast to the more narrowly focused concept of legalization (as defined by the contributors to International Organization’s special issue on legalization in world politics). 52
Legalization consists of three core dimensions—obligation, precision, and delegation—as well as other important dimensions such as the object of legalization (i.e., the issue area that is to be legalized—in this case, trade and/or investment), its scope, and its pace as a long-term process. In the sections that follow, I will disaggregate the concept of legalization and explain how variation along its various dimensions has resulted in the mobilization of North American civil society groups. I discuss the core dimensions first.
51 Comments like those of Renato Ruggierro’s (see p. 17 above) only reinforce these ideas. 52 See volume 54, issue 3, Summer 2000. Other scholars and commentators have employed the term “constitutionalism” in reference to the process which the contributors to International Organization’s (IO) special issue and myself have referred to as “legalization.” Neo-marxist Stephen Gill, for instance, has pointed to efforts to craft radical agreements such as the MAI as evidence of a “new constitutionalism” (quoted in Bruner 2002). Likewise, Bruner (2002) has described the process of legalization as “global constitutionalism.” The objective of this “constitutionalism” is to secure the creation of a governing framework for the global economy through the successful negotiation of regional and multilateral trade and investment agreements which establish the “rules of the game” for international economic transactions and relations. While the idea and perception of constitutionalism is very important for understanding the mobilization of civil society groups in the area of trade and investment policy, in keeping with the conceptualization developed by the contributors to IO, I have elected to use the term legalization to describe the collection of variables which I intend to argue have caused the mobilization of North American civil society. 47
The Core Dimensions of Legalization
Obligation
“Defining legalization in terms of obligation, precision, and delegation,” Abbott
et al (2000, 403-404) assert, “provides us with identifiable dimensions of variation whose
effects on international behavior can be empirically explored.”53 In contrast, this thesis attempts to explain how variation along these dimensions effects the domestic behavior of civil society groups. While my own explanation for civil society’s mobilization moves beyond this definition, pointing to other factors associated with the larger, long-term process of legalization, I accept obligation, precision, and delegation as the core dimensions of legalization.
The first core dimension of legalization is obligation. As Abbott and company explain:
The fundamental international legal principle of pacta sunt servanda means that the rules and commitments contained in legalized international agreements are regarded as obligatory, subject to various defenses or exceptions, and not to be disregarded as preferences change. They must be performed in good faith regardless of inconsistent provisions of domestic law…Breach of a legal obligation is understood to create “legal responsibility”…When breach leads to injury, legal responsibility entails an obligation to make reparation, preferably through restitution (2000, 409).
In the context of multilateral and regional trade and investment regimes, the presence of
obligation means that adherent member states are obligated to comply with international
commercial agreements which prescribe rules and principles aimed at maintaining agreed
upon levels of liberalization in the economic interactions among members. Obligations
can vary from high (unconditional) to low (the explicit negation of intent to be legally
bound). Table 2.2 provides a clearer picture of the range of forms which an international
53 My emphasis. 48 institution (such as a liberal commercial agreement) can take according to the degree to which it legally binds a state.
TABLE 2.2 Indicators of the Level of Obligation
High obligation
↑ 1. Unconditional obligation; language and other indicia of intent to be legally bound ↑ 2. Political treaty: implicit conditions on obligation ↑ 3. National reservations on specific obligations; contingent obligations and escape clauses ↓ 4. Hortatory obligations ↓ 5. Norms adopted without law-making authority; recommendations and guidelines ↓ 6. Explicit negation of intent to be legally bound.
Low obligation
Adapted from Abbott el al 2000, 410.
The increased legalization of multilateral and regional trade and investment regimes has placed a greater number of binding obligations on states who are signatories to agreements such as GATT or NAFTA. This has meant that signatory states are left with fewer escape mechanisms through which they might avoid such obligations. In fact, the very purpose of legalizing obligations is to constrain the behavior of states, both in the present as well as in the future, by making any changes to national laws (resulting in an increase in regulations that inhibit trade, or involving, for instance, the management of capital flows) prohibitively costly to states.54 Looking at Table 2.2, we might locate the
54 Smythe 2001, 143. In fact, depending on the faith which political leaders have in liberalization as an economic cure-all, governments may sometimes actively seek to constrain their own behavior by taking on an increased level of obligation in order to insulate themselves from the demands of domestic actors. For instance, there is a general consensus that by initiating a Mexican-U.S. free trade deal (which eventually resulted in NAFTA), Mexican president Carlos Salinas de Gortari intended to lock-in liberalization in order to tie the hands of his own government as well as future Mexican political leaders. Salinas believed that trade and investment liberalization would reinforce the domestic economic reforms (resulting in a less interventionist Mexican state) which he had achieved. Similarly, by initiating a bilateral free trade deal with the U.S., the Canadian government sought to tie the hands of the U.S. Congress (through binding 49 international trade regime somewhere between levels two and three. The emerging investment regime is in some respects unconditional (level one) yet its current manifestations (i.e., actual agreements) contain various national reservations or exceptions (level three).
Many American and Canadian civil society groups see themselves as having an interest in maintaining and preserving the regulatory autonomy of their respective governments. Hence, these groups have opposed liberal commercial agreements, which from their perspective, “tie the hands” of governments by constraining their ability to engage in regulatory actions which might indirectly impede or restrict trade and investment flows, but which might also serve an important public purpose. They have tended to view the obligatory nature of liberal commercial agreements as entailing an abdication by their respective governments of their legitimate regulatory sovereignty, and as such, a backdoor for further deregulation. They also believe that this serves the interests of transnational corporations who want domestic regulatory regimes brought to a
“standstill” or even “rolled-back.”55
obligations and dispute resolution) so that it could not enact protectionist policies (countervailing and antidumping measures) which would threaten the security of Canadian producers’ access to the U.S. market. 55 Ultimately, civil society groups view agreements such as the MAI and the FTAA as dangerous contracts, the terms (including the “fine print”) of which, nations are strictly bound to once they have signed on. While this is true to some extent, the current multilateral trade regime and the North American trade and investment regime (established by CUFTA and NAFTA) probably represent a significant but intermediary level of obligation (meanwhile, a multilateral investment regime has yet to be formally institutionalized). Thus, many civil society groups have probably overstated the level of obligation actually required by existing liberal commercial agreements. Nonetheless, in terms of understanding the mobilization of North American civil society, what concerns us here, is not whether civil society groups are able to make an accurate determination of the actual level of obligation contained in existing and proposed agreements (in comparison to previous agreements or other international institutions in other issue-areas which might be more legalized), but that these groups have found this level of obligation unsatisfactory and detrimental to their interests, and that the level of obligation has in fact increased. 50
Precision
The second core dimension of legalization is precision. The increased
legalization of multilateral and regional trade and investment regimes has meant that the
rules embedded in these regimes have become more precise, making the behavioral
demands of liberal commercial agreements (as well as their implications for the
regulatory autonomy of signatory states) increasingly transparent to signatory states as
well as domestic actors.56 Precision renders its effects on the domestic politics of trade
and investment policy by changing the information environment in which domestic actors
find themselves, altering their incentives to mobilize in defense of their respective interests within this policy area. Essentially, the increased precision of trade and
investment rules provides civil society groups and other domestic actors with more and
better information regarding how international commercial agreements affect these
actors’ interests.
Because a more legalized trade and investment regime provides more/better
information about the distributional implications of the actual commercial agreements of
which the regimes are comprised (i.e., provides information on which groups will gain or
lose under an agreement), increased legalization helps to determine which groups will
mobilize for or against new agreements. Goldstein and Martin explain the logic of
mobilization that results from increased precision as it applies in the context of the actual negotiation of a new commercial agreement:
A simple model clarifies the posited relationship between information and mobilization. Define p to be the probability with which a group believes that its interests will be at stake in negotiations. This subjective probability, p, is a
56 This discussion draws directly upon Goldstein and Martin (2000); in this section I build and expand upon the logic of mobilization developed by Goldstein and Martin. 51
random variable that takes on different values as information conditions change…The value of p will change as information improves (2000, 607).
In order for a group to mobilize, the benefits (B) of mobilization must outweigh its costs
(C), or:
B > C [1]
The introduction of information to this equation results in:
p*B > C [2]
Legalization enriches the information environment in which civil society groups (and
other domestic actors with interests in the trade and investment policy realm) find
themselves as it moves the value of p toward one of two extreme values: 0 or 1. When p
= 0, a group knows that its interests are not at stake in the negotiations; when p = 1, a group knows that its interests will be affected by the outcome of negotiations. When p =
1, the second inequality reduces to the first, which (according to Goldstein and Martin) is a much easier condition to meet when deciding whether to mobilize.57
As a consequence of its information effects, the increased precision of liberal
commercial agreements has allowed North American civil society groups to see
“precisely” how their interests could or will be affected by such agreements. As noted in
the previous section, many American and Canadian civil society groups desire a strong
state with extensive autonomy and regulatory power. They have interpreted the precisely
crafted rules and provisions of liberal agreements such as the MAI as threats to this
interest. Thus, among various protectionist forces in the domestic arena, legalization
prompts domestic economic actors (i.e., import-competing business interests) to mobilize
by providing them with more precise information regarding whether or not the economic
57 For the original (and more elaborate) version of this argument, see Goldstein and Martin 2000, 605-609. 52
sector of which they are apart will be liberalized (and to what degree) by an agreement
(hence, subjecting them to increased foreign competition). Similarly, legalization
increases the incentives domestic civil society groups have to mobilize against new
commercial agreements by providing them with more/better information regarding the
constraints which an agreement will place on the regulatory autonomy of their respective
government.
Delegation
The third and final core dimension of legalization is delegation. International agreements that are highly legalized “delegate broad authority to a neutral entity for implementation of the agreed rules, including their interpretation, dispute settlement, and
(possibly) further rule making.”58 The increased legalization of multilateral and regional
trade and investment regimes has been accompanied by a growing transmission of
decision-making power (over a state’s trade and investment policy) away from the
nation-state and into external, centralized bodies such as the WTO or the arbitration tribunals prescribed under agreements such as NAFTA. In some cases, this transfer of quasi-judicial authority has resulted in dispute resolution and arbitration panels interpreting domestic law—an outcome that North American civil society groups have found offensive and quite dubious.
The intended and avowed purpose of delegation is to remove “politics” (as much as possible) from the implementation of a commercial agreement, particularly within the dispute resolution process. In fact, the dispute settlement mechanisms and apparatuses contained in most international commercial agreements are specifically designed to distance or isolate those interpreting “the rules” from external political pressure or
58 Goldstein et al 2000, 387. 53
interference. The justification for this remoteness, of course, has been to ensure that
strong states do not dominate or manipulate the dispute resolution process. However,
while the intent of delegation is to ensure impartiality (in the dispute resolution process), it has often entailed a severe lack of transparency in dispute settlement proceedings. As a result, most North American civil society groups have come to see WTO dispute panels and NAFTA arbitration tribunals as unaccountable and undemocratic institutions at best, and “kangaroo courts” which cater to the interests of transnational capital at worst.
The Nature of Regime Change
Table 2.3 presents the three core dimensions of legalization as continuums, ranging from the weakest or “softest” form (the absence of legal obligation, precision, delegation) at the left to the strongest or “hardest” form at the right.59 These three dimensions are independent from each other. As Abbott and company explain,
“conceptually, at least, the authors of a legal instrument can combine any level of
obligation, precision, and delegation to produce an institution exactly suited to their specific needs.”
TABLE 2.3 The Core Dimensions of Legalization
Obligation Expressly ←————————————→ Binding rule non-legal norm
Precision Vague ←————————————→ Precise, highly principle/norm elaborated rule
Delegation Diplomacy ←————————————→ International court(s)
Adapted from Abbott el al 2000, 404.
59 Abbott et al 2000, 404. 54
Understanding the true nature of the changes in trade and investment regimes stemming from legalization requires us to make a “fundamental distinction” between
“principles and norms on the one hand, and rules and procedures on the other.”60 As
Krasner explains:
Principles and norms provide the basic defining characteristics of a regime. There may be many rules and decision-making procedures that are consistent with the same principles and norms. Changes in rules and decision-making procedures are changes within regimes, provided that principles and norms are unaltered.61
The increased degree of obligation, precision, and delegation found in recent international commercial agreements represent changes in the specific rules and decision- making procedures of trade and investment regimes, and hence, should be considered as changes within these regimes (and not from one regime to another62). This conceptualization of a regime helps to solve the puzzle posed earlier: The basic principles and norms (i.e., free trade, reciprocity, non-discrimination, etc.) which form the underlying essence of the trade and investment regimes have not changed much over the past fifty years. What has changed is the nature of the regimes’ rules and decision- making procedures which have become increasingly legalized. It is this important change which helps to explain the sudden and unpredicted mobilization of civil society groups within the trade and investment policy realm.
60 Krasner 1982, 187. 61 Ibid., original emphasis. 62 “Changes in principles and norms are changes of the regime itself. When norms and principles are abandoned, there is either a change to a new regime or a disappearance of regimes from a given issue- area.” Ibid., 188. 55
Hypotheses
Consideration of the core dimensions of legalization yields the following hypotheses
with respect to the relationship between the legalization of liberalization and the
mobilization of civil society groups:
H1: As the rules and provisions (obligations) of liberal commercial agreements
become more binding, the mobilization of civil society groups should increase.
H2: As the rules and provisions of liberal commercial agreements become
increasingly precise, the mobilization of civil society groups should increase.
H3: As liberal commercial agreements delegate increasing responsibility and
authority with respect to the implementation, interpretation, and enforcement of
the rules and provisions of agreements, the mobilization of civil society groups
should increase.
This brings us to the question of how to measure changes in the core dimensions of
legalization. As Abbott et al (2000, 402) note, none of these dimensions—“far less the full spectrum of legalization—can be fully operationalized.” This fact largely forces me to treat the core dimensions of legalization as binary variables. In the case studies that follow as well as the concluding chapter, I will try to explain more precisely how changes in these dimensions effect the mobilization of civil society. For now, it should be sufficient to understand that as regional and multilateral trade and investment regimes move from a prior condition of little or no legalization (the absence of obligation, precision, and delegation) toward a state of substantial legalization (binding obligations, increased precision and delegation), we should expect civil society groups to mobilize 56
within the trade and investment policy area; as these trends continue over time, we should expect the mobilization of civil society to gradually increase.
Changing Issue Areas: The Shift in the Object of Legalization from Trade to Investment
In addition to the core dimensions of legalization (obligation, precision, and delegation), the larger, long-term process of legalizing trade and investment regimes includes other important dimensions; changes in or along these dimensions are also essential for explaining observed changes in the mobilization of North American civil society groups. One such dimension is the object of legalization, meaning the issue area that is to be legalized by an international agreement. There are essentially two issues areas (regimes) with which this thesis is concerned: trade and investment. Over the past decade and a half, the agenda of liberalization has shifted from an exclusive concern for liberalizing international trade to a heightened interest in (and purported need for) the liberalization of international investment. Increased interest in investment liberalization has inevitably resulted in a movement to create a legalized multilateral investment regime that would serve as a compliment to the already highly legalized multilateral trade regime situated within the framework of the GATT and WTO.63 At the regional level, both
CUFTA and NAFTA incorporated a significant number of provisions dealing with the treatment of foreign investments and investors. The FTAA will likely extend these provisions to the rest of Latin America and the Caribbean. It is this change in the focus of the liberalization-legalization agenda—from trade to investment—that is chiefly
63 Although the OECD nations ultimately failed to agree on a proposed Multilateral Agreement on Investment, which would have established a governing framework for international investment, there remains a high degree of interest in pursuing an MAI-like agreement in another forum (most likely the WTO). The United States and Canada remain among the strongest proponents of a liberal and legalized multilateral investment agreement. 57
responsible for the dramatic growth in American and Canadian civil society mobilization within the policy sphere of global economic governance in the mid-1990s.
Much of the initial opposition to liberal commercial agreements on the part of
American and Canadian civil society groups was largely based on a generic fear that liberalization could contribute to a “race to the bottom”—in terms of social and environmental standards and domestic regulatory regimes—breaking out among signatory nations. This fear essentially centered on the issue of investment liberalization
and was grounded in the belief that investors (transnational corporations) will naturally
gravitate toward or flock to countries with the lowest social, environmental, and over-all
regulatory standards, resulting in a downward harmonization of domestic standards and
regulations among nations who are parties to these agreements. By lowering investment
barriers and providing foreign investors with increased security and protection,
investment liberalization facilitates the free flow of capital across national borders,
increasing the potential for this race to the bottom.64
Beyond these generic fears regarding the potential for downward harmonization,
progress in the legalization of investment liberalization has subsequently resulted in the
creation of an extensive array of legal “rights” for foreign investors (which can be
interpreted as additional obligations that must be met by states), as well as the granting of
legal standing for private investors to sue national governments for failure to abide by
these “rights” through what is called investor-to-state dispute settlement (the mechanisms
64 In so far as it facilitates the free flow of goods and services across national borders, trade liberalization also contributes to the movement of investors to countries with lower standards and weaker regulatory regimes (and hence, downward harmonization) by providing certainty to transnational corporations that once they locate or establish production facilities in these countries, they will then be able to export their products to other national markets without having to worry about protectionist barriers (so long as all of the countries in question are parties to the same liberal agreement(s)). 58
of which are specified by liberal agreements such as NAFTA and the proposed MAI).
From the perspective of American and Canadian civil society groups, the advent of investor-to-state dispute settlement instruments has been the most contentious component of the general movement to liberalize international investment and provide a legal, rules-
based framework for the treatment of foreign investors. It is this mechanism (which is a product of increased delegation) that has provoked these groups the most, becoming one of their primary targets and helping to stimulate them to intensify their mobilization in
this policy area.
The Investor-to-State Dispute Settlement Process
The investor-to-state dispute settlement mechanism found in NAFTA’s
investment chapter and the MAI diverge from dispute resolution systems found in
previous international economic agreements in two fundamental ways. First, under
NAFTA’s Chapter 11 and the MAI, foreign investors are given the right as private parties
to bring legal suits against governments directly. In other words, investors have direct
access to the dispute settlement system. Under the WTO’s dispute settlement procedures,
only governments can bring cases against other governments for alleged breaches of
their commitments (this is done through what are commonly referred to as state-to-state
dispute settlement procedures). Opponents of Chapter 11 (as well as the MAI) have
argued that allowing investors the right to bring legal suits against national government is
equivalent to conferring upon corporations the same rights as sovereign nations.65 They
65 Opponents of the investor-to-state dispute settlement instruments found in NAFTA and the MAI have also argued that state-to-state disputes (such as those allowed under the WTO’s rules) inevitably involve the use of political and diplomatic pressure, reducing the likelihood of frivolous suits being initiated. Such pressures are not found in investor-to-state disputes. In fact, as a form of delegation, this dispute settlement mechanism is specifically designed to avoid or remove political pressures so as to ensure impartiality in the arbitration process. 59
have also complained that even though many of the suits filed by companies against the governments of Canada, Mexico, and the U.S. have involved democratically enacted domestic laws intended to serve legitimate public purposes, citizens and citizen groups who wish to offer legal defenses for these measures are not allowed access to the dispute settlement process.66
Second, both Chapter 11 and the MAI permit foreign investors to seek monetary
damages for both actual and future profit losses resulting from discriminatory treatment
of their investments by host governments (or other behavior that is believed or found to
be inconsistent with the investor rights commitments contained in agreements like
NAFTA and the MAI). Trade-oriented agreements and institutions like the GATT and
WTO only cover investment to a limited extent and do not allow for monetary
compensation of private investors.67 Thus, because of these important differences, from the perspective of civil society, both Chapter 11 and the MAI represent a major departure from previous international economic agreements in terms of the delegation of dispute resolution authority.68
NAFTA’s Chapter 11 has served as the legal blueprint or template for the
legalization of investment liberalization. American and Canadian civil society groups
have pressured their respective governments to renegotiate the terms of the chapter,
diminish the strength of its investor rights provisions, and incorporate strong, binding
66 For instance, at this time, Chapter 11 does not contain any provisions for the acceptance of amicus curiae briefs by interested third parties. No such mechanism was incorporated into the MAI either. 67 The WTO (and the GATT agreements which it enforces) only allows retaliatory trade measures (i.e., the imposition of tariffs on nations that violate their commitments) aimed at compensating aggrieved parties (states) for trade losses resulting from breaches of obligation by other parties. 68 As will be explained later, contrary to the views of civil society groups, there is a historical precedent for the provisions contained in NAFTA’s Chapter 11 and the MAI. Nonetheless, these groups did not become aware of the significance of these provisions until the advent of NAFTA and the MAI. The investor-to- state dispute settlement process will be discussed in greater detail in chapter four. 60
exceptions for government regulatory action with respect to public-interest purposes.
They also mobilized in fierce opposition to the MAI and are currently mobilized against the inclusion of Chapter 11’s provisions in the Free Trade Area of the Americas (FTAA) which is intended to be completed by 2005 as well as efforts to introduce the same investor rights provisions into the IMF charter or WTO framework.
Additional Factors: The Increasing Scope and Pace of Legalization
Finally, in addition to increases along the core dimensions of legalization
(obligation, precision, and delegation) as well as an important shift in the object of
legalization from an exclusive focus on trade to an emphasis on the treatment of foreign
investment, the larger, long-term process of legalization has also increased in terms of its
scope and pace. The process by which international trade and investment liberalization is
legalized has in recent years become more extensive in terms of the comprehensiveness
with which regional and multilateral agreements have been crafted.69 Through
institutions such as the WTO and agreements such as CUFTA, NAFTA, and the MAI,
states have progressively sought to liberalize more and more economic commodities and
sectors in a relatively short amount of time, extending their attention to areas like public
services and intellectual property rights, for instance.70 With regard to the treatment of
foreign investment, the increased reach of legalized liberalization has led many American
and Canadian civil society groups to the conclusion that “everything’s for sale.”71
69 The term “comprehensiveness” should not be confused with the concept of precision. 70 It should be noted that even though states have sought to liberalize a greater portion of their economies, they have often included lengthy time schedules (ranging from two or five to ten and even fifteen years) over which liberalization will occur. Nonetheless, once a country signs on to an agreement, these schedules are locked-in. Thus, liberalization, for all intents and purposes, can be said to have been achieved. 71 For instance, the MAI represented a dramatic departure from previous agreements in that it employed a so-called “top-down” approach in determining which economic sectors would be open to investment liberalization. Unlike the GATT/WTO which operates on the principle of “positive lists” or “offers,” meaning that negotiating countries provide lists of which economic sectors they are willing to open up to 61
Furthermore, in comparison to the steady but plodding and incremental progress that
characterized much of the post-war GATT experience, the current pace of liberalization
and its legalization appears to have quickened both at the multilateral level and within the
Western hemisphere. This is especially true of investment. Although many of the
investment rules contained in NAFTA and the MAI are not without precedent, in the span
of three to four years, negotiations for the MAI (had they been successful) would have
done for international investment what essentially took the GATT countries almost a half
century to do for international trade!
The expansion of the multilateral and regional trade and investment regimes and
the increasingly rapid extension of existing arrangements to other countries (for instance, the enlargement of NAFTA into the FTAA, or the attempt to extend NAFTA’s investment rules to the entire OECD membership through the MAI) have also given
North American civil society groups cause for concern. American and Canadian groups have been particularly worried that the proposed extension of NAFTA’s investment provisions to the entire Western hemisphere through the FTAA will further curtail their respective country’s regulatory autonomy, leaving future efforts to raise domestic environmental and social standards open to (exponentially) increasing challenges from foreign investors who could use the investor-to-state dispute settlement process to extract monetary compensation from host governments (as some North American companies have already done under NAFTA’s Chapter 11). This fear has given American and
Canadian civil society groups further cause to mobilize against the FTAA.
liberalization, the top-down approach utilized in the MAI negotiations meant that every economic sector would be open to liberalization unless a sector was specifically put on a country’s exception (exemption) list. The difficulties of this method became readily apparent after participating countries began creating enormous lists of exceptions. I will discuss this point further in chapter 4. 62
At the same time, the negotiated extension of existing liberal commercial
agreements also contributes to civil society mobilization by providing new opportunities
for groups to contest the content of existing agreements or even win changes in the rules or provisions of these agreements. Hence, many American and Canadian groups have regarded the FTAA negotiations as a chance to reverse or eliminate the dangers contained in NAFTA’s Chapter 11, either by pushing for the exclusion of the investor-to-state dispute settlement instrument from the FTAA altogether or by demanding that they be offered legal standing (equivalent to that of private investors) to participate in (or even bring legal challenges themselves under) the dispute resolution system.
The Argument: Re-aggregating the Concept of Legalization
Table 2.4 provides a summary of the key dimensions of legalization. In the two
case study chapters that follow, I will attempt to document how changes within or along
these dimensions have positively affected the incentives domestic civil society groups
within the United States and Canada have to mobilize within the trade and investment
policy domain. In the final section of this chapter, I put the pieces of the legalization
puzzle back together, elaborating upon and clarifying the relationship between
legalization and civil society mobilization.
Now that I have identified the key dimensions of legalization, I will summarize
my generalized explanation for the mobilization of American and Canadian civil society
groups within the domain of international trade and investment policy by integrating the
individual components of the legalization process and accounting for the observed
growth in civil society mobilization.
63
TABLE 2.4 The Dimensions of Legalization
Core dimensions
Obligation Increasingly binding commitments placed on states (governments)
Precision Increasingly precise rules and provisions
Delegation Granting of increased decision-making authority to independent, centralized, external institutions (in terms of implementation and interpretation of rules and provisions)
Procedural dimensions
Shift in object (issue area) of legalization (from trade to investment)
Increased scope and pace of legalization (liberalization of more commodities and sectors, extension to more countries, in a shorter amount of time;)
First, the decision to legalize trade and investment regimes entails the acceptance
of binding obligations by states who are regime adherents. So long as the rules of the multilateral trade regime were non-binding or entailed only a modest or minimal level of obligation, there was no urgent reason for civil society groups to mobilize against liberal trade policies (though this is not to say that such groups might not have harbored
concerns about such policies). Under a minimally or non-binding international trade
regime, American and Canadian civil society groups could still work within their respective domestic political arenas to achieve public policies that at least struck a rough
(if not always perfect or entirely satisfactory) balance between liberal trade policy goals and policies intended to serve domestic public-interest objectives. However, legalization of the trade regime locks-in liberal domestic trade policies and compels member states to pursue further liberalization. Although member compliance may not always be forth- 64 coming, legalization at least tries to bring the domestic political process of member states to a standstill, proscribing the contemplation or adoption of policies which might interfere with the goals of trade liberalization (i.e., what are commonly called non-tariff barriers to trade). Its very purpose is to stop the ebb and flow of domestic politics between free trade and protectionist policies by establishing legally binding obligations and commitments which are enforceable through third-party institutions (a result of delegation). The emergence of highly legalized investment rules (and their attendant enforcement mechanisms—namely, the investor-to-state dispute settlement process) only creates more obligations for states. Moreover, regime adherents know that violations of their obligations are subject to challenge or retaliation by other regime members (or in the case of investment rules, by private investors). Thus, in the negotiating and pre- ratification stage of a liberal commercial agreement, proposals to increase an agreement’s level of legal obligation create a new sense of urgency on the part of civil society groups who do not want their government’s regulatory autonomy constrained by legally binding free trade commitments. Furthermore, this distress does not subside, but instead, increases, after an agreement is ratified.
Second, legalization encourages civil society mobilization by changing the information environment in which civil society groups find themselves. Because increased legalization results in an increased precision in liberal trade and investment rules, it provides groups with more and better information regarding how trade and investment liberalization will (or could) affect their individual and collective interests; it makes the implications of liberalization for national sovereignty (regulatory autonomy) increasingly transparent to groups by spelling out in great detail the exact nature of the 65
behavioral obligations which adherence to legalized trade and investment regimes places
upon states. Thus, liberal commercial agreements which are crafted with greater legal precision give civil society groups greater incentive to mobilize (against such
agreements) by eliminating the informational costs groups would ordinarily have to incur
in order to acquire accurate and reliable information regarding the potential consequences
of an agreement.
Finally, through increased delegation of responsibilities for implementation,
interpretation, and enforcement of liberal trade and investment rules, legalization
removes decision-making authority from the domestic arena and centralizes it in external,
quasi-judicial institutions that are largely unaccountable to domestic actors. Essentially,
delegation subjects the regulatory autonomy of member states to the scrutiny and
oversight of exterior institutions, and while civil society groups may have some direct access to domestic political institutions (even if this access may be at times severely
limited), they have no access to the dispute resolution systems established by liberal
commercial agreements. This only adds to the sense of urgency which increased
obligation produces in civil society groups, inciting them further to mobilize. Thus,
American and Canadian civil society groups have found the delegation of decision-
making power to be an especially objectionable and unacceptable feature of liberal
commercial agreements and have mobilized in vehement opposition to this component of
legalization.
These are the core dimensions of legalization—obligation, precision, and delegation. Each dimension is independent from the other two, meaning they can be
blended in varying degrees within an international institution to form a number of 66
different combinations.72 I have hypothesized that variation (increases) along these dimensions contributes to the mobilization of civil society groups. However, this hypothesized relationship is need of clarification. It is actually the interactions among these three components and their combined, cumulative effect which has produced the dramatic changes in the mobilization of groups which we observe. Without some degree of obligation, precision and delegation become meaningless. Likewise, high levels of obligation and precision are not as threatening to civil society groups when delegation is low or absent. Thus, it is when these three components are combined together (in moderate to high levels) that civil society groups feel most threatened. Therefore, consideration of the combined, interactive effects of the core dimensions of legalization provides an important qualification to the set of hypotheses outlined above. Ultimately, it is the combined, cumulative, and interactive effects of increased obligation, precision, and delegation which contributes to civil society mobilization.
Furthermore, the effects of legalization’s core dimensions have also interacted with significant procedural changes in the larger, long-term process of legalization. First, the shift in the object (issue area) of legalization from trade to investment has resulted in an enormous growth in the mobilization of civil society groups in the United States and
Canada. Moreover, the effects of legalization’s core dimensions within the realm of investment liberalization are particularly conspicuous and can be seen with tremendous clarity in efforts to legalize investment regimes. Civil society groups have reacted with intense hostility toward efforts to establish legally binding obligations with respect to the treatment of foreign investment by governments (where before, there were no such
72 For instance, a legal institution might be characterized by high levels of obligation and precision but a low level of delegation; or high levels of precision with low levels of obligation and delegation; etc. See the discussion in Abbott et al (2000, 404-408). 67
binding obligations, or minimal commitments at best); formulate highly precise rules and
provisions creating unprecedented new rights for foreign investors; and delegate
increased authority to international commercial arbitration tribunals to interpret and
enforce these new rights and obligations. While it is impossible to know whether the
mobilization of North American civil society groups would have been less intense had
the process of legalization remained confined to the area of international trade (a
counterfactual), it is abundantly clear that group mobilization, while not neglecting trade,
has nonetheless, become centered and concentrated on the legalization of investment
The reason is simple: Although trade and investment are to some degree inextricably
linked (and, as a result, have become increasingly linked by the global economic policy-
making process), it is the liberalization of investment and its consequences for national sovereignty (i.e., regulatory autonomy) which strikes at the heart of civil society’s concerns and beliefs about liberalization in general (i.e., the “race to the bottom,” downward harmonization) as well as the legalization of liberalization.
Furthermore, the legalization of investment regimes has entailed unforeseen and unintended consequences which have only served to provoke civil society mobilization even more. While the crafters of new investment rules have claimed that their intention was to protect foreign investors from extreme forms of government intervention (namely, nationalization or confiscation of an investor’s property), the granting of legal standing to private investors (under NAFTA’s Chapter 11) to sue host governments directly has resulted in several legal suits in which democratically enacted laws and regulations— laws and regulations which civil society groups have regarded as serving legitimate public purposes (many of which they themselves pushed for)—have been directly 68
attacked by foreign investors as “regulatory takings” which are “tantamount to
expropriation.”73 Hence, not only have American and Canadian civil society groups had
to worry about trade and investment liberalization contributing to capital flight (to
Mexico) and the potential for downward harmonization, they have also had to worry
about each others companies and investors coming into their respective countries and
declaring war on regulatory laws that incidentally inhibit their ability to make a profit.
Many civil society groups have seen these cases as evidence of an agenda to roll-back
existing domestic regulatory regimes. What is more, for many groups, legalized investment rules are not simply about foreigners usurping national sovereignty; rather,
“through the use of an international treaty, it is capital, both domestic and foreign, usurping the rights of citizens and workers in their attempts to influence government policy.”74
Finally, aside from the shift in the agenda of legalization from trade to
investment, the scope and pace of the legalization process for both trade and investment
has increased significantly within the past decade and a half as more and more economic
sectors have come under the liberalization chopping block and more and more countries
have or are preparing to jump on the liberalization bandwagon. Civil society groups
(particularly those in Canada) have always feared the possibility that public services, especially areas like health and education, could be liberalized. Again, it is investment liberalization which poses the gravest threat.75
73 These cases will be discussed in further detail in the case studies that follow. 74 Braunstein and Epstein 1999, 121. 75 For instance, current trends in the creation of investor rights appear to be moving toward rules which proscribe limitations on foreign ownership of public utilities and which require that foreign investors be given the same opportunities to purchase public utilities as domestic investors (under the principle of national treatment). 69
Before concluding this chapter, further consideration of the informational effects of legalization is necessary. The informational effects of legalization on the mobilization of civil society groups are both immediate and long-term. While my discussion thus far as repeatedly referred to legalization as an on-going process, it is worth making this crucial point even more explicit. The process by which trade and investment regimes are legalized does not necessarily end with the successful conclusion of a single liberal agreement. In fact, it often continues as the same legalized model of liberalization is extended to other economic sectors or countries. This is particularly apparent in the case of investment liberalization, as the U.S. and Canadian governments have pushed for the expansion of the investment model contained in NAFTA.76
During the negotiation and pre-ratification phase, increased precision in the rules and provisions of individual commercial agreements allows civil society groups to see exactly how an agreement could affect their interests. This of course hinges upon groups having access to the actual text of an agreement. While negotiators are keenly aware that they must craft agreements in such a manner so as to garner the requisite domestic support necessary for ratification (this is particularly the case for U.S. negotiators who must present any agreement to the U.S. Senate for approval), they also have an incentive to keep the content and details of an agreement concealed for as long as possible so as to forestall the mobilization of potential domestic opposition. Thus, civil society groups may not always have the opportunity to thoroughly assess the content of a commercial agreement until after it has already been successfully ratified. This was most likely the
76 Indeed, proponents of investment liberalization have attempted to extend and expand investment rules to an increasing number of sectors and countries. Having their origins in various different bilateral investment treaties, these rules appeared in weak form in CUFTA, were strengthened under NAFTA, and would have been significantly expanded by the MAI, and will be substantially extended by the FTAA. 70
case with NAFTA and explains the failure of North American civil society groups to recognize the implications of NAFTA’s investment chapter. Nonetheless, even after they
have been successfully implemented, legalized agreements continue to provide groups
with important information—information that is useful for understanding the implications
of future agreements that are based on the same legalized model.
In fact, certain kinds of information can only be acquired after an agreement is up
and running. This is most clearly illustrated by the effects of delegation and the role
played by the decisions of GATT and WTO dispute panels and NAFTA Chapter 11
arbitration tribunals in prompting civil society groups to mobilize. For instance, it was
the GATT decision regarding a dispute between the United States and Mexico over the
U.S.’s dolphin-safe tuna requirements which first alerted environmental groups to the
potential impact which the GATT could have on environmental interests. Likewise, the
emergence of NAFTA Chapter 11 cases called the attention of environmental and public-
interest groups to the legal mechanisms by which foreign companies could attempt to
squash or emasculate domestic environmental regulations. Events such as these provide
civil society groups with practical experience and knowledge regarding how the legalized
instruments contained in liberal commercial agreements actually function. In other
words, as time passes, groups acquire additional information beyond that which they
could gain during the negotiating and pre-ratification stages of an agreement. They can
then use this information to make more accurate and reliable evaluations of new or
prospective agreements based upon the same model as existing agreements.77 As time
77 For instance, while North American civil society groups were relatively unaware of the significance of NAFTA’s investment chapter during and immediately after its negotiation and ratification, as a result of the knowledge gained from actual Chapter 11 investor-to-state disputes, upon acquiring a draft text of the proposed MAI, these groups immediately recognized it for what it was—an expanded version of the 71
goes on, experience under functioning commercial agreements begins to mount and
reinforces negative group attitudes toward liberalization. Thus, consideration of the
temporal dimension of the legalization process leaves us with the following expectation:
Over time, as regional and multilateral trade and investment regimes become
increasingly legalized, the number of civil society groups who mobilize in the trade and
investment policy domain should increase while the degree of mobilization exhibited by
previously mobilized groups should intensify or remain the same.
The causal logic of the entire process of legalization can be summarized as
follows: The increased precision and delegation of multilateral and regional economic
regimes (or more specifically, the actual agreements and institutions which constitute
these regimes) provides civil society groups with greater knowledge, awareness, and
general consciousness of how their interests are impacted by international trade and
investment agreements and institutions (e.g., NAFTA, MAI, WTO, FTAA, etc.). This
increased knowledge, awareness, and consciousness, in turn, causes groups to mobilize to
defend their interests in the domain of trade and investment policy. Furthermore, given
their heightened level of knowledge, awareness, and consciousness of the implications of legalized commercial regimes, groups find the increased delegation and obligation contained in international economic agreements and institutions to be unacceptable giving them further cause to mobilize. Finally, the shift from an exclusive concern for the liberalization of trade policies to an increasing emphasis on the liberalization of investment policies as well as attempts to establish legalized rules governing the treatment of foreign investors (i.e., the creation of legal investor rights) gives rise to a
NAFTA investment model. They later used this knowledge to attack the FTAA’s investment rules and provisions. 72 whole host of potential threats to the regulatory sovereignty of states from the view point of civil society groups, causing them to intensify their mobilization. The figure below provides a more graphical representation of the causal directions of these separate, but ultimately interactive elements.
Precision Knowledge, Awareness, and Consciousness of Civil Society Groups Delegation
Obligation Mobilization of Shift to an emphasis on Investment Civil Society Groups
Finally, before concluding this chapter, the following question is in need of an explicit answer: After analyzing the evidence of regime change and civil society mobilization, how will we know whether the explanation offered in this chapter accurately accounts for the observed phenomena—that is, how will we know that the explanation is right, that legalization contributes to mobilization? While my discussion thus far (as well as in the previous introductory chapter) has repeatedly hinted at the fact that the increased legalization of multilateral and regional trade and investment regimes
(as well as other important changes identified within this process) has, in fact, coincided with the mobilization of North American civil society groups, how can we know whether this correlation is not spurious, owing to some other unidentified factors? There is a simple way in which we can prove that the relationship is not spurious. By paying close attention to the reasons groups give for why they have mobilized in the trade and investment policy sphere, we can test the validity of the explanation offered in this 73
chapter. If groups provide reasons for their mobilization which have nothing to do with the legalized aspects of liberal regimes, then it is safe to conclude that my explanation is
incorrect. If on the other hand, the reasons for opposition publicly professed by
mobilized groups happen to center on the nature of the rules and decision-making
procedures (as opposed to the principles and norms) of a regime—especially, the level of
obligation or delegation contained in a particular commercial agreement specific rules
and decision-making procedures—then this would seem to indicate that my explanation
is an accurate depiction of reality.78
In summary, North American civil society has mobilized within the last decade
and a half to ensure that its interests are represented in the global economic policymaking
process. Ultimately, the mobilization of North American civil society can be seen as a
learning process in which more and more groups have acquired greater knowledge of the
implications of legalized trade and investment liberalization as well as the neoliberal-
legal model upon which it is based. Moreover, the exact features, mechanisms, and
workings of this legalized infrastructure have become increasingly salient to civil society
groups. This explains why the number of groups who have mobilized within this policy
area appears (and is hypothesized) to have grown with the negotiation of each successive
agreement. As things currently stand, civil society groups probably cannot take in any
more information that would give them cause or motivation to increase or intensify their efforts beyond the level of attention they currently devote to trade and investment issues.
78 For instance, if a group proclaims its opposition to the principle of free trade in general, then this would mean that the group draws no distinction between the principles and norms of the trade regime and that regime’s specific rules and decision-making procedures, leaving us with an unanswered puzzle: namely, why the group did not mobilize against the regime earlier. If on the other hand, the group does not disagree with the goal of free trade itself, but rather the trade regime’s actual rules, provisions, and decision-making procedures (which the group might believe neglect or fail to take into consideration public-interest goals), then legalization offers a valid solution to our puzzle. 74
In a sense, they have reached a point of information saturation. They have made trade and investment policy reform a permanent part of their wide-ranging political agendas.
The task that now lays before them is to gain direct access to the institutions of international trade and investment governance without being co-opted. This may prove to be an impossible goal. I will give this issue further consideration in the concluding chapter. 75
CHAPTER 3
FROM CUFTA TO NAFTA: THE ORIGINS OF CIVIL SOCIETY OPPOSITION
In this chapter and the chapter that follows I provide case study evidence in support of my explanation for the mobilization of North American civil society within the
domain of trade and investment policy. The evidence is essentially divided into two parts. First, this chapter examines the origins of North American civil society opposition to trade and investment liberalization by looking at the mobilization of American and
Canadian civil society groups against the Canada-United States Free Trade Agreement
(CUFTA) and its successor, the North American Free Trade Agreement (NAFTA). The focus of this chapter is largely on the mobilization of groups during the negotiation and pre-ratification stages of both agreements. It largely paints a picture of civil society mobilization within the context of a low-information environment prior to the legalization of the regional trade and investment regime. Second, chapter four offers an analysis of the growth and evolution of civil society’s opposition to liberalization following the conclusion of NAFTA. It examines the mobilization of U.S. and Canadian civil society groups against the Multilateral Agreement on Investment (MAI), the World
Trade Organization (WTO), and the Free Trade Area of the Americas (FTAA) which is currently being negotiated among the nations of the Western hemisphere. Unlike the
CUFTA and NAFTA cases, chapter four provides a portrait of civil society mobilization within the context of a high-information, post-legalization environment where American 76 and Canadian civil society groups are fully aware of the potential consequences of
(further) legalization of regional and multilateral trade and investment regimes.
Explaining the opposition of North American civil society to CUFTA and
NAFTA essentially involves the recounting of two separate but ultimately connected stories. The first is a tale of Canadian civil society groups mobilizing against a historic trade agreement between two neighbors (the United States and Canada) whose relationship was (and is) marked by a significant inequality in terms of power—an agreement which many Canadians believed would result in a severe loss of national sovereignty as well as significant economic dislocations. The second story largely comprises the efforts of two distinct sets of domestic actors operating within the
American political landscape—namely, labor and environmentalists—who, along with other civil society groups, initially attempted to influence the content of an even more momentous agreement designed to foster and deepen regional economic integration, but who eventually mobilized in concert to stop its ratification by the U.S. Congress. I consider these two cases in chronological order, analyzing CUFTA (and Canadian civil society opposition to this agreement) first, and NAFTA (and American civil society opposition to this agreement) second.79
79 The dichotomy I have drawn between Canadian civil society opposition to CUFTA and American civil society opposition to NAFTA is not meant to suggest that Canadian civil society groups who mobilized against CUFTA did not also mobilize against its successor, NAFTA. However, I have elected to focus primarily on American groups in my discussion of civil society opposition to NAFTA for two basic reasons. First, I have minimized consideration of Canadian groups in order to save space. Second, during the course of my research, while I found an extensive amount of literature on opposition to NAFTA by American domestic groups, I was unable to find a comparable amount of information (both in terms of quantity and quality) on the opposition of Canadian domestic groups to NAFTA. Thus, I did not feel that I could offer any authoritative conclusions regarding the mobilization of Canadian groups against NAFTA. Nonetheless, based upon the evidence which I was able to gather, I believe that the opposition that materialized within Canada during the negotiation of CUFTA reemerged (in fact, it never really went away) during the negotiation of NAFTA (although I cannot say for certain whether the mobilization of Canadian civil society groups increased). Aside from some activity on the part of American labor groups, there is no evidence that American civil society groups mobilized against CUFTA. 77
The Canada-U.S. Free Trade Agreement80
The United States has historically been and continues to be Canada’s most
important trading partner. In each of the seven GATT rounds between 1947 and 1979,
negotiations with the U.S. had been among the most important for Canada.81 In the
1980s Canada was the U.S.’s largest trading partner and its fastest growing market, but
the relationship remained asymmetrical.82 By 1985 Western Europe was well on its way
to becoming one big free trade area while Australia and New Zealand had worked out
their own exclusive free trade arrangement. This left Canada as the only small
industrialized country heavily dependent on trade with a single country but having a wholly independent trade policy, making it difficult for Canada to find others with whom to form trade alliances other than the United States.83 Meanwhile, U.S. protectionism had
made a comeback, threatening Canadian access to the U.S. market. Despite much chest-
beating about the benefits of free trade, the Reagan administration was quick to bow down to short-term protectionist pressures.84 Within this context Canadian elites were
more willing to go along with the idea of deepening continental integration than they had
previously been.
80 In the two sections that follow, I have relied heavily on Hart’s (1994) account of the CUFTA negotiations. 81 Hart 1994, 57. 82 While the U.S. absorbed almost 80 percent of Canadian exports in 1984 and supplied about 70 percent of Canada’s imports, Canadian trade accounted for only one-fifth of American imports and exports (Hart 1994, 50). 83 Canada had previously tried to pursue expanded trading relationships with Europe and Japan, but these attempts had borne little fruit. 84 By the 1980s a discernible gap between American ideology and practice had emerged. The U.S.’s early enthusiasm for liberalism in the postwar period was due to its guaranteed broad-based comparative advantage, but by the 1970s competition had increased among the OECD countries while per capita income had narrowed. Thus, imports began to be viewed as damaging to U.S. industries, and protectionism began to look more attractive. The Reagan administration virtually doubled import restrictions, raising them to 23%, more than all postwar administrations combined. See Hart 1994, 36-41; Chomsky 1996, 107. 78
In the 1970s, economists on both sides of the American-Canadian border first
proposed the idea of a North American free trade area, but at the time protectionist policies prescribing high tariffs on American imports continued to dominate the views of
Canadian business and political leaders. However, by the 1980s, many business elites
and government officials had become more receptive to the idea of liberalized trade
between Canada and the United States. Many in the Canadian business community
(particularly, large exporting interests) had come to believe that the key to Canada’s
economic well-being was continued and expanded access to the U.S. market, and that
success in that market depended on establishing and maintaining a stable relationship
based on clearly defined, negotiated, and agreed upon rules setting out exact and precise obligations and rights which would serve to constrain American protectionism.85
By 1985 three-quarters of Canada’s exports went to the U.S. Improved access, it was thought, would stimulate growth.86 Furthermore, without secure access to a large
market of 100 million or more people, Canada risked losing its competitive trading
position.87 Thus, many business elites were increasingly willing to open up the Canadian
market to U.S. competition in exchange for guaranteed access to the enormous American
market. Thus, when the Conservative Party came into power in 1984, the Mulroney
government was confronted with two seemingly clear-cut choices with regard to
Canada’s future direction: Heed the “urgent call of business” for a Canadian-U.S. free
85 Hart 1994, chapter 2. 86 Ibid., 21. As Hart notes, future diversification of Canada’s trading patterns also came to be seen as dependent on a sound North American economic base. 87 Ibid., 25. 79
trade agreement or the “dire warnings” of nationalists who “worried about Canada’s
future as an independent nation.”88
After much preparatory work on the part of the Canadian government (and to a
lesser extent on the part of the U.S. government) which would lay the foundation for a
comprehensive trade deal, Prime Minister Mulroney announced on September 26, 1985
that Canada would seek a new trade agreement with the United States to secure and
enhance Canada’s access to the U.S. market. On December 10, 1985, President Reagan
formally notified Congress, under fast-track procedures, of his intent to enter into
negotiations with Canada. By April 23, 1986, the U.S. Senate Finance Committee had
agreed not to disapprove bilateral negotiations with Canada, clearing the way for the
Reagan administration to enter negotiations pursuant to the fast-track approval
procedures. Negotiations formally commenced on May 21, 1986 and continued through
December 12, 1987. On January 2, 1988 President Reagan and Prime Minister Mulroney
signed the Canada-United States Free Trade Agreement (CUFTA); the agreement entered
into force on January 1, 1989.
Both Canada and the United States entered into the CUFTA negotiations with the
intention of pursuing several key objectives. For Canada, the key objectives were to
serve domestic economic interests by achieving secure and unimpeded access to the U.S.
market by subjecting the U.S.’s use of contingency protection measures to binding
disciplines and by gaining free access to U.S. government procurement markets. For the
United States, the key objectives were to serve transnational corporate interests by achieving national treatment for investment, a new regime for intellectual property protection, and stringent disciplines on Canadian subsidy practices. In addition, the two
88 Ibid., 3. 80
countries shared common interests in liberalizing trade in services, eliminating tariffs,
and improving the conditions of agricultural trade.89 Thus, CUFTA negotiators
attempted to chart new territory in a number of different areas, many of which had never
before been included in trade negotiations (e.g., investment, intellectual property,
services, government procurement). With regard to the mobilization of North American
civil society against future agreements (i.e., the MAI and FTAA) and the explanation for
this mobilization outlined in the previous chapter, two areas of the agreement—dispute
resolution and investment—are worth highlighting.90
Dispute Settlement
Throughout the course of the CUFTA negotiations, Canada’s primary objective
was to incorporate binding dispute settlement mechanisms into the agreement. As Hart
(2000, 114) explains, the purpose of dispute settlement is to “ensure that conflicts are resolved on the basis of mutually accepted rules and procedures rather than on the basis of power and politics.” As previously stated, Canada’s primary purpose for pursuing a
CUFTA in the first place was to gain secure and unimpeded access to the U.S. market. In order to do this, Canada needed an agreement that would constrain the U.S.’s use of contingency protection measures.91 Binding dispute resolution mechanisms were seen as the best way to achieve this goal.92 As Hart (1994, 208) explains:
89 Ibid., 190-191. 90 In highlighting these areas of CUFTA, it is not my intention to argue that either of these components significantly affected the mobilization of Canadian civil society groups against this particular agreement. My purpose in calling attention to them is to provide an account of CUFTA’s treatment of dispute resolution and investment that can later be compared to the treatment of these areas in NAFTA and the MAI so as to capture the evolution of these areas within the larger, long-term process of legalization. 91 Contingency protection is a collective term referring to trade remedies that may be imposed by a government contingent upon certain criteria being met, such as the importation of dumped or subsidized goods that cause material injury to domestic producers. It usually refers to anti-dumping and countervailing duties as well as other safeguards provided for under the GATT. During the period preceding the CUFTA negotiations, the U.S. had made liberal (and from the Canadian’s perspective, 81
As the smaller of the two countries and more liable to be affected by the exercise of power by the other, Canada had a relatively greater interest in effective dispute- settlement. Only through the development of procedures and institutions based on jointly agreed principles and rules would the power disparity be attenuated…[D]ispute settlement and institutional arrangements [would] provide certainty and predictability, and thereby respect the expectations of the two governments and private parties as to the rules that would govern bilateral trade. Avenues for redress [would] not be susceptible to use or abuse solely for harassment, but [would] result in binding decisions that would ensure corrective action for governments and private parties affected adversely by unauthorized or unforeseen conduct…[Furthermore, having] made a significant adjustment and eliminated tariffs and other barriers to trade, Canada and the United States should have a basis on which to seek compensation from each other by way of tariff or other concessions in response to improper conduct (my emphasis).93
Ultimately, any dispute settlement mechanism would have to be tied to
substantive rules, replacing unilateralism with bilateralism.94 “Covering trade in all
goods and most services as well as many investment transactions and most business
travel,” CUFTA essentially provided a “code of conduct” for the Canadian and U.S. governments “in their regulation of both private firm behavior and their own economic policies.”95 The agreement’s general dispute settlement chapter—Chapter 18— established a range of institutional obligations to avoid and settle all disputes between the
illegitimate) use of contingency protection. This had resulted in severe limitations on the access of Canadian goods to the U.S. market. 92 From the start of the negotiations, “Canadian business had intimated that a suitable dispute settlement mechanism would go a long way towards satisfying its concern about security of access” (Hart 1994, 207). 93 One can easily see an implicit appreciation for the core dimensions of legalization—obligation, precision, and delegation—in Hart’s comments. 94 Dispute settlement “in the absence of rules” would be “of little use, akin to a vehicle without an engine to move it” (Hart 1994, 380). 95 Hart 2000, 99. The agreement’s most extensive obligations covered trade in goods and included obligations regarding tariffs, rules of origin, quotas, customs procedures, safeguards, unfair trade remedies, government procurement, national treatment, technical barriers, and exceptions. 82
two parties except those related to trade remedies and financial services.96 These
included:97
• Mandatory notification of any measure affecting trade and investment;
• Compulsory provision of information to the other party on request regarding any measure, whether or not it had been notified;
• Consultations at the request of either party concerning any measure or any other matter affecting the operation of the Agreement, with a view to arriving at a mutually satisfactory resolution;
• Referral to a Canada-United States Trade Commission, should resolution through consultations fail; and
• Use of dispute settlement procedures should the Commission fail to arrive at a mutually satisfactory resolution.
The dispute settlement procedures included:
• Compulsory arbitration, binding on both parties, for disputes arising from the interpretation and application of the safeguards provision;
• Binding arbitration in all other disputes where both parties agree; and
• Panel recommendations to the Commission, which, in turn, is mandated to agree on a resolution of the dispute.
The dispute settlement instruments contained in CUFTA’s Chapter 18 were strictly state- to-state, meaning only the governments themselves could employ them; private investors in both countries were not given standing to initiate claims or file suits against either government for alleged government violations of the agreement’s rules regarding the treatment of foreign investment. Ultimately, in comparison to the dispute settlement mechanisms contained in NAFTA and the MAI, CUFTA is a less legally binding commercial agreement, especially with regard to the treatment of foreign investors.
96 CUFTA’s Chapter 19 established dispute settlement provisions and procedures addressing trade remedies; in comparison to Chapter 18, these obligations were less binding (weaker). 97 The following list of CUFTA’s dispute settlement provisions and procedures are taken directly from Hart 2000, 99-100. 83
Investment
During the CUFTA negotiations investment was at the top of the United States’ agenda.98 While Canada was motivated by concerns regarding the access of Canadian goods to U.S. markets, the U.S. was worried about the access its companies had with respect to investing in Canada. Canada’s investment-screening process gave the impression of a hostile environment for foreign investment, causing many U.S. companies to express concern over the security of their current and future investments in the country.99 Through CUFTA, the U.S. sought to achieve increased access, security, and non-discriminatory treatment for U.S. companies investing in Canada, arguing that the establishment of clear and precise investment rules would attract not only U.S. businesses but European and Japanese investment as well.
Ultimately, the United States sought contractual obligations on investment from
Canada during the CUFTA negotiations. Its two basic goals were to achieve national
98 Prior to formal negotiations U.S. Trade Representative (USTR) Mike Smith indicated that in order to arrive at a successful agreement, the U.S. would need to be seen as making progress on the so-called new issues—namely, investment, services, and intellectual property (Hart 1994, 96). 99 As Hart (1994, 221-224) explains, “[r]apidly increasing levels of direct investment, its concentration in secondary manufacturing and resource industries, and its predominance in some of these industries had provoked considerable public debate [in Canada] about the costs and benefits of foreign ownership in the 1960s and 1970s. As a result, Canada had adopted measures to ensure Canadian control or a Canadian presence in certain key sectors as well as measures to encourage the growth of strong Canadian-controlled enterprises and the investment of Canadian savings in Canada. The most important measure, however, had been the creation of the Foreign Investment Review Agency (FIRA) in 1974 to review the acquisition of control of a Canadian business enterprise and the establishment of a new business in Canada either by a person or corporation not already having a business in Canada or by a foreigner with an existing business in Canada…By 1984 a number of factors, including economic performance and increased competition for foreign direct investment, led to a reassessment of the Foreign Investment Review Act. It was widely perceived to have contributed to creating an inhospitable investment climate in Canada.” The Mulroney government “met these concerns by turning FIRA’s mandate on its head. Instead of screening new investment, FIRA officials were told to promote and search out investment, and the agency’s name was changed to Investment Canada. These changes were welcomed in the United States and elsewhere, but did not alter the perception that Canadian foreign investment policy was capricious. Thus the United States had an interest in changing existing practices into contractual commitments.” Canadian civil society groups, however, regarded these developments as entailing a severe loss of national sovereignty. 84
treatment and the right of establishment for its investors.100 National treatment is one of the most basic principles (along with Most-Favored-Nation treatment) underlying international trade and investment regimes. It refers to the extension to imported goods, services, and investments of treatment no less favorable than that accorded to domestic goods, services, and investments with respect to internal taxes, laws, regulations, and requirements. In the context of investment, national treatment essentially requires countries to treat foreign investors in a non-discriminatory manner, meaning countries must treat foreign investors in exactly the same manner as their domestic investors. The right of establishment is one of the basic principles which comprise national treatment for investors. It requires countries to provide foreign investors with the right to establish new businesses on the same basis as nationals.101
Investment would prove to be an extremely sensitive area for Canada who had never before accepted any binding obligations on investment policy. “Changing the laws in Canada to welcome foreign investment in Canada’s own economic interests was one thing; entering into a contractual commitment to maintain open investment policies was quite another.”102 Through CUFTA, the U.S. sought to abolish Canada’s capacity to
review direct and indirect takeovers as well as roll back existing commitments
undertaken by American investors under existing and previous Canadian legislation, and
demanded “ironclad guarantees” against the reintroduction of investment reviews or
takeover legislation. The U.S.’s proposals were viewed by Canadian negotiators as
100 The U.S. also sought to limit performance requirements on its investors and ensure free repatriation of U.S. investors’ profits. 101 The significance of national treatment and the right of establishment in relation to the mobilization of civil society groups will become apparent in the next chapter. 102 “National treatment (even if circumscribed by exceptions) touches the sensitive nerve of national sovereignty” (Hart 1994, 223). 85
“nothing less than a draft license to take over the country.”103 In the end, the U.S. did not
achieve the unfettered access for its investors to the Canadian market (along the lines of
its bilateral investment treaties with developing countries) which it had sought during the
negotiations. As Hart (1994, 382) describes it, the investment chapter was a “mixed
blessing” for the United States and “a lot less ambitious” than what the U.S. wanted:
American investors achieved more predictability, but access [was] not unfettered. Major takeovers, covering about two-thirds of all corporate assets in Canada other than financial institutions, would continue to be subject to review. Sectors that were barred to foreign ownership or required review—particularly transportation, energy, and communications—would continue to be treated this way. Once established in Canada, U.S. firms became entitled to national treatment. Any controls that any future government might wish to impose on investment practices would have to be applied to both Canadian and American investors. Like everything in the agreement, this [was] a reciprocal commitment. Canadian investors in the United States…would benefit from the same clear framework of rules.
As mentioned above, private investors were not given the right to initiate disputes against
either government for violations of the investment chapter’s rules or provisions.
The Opposition of Canadian Civil Society to CUFTA
By the mid-1980s the idea of free trade had become a major public controversy
in Canada. CUFTA was undoubtedly a very important public policy issue for all
Canadians, representing the most far-reaching change that Canada had faced since
Confederation.104 Most of the Canadian public was quite conscious of the debate over
free trade with the United States and were well aware of the arguments both for and
against a CUFTA; the agreement would later become the most important issue in the
103 Hart 1994, 236. 104 Warnock 1988, 9. 86
Canadian election of 1987 and would remain a festering source of public anxiety and
hostility afterwards as the Canadian economy sunk into recession.105
The arguments against CUFTA put forth by opponents of the liberalization of trade between Canada and its gargantuan southern neighbor can be grouped into four
basic categories of concerns. First, the Mulroney government had been elected in 1984 in
part on the promise of “jobs, jobs, jobs,” yet economists readily admitted that the
problems of adjustment posed by a CUFTA would be greater for Canada than the U.S.,
requiring significant structural changes in the economy. Thus, the most traditional voice
of dissent on CUFTA came from labor. Canadian labor was wary of and strongly
opposed to the prospect of increased competition, severe economic dislocations, and job
losses which were sure to result from a CUFTA. Speaking before a special parliamentary
committee (set up to hold public hearings on a possible CUFTA) on July 15, 1985,
Canadian Labour Congress (CLC) Vice President Richard Martin suggested that there
would be “a price to be paid for any ‘trade enhancement’ agreement with the U.S.” As
Martin explained:
What guarantee was there that such enhancement would not mean shutdown of Canadian branches of U.S. companies? Or a slowdown in the rate at which new companies in Canada open? What guarantees were there that Canadian firms would not move their facilities to the U.S. in the medium and longer term as they are faced with decisions about where to put new investment?106
Desiring an industrial policy that would generate high-paying union jobs, labor leaders
105 Smythe 2001, 149; Mayer 1998, 2. 106 Quoted in Hart 1994, 82-83 (my emphasis). Canadian labor’s worries about capital flight to the U.S. would later be echoed and reiterated by American labor groups who worried about capital flight to Mexico during the NAFTA negotiations. 87
wanted more, not less, government intervention and control over market forces. Many
Canadian women’s groups also opposed CUFTA for largely the same protectionist reasons put forth by Canadian labor. Convinced that “the brunt of the adjustment burden would fall on single and poorer women” working in service, textile, clothing, and similar industries, women’s groups concluded that women would be among the worst victims of free trade.107
Second, many Canadian civil society groups harbored worries about the potential for downward harmonization which a CUFTA might entail. They feared that the United
States would regard many Canadian domestic social and economic policies (including
social programs such as Medicare and unemployment insurance) as unfair or
discriminatory subsidies, and that under a CUFTA, Canada would be forced to eliminate or align them with the U.S.’s own domestic policies. For instance, aboriginal groups warned that any programs which discriminated in favor of native groups would be vetoed by the United States under a CUFTA.108
Third, numerous nationalists and civil society groups voiced their concerns about the future of Canadian culture (and domestic cultural industries) under a CUFTA, fearing
that the country would be overrun by American media and Hollywood entertainment.
Finally, although CUFTA was strictly a commercial agreement, many Canadian
107 Hart 1994, 112. Furthermore, because women had been the last hired by many firms, women’s groups argued that they would be the first out. Countering these charges, Hart points out that while Canadian textile and clothing industries are perhaps not world-competitive, they are more than a match for their American counterparts. 108 Hart 1994, 113. With regard to the safety of social programs, civil society groups were not wrong to be concerned. The U.S.’s lead negotiator for CUFTA, Peter Murphy, initially stated during the beginning of the negotiations that “everything was on the table,” including Canadian social programs. Hart suggests that this was probably a political maneuver (see 157). Murphy would qualify his earlier statement at a later point in the negotiations, suggesting that “Canadian social programs per se were not of interest to the United States but in areas in which they had trade effects, the U.S. side would, of course, want to examine them as part of the negotiations” (see 167). 88
nationalists feared not only the immediate consequences of economic integration but the
possibility that a comprehensive free trade agreement could lead to a political union between the two countries (comparable to the direction which Europe was heading at the
time), resulting in a loss of political independence for the smaller and weaker partner.
This fear dovetailed with concerns about downward harmonization and represented the
most guttural reaction to the proposed CUFTA.
Outside of these four basic categories of anti-CUFTA arguments, other civil
society groups voiced additional concerns. Church groups believed that closer economic
relations with the United States would compromise achievement of their social
objectives. Speaking before a meeting of the Confederation of Canadian Unions on
October 6, 1985, Remi de Roo, a Roman Catholic bishop of Victoria, suggested that
CUFTA would result in Canada’s economy “being reorganized in such a way that
transnational capital takes precedence over human labor and human needs.” At least
some environmental groups feared that efforts to combat acid rain “would be sacrificed
on the altar of free trade.”109
The views of groups opposed to CUFTA found only “an occasional echo in the
ranks of the Liberal and New Democratic parties.”110 The Liberal Party was “hopelessly
divided” on the issue.111 The New Democrats, on the other hand, suffered from no such
internal conflicts and were zealously opposed to the CUFTA negotiations.112
109 Ibid., 112-113. Determining the extent of environmental mobilization against CUFTA has proven difficult. Hart’s account suggests that mobilization of environmental groups was minimal at best. Warnock (1988) identifies only one group, Pollution Probe, as engaged in a significant amount of activity on the issue. However, Mayer’s (1998, 49) account, although not directly addressing the question of Canadian environmental group mobilization, seems to suggest that there was a significant coalition of environmental groups who mobilized against CUFTA. 110 Hart 1994, 67. 111 Ibid., 123. 112 Ibid., 168. 89
Nonetheless, the real opposition was outside Parliament, concentrated within the CLC
and its affiliates, cultural industries, and various single-issue groups. One of the most
important groups opposed to CUFTA was the Council of Canadians (COC).113 Formed
in June 1985 by a group of prominent Canadians concerned over the policy directions of
the newly elected Mulroney government (specifically, the dismantling of the Foreign
Investment Review Agency, the prospect of free trade with the United States, and a perceived erosion of cultural sovereignty), the COC was intended to be a broad-based
citizen’s organization that would “protect and promote Canadian sovereignty and
democracy.” In response to the third “Shamrock Summit” in Ottawa in which Prime
Minister Mulroney and President Reagan had met to discuss progress in the CUFTA
negotiations, the COC convened the “Maple Leaf Summit” in April 1987.
Representatives from labor, environmental, aboriginal, and women’s groups (joined by
farmers, seniors, students, teachers, and church leaders) attended the meeting and
participated in the drafting of a joint anti-CUFTA declaration that was later posted to the
door of the Parliament Buildings. The Summit also gave birth to the Pro-Canada
Network, a national coalition of labor and social groups opposed to what they perceived
to be a corporate-backed free trade agenda.114 The CUFTA opposition was, for the most
113 As we will see later, the Council of Canadians would continue to be one of the leading civil society groups in the fight against trade and investment liberalization, mobilizing against NAFTA, the MAI, and the WTO. The group is currently mobilized against the FTAA as well as revisions to the GATS agreement currently being negotiated within the WTO. The Council describes itself as an “independent, non-partisan organization, with over 100,000 members and 70 chapters across Canada” as well as a “non-profit, public interest organization” that “does not take money from corporations or governments,” sustaining itself “entirely by the volunteer energy and financial assistance of its members.” See the COC’s website www.canadians.org (specifically the sections listed “About Us” and “Our History”). 114 The Pro-Canada Network would later change its name to Action Canada and would remain mobilized against NAFTA. 90
part, led by two individuals, Maude Barlow and John Trent.115 A list of groups who
mobilized against CUFTA is provided in Appendix 1.
The North American Free Trade Agreement
Five years after its completion, CUFTA would be superseded and subsumed by a
trilateral commercial agreement whose purpose was identical but which represented an
even more ambitious effort at legalizing liberalization and facilitating continental
economic integration. The North American Free Trade Agreement (NAFTA) was a
sweeping accord aimed at eliminating most barriers to trade and investment in North
America over time. Like CUFTA in Canada, NAFTA would become a major national
issue in the United States before it was finally ratified and implemented.
NAFTA was initially supposed to be a bilateral commercial agreement between
the United States and Mexico.116 During the 1980s, Mexico began to open up its economy. Subsequently, international trade became increasingly important for the
country.117 By the end of the 1980s, Mexico was the United States’ third largest trading
partner (after Canada and Japan).118 Mexico also became the destination for an
increasing amount of foreign investment during the decade, the majority of which came
115 Barlow was leader of the Council of Canadians. She had previously been employed as an advocate for women’s rights and had subsequently become a policy advisor to the Liberal party. She is currently the National Volunteer Chairperson for the COC, a Board member of the International Forum on Globalization, and has been one the most active individuals within the domain of trade and investment policy. Trent is a University of Ottawa political scientist active in the New Democratic party. 116 Just as Canada had initiated CUFTA, Mexico initiated NAFTA. 117 According to Mayer (1998, 35), Mexican exports nearly doubled in real terms from 1980 to 1989, increasing from $15.2 billion in 1980 to $29.6 billion in 1989 (in constant 1987 dollars). As a percentage of GDP, exports grew from 12 percent (where they had been for decades) to 20 percent, while imports rose from $19.3 billion to $31.1 billion. By 1985, Mexico had negotiated its accession to GATT and officially joined in 1986. 118 Two-way trade between the two countries “soared” from $18.4 billion in 1979 to $51.5 billion in 1989 (measured in current dollars). For Mexico, this represented more than two-thirds of both imports and exports (Mayer 1998, 35). 91
from the U.S..119 As Mayer (1998, 36) suggests, the growth in trade and investment
between the U.S. and Mexico “represented a kind of ‘silent integration,’ which in both
countries created interests that had a stake in freer trade.”
In 1988, Carlos Salinas de Gortari came to power in Mexico. After taking office,
Salinas and his cabinet ministers pursued an ambitious program of domestic reform,
putting their faith in market economics and free trade. To grow economically, they
believed that Mexico needed to attract foreign capital. Toward this goal, Salinas reduced
tariffs unilaterally, eliminated most remaining import licensing requirements, privatized
the vast majority of Mexico’s state-owned enterprises (including the banks), and pursued
closer economic relations with the United States. Salinas and his technocrats believed
that a bilateral free trade agreement with the U.S. would help to lock in many of Salinas’
domestic economic reforms.
In February 1990 Mexican officials first approached the United States, asking
U.S. leaders to consider a bilateral free trade agreement similar to the one that the U.S.
had just concluded with Canada. The Bush administration quickly agreed to pursue a
trade deal with Mexico, and in June 1990, presidents Salinas and Bush announced their
intention to negotiate a trade agreement between their countries. By August 1990, the
Canadian government had requested that it be included in the talks. 120 In the spring of
1991, Bush asked Congress for an extension of fast-track authority which would enable
119 Foreign direct investment (FDI) in Mexico increased from $1 billion a year in 1982-83 to an average of $3 billion a year in the last three years of the decade; the accumulated value of FDI grew fourfold during the decade to $26.6 billion, two-thirds of which was from the United States (Mayer 1998, 36). 120 After dealing with a grueling fight for reelection in 1987, the Mulroney government initially decided that Canada would not participate in trade talks between the U.S. and Mexico. Shortly after the 1987 election Canada’s economy had entered a recession and a majority of the public (as well as civil society groups) blamed the downturn on the recently negotiated CUFTA. Thus the last thing the Mulroney government wanted to do in 1990 was reopen the issue by “embarking on another free trade negotiation” (Mayer 1998, 2). However, Canada eventually decided to join the negotiations out of “fear of the loss of CUFTA benefits as Mexico negotiated its own access to the U.S. market” (Smythe 2001, 149). 92
him to negotiate a regional trade agreement. After confronting intense domestic
opposition from an unprecedented coalition of labor unions, environmental organizations, and other civil society groups, Bush received congressional authorization in May after
agreeing to address the concerns of labor and environmentalists in the talks. Formal
negotiations began in June, and a final agreement was reached on August 12, 1992 right
in the middle of the U.S. presidential election. Presidential candidate Bill Clinton came
out in favor of the agreement, but in a classic display of political opportunism, pledged to
pursue stronger supplemental side agreements with Canada and Mexico on labor and
environmental issues, if elected, before submitting NAFTA for congressional approval.
After winning the election, Clinton made good on his election promise, and side
agreement negotiations on labor and environmental issues began in February of 1993.
They were concluded in August. The entire NAFTA package faced an incredible amount
of domestic opposition but finally passed in the U.S. House of Representatives by a vote
of 234 to 200 and in the U.S. Senate by a vote of 61 to 38. The agreement entered into
force on January 1, 1994.
The goals of NAFTA were essentially the same as those of CUFTA—to eliminate
barriers to trade for all goods and services as well as barriers to investment121 (and
provide greater security for investors) and to establish new rules for government
procurement, intellectual property, and dispute settlement.122 The CUFTA text was used
by the negotiators as a general blueprint for the agreement. Deputy USTR Jules Katz
121 The final product would commit all three countries to an open investment regime in most sectors of the economy; however, politically privileged industries were largely exempted: Mexican oil, Canadian culture, and U.S. shipping (Mayer 1998, 110). I give fuller consideration of NAFTA’s investment chapter in the next chapter, as it provides the relevant context in which North American civil society groups confronted the MAI. 122 I also give fuller consideration to NAFTA’s dispute settlement mechanisms and procedures in the next chapter for the same reason as I have chosen to postpone consideration of NAFTA’s investment chapter (see the previous note). 93 described NAFTA as “CUFTA with improvements and extensions.”123 When all was said and done, NAFTA would essentially combine the economies of the three countries, creating a tariff-free $6.5 trillion market of 360 million consumers.124 Its rules governing
investment and market access would enable North American business to “rationalize”
their investments and production throughout the region, resulting in tremendous
“synergy” among the three economies and enhancing international competitiveness.125
Never before had a free trade agreement ever been negotiated among countries at such different levels of economic development.
The Opposition of American Civil Society to NAFTA126
NAFTA was met with stiff resistance by domestic groups in the United States and
Canada from the day that it was officially announced until its conclusion in 1994.127 As in the case of CUFTA, labor unions were among the first groups to voice their opposition to the agreement. Speaking on behalf of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) at a hearing in the U.S. House of Representatives in June 1990 (after the official announcement of negotiations between the United States
123 Quoted in Mayer 1998, 49. The U.S. wanted an agreement that would be as broad as possible; its strategy was to use CUFTA as a starting point and broaden it slightly, insisting on full market openings in goods, services, and investment. For Canada, the overriding goal was to avoid reopening CUFTA, making it the core of the new agreement. All three trade ministers agreed that there would be no backsliding from CUFTA in any area—ultimately, NAFTA would go forward, not backwards (Mayer 1998, 111-113). 124 Audley 1997, 1. 125 Ibid. 126 A comprehensive recounting of the politics of NAFTA in the U.S. (during the 1991 fast-track period, the commercial and side agreement negotiations, and the ratification period) is beyond the scope of this chapter. In this section I discuss some of the more notable instances of American civil society mobilization that occurred between the summer of 1990 and the fall of 1993. For a more comprehensive treatment of the politics of NAFTA in the U.S. (particularly, the opposition of domestic interest groups), see Mayer 1998. For a comprehensive account of the mobilization of U.S. environmental groups over NAFTA, see Audley 1997 (also Fox 1995 and Vogel 2000). Nonetheless, I have taken advantage of the extensive literature that exists on the politics of NAFTA and provided a highly detailed account of civil society mobilization against the agreement. 127 What is more, as will be explained in chapter four, this resistance did not dissipate after NAFTA’s implementation but continues to this day. 94
and Mexico on June 10), Mark Anderson, director of the union’s trade task force,
expressed the “considerable alarm” which labor felt toward the prospect of a Mexican-
U.S. free trade agreement: “A free trade agreement with Mexico, a country where wages
and social protections are almost nonexistent when compared with our own, simply
invites disaster for U.S. workers.”128 Environmental groups also began mobilizing early to effect the outcome of NAFTA. In July 1990, Friends of the Earth (FoE) submitted a
document to the International Trade Commission, becoming one of the first American
environmental groups to issue a statement on NAFTA. FoE contended that CUFTA had
resulted in environmental problems, indicating the need to include environmental issues
in the U.S.-Mexico negotiations.129
The announcement by Canadian Trade Minister John Crosbie on September 23,
1990, informing the House of Commons that the Canadian government would “involve
itself” in the Mexican-U.S. negotiations immediately drew criticism from Canadian
opposition parties and the coalition of labor unions and citizen groups that had opposed
CUFTA. Maude Barlow, leader of the Council of Canadians, summed up the fears of
Canadian civil society: “We want our country back. As long as the free-trade agreement
[CUFTA] is in effect, no future [Canadian] government will be able to determine the fate
of this country.”130 Canadian groups wanted CUFTA rolled-back, not expanded into a
NAFTA.
128 Quoted in Mayer 1998, 45. 129 Vogel 2000, 86. Shortly after FoE’s move, twenty-four Canadian, Mexican, and American environmental groups issued a joint-statement calling for the inclusion of environmental issues in the NAFTA negotiations. 130 Quoted in Ibid., 49. 95
Labor131
The reaction of American labor groups to the prospect of liberalized trade and investment relations with Mexico was conditioned by their general suspicion of the
Republican Bush administration and their previous experience with U.S.-Mexican trade relations, particularly the maquiladora program.132 In the mid-1980s, the AFL-CIO had begun an information campaign exposing the maquiladoras. During this period, many unionists drew a direct connection between American layoffs and corporate downsizing and the increased transfer of production to Mexico.133 By 1989, the AFL-CIO’s campaign had gradually shifted from an initial focus on how the maquiladora program contributed to U.S. job losses to a focus on the degradation of Mexican workers and the
squalid environmental conditions (e.g., toxic dumping, etc.) which the program had
caused.
Thus, the Bush administration’s proposal to negotiate a trade agreement with
Mexico came at a time when American labor was already mobilized against the
maquiladoras. Furthermore, even if the union leadership had been willing to bargain with
the Bush administration, the rank and file’s spontaneous, visceral, and “unambiguously
131 In the next two sections I outline the specific reasons why American labor, environmental, and public- interest groups mobilized against NAFTA, examining the larger context in which these groups received the news that the U.S. government would pursue liberalization with Mexico—a context which shaped their perceptions of NAFTA. 132 The maquiladora program had been established by Mexico and the United States in 1965. The stated purpose of the program was to develop the border economies of both countries and reduce immigration pressures. It allowed U.S. businesses to locate assembly operations in “free trade zones” along the U.S.- Mexican border, import components from the U.S. duty free, assemble them in Mexico, and reexport them to the United States without tariff. The program got off to a slow start but increased rapidly after the peso was devalued after 1982 and the number of firms taking part rose dramatically. By 1989, roughly 1,500 maquiladora plants were in operation in Mexico, employing nearly 400,000 workers who earned a fraction of what their U.S. counterparts earned. The true purpose of the program was apparent to anyone who bothered to look at the facts (including American labor): to allow U.S. manufacturers to substitute cheap Mexican labor for “expensive” U.S. workers. 133 As Mark Anderson, research director for the AFL-CIO, explained: “[the maquiladora issue] was a very visible thing to [union] members. It wasn’t theoretical. They knew about Mexico.” Quoted in Mayer 1998, 71. 96
negative” reaction to the issue precluded such an outcome. Rightly or wrongly, union
members understood NAFTA to be a direct threat to their jobs.134
Environmental and Public-Interest Groups
Unlike labor unions, American environmental and public-interest groups had no history of involvement in trade negotiations. Having largely ignored CUFTA, most groups had no staffers or personnel who dealt with trade issues. However, although many groups may have been slow to link their interests to trade negotiations, they would succeed in making sure that their issues were addressed in the NAFTA package.135
The concerns which American environmental and public-interest groups held with regard to NAFTA can be grouped into three general categories. First, like labor, these groups were primarily concerned about the impact of the maquiladora program. Because of Mexico’s lax enforcement of its environmental laws as well as a population explosion around the maquiladora factories which had overwhelmed local environmental infrastructures, the program had resulted in numerous environmental problems that were easily documented. The National Toxics Campaign (NTC) reported that many of the maquiladoras, generating substantial amounts of toxic waste and pollution, were illegally disposing of their hazardous waste, contaminating local rivers and streams.136 The effects
134 See Mayer 1998, 70-74 for an analysis and discussion of the underlying causes for labor opposition to NAFTA and fast track. 135 The origins of environmental group mobilization in the United States within the area of trade and investment policy can be traced back to the spring of 1989 when Stewart Hudson, a staffer at the National Wildlife Federation (NWF), put together an “Ad Hoc Group on Trade and Environmentally Sustainable Development.” Hudson assembled the group to discuss the affect of trade on environmental interests. Of immediate concern to many of the group’s participants was the on-going Uruguay Round talks of the GATT. 136 Vogel 2000, 86. As Vogel notes, environmental groups “pointed out that contamination levels in the Rio Grande were many times greater than those considered safe for recreational use.” 97
of this pollution could also be found in the U.S. border regions.137 The co-director of a
grassroots organization opposed to NAFTA described the maquiladoras’ negative
environmental effects on the border regions as “the best predictor of what will happen
under a broader agreement. It’s a wild-West, dump-and-run kind of situation that has
turned the 2,000 mile border into one big Love Canal.”138
Second, environmental and public-interest groups worried that the liberalization
of investment (which NAFTA would facilitate) would, in the context of Mexico’s laxer
enforcement of pollution laws, encourage American companies to relocate to Mexico,
exacerbating Mexico’s pollution problems (as well as costing American jobs).139 Many groups felt that provisions requiring “comparable enforcement” of domestic environmental regulations (on the part of Mexico) would have to be directly incorporated into NAFTA in order to prevent capital flight to what many groups regarded as a
“pollution haven.”140
Finally, environmental and public-interest groups suspected that international trade agreements like GATT and NAFTA were becoming (or had the potential to be used as) a means by which domestic environmental and other public-interest laws could be attacked and struck down as trade restrictive by unaccountable trade tribunals. In
February 1991, “alarm bells went off” throughout the American environmental
137 As Vogel (2000, 86) explains: “Raw sewage dumped into the New River in northern Mexico had been carried across the border to California, while Tijuana’s lack of adequate waste disposal had polluted beaches in San Diego. A public health official from El Paso, Texas, already faced with rates of hepatitis, dysentery, and tuberculosis substantially above the U.S. average, warned that ‘unless the government marries free trade and the environment, we will be totally burnt. We cannot cope with more growth.’” 138 Comments of Craig Merrilees; quoted in Vogel 2000, 86. 139 Vogel 2000, 86; Mayer 1998, 74-75. 140 Mayer 1998, 74-75. As illustrations of their concerns, environmental groups pointed to the case of furniture makers in Los Angeles who had moved to Tijuana to avoid installing ventilation hoods in their factories, as well as statements by Mexican investment recruiters to American businesses highlighting low regulatory compliance costs as part of their pitch to attract new investment. 98 community, when the Mexican government challenged a U.S. federal court ruling that blocked imports of Mexican tuna on the grounds that Mexican fishers did not protect dolphins as required by the U.S. Marine Mammal Protection Act (MMPA). Mexico brought its case before the GATT, alleging that the court ruling was an illegitimate barrier to free trade prohibited by the GATT. If this act could be challenged in such a
manner, environmental and public-interest groups feared that other environmental, health,
and safety standards and regulations could be vulnerable to the same kind of attack.141
These fears were confirmed in August 1991 when a GATT dispute panel found that the
American trade embargo violated the GATT’s national treatment provisions.142 The
ruling was the most visible and controversial in the GATT’s forty-four-year history.
American environmental and public-interest groups were outraged. Under a NAFTA blessed by the GATT, many groups believed that other American regulatory standards
could be threatened.143
141 Mayer 1998, 74-75. Public outcry over the increase in dolphin deaths resulting from the use of purse seines (enormous nets that are approximately one mile long and 600 feet deep) by American commercial tuna fishermen helped prompt Congress to pass the MMPA in 1972. The goal of the legislation was to reduce the rate of dolphins killed or maimed to “insignificant levels.” In 1988, Congress amended the MMPA in order to impose regulations on imports of tuna from foreign fishing vessels as well as domestic ones. Despite substantial efforts by the Mexican government to bring its tuna fishing regulations in line with American standards which had resulted in significant declines in the number of dolphin kills, because the number of American dolphin kills had fallen even more dramatically, Mexican fishing fleets were still killing dolphins at a higher rate than their U.S. counterparts. In June 1990, the Earth Island Institute, a California nonprofit organization, sued the U.S. Department of Commerce in order to compel it to enforce the MMPA’s restrictions on tuna imports. In October 1990, a U.S. District Court ordered the Secretary of Commerce to ban all tuna imports from Mexico, Venezuela, and the Pacific island of Vanuatu. For Mexico, the American tuna embargo represented an effort by a developed nation to use environmental standards to protect domestic firms from competition from producers in developing nations. In February 1991, with the support of several other countries, Mexico filed a formal complaint with the GATT. See Vogel’s (2000, 74-75) discussion of the tuna-dolphin case. 142 The panel asserted that “GATT rules do not permit signatory nations to restrict imported products on the basis of how they are produced outside their legal jurisdiction;” otherwise, “nations would only be assured of access to the markets of those countries whose regulations were similar to their own” (Vogel 2000, 74- 75). 143 For instance, since many pesticides (like DDT) that had been prohibited or suspended by the U.S. Environmental Protection Agency (EPA) were still being used by Mexican farmers, groups feared the U.S. 99
The Fast Track Fight144
The first major battle over NAFTA in the United States centered around President
Bush’s request for an extension of fast-track authority. Invented in 1974 for the Tokyo
Round of GATT, fast-track has become the standard process by which Congress delegates its constitutional authority to the president to negotiate trade and other international commercial agreements on its behalf.145 Historically, most fast-track requests had never resulted in serious confrontations between the president and Congress.
This would change with NAFTA. As Mayer (1998, 67) points out:
The process of negotiating [fast-track] authority had never been the focus of protracted political maneuvering. Indeed, outside the small circle of trade insiders, no one even knew what “fast track” was. Certainly few envisioned this previously obscure process would become a defining issue for the negotiations to follow.
The 1988 U.S. Trade Act had authorized fast-track for three years so that the president could conduct negotiations for the ongoing Uruguay Round of GATT talks. However, the Act also included a provision that would give the president two more years if he
would be unable to prevent the importation of Mexican fruits and vegetables having harmful pesticide residues, rendering years of environmental reform meaningless. 144 In the next two sections, I provide a recounting of some of the more notable events and instances of American civil society mobilization against NAFTA during the fast-track episode, the negotiations themselves (including the 1993 side agreements on labor and the environment), and the period during which groups mobilized against the entire NAFTA package’s ratification. Taking advantage of the enormous research that exists on the domestic politics of NAFTA, my intention is provide a concise history of civil society opposition to NAFTA and highlight some of the activities which civil society groups engaged in throughout the entire case. I have tried to keep these sections as short as possible; therefore, those familiar with the case may notice that I have left out discussion of certain individuals or groups (for instance, I do not discuss the opposition of 1992 presidential candidate Ross Perot or his organization United We Stand which mobilized against NAFTA). I have intentionally restricted my focus to the activities of labor, environmental, public-interest, and grassroots citizen groups. 145 Article I, section 8 of the U.S. Constitution grants Congress the power to “regulate commerce with foreign nations,” including responsibility for the content of bilateral and multilateral commercial agreements. 100 requested it, subject to a veto by a majority of either house of Congress.146 Bush needed to ask for the extension by the beginning of March 1991. By this time, a diverse array of domestic groups had mobilized to oppose the extension or demand that conditions be attached to its approval.
Organizations concerned about the environment, food safety, family farmers, human rights, worker rights, and other issues—“all newcomers to the politics of trade”— joined with more traditional opposition groups (namely, industries that stood to lose from increased Mexican competition as well as organized labor, which naturally felt threatened by the prospect of competition from cheaper Mexican labor) to contest fast-track approval.147 On January 15, 1991 a coalition of labor, environment, farm, consumer, religious, and human rights groups held an all-day forum on Capitol Hill in an effort to bring attention to their concerns about NAFTA and the extension of Fast Track authority.148 Over 400 people attended, including a huge turnout of Capitol Hill staffers and representatives of various NGOs.149 On February 21, participants from the January forum held a press conference at the Methodist Building on Capitol Hill to announce the
creation of a coalition of sixty-two environmental, labor, religious, consumer, and
146 The extension was automatic if neither the House nor the Senate voted to deny it within ninety days of the request. 147 Mayer 1998, 68. NAFTA threatened few economic sectors. In fact, “virtually the whole of American big business” stood to gain from the agreement. Thus significant opposition to the agreement would come not from traditional protectionists (import-competing sectors who stood to lose from increased foreign competition) but from the new coalition of labor, environmental, and grassroots groups. 148 The origins of this event can be attributed to the organizational efforts of Pharis Harvey, head of the International Labor Rights Education and Research Fund (ILRERF), Stewart Hudson of NWF, and Cam Duncan of Greenpeace. Harvey, Hudson, and Duncan began planning the event in mid-November 1990. The event was essentially intended to function as a congressional briefing and was sponsored by Democratic Congresswoman Marcy Kaptur of Ohio. At this time, the ad hoc coalition consisted of the ILRERF, the NWF, Greenpeace, the Natural Resources Defense Council (NRDC), the Family Farm Coalition, the Community Nutrition Institute (CNI), the United Auto Workers (UAW), and representatives of the AFL-CIO (Mayer 1998, 76). 149 While the gathering received very little mainstream media coverage, C-SPAN had been there and would eventually broadcast the forum three times. The Bureau of National Affairs International Trade Daily reported the event on January 20th (Mayer 1998, 77). 101
community groups “intent on opposing fast track authority unless the administration
agreed to address the host of social concerns they represented.” The coalition adopted
the name Mobilization on Development, Trade, Labor, and the Environment, or
MODTLE. 150
On February 21, 1991, several groups testified before a House Ways and Means
Committee hearing on NAFTA. Tom Donahue, Secretary-Treasurer of the AFL-CIO,
“issued a thundering condemnation” of fast-track for NAFTA:
This is an unusual occasion. It is not every day that a sovereign nation seeks to negotiate an agreement that is certain to destroy the jobs of tens of thousands of its citizens…We believe that the substance of the administration proposal is harmful and ill-conceived, and we believe that American workers will pay for it with their jobs…We are alarmed by the effort to limit discussion and debate, the effort to circumscribe the role of Congress in what will be a wholesale restructuring of the economy of North America.151
The CUFTA experience had provided American union leadership with an appreciation for the significance of fast-track. Union leaders knew that whether they intended to push for a better agreement or block it all-together, they would need to kill fast-track; otherwise, the Bush administration would be able to determine the terms of the agreement without any input from labor and other domestic interests, and Congress would have to essentially “take it or leave it.”152 Testifying on behalf of FoE, the NWF, and the Texas
150 Mayer 1998, 77. On February 6, many of the environmental groups participating in MODTLE had collaborated on a document called the “Environmental Agenda for Trade Policy” in which they pledged to oppose fast-track if their issues were not included in the NAFTA negotiations. The document was endorsed by the NWF, NRDC, FoE, CNI, NTC, the Institute for Agriculture and Trade Policy, Arizona Toxics Information, the Border Ecology Project, and the Texas Center for Policy Studies 151 Quoted in Mayer 1998, 78. 152 As Mayer (1998, 98) explains, fast-track authorization for CUFTA “had met no significant opposition.” However, when Congress considered the completed agreement in the spring of 1988, unions and other opponents discovered that their ability to block the agreement or to influence its terms had been severely limited by the fast-track process. “The lesson learned,” opponents of NAFTA were ready to block fast- track, recognizing that it would be “their last best chance” to derail the agreement. Moreover, “groups 102
Center for Policy Studies, David Ortman told the committee that these environmental
groups would not support fast track unless their concerns were addressed as a part of the negotiations.153 The composition of this opposition gave Democrats cause to worry.
“Union opposition was bad enough, but when joined with environmentalists and others,
the resulting coalition made Democrats very nervous.”154
While the Bush administration believed that it could win fast-track approval without the support of either labor or environmentalists, combined, the opposition would be too formidable. Environmental issues and the opposition of environmental groups to fast-track provided congressional Democrats, who wanted to support labor unions, with a
reason to oppose NAFTA without appearing to give in to union pressure. Thus,
recognizing that labor could not be bargained with, the administration decided to focus its
efforts on neutralizing the environmental issue. The administration began targeting
moderate environmental groups with the intention of splitting the American
environmental community. Daniel Esty, who worked at the EPA during this period,
provides an explanation for the reasoning behind the Bush administration’s strategy:
The environmental community breaks down on several fracture lines. Some groups are national in focus. They perceive that they have the ability to shape environmental policy. Other groups are more grassroots. They distrust national processes. The second fault line is between those in the environmental community who think that economic growth can be good for the environment and those who subscribe to the limits-to-growth model in which economic growth translates into pollution.155
seeking to link their concerns to the negotiating agenda recognized that the fast track fight represented their best opportunity to compel such linkage.” 153 Ibid. Other members of the MODTLE coalition testified as well (including Pharis Harvey of the ILRERF, Linda Golodner of the National Consumers League and the Child Labor Coalition, and Joseph Kinney of the National Safe Workplace Institute), urging Congress to ensure that the concerns which they represented be addressed in the negotiations. 154 Ibid., 79. Responding to union pressure, the Democratic National Committee would go on record in opposition to fast-track. 155 Quoted in Mayer 1998, 83. 103
Eventually, the administration would win fast-track approval by exploiting philosophical differences among the environmental community, dividing environmental groups, and defusing the environmental issues which had been linked to NAFTA (and hence, congressional opposition to fast-track).156
Until March of 1991 NWF was the leading environmental group in the fight
against fast-track. EPA and USTR officials considered the group’s initial rhetoric
“extreme.” However, after being approached by the Bush administration (along with the
NRDC, the National Audubon Society (NAS), the Environmental Defense Fund (EDF),
and the Nature Conservancy), NWF pulled out of MODTLE (arguing that the interests of
NWF and the groups comprising the coalition had become inconsistent).157 This left a
leadership void in the anti-fast-track coalition. As Audley (1997, 54-55) explains, the
NWF’s “shift toward more accommodating politics” on fast-track “left vacant the
leadership role to argue more aggressive environmental demands. Few organizations had any resources available to staff a new policy issue, and virtually none possessed the technical knowledge to engage in trade policy discussions.” Public Citizen, a public- interest group founded by Ralph Nader, would emerge as the “leading aggressive group” to represent environmental and public-interest issues in the fast-track debate, filing the leadership vacancy left by the NWF. Together with more radical and aggressive
156 This cleavage in the American environmental community would continue throughout the entire NAFTA episode. Environmental organizations which practiced a more “accommodating” form of politics included the World Wildlife Fund (WWF), the Environmental Defense Fund (EDF), the National Wildlife Federation (NWF), the Nature Conservancy (TNC), the National Resources Defense Council (NRDC), and the National Audubon Society (NAS). Groups who pursued a more “aggressive” (and uncompromising) form of politics included the Sierra Club, Friends of the Earth (FoE), and Public Citizen. One group, Defenders of Wildlife, appeared to straddle these two camps. See Audley 1997 for an excellent treatment of the environmental politics of NAFTA, especially the divisions among the environmental community. 157 Audley 1997, 54; Mayer 1998, 83-84. 104
environmental groups like FoE, Greenpeace, and the Sierra Club, Public Citizen would continue to lead the fight against NAFTA until it was finally ratified.158
During the time when NWF had begun its withdrawal from MODTLE, Lori
Wallach, a staff attorney for Public Citizen, had started attending the coalition’s weekly
meetings. Leadership of the environmental opposition quickly shifted from the NWF’s
Steward Hudson to Wallach who argued for a more proactive agenda for defeating fast-
track.159 After beginning to work more closely with other groups and individuals
opposed to fast-track reauthorization (including the AFL-CIO’s Mark Anderson and the
UAW’s Steve Beckman, and a small coalition of groups calling themselves the Fair
Trade Campaign), Wallach had by April 1991 organized the Citizen’s Trade Campaign
(CTC), a new coalition comprised largely of those lobbying groups most opposed to fast-
track.160
Thus, by the end of April 1991 divisions within the American environmental
community had “crystallized into two distinct political camps.” On the one side were groups who were conditionally supportive of fast-track, including NWF, NRDC, NAS,
EDF, and WWF. On the other side were Public Citizen, FoE, Greenpeace, and the Sierra
Club who were conditionally opposed to fast-track. As already mentioned, exploitation
158 As Mayer (1998, 84) explains, these groups were “deeply suspicious of the [Bush] administration and the business community pushing for free trade. The whole agenda was defined by the very people they had been fighting for years. To them free trade was just a backdoor way to deregulate.” The Sierra Club, Public Citizen, and FoE (along with the Council of Canadians and Canadian Labour Congress) would later lead the international campaign against the MAI and the hemispheric campaign against the FTAA. 159 Audley 1997, 55. According to Hudson, Wallach told the MODTLE leadership: “You people don’t know how to run a campaign” (quoted in Mayer 1998, 84). 160 Initially, the CTC’s executive committee consisted of representatives from FoE, the International Ladies Garment Workers Union, Amalgamated Clothing and Textile Workers Union, National Farmers Union, National Family Farm Coalition, International Union of Electricians, the Sierra Club, and Public Citizen. Originally, during the fast-track period, the CTC was known as the Citizen’s Trade Watch Campaign. Its name would later be changed after the fast-track fight. The CTC still exists and has mobilized against the MAI and is currently mobilized against the FTAA. 105 of this division enabled the Bush administration to win fast-track reauthorization.161
Bush promised congressional Democrats that he would pursue a parallel track of negotiations with Mexico on environmental and labor issues. This was apparently enough to satisfy the Democrats as well as some of the more moderate environmental organizations who had mobilized around the fast-track issue. On May 23, 1991, the
House of Representatives voted 231 to 192 against a resolution introduced by Byron
Dorgan (Democrat, North Dakota) which would have stopped fast-track extension. The next day, the Senate followed suit, voting 59 to 36 against a similar resolution introduced by Fritz Holling (Democrat, South Carolina).
The Commercial and Supplemental Negotiations and Ratification
Negotiations for NAFTA began in June 1991. The coalition of civil society groups that had mobilized to stop fast-track continued their activities and began
“shadowing the negotiators wherever they went.”162 On August 1, 1991, Friends of the
Earth, the Sierra Club, and Public Citizen filed a legal suit against the U.S. Trade
Representative (USTR), arguing that both NAFTA and the Uruguay Round of GATT were major actions that required environmental impact assessments under the National
161 On May 8, 1991 President Bush met with a small group of environmental leaders including John Adams, executive director of the NRDC; Kathryn Fuller, president of the WWF; and Frederic Krupp, executive director of the EDF. Bush assured them of his commitment to addressing environmental issues in the NAFTA negotiations, and among other things, promised to appoint five environmentalists to the trade advisory committees which would be convened for the negotiations. The group was apparently impressed and all the organizations came out in favor of fast-track approval (Ralph Nader accused them of “selling out”). On May 10, Jay Hair, president of the NWF, announced his organization’s support of the fast track in a New York Times editorial, effectively neutralizing environmental issues (as a reason to oppose fast-track) in Congress, and angering environmental groups like FoE and the Sierra Club who continued to oppose NAFTA (Mayer 1998, 90-91). 162 Mayer 1998, 126. When trade ministers met in Seattle in late August, MODTLE held a press conference nearby to draw attention to its concerns and protest its exclusion from the talks. The coalition also rented a huge weather balloon, attached an anti-NAFTA sign to it, and floated it up to the forty-fourth floor where the negotiators could see it. At the Zacatecas meeting in October, NAFTA critics held a three- day, trinational parallel forum on labor, environmental, and human rights issues. 106
Environmental Policy Act (NEPA).163 Later that month, a GATT panel ruled that the
U.S. Marine Mammal Protection Act which prohibited imports of Mexican tuna was a
violation of GATT obligations.164 For many environmental and public-interest groups
opposed to NAFTA, having now seen GATT “actually declaring that a U.S.
environmental law must go,” the outcome of the tuna-dolphin case between the U.S. and
Mexico represented what Public Citizen’s Lori Wallach described as the “smoking gun,”
proving that liberal trade agreements were a threat to the regulatory autonomy of
states.165 The outcome of the case only served to intensify these groups’ opposition to
NAFTA and their willingness to mobilize against it.
In March 1992, a leaked draft of the NAFTA negotiating text from the Dallas meetings became public when it was published by the Washington journal Inside US
Trade. The leaked text became a “lightening rod,” further intensifying civil society mobilization and momentarily reuniting the environmental community. Public Citizen’s
Lori Wallach described the draft text as a “little lost baby” that had showed up “on the doorsteps of citizen activists of all three countries, with a little tag that said ‘liberate me.’”166 For the first time, Mayer (1998, 133) explains, civil society groups “that had
been outside of the negotiations could see what was going on inside. They did not like
what they saw.” The Sierra Club’s John Audley summed up the views of many in civil
society:
163 Public Citizen president Joan Claybrook asserted that an assessment was necessary because the “United States negotiators are so closely intertwined with the needs and wishes of big business” (Quoted in Mayer 1998, 127). While the case was eventually decided in favor of the government and ultimately failed on appeal, it served to attract more media attention to the linkage of environmental issues to NAFTA, enabling anti-NAFTA groups to broaden the scope of their opposition (Audley 1997, 75-76, 146). 164 See discussion on p. 90-91 above (as well as notes 136 & 137). 165 Quoted in Mayer 1998, 128. 166 Ibid., 133. 107
It’s pure and simple, the document does not pay any attention to anything but expanding trade…The best you get is meaningless language or no mention of the environment. Yet when you get to the sections about environment and health, such as food standards, you get [precise] language to protect economic activity from environmental standards.167
NAFTA was completed on August 12, 1992 right in the middle of the U.S.
presidential election. In Canada, labor unionists, environmentalists, nationalists, and a
majority of the general public appeared to be “solidly opposed” to the finished
agreement. Bob White, president of the Canadian Labour Congress (CLC), declared that the Mulroney government had shown “nothing but contempt” for Canadian citizens by pursuing NAFTA.168 The CLC was joined by the Council of Canadians and Action
Canada (previously the Pro-Canada Network), a coalition of forty environmental, labor, and other citizen groups. The reaction was much the same among civil society groups in the United States as those groups that had opposed fast-track and continued to oppose
NAFTA during the negotiations came out in opposition to the final product.
During the remaining part of August and much of September, the Bush administration struggled to finish the parallel track of negotiations on labor and environmental issues with Mexico which he had promised as a condition for receiving extension of fast-track, but by the end of September, Bush was running well behind
Governor Clinton in the polls and time was running out to complete the NAFTA package.
Many environmental groups that had given Bush their support on the fast-track began to recognize that they might be able to get a better deal from Clinton (if he were to win the presidency), and so many withheld their support for Bush’s package. Candidate Clinton was initially silent on NAFTA, but eventually, came out in support of the agreement.
167 Ibid., 133. 168 Ibid., 143-144. 108
However, while declaring his approval of the commercial agreement itself, Clinton
promised to renegotiate side agreements with both Mexico and Canada on both labor and
environmental issues if elected.
After Clinton’s election, labor and environmental issues became central in the
NAFTA debate as the U.S. prepared to launch negotiations with Canada and Mexico on the side agreements which Clinton had promised during the election. Labor and environmental groups were initially hopeful that Clinton would push for the inclusion of
new international social and environmental standards in the supplemental agreements
(creating a “social charter” that would be akin to standards established by the European
Union). However, the Clinton administration concluded that Mexico’s existing labor and
environmental laws were good enough, and U.S. negotiators largely pursued a
mechanism through which “national enforcement of national laws” could be ensured so
as to make certain that Mexico could not relax its existing social and environmental
regulations in order to attract investment.169
The side negotiations began in March 1993. On March 4, a group of 21
grassroots organizations, including Defenders of Wildlife, the Center for International
Environmental Law, Friends of the Earth, the Sierra Club, and Public Citizen, sent
Mickey Kantor, the new USTR, a letter outlining their position on the environmental side agreement:
169 Mayer 1998, 168-169. The political problem facing the Clinton administration with regard to negotiating the supplemental agreements essentially boiled down to a matter of how far the side agreements would (or could) go. Civil society groups on the left wanted the agreements to have “teeth”—effective enforcement mechanisms (possibly the use of economic sanctions) while Republicans and business interests on the right did not want Clinton to go “too far” with the agreements, preferring something much weaker. Moreover, Mexico and Canada would only be willing to accept so much in these areas. 109
We support a NACE [North American Commission on the Environment] that will possess investigative, monitoring, and enforcement powers…as well as serve as a mechanism for meaningful public participation…Enforcement is a crucial issue. We should not subject U.S. citizens to economic, health, safety, or environmental injury as a result of weak enforcement of standards elsewhere…Sanctions, including both trade and nontrade measures, must be available to ensure compliance.170
Similarly, American labor groups desired a strong labor side agreement that would serve
as a social charter, establishing common international rights and standards that would be
enforceable through domestic courts and, if needed, through the use of international
sanctions.171 On March 25, the Citizen’s Trade Campaign, having by now grown into a
coalition of seventy consumer, environmental, agriculture, labor, and citizen’s groups fundamentally opposed to NAFTA, rallied in Washington, D.C.172 On April 13, the CTC
issued a public statement which asserted that NAFTA needed “a dramatic recasting by
the Clinton Administration if it is to promote and protect the environment, workers,
consumer health and safety, agricultural and rural communities, as well as reflect
democratic decision-making.”173
Throughout the rest of 1993, many civil society groups remained mobilized
against NAFTA and continued their efforts to defeat the agreement regardless of the
outcome of the supplemental negotiations. Among labor groups, the Teamsters, the
textile and garment unions, the electrical workers union, and the glass union took an
aggressive stance toward NAFTA, while state and local union chapters launched their
own campaigns (including rallies, phone calls, and personal visits to Congress) largely
170 Quoted in Mayer 1998, 177. 171 Mayer 1998, 178. 172 Mayer 1998, 185-186. Both Ralph Nader and Democratic Congressman Dick Gephardt addressed the rally. 173 At a press conference held for the announcement of the statement’s issuance, FoE spokesman Brent Blackwelder stated that any “trade agreement which does not embody these principles paves the way for social disruption and environmental decline” (Quoted in Mayer 1998, 186). 110
independent of national efforts.174 The Citizen’s Trade Campaign, by now, a
extraordinarily broad coalition of groups, continued its activities against NAFTA,
working closely with the Alliance for Responsible Trade (ART), which had become the
successor to the original anti-NAFTA coalition MODTLE. The CTC’s strategy was to
build grassroots opposition and place pressure on members of Congress, particularly
when they were in their home districts on recess. On May 1-9, the CTC orchestrated a
“National Week of Action for Fair Trade,” which included rallies and events in New
York City, St. Louis, Seattle, and elsewhere.175
The supplemental negotiations were finished on August 13, 1993. The reaction
from civil society was predictable. The CTC held a press conference at the National
Press Club to give its reaction to the completed side accords. CTC chair Jim Jontz176 summed up the coalition’s views on the side agreements:
These side deals aren’t half a loaf. In fact, they aren’t even half a slice. NAFTA is fundamentally an agreement to protect investors, to encourage them to go to Mexico to take advantage of low wages and lax environmental standards and enforcement. And nothing in the side agreements announced this morning will fundamentally change that. NAFTA is still a bad agreement for workers. It’s still a bad agreement for the environment, it’s still a bad agreement for family farmers, it’s still a bad agreement for consumers.177
174 The AFL-CIO officially launched its “Not This NAFTA” campaign in early May 1993, employing billboards, radio ads, posters, and other media. Yet as Mayer (1998, 226) notes, the AFL-CIO leadership “continued to debate whether to launch an all-out campaign against the agreement. The ambiguity of this stance resulted in fewer resources being devoted to the campaign.” Frustrated by the AFL-CIO’s “less than total commitment,” more activist unions “gravitated toward the Citizen’s Trade Campaign.” 175 Mayer 1998, 226-229. Local organizers in Colorado set up a “tractorcade/truck convoy” between Colorado Springs and Denver, while a similar car caravan and tractorcade was held in Minnesota. Throughout the country, anti-NAFTA organizers held rallies, conferences, chili dinners, and other events to advertise their opposition. 176 Jontz was a former Indiana Congressman. 177 Quoted in Mayer 1998, 204 (my emphasis). Jontz was joined at the press conference by Willie Baker of the United Food and Commercial Workers Union, Bill Bywater of the International Union of Electronic, Electrical Salaried Machine and Furniture Workers, Ron Carney of the Teamsters Union, Evie Dubros of the International Ladies Garment Workers Union, Bill Lucy of the American Federation of State, County, and Municipal Employees, Lori Wallach of Public Citizen, Jane Perkins of Friends of the Earth, and Mike Dunn of the National Farmers Union. 111
With a congressional ratification vote coming up in November, in August of 1993,
American civil society groups intensified their efforts to kill NAFTA. Across the
country, groups expressed their opposition to the agreement by organizing town meetings, holding rallies, and mounting phone-call campaigns directed at congressional offices. In September 1993, the CTC launched its fall campaign to defeat NAFTA and purchased two full page ads in the New York Times and Washington Post which described
NAFTA’s “eight fatal flaws.” However, despite the efforts of American civil society,
NAFTA would ultimately be ratified by the U.S. Congress.
Assessing Civil Society Mobilization against CUFTA and NAFTA
Having now provided an account of civil society mobilization in the United States and Canada against NAFTA and its predecessor CUFTA, we are now in a position to ask how the explanation for civil society mobilization outlined in the previous chapter fares in these two related cases. Compared to other free trade agreements negotiated under the
GATT, both CUFTA and NAFTA were more comprehensive, covering more trade and addressing more barriers than any other previous agreements. One of the major outcomes of CUFTA was Canada and the United States’ submission to bilateral dispute resolution mechanisms. CUFTA was also notable for its inclusion of and attempt to liberalize investment. It essentially marks the beginning of the shift in the object of legalization from an exclusive concern for trade to an increasing emphasis on investment. NAFTA extended and substantially expanded CUFTA’s innovations in these areas.178 Both
agreements were highly legalized, entailing a substantial degree of obligation, containing
178 In the next chapter I will discuss how NAFTA built upon CUFTA’s treatment of dispute resolution and investment. 112
enormous precision in their rules and provisions, and delegating a significant amount of
independent decision-making authority to external (quasi-judicial) institutions.
Ultimately, however, the legalization of trade and investment liberalization
represented by these two commercial agreements cannot fully explain the intense
mobilization of American and Canadian civil society groups against CUFTA and
NAFTA. At the end of the day, the reasons behind North American civil society’s
opposition and mobilization to stop these two agreements had more to do with civil
society’s concerns about the anticipated effects of liberalization itself rather than the effects of legalizing liberalization. Canadian civil society groups instinctively construed
CUFTA as a threat to their nation’s sovereignty, political independence, culture, social programs, and jobs. They viewed NAFTA as an unwanted extension of this threat. With the exception of labor unions, American civil society groups largely ignored CUFTA.
However, they interpreted NAFTA within the context of the maquiladora experience and believed that trade and investment liberalization would only serve to intensify the problems created by the maquiladoras (i.e., American job losses and environmental degradation along the U.S.-Mexican border). They also viewed the agreement as having the potential to increase capital flight to Mexico where labor and environmental standards were significantly lower and laxly enforced, resulting in downward harmonization of regional standards or, in other words, a “race to the bottom.”
Ultimately, American and Canadian civil society groups found themselves in a low-information environment. Legalization of the North American trade and investment regime was basically just beginning and had not yet taken place. Therefore, civil society groups essentially had to base their decisions to mobilize on rough estimations of the 113
likely effects of liberalization. Labor groups in both countries reasoned that
comprehensive trade agreements would inevitably result in job losses—by their very
nature, comprehensive agreements create short-term “winners” and “losers.” They could
also create downward pressure on wages by giving businesses a tool with which to
combat unions bargaining for higher wages.179 Without a text that would enable them to
determine who would win and who would lose (i.e., the distributional outcome of the
agreements), it made more sense for labor unions to stick together and mobilize early
against any agreement (and at the very least, pressure their respective governments for
some form of insurance—in the form of adjustment programs—against resulting
dislocations). Thus, labor groups in both countries would have probably mobilized
against any agreement whether it was highly legalized or not. Environmental and public-
interest groups found themselves in a similar, if less certain, situation and felt compelled
to mobilize so as to ensure that their interests were represented in the content of the
agreements.
Nonetheless, despite the fact that civil society groups in Canada and the United
States found themselves in a low-information, pre-legalization environment, the CUFTA
and NAFTA cases do provide some evidence in support of the legalization explanation put forth in chapter two. Three points are worth discussing. First, we can examine the effect which acquiring the text of an agreement had on civil society mobilization. As explained in the previous chapter, in order for civil society groups to reduce the information costs associated with the decision to mobilize, they must have access to an agreement’s text in order to take advantage of the precision (and hence, increased
179 By relaxing trade and investment barriers, CUFTA and NAFTA would make threats to move operations or plants elsewhere (on the part of management) more credible. 114
information) which legalization affords. Throughout the CUFTA and NAFTA
negotiations, civil society groups complained about the secrecy with which negotiators
conducted their talks and demanded access to the content of the agreements. As Hart
(1994, 343) explains, in the case of CUFTA and Canadian civil society opposition to this
agreement:
After two years of debate, critics of the initiative were not content to take the bare outline of an agreement as sufficient. They pointed out that the elements did not take them very far. Supporters were equally skeptical if less vocal in their views. In order to come to some judgment about the deal, both sides needed the detail that only a legal text could supply…Without such detail…the debate continued to be based on general views as to whether any agreement was desirable [my emphasis].
Throughout the CUFTA talks, negotiators had agreed that no text should be finalized in a
formal sense until the end of the negotiations because it could be leaked, attracting the
attention of special interest groups, lobbyists and their friends in Parliament and
Congress; in other words, a formal draft text would have further provoked domestic
mobilization in both countries. NAFTA negotiators worked under the same assumption.
It would appear that they were right to assume this. For instance, after a draft text of
NAFTA was leaked in the United States, the number of civil society groups mobilized against the agreement increased significantly while those groups who were already mobilized against NAFTA redoubled their efforts and refined their arguments against the
agreement.180
180 An illustration of the effect which access to the text may have had on the number of groups mobilized against NAFTA can be seen in the growth of the Citizen’s Trade Campaign. Prior to the leaking of the draft text in March 1992, the CTC encompassed roughly seventy consumer, environmental, agriculture, labor, and citizen groups (however, this number may actually be lower). By September 1993, the CTC included approximately 300 environmental, labor, community, agriculture, human rights, consumer, and other grassroots citizen groups, claiming a collective membership of more than five million individuals. 115
Second, in the case of NAFTA, American civil society groups were quick to pick
up on the shift in the agenda of liberalization (and the legalization of liberalization) which
both CUFTA and NAFTA represented—namely, an increasing emphasis on the
legalization of investment liberalization. Despites its being touted as a free trade
agreement by its proponents, labor, environmental, and public-interest groups all
recognized NAFTA as essentially an investor rights agreement intended to make it easier for transnational capital to move across national boundaries.181 For these groups,
NAFTA was just another part of the neoliberal agenda that had been ushered in by the
Reagan administration and an additional means through which deregulation could be
furthered. This conclusion was only reinforced after groups got their hands on the actual
negotiating text.
Finally, implicit in all of the arguments of civil society groups who opposed
CUFTA and NAFTA was an appreciation for the fact that each of these agreements would entail a significant degree of obligation. This would mean that national sovereignty and regulatory autonomy could be significantly constrained in some form or another. Beyond this, however, groups had only the vaguest idea of the degree of obligation the agreements would demand or how sovereignty and autonomy could be effected (or undermined). Nor did groups have a grasp of the precise elements and provisions of the agreements. Their mobilization was largely a function of fear, uncertainty, and an inherent hostility toward the idea of liberalization. Nevertheless,
during the negotiation of NAFTA, civil society groups in the United States (as well as
Canadian groups who were also paying attention) did learn the first lesson regarding the
181 For instance, CTC chair Jim Jontz described NAFTA as “fundamentally flawed” and designed to “serve the interests of multinational corporations and not average citizens” (quoted in Mayer 1998, 227). 116
effects of delegation which legalization of trade and investment regimes entails. The
GATT dispute panel’s decision to rule in favor of Mexico (over the U.S.) in the tuna- dolphin case would finally provide civil society groups (especially environmental and public-interest groups) with the “smoking gun” which they had been searching for. From the perspective of civil society, the panel’s decision had essentially nullified a democratically enacted domestic regulation, throwing years of environmental lobbying down the drain in an instant and calling into question the regulatory autonomy and national sovereignty of a democratic government.
Ultimately, American civil society groups were unable to identify a mechanism in
NAFTA similar to the GATT’s dispute settlement instruments prior to the agreement’s ratification (though many groups such as Public Citizen suspected that such a mechanism would, in fact, be included in the agreement). However, two years after the agreement
went into effect, both Canadian and American groups would learn an even more
disturbing lesson about NAFTA’s investment chapter and its own dispute resolution
mechanisms—a lesson which would largely overshadow those of the tuna-dolphin GATT
case. I take up this topic in the next chapter.
In conclusion, this chapter has examined the origins of North American civil
society’s opposition to trade and investment liberalization. It has focused on the
activities which mobilized groups engage in when trying to effect the outcome of
important political decisions by their governments such as the decision of whether or not
to negotiate or sign on to an international trade and/or investment agreement. In contrast,
the focus of the next chapter, while not neglecting the activities of mobilized groups, will
instead be on the arguments which mobilized groups put forth as explanations for their 117 mobilization and opposition. I will attempt to show that the reasons for which civil society groups have continued to mobilize within the area of trade and investment policy have come to center on the legalized aspects of trade, and especially, investment liberalization. Finally, in terms of the dimensions of mobilization identified in chapter two, it must be noted that both the CUFTA and NAFTA cases establish a rather high baseline from which to measure changes in the mobilization of North American civil society. In both cases, the number of groups that mobilized was relatively large
(especially when one considers the fact, with the exception of labor unions, many of these groups had never before mobilized in this policy domain). Moreover, a diverse collection of groups mobilized and many of these groups engaged in a wide range of activities in pursuit of their political goals. Nonetheless, in the final two chapters of this thesis, I will attempt to marshal evidence showing that the mobilization of North American civil society has, in fact, grown—primarily in terms of the number of groups who have mobilized—since the conclusion of NAFTA. 118
CHAPTER 4
THE CONTINUING MOBILIZATION OF CIVIL SOCIETY: LESSONS LEARNED
AND APPLIED TO THE MAI, SEATTLE, AND THE FTAA
In this chapter I examine the mobilization of North American civil society within
the domain of trade and investment policy in the years directly following the
implementation of NAFTA.182 Although Canadian and American civil society groups failed to stop NAFTA (and its predecessor CUFTA), many groups continued to observe and follow developments within the trade and investment policy sphere afterwards, while at the same time, other groups who had not mobilized against either CUFTA or NAFTA began to take an interest in their governments’ foreign economic policy. In 1997 these groups discovered the existence of what many immediately perceived as a new and potentially even more perilous threat to their collective interests—the Multilateral
Agreement on Investment (MAI). Immediately prior to learning of the MAI, civil society groups had begun to finally discern the true nature of NAFTA’s investment provisions as the first investor-to-state disputes under NAFTA’s Chapter 11 began to surface. As a result, groups instantly recognized the MAI for what it was—an expansion of Chapter 11, which, if completed and ratified by their respective governments, would extend the legalized investment model of NAFTA to the entire developed world. Thus, as they had
182 NAFTA went into effect on January 1, 1994. This chapter looks at civil society mobilization from 1994 through 2001. 119 done in the cases of CUFTA and NAFTA, American and Canadian civil society groups rapidly mobilized to stop the MAI.
By the end of 1998, the MAI was ostensibly dead, having been abandoned by the countries who had spent over three years negotiating it. Whether or not “global civil society” was responsible for the MAI’s demise, civil society groups across the globe claimed credit for the agreement’s death. However, the story did not end there. Having reason to believe that a similar investment agreement would soon be introduced in the
World Trade Organization (WTO), American and Canadian civil society groups made preparations beginning in the spring of 1999 to “crash” the WTO’s third ministerial meeting which would be held in Seattle that winter. Determined to prevent the introduction of legalized investment rules to the WTO’s negotiating agenda and wishing to vent their anger toward an institution which they believed was fundamentally undemocratic and a threat to the public good, civil society groups took to the streets of
Seattle at the end of November 1999.
The Seattle episode would soon be relived roughly a year and a half later in
Quebec City, as civil society groups again hit the streets—this time, taking their fight to the Summit of the Americas where trade ministers from the entire Western hemisphere had met to continue ongoing negotiations for the Free Trade Area of the Americas
(FTAA). Again, knowing that NAFTA’s Chapter 11 (and possibly remnants of the defunct MAI) would likely be included in a hemispheric extension of NAFTA, investment was chief among the concerns which groups had about the FTAA. Since
Quebec, civil society groups in the United States and Canada have continued to watch developments in the policy area of trade and investment and have remained mobilized 120
against the FTAA and the extension of the legalized investment model contained in
NAFTA.183
In this chapter I examine the mobilization of North American civil society groups
against the MAI, WTO, and FTAA. The chapter’s primary focus is on the MAI. While the previous chapter’s discussion of civil society’s opposition to CUFTA and NAFTA provided a general account of the activities which groups undertook in their efforts to defeat these agreements, this chapter will emphasize changes in the kinds of arguments which mobilized civil society groups put forth against subsequent commercial agreements and institutions. While not neglecting the activities mobilized groups have engaged in since NAFTA, this chapter will show how the process of legalization has resulted in the criticisms of civil society becoming increasingly based on the legal aspects of liberal commercial agreements and institutions. I will argue that this is largely a consequence of the increased information which the process of legalization provides groups with regarding how liberal agreements and institutions affect their collective interests. I begin this analysis with a discussion of NAFTA’s Chapter 11 (which is resumed later in the chapter), including a brief history of one of the initial and most controversial cases brought under Chapter 11’s investor-to-state dispute settlement instruments. This discussion provides the context for North American civil society’s mobilization against the MAI and FTAA.
183 American and Canadian civil society groups have also turned their attention to other efforts to extend the NAFTA investment model—particularly, efforts to incorporate legalized investment rules into the International Monetary Fund (IMF) charter and as part of revisions to the General Agreement on Trade in Services (GATS). They have also begun to monitor efforts to extend NAFTA to the countries of Central America through a Central American Free Trade Agreement (or CAFTA). 121
Chapter 11: NAFTA’s Dirty Little Secret
On September 10, 1996, the Ethyl Corporation, a Virginia-based chemical company, notified the government of Canada that it would sue the government for compensation under NAFTA’s investment chapter if the Canadian Parliament voted to impose a ban on the import and inter-provincial transport of MMT, a gasoline additive which the company produced.184 In April 1997, Parliament passed the ban. On April 14,
Ethyl followed through with its threat, filing one of the very first NAFTA Chapter 11 investor-to-state claims against the Canadian government for $251 million in damages at the United Nations Commission for International Trade and Law (UNCITRAL).185 Ethyl
184 Ethyl was the inventor of the chemical additive (tetraethyl lead) used to make leaded gasoline, which it began producing in 1922. In the 1950s, Ethyl developed a new gasoline additive called methylcyclopentadienyl manganese tricarbonyl (MMT), an anti-knocking agent used to enhance octane and improve engine performance. MMT contains manganese which is a known human neurotoxin. In 1977, MMT was banned from use in unleaded gasoline by the state of California and by the U.S. Environmental Protection Agency due to environmental and public health concerns. According to a report issued by Public Citizen (2001, 8), although “little was known about the specific dangers posed to the public from manganese particles coming out of the tail pipes of cars burning fuel containing MMT, the dangers of inhaling manganese have been known since the 1800s. Airborne manganese has been found to cause disabling neurological impairments and symptoms similar to Parkinson’s disease in manganese miners. A series of occupational studies of battery plant workers, steelworkers and other workers conducted in the 1990s was characterized in a public health journal as ‘compelling evidence of neurotoxicity associated with low-level occupational exposure’ to manganese in the air.” Canadian legislators wanted to ban the use of MMT for two reasons. First, Canada was working to tighten vehicle emissions standards. Auto manufacturers were recommending against the use of MMT because of concerns that the additive damaged the proper functioning of catalytic converters, emissions diagnostics, and other devices in automobiles that help control auto emissions. Legislators were concerned that MMT could undermine Canada’s efforts to control air pollution. Second, although the potential hazards to human health were not fully known, legislators were concerned about the potential health effects of exposing workers and drivers to airborne manganese particles via MMT. Ethyl, who produces MMT in concentrated form in the U.S. and imports it into Canada (where it is diluted and sold to Canadian gasoline refiners) through its Canadian subsidiary, is the only manufacturer of MMT. Under the provisions of the Canadian Environmental Protection Act, legislators could not ban the use of MMT in gasoline. However, because Ethyl is the only company who produces MMT, a ban on the import and inter-provincial transport of the substance would effectively remove MMT from the Canadian gasoline market by preventing Ethyl from exporting its product to Canada. 185 Ethyl’s case was actually not the first Chapter 11 case to be filed; two other cases were filed before Ethyl’s. However, Ethyl was the first company to threaten a Chapter 11 suit and its case was the first to receive substantial public and media attention in the U.S. and Canada causing many domestic groups to perceive it as the first such case. 122 argued that the ban on MMT was a violation of NAFTA’s Article 1110 which establishes rules for the expropriation of an investment. Article 1110 provides that no party
may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment except: (a) for a public purpose; (b) on a non-discriminatory basis; (c) in accordance with due process of law and article 1105(1)186; and (d) on payment of prompt, adequate and effective compensation.”187
By placing a ban on the import of MMT, Ethyl essentially argued that the Canadian
Parliament had taken an action that was “tantamount” to an expropriation of the company’s assets.188 Ethyl also argued that the MMT ban violated NAFTA’s Article
1102 rules which require “national treatment” for foreign investors.189 Because it banned
imports, but not local production of MMT, the measure discriminated against Ethyl as a
foreign investor. Finally, because the transport ban would effectively require Ethyl to
build a factory in every Canadian province in order to comply with the measure (and thus
establish an MMT investment in Canada), Ethyl claimed that the ban was a “performance
requirement” prohibited under NAFTA’s Article 1106.190
186 Article 1105(1) establishes a “minimum standard of treatment” for foreign investments, stating that each “Party shall accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment and full protection and security.” 187 My emphasis. See Harbine 2002, 377, and Jones 2002, 533. According to Jones, the payment “must be made without delay, valued at the fair market value the day prior to the expropriation—taking into account any negative effects on the value of the property from imminent expropriation—and in a G7 currency.” 188 Ethyl claimed that the ban resulted in an anticipated loss of future sales of MMT. Ethyl even claimed that the legislative debate itself (on whether to impose the ban) constituted an expropriation of its assets because public criticism of MMT damaged the company’s reputation. 189 Article 1102 states that “each NAFTA Party must accord investors of the other Parties, or their investments, treatment no less favorable than the treatment it accords its own investors and their investments.” 190 Article 1106 forbids NAFTA Parties from “attempting to gain host-country benefits by imposing ‘performance requirements’ on foreign investors” (Jones 2002, 532). According to Jones, examples of performance requirements by a host country that are not permitted include “mandatory export levels by the investor, mandatory domestic content levels in the products produced by the investor and mandatory purchase of goods or services from persons in the host country’s territory by the investor.” 123
For years civil society groups in the United States and Canada (and elsewhere)
had argued that trade and investment agreements such as GATT and NAFTA were a
threat to national sovereignty, especially the regulatory autonomy of governments. Yet
their arguments were largely based on the “race to the bottom” thesis, which was merely
an inference of the likely consequences of increased capital mobility which trade and
investment liberalization would facilitate. However, many groups were also convinced
that liberal agreements could be used by other governments to directly attack a country’s
laws and regulations through an agreement’s dispute resolution mechanisms. Proof of
this had emerged in 1991 during the NAFTA negotiations in the form of a GATT dispute
panel ruling which declared an American law banning tuna imports from countries that
killed more than 20,000 dolphins annually during tuna catches a violation of the U.S.’s
commitments under GATT.
American and Canadian civil society groups knew that a similar state-to-state
dispute resolution mechanism was contained in NAFTA191, but they failed to notice or
grasp the significance of the investor-to-state dispute settlement provisions contained in
the agreement’s investment chapter. The Ethyl case (and the cases which followed)
would come as a dramatic wake-up call about the consequences of Chapter 11. After
Ethyl made its initial threat against the Canadian government, American and Canadian
civil society groups went back to the NAFTA text and began carefully scrutinizing
Chapter 11. They did not like what they found. Enraging environmental and public-
interest groups, the Ethyl case would finally provide civil society groups opposed to
191 Abbott (2000, 520) asserts that NAFTA’s state-to-state dispute resolution mechanisms (which are contained in Chapters 19 and 20) represent “a moderate degree of delegation of decision-making authority.” Thus, NAFTA’s state-to-state dispute settlement instruments are actually weaker than those of the WTO. However, as will be discussed shortly, NAFTA’s Chapter 11 delegates a relatively high degree of decision-making authority in the case of investor-to-state disputes. 124
NAFTA with the “smoking gun” which they had long been searching for— incontrovertible proof of the danger posed by the agreement.
NAFTA’s Chapter 11 basically represents the most recent and notable instance of
a growing trend in the legalization of international economic relations. As MacDonald
(1998) points out, over the course of the past thirty years, “there has been a clear trend
toward protecting the rights of investors in other states [through] bilateral international
treaties.” This trend represents a gradual departure from the days of so-called “gun boat
diplomacy” during the eighteenth and nineteenth centuries, when colonial powers
frequently “resolved disputes in foreign investment matters by imposing their will upon
their subjected colonies either by implied or actual force.”192 The UN Charter outlawed
the use of force in settling foreign investment disputes. As Jones (2002, 529) explains,
prior to the enactment of the Charter, “disputes were commonly waged between states because private investors lacked standing under international law:
If private investors sought action against a foreign state, the investors had to rely on their home governments to bring the claim in accordance with an international dispute resolution treaty, assuming the two countries were a part of a bilateral or multilateral agreement. Unfortunately for investors, the home government was under no obligation to bring the claim, and few investors were able to obtain relief. This lack of representation for private investors was one of the biggest reasons why NAFTA included Chapter 11 investor-to-state dispute resolution. Too often under the old system investors had no recourse, so Chapter 11 was created to act as a “shield” for foreign investors who needed a mechanism to protect their interests from host nations.
Chapter 11’s investor-to-state dispute resolution provisions, particularly the allowance of “direct access” to dispute settlement instruments for private investors, essentially rest upon two historical underpinnings. First, the development of the
192 Jones 2002, 529. 125
International Center for the Settlement of Investment Disputes (ICSID) in 1966 and the
UNCITRAL Model of Law on International Arbitration in 1985 “enabled private investors to bring claims before binding arbitral bodies without dependence upon their home governments. These arbitral bodies established arbitration rule regimes that parties could rely on to solve international investment disputes.”193 Second, in the past three
decades there has been a “veritable explosion” in the number of Bilateral Investment
Treaties (BITs) which various different countries have negotiated among themselves.
BITs, many of which contain binding arbitration clauses (either under ICSID or
UNCITRAL rules), “have in and of themselves created the current international
investment regime.”194 As of 1998, over 160 countries had entered into at least one BIT
with over 1,300 BITs in total having been signed.195 Thus, despite the claims of Chapter
11 critics that the investor-to-state dispute settlement instruments contained in NAFTA
represent a “radical departure from established norms in the area of investor dispute
resolution, the concept of direct access is not without precedent.”196 Defending Chapter
11’s dispute resolution regime, Haigh suggests that
NAFTA’s Chapter 11 is, in essence, a tri-lateral investment treaty grafted onto an arrangement which is otherwise largely directed at establishing liberalization and fairness in the trade of goods and services…[A]s an investment treaty, it has simply followed the already well-established model for investor-state dispute resolution.197
193 Jones 2002, 530. 194 Ibid., 530. The arbitration clauses of BITs have developed as a result of the prohibition on the use of force for the protection of foreign property and the assumption that liberal economic theory requires a legal system to protect foreign investment (this point will be addressed below). 195 Ibid., 531. Other authors writing on this subject have put the current total number of BITs at around 1,600, although some suggest that by now the number is closer to 2,000. 196 Ibid., 531. 197 Quoted in Ibid., 531. Haigh claims that Chapter 11 dispute resolution essentially creates a “bargain between host states and investors.” As Jones explains, investors “agree to invest in the host country with the understanding and assurance that they will enjoy the basic standards of fairness outlined in Section A of Chapter 11.” 126
Chapter 11 also represents an expression of the current consensus among many
governments and economists that trade and investment are interdependent and have
become inextricably linked, and that in order to achieve the benefits of economic
liberalization, investment barriers must be addressed as comprehensively as trade
barriers. As Thomas Kierans explains, “a key item” on the “formal liberalization
agenda” has become “the codification of relations between states and foreign investors.”
Policymakers have arrived at the belief that such a codification is “an essential
complement to the existing elaborate rules governing trade flows.”
This is because trade and investment, instead of being substitutes, increasingly compliment each other—that is, open trade functions better with an open investment regime. Another, related, reason is that fostering trade in services— the fastest growing component of modern economics—requires credible rules underpinning investment, the principal means through which services are transacted. Indeed, service providers like all investors, must be assured that they have “access” to a particular market and that the rules governing their “presence” in that market are transparent.198
In order to “harness the advantages of globalization,” proponents of liberalization argue, investment rules like those contained in NAFTA’s Chapter 11 are necessary.199
By giving investors direct access to dispute settlement instruments, NAFTA went significantly beyond CUFTA’s treatment of investment.200 While the principles and
norms (e.g., national treatment) as well as many of the rules of Chapter 11 were
essentially based on those found in CUFTA’s own investment chapter, Chapter 11 went
further by providing investors the means of enforcing these obligations without appealing
198 For further discussion of the the global economy’s “need” for investment rules, see the collection of essays found in Sauve and Schwanen (1996), from which Kierans comments are taken (in the forward, vii). See also OECD 1996. 199 For instance, see Schwanen (1996). 200 See the discussion of CUFTA’s treatment of investment in chapter three. 127
to their home government.201 Thus, Chapter 11 represents a much more binding set of
commitments than CUFTA’s investment chapter because of the radical decision-making
procedures it provides for enforcement of these commitments.
While the United States has been among one of the leading proponents of
investment obligations, having entered into hundreds of BITs, for Canada, acceptance of
Chapter 11’s obligations represents a significant departure from its previous policy
stances in the area of investment. First, as MacDonald (1998) notes, prior to its
acceptance of Chapter 11, Canada had “adhered to the more traditional view that nation-
states, and, under some circumstances, international organizations, are the appropriate persons to make claims based on international law in international tribunals, but that nationals, either individual or corporate, are not.” Second, the government of Canada had in the past been “loath to enter into either bilateral or multilateral treaties guaranteeing investment.”202 As MacDonald explains, this “reluctance was in no sense because of
hostility to international investment.”
It is not investment itself which has been the source of the Canadian reluctance, although there has always been a spirited national debate as to the potential risk of loss of control that investment might bring. Rather, it is the structure of the Canadian constitution, specifically the distribution of powers between the national and provincial governments, which has caused the government of Canada to hesitate in making international commitments to protect foreign investment…The Canadian government has the power to enter into treaties with foreign states on behalf of Canada as a whole, but the Canadian Parliament has no power to carry such treaties into effect within the country where the subject matter of the treaty and the enactment falls within the jurisdiction of the provincial governments.203
201 CUFTA relied on a more traditional state-to-state dispute resolution mechanism. No investment disputes were ever initiated by Canada or the United States under CUFTA in the six years that it was in effect before NAFTA was implemented. 202 As MacDonald (1998) points out, relative to other developed countries, “Canada has been slow to accept the obligations of such treaties. 203 As MacDonald (1998) explains, the changes to Canada’s constitution in 1982 “put important restraints on the freedom of action of both the federal and provincial governments in the field of civil rights. But, they did not impose rights comparable to those of American constitutional law in favour of the owners of 128
With its acceptance of Chapter 11, the federal government of Canada has apparently abandoned its reluctance to undertake comprehensive international obligations to protect
foreign investment.
The controversy which has surrounded Chapter 11 is due to the kinds of claims
which have been brought under its provisions. As Jones (2002, 527) notes, “Chapter 11
proceedings have resulted in broader interpretations and far wider applications of the
statutory framework than many of the NAFTA’s drafters envisioned.” As Mann
suggests, it is “increasingly apparent that the private rights of foreign investors are being
used not as a defensive protection against government abuse because an investor is a
foreign-owned company, but as a strategic offensive threat to be wielded against
government decision-makers rendering or considering decisions adverse to the interests of the company involved”—namely, a company’s profits.204 Thus, rather than being used
as a “shield,” Chapter 11 has become a “sword” to be brandished by corporations whose
bottom lines might be hurt by a host government’s exercise of its sovereign regulatory
powers. All of this is a direct result of the delegation of decision-making authority to
external institutions (i.e., arbitration tribunals) and the granting of direct access to dispute
resolution mechanisms to investors.
While at first, not many cases were filed under Chapter 11’s provisions, once the
first investors obtained damages and/or reversals of the government policies or actions
that they had challenged, a “flurry of additional cases” quickly emerged.205 After Ethyl
property. The Canadian Charter of Rights, section 7, assures that ‘everyone has the right to life, liberty and security of the person…,’ but it does not go on, as do the Fifth and Fourteenth Amendments of the United States Constitution with respect to the powers of Congress or the States, to assure the right to ‘property.’” 204 Quoted in Harbine 2002, 376. 205 Public Citizen 2001, iii. To date there have been 15 cases brought under NAFTA’s Chapter 11 that are publicly known. 129
filed its claim, a NAFTA arbitration panel was constituted at UNCITRAL to hear the
case. Canada initially objected to the suit, arguing that the MMT ban was not a
“measure” covered by Chapter 11.206 On June 24, 1998, a little over a year after the case
had been filed, the panel rejected Canada’s claims, clearing the way for the case to move
forward. After this initial ruling, the Canadian government decided to settle with Ethyl
before the case went any further. On July 20, 1998, Canada reversed its ban on MMT,
paid the Ethyl Corporation $13 million in legal fees and damages, and issued a statement
(which Ethyl had demanded for use in its advertising) declaring that “current scientific
information” did not demonstrate MMT’s toxicity or that MMT impairs the functioning
of automotive diagnostic systems.207
The outcome of the Ethyl case only confirmed the worst fears of civil society
groups in the United States and Canada who, by this time, were engaged in preparations
to wage an all-out campaign against what many groups regarded as an even more
dangerous, but related, threat to their collective interests. Around February of 1997, two
months before Ethyl would make its Chapter 11 suit official, copies of a hitherto
unknown commercial treaty “showed up like a little lost baby on the doorsteps” of civil
society groups in Canada and the U.S. “with little tags that said ‘liberate me.’” This
treaty was the Multilateral Agreement on Investment.
206 The government also objected to the suit because Ethyl had failed to wait the requisite six months after the ban was passed and implemented before filing its claim. Chapter 11 specifies that an investor must wait six months after an alleged violation takes place before initiating an investor-to-state dispute. 207 Public Citizen 2001, 9. 130
The Multilateral Agreement on Investment
Background
The past two decades have borne witness to a dramatic growth in foreign direct
investment (FDI) as a result of the increasing liberalization of global markets.208 Global investment now outpaces global trade. According to one analyst, the “total accumulated book value of FDI tripled between 1985 and 1993; correcting for inflation, FDI doubled in just eight years.”209 Still, another commentator asserts that the “global stock of FDI
increased fourfold from 1982 to 1994,” with annual flows of cross-border investment
reaching an all-time high of $350 billion in 1996.210 A UN estimate put the total value of
FDI in 1993 at $4.2 trillion. According to the Institute for International Economics, FDI grew by 80 percent over the past decade, overtaking trade in goods and services as part of
the world’s fixed capital formation.211 Annual growth in trade averages between 6 and 8 percent while investment grows at a rate of more than 10 percent each year. This general trend in the growth and importance of FDI has prompted many developed countries to
focus more attention on the management of international investment. While only about
15 percent of the world’s population live in developed countries, roughly 85 percent of
the world’s capital flows among these countries.212 It was against this background (as
well as trends in international law dealing with the rights of foreign investors discussed in
the previous section) that a consensus had emerged by the mid-1990s among the nations
of the developed world regarding the desirability of a comprehensive, multilateral
208 The late 1980s and early 1990s, in particular, were a time of phenomenal growth in FDI. 209 Sazama 1998, 103. 210 Korbrin 1998, 100. 211 Cited in Barlow and Clarke 1998, 8. 212 Sazama 1998, 102. This is due in large part to the simple fact that about 80 percent of the world’s GDP is produced in the developed countries. 131
framework for governing and managing international investment—a framework that would effectively replace the diffuse web of BITs already in existence. The Multilateral
Agreement on Investment (MAI) represented an attempt by these countries to create such
a framework.
Described variously as a “constitution for the global economy,” a “Magna Carta
for multinational corporations,” “NAFTA on steroids,” and “GATT on crack” by its most vehement civil society critics, the MAI was negotiated among the member countries of the Organization for Economic Cooperation and Development (OECD) between 1995 and 1998.213 The MAI was essentially intended to legalize the liberalization of
international investment, providing an institutional governing framework for investment
comparable to that which the GATT and WTO have supplied for international trade. It
was meant to be a free-standing international treaty open to all OECD member-states and
to accession by non-member states. The OECD was chosen as the proper venue for the
MAI negotiations on the grounds that its members represented roughly 85 percent of all
FDI outflows and 60 percent of FDI inflows.214
Since their commencement exactly seven years ago and eventual cessation in late
1998, the MAI negotiations have received virtually no mainstream media attention in the
United States. Beginning in May 1995, the MAI talks “drifted aimlessly for almost three
213 The initial proposal to negotiate the MAI at the OECD was presented in the final communiqué of the Halifax G-7 summit in early 1995. 214 The treaty was originally supposed to have been negotiated within the WTO (in fact, at one time, simultaneous discussions were occurring at both the WTO and OECD). While the European Union had pushed for the WTO as a negotiating forum, the United States insisted on the more exclusive OECD as the appropriate forum for the negotiations, so as not to “water-down” the agreement. At any rate, efforts to put the MAI on the WTO’s negotiating agenda were soon blocked by developing countries, particularly India and Malaysia (see The Economist, 3/21/1998). It has been suggested that the U.S. preferred the OECD to the WTO because it wanted to avoid having developing countries involved in the negotiations. For the most part, the OECD is largely comprised of the richest countries in the world. By completing the MAI within the OECD forum, non-member (developing) countries that wanted to sign-on later would have to take the agreement “as-is.” 132 years.”215 They were initially scheduled to be completed by the time of the OECD’s
1997 ministerial meeting.216 The delegations failed to conclude the agreement by this date and negotiations were extended. The April 1998 ministerial meeting was set as the new date for completion of the talks while the remainder of 1997 was spent refining the
MAI’s text and exploring solutions to the main political issues, including environmental and labor matters. Successful conclusion of the negotiations was perceived as contingent
upon achieving agreement on the text itself and on an “exceptions regime” that would be
satisfactory to all of the negotiating parties. This goal was not realized by the 1998
ministerial meeting and negotiations were suspended on October 20, 1998 after the
French delegation officially withdrew from the talks a few days before.217 Two months later, after U.S. and OECD secretariat efforts failed to resuscitate the talks, the negotiations were finally terminated.
The MAI negotiations were largely conducted in secret prior to November 1996 when a draft of the treaty was first leaked to French activists. A handful of Canadian and
American civil society groups first learned of the agreement through the participation of some of their activist leaders in the International Forum on Globalization (IFG).218
215 “The Sinking of the MAI.” The Economist, 3/14/1998, volume 346, issue 8059, p. 81-82. 216 Prior to this, preliminary work on what would become the foundations of the MAI was conducted by the OECD’s Committee on International Investment and Multinational Enterprises (CIME) and Committee on Capital Movements and Invisible Transactions (CMIT), beginning in 1991. In 1994, five working groups, composed of independent governmental experts, were established to study the major issues of the agreement, including liberalization obligations under existing OECD instruments, liberalization obligations in new areas, investment protection, dispute settlement, and the involvement of non-members and institutional matters. The conceptualization of a global investment pact is thought to date back to the mid- 1980s, coinciding with the start of the GATT Uruguay Round negotiations. 217 This had been the date scheduled for re-launching the negotiations following a six-month pause. The French delegation had originally asked for the hiatus. Once France withdrew, the European Union would not continue with the talks; without the EU, there was no point in continuing the negotiations. See Dymond 1999, 25. 218 The International Forum on Globalization describes itself as “an alliance of sixty leading activists, scholars, economists, researchers and writers formed to stimulate new thinking, joint activity, and public education in response to economic globalization.” The IFG first convened in San Francisco in January 133
Among those actively participating in the IFG were Maude Barlow, national chair of the
Council of Canadians (COC), Tony Clarke, director of the Polaris Institute of Canada and
vice-chair of the COC, and Lori Wallach, who, by now, was director of Public Citizen’s
newly created Global Trade Watch.219 The IFG was first alerted to the existence of the
MAI by Martin Khor of the Malaysian-based Third World Network. According to Clarke and Barlow (1997, 2), while Wallach “began to probe developments in Washington,
D.C.,” other activists in the U.S. and Canada “started digging up whatever information they could find about the new treaty.” In January 1997 the OECD began circulating a
confidential draft of the MAI. By the end of the month, Public Citizen had obtained a
copy of the draft and immediately proceeded to put the document on the internet. On the
Canadian side, as Clarke and Barlow (1997, 2-3) tell it:
Through our network of researchers, we began an extensive search for the MAI draft text here in Canada. One lead followed another and before we knew it,…we had the confidential document in our hands. Our strategy was threefold: first, study the text; second, make it public; third, circulate it worldwide.
The posting of the MAI draft on the internet by Public Citizen (and eventually other groups) sparked widespread international mobilization of environmental, labor, and other civil society groups in North America, Europe, Australia, and the developing world.
These groups demanded greater openness and public discussion of the agreement.
1994 in the wake of the passage of NAFTA and the conclusion of the Uruguay Round of GATT. It claims to represent over sixty organizations in twenty-five countries. 219 Barlow, Clarke, and Wallach are all currently board members of the IFG. 134
The Agreement
Unlike currency speculation, FDI requires establishment of a market presence or
foothold in another country.220 While BITs are primarily designed to ensure fair
treatment for foreign investors after they have invested in a country, a global treaty like
the MAI would lock-in these achievements, but go further by making the establishment
of new investments easier. An MAI would, according to its proponents, “provide a strong and comprehensive framework for international investment and would strengthen the multilateral trading regime,” setting “clear, consistent and transparent rules on liberalization and investor protection.”221 NAFTA’s Chapter 11 essentially served as the template upon which much of the MAI’s substantive content was based. The fundamental principle underlying the entirety of the MAI is non-discrimination. Under
the agreement, contracting parties (i.e., countries who play host to foreign investors from
other contracting states) are obligated to avoid engaging in actions or enacting measures
or policies that discriminate between domestic (i.e., nationals) and foreign investors. In
other words, countries that have signed on to the MAI are required to treat foreign
investors in exactly the same manner as their domestic investors. The agreement also
provided for effective dispute settlement procedures between contracting parties (state-to-
state dispute settlement) as well as between individual investors and contracting parties
220 According to the European Union, to “conquer a market, one must be present as a producer” (cited in Barlow and Clarke 1998, 9). 221 “A Multilateral Agreement on Investment: Report by the Committee on International Investment and Mulitnational Enterprises and the Committee on Capital Movements and Invisible Transactions”; presented to the OECD Council meeting at the ministerial level [DAFFE/CMIT/CIME (95) 13/FINAL, 5 May 1995]; available online at http://www1.oecd.org/daf/mai/htm/cmitcime95.htm. See Introduction. 135
(investor-to-state dispute settlement). Some of the major provisions of the MAI
included:222
• National Treatment, “which requires contracting parties to treat foreign investors at least as well as domestic firms, but, in the words of the OECD, ‘[Countries] have no obligation to grant foreign investors more favorable treatment.’”223
• Most-Favored-Nation (MFN) status, “which requires governments to treat all foreign countries and all foreign investors the same with respect to regulatory laws.”
• A broad definition of investment, including investment in stocks and bonds, as well as foreign direct investment, contract rights, intellectual property, real estate, and “claims to money.”
• “Very strict limits on ‘performance requirements’—laws governing such matters as the obligation to have a certain level of local content, exports, local hiring, local research and development, transfer of technology, and domestic equity participation, among others.”224
• Limits on expropriation subject to certain justifications and conditions: a public purpose; nondiscriminatory application (in accordance with national treatment); due process; and prompt, adequate, and effective compensation. The phrasing, however, is quite broad, including both nationalization and “any…measure having equivalent effect.” Thus, “certain forms of regulation could be argued to be expropriation, potentially requiring governments to compensate investors for lost revenue.”225
• Free transfer or repatriation of capital, profits, interest payments, expropriation settlements, and the like, “ensuring that corporations and individuals can move their assets more easily.”
• Dispute settlement provisions that establish an international tribunal to arbitrate between countries and give private investors the standing to sue a country in its courts for breach of the agreement or to bring action in an international tribunal. This investor-to-state dispute settlement system would “enable private investors and corporations to sue national governments and seek monetary
222 The following descriptions are taken directly from Korbrin 1998, 101, and Braunstein and Epstein 1999, 118. 223 But as Braunstein and Epstein (1999, 131, n9) conclude, “nowhere does the MAI [expressly] bar countries from treating foreign investors better than locals.” 224 Braunstein and Epstein (1999, 118) define performance requirements as “any laws that require investors to invest in the local economy or to meet social and environmental goals in exchange for market access.” 225 Braunstein and Epstein 1999, 118. The experience of NAFTA’s Chapter 11 investment rules, which prohibit any government measures that are “tantamount” to expropriation, supports the validity of this interpretation. 136
compensation when they believe a law, practice, or policy violates [the investor’s] rights as established in the agreement. This provision is a significant departure from most previous international agreements, save NAFTA, and is perhaps the most important aspect of the MAI. Previous agreements, such as the [GATT], only allow governments to bring complaints against other governments, whereas this provision would allow corporations to sue governments over these issues.”
• “Rollback” and “standstill” provisions that require nations to eliminate laws violating MAI rules and to refrain from passing any such laws in the future. State and local, as well as federal laws, would be affected, though many existing laws specifically acknowledged by “reservations” to the agreement would be exempted.
• Specific application of non-discrimination or national treatment to privatization, monopoly regulation, and access to minerals and raw materials.
Ultimately, the MAI would have established a “strong non-discriminatory legal regime for the treatment of investors and investments, based on a ‘top-down’
approach.”226 Its “core principles” were national treatment, MFN preferences, and
transparency. It would have been “comprehensive in its scope and coverage of investors
and investments,” covering all economic sectors and “extending disciplines to special topics such as privatization and monopolies and providing mechanisms for further liberalization” (“roll-back”).227 While exceptions would be allowed under the MAI (so
long as they were clearly specified and negotiated by the contracting party prior to conclusion of the agreement), as noted above, the MAI also contains “roll-back” and
“standstill” provisions which are intended to eventually phase out all exceptions. Finally,
226 Again, the MAI represents a dramatic departure from previous agreements in that it employed a so- called “top-down” approach in determining which economic sectors would be open to investment liberalization. Unlike the GATT/WTO which operates on the principle of “positive lists” or “offers,” meaning that negotiating countries provide lists of which economic sectors they are willing to open up to liberalization, the top-down approach utilized in the MAI negotiations meant that every economic sector would be open to liberalization unless a sector was specifically put on a country’s exception (exemption) list. The difficulties of this method became readily apparent after participating countries began creating enormous lists of exceptions. 227 “Main Features of the Multilateral Agreement on Investment.” Note by the Chairman to the Negotiating Group on the Multilateral Agreement on Investment. February 5, 1998. [DAFFE/MAI (98) 4]. 137
once a country entered into the MAI, it would have been irrevocably bound to the
agreement’s terms for at least twenty years.228
In short, the MAI is an investor rights agreement, and nothing more. As
Braunstein and Epstein (1999, 118) point out, perhaps the only thing that the MAI does
not include is “any binding language on the responsibilities of corporations or any
mechanisms to enforce those responsibilities.” They conclude (114) that the MAI (and
similar initiatives, including NAFTA’s Chapter 11) would have had two main intended
effects: First, “to create a new set of international property relations and governance
structures,” and second, “to fundamentally change national property relations and
governance to the benefit of [transnational corporations] but at the expense of citizens,
labor, and communities.” It is the lack of any enforceable responsibilities or obligations
for investors, as well as the MAI’s exclusive emphasis of investor rights (over and above
the obligations of foreign investors to their host countries), which lies at the core of civil
society’s critique of the agreement. One observer, writing on behalf of the Sierra Club,
described the agreement as such:
[It] purports to “liberalize” the rules for international investing. It’s sort of like [NAFTA], but global; like [GATT], but more powerful; like the [U.S.] Constitution, but for corporations, not people.”229
As another commentator put it: “Francis Fukuyama may be satisfied that the current
winning streak of market ideology heralds the ‘end of history,’ the corporations,
however, want to put it in writing.”230
228 Contracting parties are only allowed to express their desire to back out of the treaty after they have been subject to its rules for at least five years; they must then wait an additional fifteen years before they are able to legally withdraw from the agreement. It has been alleged that the United States negotiating delegation proposed this feature. 229 Rauber 1998, 16. 138
The MAI would have been open to all OECD members. As a free-standing treaty,
it would also have been open to non-OECD countries so long as they could meet its terms and obligations.231 Explaining the need for as many countries to join the MAI as
possible, negotiators argued that the MAI would provide a benchmark against which
potential investors would assess the openness and legal security offered by countries as
investment locations; this would, in turn, act as a spur to further liberalization.232
The Arguments Against the MAI
The arguments put forth by American and Canadian civil society groups against the MAI were numerous and varied, but they were all very specific, based on an assessment of the MAI text itself instead of mere speculation, and were linked by a common theme—namely, that the MAI rules granted too many potent rights to investors and imposed too many obligations and responsibilities on governments and too few on investors. The arguments were further informed by the practical knowledge gained from the actual functioning of NAFTA’s Chapter 11 and the investor-to-state dispute settlement cases brought under the chapter’s provisions (i.e., the consequences of
NAFTA’s delegation in the area of investment). The anti-MAI critique essentially resembled that which civil society groups had begun to lodge against Chapter 11. Yet while MAI proponents contended that the agreement was merely a formal extension and codification of the various provisions contained in the multitude of BITs which already
230 Nova, Scott, and Michelle Sforza-Roderick. “The Mystery MAI Treaty Negotiations.” The Preamble Center for Public Policy (www.globalpolicy.org); article 9496. 231 Argentina, Brazil, Chile, Hong Kong, and the Slovak Republic participated in the MAI negotiations as observers starting in September 1997. In January 1998, several Baltic countries began working in close cooperation with the negotiating group. 232 MAI opponents argued that the pressure for all countries to join the MAI would be immense as it will become the equivalent of a “Good Housekeeping” seal for approval for investment. Testimony of Lori Wallach, Public Citizen’s Global Trade Watch, Before the March 5, 1998 U.S. Congressional hearing on the Multilateral Agreement on Investment (MAI). 139
existed among the OECD countries (as well as the investment deal represented by
Chapter 11 which had been grafted onto NAFTA), civil society groups argued that the
MAI was, in fact, substantially larger in scope and went significantly further in its legal
obligations and liberalizing demands. In this section I survey some of the more
noteworthy arguments put forth by civil society against the MAI.233
First, above-all-else, civil society groups contested the MAI’s investor-to-state
dispute settlement mechanisms. The MAI’s provisions would have required
“unconditional consent,” on the part of signatory governments, “to the submission of a
dispute to international arbitration,” exposing governments to untold legal and financial
liabilities from which they are currently shielded in domestic legal systems by the
concept of “sovereign immunity.” The consequences of conferring upon private
investors the same legal rights and remedies available to sovereign nations under the
WTO’s own dispute resolution system, groups argued, was readily apparent in the normal
functioning of NAFTA’s Chapter 11 which had resulted in attacks on what many groups regarded as legitimate government regulations enacted in the public interest. During the
early phase of civil society’s mobilization against the MAI, the Ethyl corporation’s suit
against the Canadian government remained the most visible and well-known Chapter 11
case. If Ethyl succeeded in winning its expropriation claim and extracting financial
compensation from the Canadian government, civil society groups argued that it would
establish a dangerous precedent, transforming and inverting the “polluter pays” principle
into a “pay the polluter” principle.
233 For a comprehensive survey of the arguments put forth by civil society groups against the MAI, see Clarke and Barlow 1997, Barlow and Clarke 1998, Jackson and Sanger 1998, and Wallach 1998b. 140
Second, many groups opposed the MAI’s blanket ban on performance requirements, arguing that it would prevent nations from garnering any benefits from FDI or shaping investment to benefit broad public interests. For instance, groups argued that the ban would prohibit governments from attaching requirements to incentive and subsidy programs, such as requiring investing companies to hire local employees or minority employees. They also contended that the ban would be absolute and retroactive, meaning that even if a country lodged specific reservations or “grand-fathered” its current laws and regulations before signing on to the MAI, these exemptions could later be attacked by investors through the agreement’s “roll-back” provisions. Indeed, many groups believed that a country’s exemptions would eventually become a “hit-list” for foreign investors seeking to further dismantle a host country’s domestic regulatory structures. Thus, many groups argued that the MAI would have a “ratchet effect” on domestic laws and regulations.
Third, groups took issue with the phrasing of the MAI’s national treatment and
MFN provisions. Arguing that nothing in the MAI would prevent governments from treating foreign investors more favorably than domestic investors, many groups alleged that the MAI would result in reverse discrimination against domestic companies (or conversely, “affirmative action” for foreign investors). Fourth, groups believed that the expropriation provisions of the MAI were too broad. U.S. groups were quick to point out that the MAI’s definition of an expropriation, which included any government actions having “the equivalent effect” of even an “indirect expropriation,” went well beyond U.S. domestic law on so-called regulatory “takings,” going so far as to specify that a “lost 141
opportunity to profit from a planned investment would be a type of loss sufficient to give
an investor standing.”
Finally, the MAI’s disciplines cover every phase of an investment. Thus, not only
did the MAI guarantee national treatment and other protections to investments that are
already established in a country, it also extends these same protections to foreign
investors in the pre-establishment phase of an investment, making entrance into a foreign
market easier for private investors. Noting an increased trend in privatization of public
utilities and other state-owned enterprises, many groups worried about the impact which
the MAI might have on local or national control of public utilities or even areas such as
education and health-care. If a national or sub-national government decided to sell-off a
public utility, groups argued, it would be forced to allow foreign investors equal
opportunity to bid on the utility, thus risking the possibility that the utility would no
longer be community owned. Likewise, if a government decided to privatize portions of
its education, health-care, or other public services, the MAI would also require them to
give foreign companies equal opportunity to bid on these contracts or risk these
investors’ retribution through the MAI’s dispute settlement mechanism. Moreover, once
a publicly-owned or controlled utility or service is sold off, there is little or no chance of
regaining public ownership or control. This was a big issue for Canadian civil society
groups who worried about the preservation of social programs as well as the country’s remaining Crown corporations.
Mobilization Against the MAI
After getting their hands on the MAI draft text, civil society groups in the United
States and Canada quickly mobilized to block what they perceived to be a “slow-motion 142
coup d’etat against democratic governance.”234 Upon questioning members of
Parliament and Congress, groups soon learned that their representative institutions were
oblivious to the MAI’s existence, having been kept in the dark by their executive
counterparts. This was especially apparent in the U.S. Although the U.S. State and
Treasury Departments had spearheaded the MAI talks for over a year and a half, congressional committees with direct jurisdiction over international investment and commerce had never even been briefed about the MAI by the departments.235 In fact,
until January 1997, when American civil society groups first acquired the MAI text, U.S.
officials had denied that the agreement even existed. As Lori Wallach noted in her
congressional testimony on the MAI in 1998236, in May 1997, the date which had
originally been set for the MAI’s completion, “only a handful of legislators in any of the
involved countries even knew what the initials MAI meant.”237
In September 1997, the Clinton administration submitted its first official request for fast-track authority to Congress. Included on Clinton’s negotiating agenda was the
MAI. As numerous American civil society groups were quick to point out to their representatives, President Clinton’s failure to notify Congress that the U.S. was engaged in the MAI negotiations at the OECD was blatantly unconstitutional. On November 5,
1997, twenty-five House representatives sent a letter to President Clinton informing him that the MAI negotiations had come to their attention (largely as a result of the efforts of
American civil society groups). In the letter, the congressmen demanded that Clinton
234 Comments of Lori Wallach and Ralph Nader in Barlow and Clarke 1998, vii. 235 They would not begin doing so until after the Clinton administration failed to receive fast-track approval in late 1997. 236 The only congressional hearing ever to be held on the MAI took place on March 5, 1998, a month before the agreement was to be completed at the OECD. 237 See Wallach 1998. 143
answer three questions. First, given “the Administration’s recent claims that it cannot
negotiate complicated, multisectoral, multilateral agreements without fast track authority, how has the MAI nearly been completed,” with a text “as intricate as NAFTA or GATT” and with provisions that “would require significant limitations on U.S. laws and policy concerning federal, state, and local regulation of investment?” Second, the congressmen wanted to know how the agreement had been under negotiation since May 1995, “without any Congressional consultation or oversight, especially given Congress’ exclusive constitutional authority to regulate international commerce?” Finally, the congressmen posed the following question:
The MAI provides expansive takings language that would allow a foreign corporation or investor to directly sue the U.S. government for damages if we take any action that would restrain “enjoyment” of an investment. This language is broad and vague and goes significantly beyond the limited concept of takings provided in U.S. domestic law. Why would the U.S. willingly cede sovereign immunity and expose itself to liability for damages under vague language such as that concerning taking any actions “with an equivalent effect” of an “indirect” expropriation?238
Clearly, the arguments of civil society groups had left an impression on these
congressmen. Unlike his predecessor who had successfully negotiated an extension of
fast-track authority for NAFTA, Clinton would be forced to withdraw his fast-track
request as a result of intense congressional opposition. Concluding that the bill would
not be approved, Clinton withdrew the request on the eve of its vote.239 Clinton’s defeat was perceived by American civil society groups as an important victory in their campaign against the MAI. If the MAI had been successfully negotiated, lack of fast-track authority would have forced Clinton to submit the MAI as a treaty requiring a two-thirds
238 House letter on MAI, to President Clinton; November 5, 1997. 239 Wrobel 1999, 299. 144
vote by the Senate in order to be ratified; more importantly, the Senate would have had
the right to alter or suggest amendments to the agreement.
In their campaign against the MAI, American and Canadian civil society groups
engaged in many of the same activities and tactics that they had employed against
CUFTA and NAFTA. However, by 1997, they had an important new weapon in their
arsenal: the Internet. The importance of the Internet as a tool for disseminating
information and mobilizing citizens within the domain of trade and investment policy
cannot be overstated. After groups acquired the draft text of the MAI, the Internet
allowed them to post it on the world wide web for everyone to see instantly, whereas,
previously, it would have taken months for copies of the agreement to circulate among
activists. Furthermore, the Internet contributed enormously to a free flow of ideas and
information, not only about the MAI itself, but about NAFTA and Chapter 11, the WTO,
and even literature about international political economy in general. Websites devoted to the anti-MAI campaign typically cross-referenced or cross-linked other anti-MAI sites, increasing the overall exposure of the campaign and creating a rich, dense, and layered web of information for anyone attempting to find out about the agreement on-line.240
Deibert (2000, 261) explains the significance of the Internet in relation to the activities of civil society groups:
The fact that local activists from disparate regions around the world could communicate dense information across several time zones instantly may seem commonplace today, but it is remarkable in light of the extent to which activists of even a decade ago did not enjoy the same benefits. Certainly phones, faxes, and regular mail were employed as a matter of practice among activists for decades and were employed alongside new media in the anti-MAI campaign. But
240 For instance, the highly informative website of Public Citizen’s Global Trade Watch could be found as a link on any number of anti-MAI websites. 145
the Internet formed the technological infrastructure of the campaign in ways that older, more traditional media simply could not accommodate.
Electronic mailing lists were at the center of the technological infrastructure Deibert
describes. E-mail list-serves allowed information from any one of the anti-MAI
campaign’s participants to be immediately forwarded to anyone else on the list, allowing
participating individuals and groups to be kept apprised of the progress of negotiations, meetings, protests, letter campaigns, editorials, news items, web sites of interest, and general information. Of the three most important anti-MAI e-mail lists which Deibert discusses, one was based in Canada while another was run by Public Citizen in the
U.S.241 As Deibert suggests, the Internet was crucial in allowing civil society groups to
propagate their interpretation of the MAI. Eventually the OECD would be forced to
respond to the proliferation of anti-MAI websites by creating its own site devoted to
explaining the agreement and its alleged potential benefits.
Ultimately, negotiators at the OECD failed to conclude the MAI. Whether
“global” or “transnational civil society” was responsible for the agreement’s demise
remains an open question. Dymond (1999, 26) has suggested that “the fundamental
cause of failure lay in the attempt to negotiate an investment agreement among countries
with well-established, liberal, and transparent foreign investment policies and the
consequent choice of the OECD rather than the [WTO] as the negotiating forum.”
Dymond argues that because the relationships among these countries with respect to the
treatment of each others’ investors was already highly liberalized to begin with, none of
them were willing to open up new sectors to foreign investment. Nonetheless, he and
241 These lists would later be used to mobilize individuals and groups for the WTO’s ministerial meeting in Seattle in 1999. Many groups are still using the lists in their continued activities within the trade and investment policy domain. 146
other observers have readily acknowledged that the intense mobilization of civil society
was definitely a contributing factor in the collapse of the negotiations, largely having the
effect of throwing even more sand into the gears. However, regardless of the exact cause
of the MAI’s demise, civil society groups across the globe regarded it as a victory and an
outcome in which they had played a significant role. The entire episode would leave
many groups with a newfound sense of efficacy in the realm of foreign economic policy.
Seattle: Taking the Fight to the WTO
With the MAI on the scrap-heap, American and Canadian civil society groups entered 1999 with a renewed sense of purpose and increased confidence in their ability to challenge the neoliberal agenda of global economic policymakers. Refusing to rest on their laurels, they soon turned their attention to the WTO, where many suspected that the proponents of an MAI would soon try to re-introduce the scuttled agreement.242 The
WTO was scheduled to hold its third ministerial meeting in Seattle, Washington at the
end of November. The meeting was being advertised as an opportunity to launch an
ambitious new round of multilateral trade negotiations—a so-called “Millennium
Round.” This was the last thing civil society groups wanted.
All of the assorted cast of characters that had mobilized against the MAI were
present at Seattle. In the U.S., Public Citizen’s Global Trade Watch led the anti-WTO
efforts. For months in advance, the group had made preparations for the meeting,
242 For reasons of space, I have chosen not to provide a detailed analysis of North American civil society’s mobilization against the WTO. It is worth pointing out that many civil society groups had already developed concerns about the WTO prior to the advent of the MAI. Of particular concern was the WTO’s own (state-to-state) dispute resolution procedures which many groups regarded as secretive, unaccountable, and a threat to democratically enacted laws, and more generally, the regulatory autonomy of member governments (though perhaps, not as dangerous as the investor-to-state dispute resolution mechanisms of NAFTA’s Chapter 11 or the MAI). In this section I discuss the most notable instance of mobilization by American and Canadian civil society groups against the WTO, placing it within the context of the anti-MAI campaign of the previous two years. 147
mobilizing other groups and circulating information on the event.243 A coalition calling itself the Direct Action Network (DAN) was initiated by four American groups—the
Rainforest Action Network, the Ruckus Society, Global Exchange and Art and
Revolution. DAN functioned as the primary organizer of direct action, educating and training people who planned to engage in non-violent direct action to shut down the meetings.
On the opening day of the meetings the AFL-CIO held an enormous rally.
Addressing the rally, International Longshoreman president Brian McNally declared that neither labor nor the rest of civil society were “going to sit idly by and let [the WTO and transnational corporations] seize our world without a fight.” He then asked the gathered crowd: “Are you ready to fight?”—to which there was a immediate and resounding
“yes” from those assembled.244 The rally was followed by a large march. Other marches were conducted by other groups. Individual “affinity groups” engaged in various instances of non-violent direct action.
Civil society was also present inside the WTO meetings as well as in the streets.
Approximately 767 NGOs were officially registered as “observers” of the WTO’s
ministerial meeting and were represented by 2089 delegates who were actually allowed
inside the meetings.245 Goldstein and Martin (2000, 611, n16) note that the number of
groups who petitioned for observer status at the Seattle ministerial meeting was the largest in GATT/WTO history. Some 672 “accredited” NGOs participated in a special
243 Prior to the meeting, Ralph Nader had called for the United States to give six months notice before withdrawing from the WTO. Nader believed the withdrawal should be followed by “renegotiation of the whole thing.” 244 See Marc Cooper, Nation (12/20/1999). 245 Smythe 2001, 159 148
symposium sponsored by the WTO which preceded the ministerial meeting—half of
these were American while roughly another ten percent were Canadian.246
In the end, the streets of downtown Seattle wound up looking like a battle zone
after violent clashes between police and protestors.247 While authorities knew that
numerous protest groups were planning to descend upon the meeting, they were largely
unprepared for the enormous mobilization of citizens which actually occurred—over
40,000 people filled the city’s streets on the opening day of the meetings. Ultimately, the
magnitude of civil society mobilization at Seattle cannot be fully appreciated without
realizing that the vast majority of groups represented were already in a state of
mobilization owing to their participation in the anti-MAI campaign of the previous year.
All of the resources that had been brought to bear on the MAI were gradually focused on
the WTO and its ministerial meeting during the course of 1999.248 The result was “high
drama” in the streets of Seattle and a focusing of attention on the WTO, by both the
American and Canadian media and general publics, which the organization had never
before received since its creation in 1995. Moreover, nothing productive came out of the
ministerial meeting as trade ministers failed to agree on the launching of a new round of
comprehensive trade negotiations, giving civil society groups further cause for
celebration.
246 Curtis and Wolfe 2000, 331. 247 Seattle had competed with forty other U.S. cities for the right to host the seemingly prestigious ministerial meeting. In hindsight, Seattle authorities might have conceivably relinquished their bid to host the event had they known or anticipated that the city would become the scene of such mass chaos. 248 For instance, the internet list-serves that had first been created by American and Canadian groups in the campaign against the MAI were later used to circulate information about the WTO and the Seattle meeting. 149
The Free Trade Area of the Americas
The same month that negotiators at the OECD failed to reach agreement on the
MAI, heads of state from thirty-four nations in the Western hemisphere met in Santiago,
Chile for the second Summit of the Americas. On April 19, 1998, these leaders
announced that their countries were finally ready to start negotiating a Free Trade Area of
the Americas (FTAA). The FTAA had first been proposed by U.S. Vice-President Al
Gore in a speech in Mexico City in December 1993. The first summit had been held in
Miami in December 1994. Since then, periodic meetings had been held among trade
ministers from all the countries involved in preparation for the actual negotiating stage.
At Santiago, 2005 was set as the target date for the conclusion of the FTAA. If successfully concluded, the FTAA would create a gigantic regional trade block extending from Alaska to Tierra del Fuego, with a population of around 730 million people
(roughly 15% of the world’s population), a combined GDP approaching U.S. $10 trillion, and total exports of more than U.S. $1 trillion (1997 data)—“arguably the largest regional
economic grouping in the world.”249 Throughout the negotiations thus far, the United
States has pursued the same vision that it pursued with both CUFTA and NAFTA,
seeking to ensure that the FTAA, while reducing tariffs and other trade barriers, also
includes services, investment, competition policies, intellectual property, and government
procurement.250 This has given American and Canadian civil society groups cause for
concern. Furthermore, initially, the U.S. wanted the FTAA to function as a gradual
extension of NAFTA to the other Latin American and Caribbean countries.251 Brazil led
249 Wrobel 1999, 291. 250 Wrobel (1999, 296-297) describes the U.S.’s goals as “GATT-plus.” 251 As Wrobel (1999, 297) notes, Chile was formally invited to join NAFTA at the Miami Summit, while other nations such as Argentina were mentioned as “next in line.” 150 the opposition against this approach, arguing that an FTAA “should not be an extension of trade preferences granted unilaterally by the United States to well-behaved countries, but a truly new initiative, negotiated by equal partners.”252 Eventually, Brazil’s view won-out, giving civil society groups hope that the worst components of NAFTA could be excised from the FTAA or, at the very least, minimized, if enough pressure is brought to bear on the negotiating governments.
American and Canadian civil society groups have followed developments in the
FTAA closely. In 1996 and 1997 they mobilized against the extension of NAFTA to
Chile prior to turning their attention to the MAI. After the MAI’s apparent demise in late
1998 and the confrontation with the WTO at Seattle in late 1999, civil society groups next prepared to take their fight against liberalization directly to the FTAA by descending upon the third Summit of the Americas scheduled to be held in Quebec City on April 21-
22, 2001. The same amount of preparation that had gone into civil society’s convergence upon the WTO in 1999 was invested in the protests against the FTAA in Quebec.
Roughly 9,000 delegates would be attending the summit. They would be joined by roughly 6,000 police and security officials (as well as some 2.500 journalists from around the world). Canadian officials responsible for the event had learned from the mistakes made by Seattle officials and would apply these lessons to their handling of the summit’s security. A three-meter-high, four-kilometer-long, chain-link perimeter fence was erected around the site of the talks to keep out protestors. Nonetheless, despite the heightened security, the summit would still experience the same turbulence that occurred between protestors and police at Seattle. Protestors were met with teargas, water cannons, pepper spray, and rubber bullets. Hundreds were injured (some seriously),
252 See Wrobel 1999, 297. 151
while hundreds more were arrested and transported by heavily-guarded convoys to a
special prison setup for the summit outside of town.
Realizing that the apparent secrecy of the Quebec summit did not look good from
a public relations standpoint, the summit’s participants agreed to release the proposed text of the FTAA to the public. However, because it would need to be translated into four languages, it would take more than two months to do this. Finally, on July 3, 2001, the official draft text of the FTAA was made public. It was immediately met with
criticism by civil society groups who regarded it as a “sanitized” version of the real agreement. Public Citizen’s Lori Wallach suggested that even “with a sizable chunk of
the negotiating text remaining concealed from the public, it is clear that FTAA is all about cramming NAFTA-on-steroids down the throats of people from Toronto to Tierra
del Fuego. FTAA was supposed to represent the improved renegotiation of NAFTA.
Instead it worsens and expands NAFTA’s worst provisions.”253 However, in deciding
whether or not to mobilize against the FTAA, most groups did not need a copy of the
negotiating text of the agreement. By 2001, the repeated suggestions by both American
and Canadian officials that the FTAA would extend the “benefits” of NAFTA to Latin
America and the Caribbean were enough to convince many groups that the FTAA would
pose a significant threat to their interests, especially if it included NAFTA’s investor
rights provisions. Many feared that the new agreement could even include provisions
taken directly from the defunct MAI. Citing at least three Chapter 11 cases in support of
his claim and speaking from an environmentalist’s point of view, Daniel Seligman, a
Senior Trade Fellow for the Sierra Club, voiced such concerns:
253 Quoted in Stephen Norton, “FTAA Draft Generates Labor, Environmental Opposition,” Congress Daily (7/9/2001). 152
[T]he FTAA itself could also contain a number of legal principles embedded in its trade disciplines that run directly counter to hard-won principles of environmental law. Among other provisions, the FTAA is likely to restrict use of the precautionary principle, limit regulation of the way products are made, and allow private investors to sue national governments for supposed “regulatory takings.”254
Given their knowledge of Chapter 11 and the MAI, civil society groups had only to glance at the FTAA text in order to know that it was more of the same.
Assessing Civil Society Mobilization in a Post-Legalization Environment
Having now provided an account of North American civil society mobilization within the trade and investment policy domain since the implementation of NAFTA, we are now in a position to ask how the explanation for mobilization developed in chapter two fares in the case of the MAI, WTO, and FTAA.
While also providing a descriptive account of civil society mobilization in the
United States and Canada against the MAI, WTO, and FTAA, this chapter has focused primarily on the arguments put forth by civil society groups against the MAI. Groups based their arguments on an extensive analysis of the MAI’s draft text as well as
NAFTA’s Chapter 11 upon which much of the MAI was based. Moreover, civil society’s critique of the MAI was also informed by the practical knowledge provided by actual investor-to-state disputes brought under Chapter 11. Groups later applied this critique to the FTAA.
Ultimately, American and Canadian civil society groups found themselves in a high-information environment. By the time groups learned of the MAI, legalization of the North American trade and investment regime had already taken place, providing
254 Seligman’s comments can be found at http://www.sierraclub.org/trade/ftaa/seligman.asp. 153 groups with a wealth of useful and practical information (on how the MAI might effect their collective interests) with which to base their decision to mobilize. This situation stands in stark contrast to the earlier cases of CUFTA and NAFTA in which groups were forced to base their decisions to mobilize on rough estimations of the likely effects of liberalization. Furthermore, the effects of the increased information rendered by legalization of the regional trade and investment regime can be clearly discerned in the conspicuous change in the reasons given by groups for their mobilization. Whereas in the cases of CUFTA and NAFTA, groups had primarily relied upon arguments suggesting that liberalization per se—not the legalization of liberalization—would intensify existing problems (i.e., job losses, environmental degradation in the U.S.-
Mexican border region, etc.) and create new ones (i.e., a race to the bottom), in the case of the MAI and FTAA, groups based their arguments against these agreements on the rules and provisions of the agreements and the legal implications of these rules and provisions. It is important to point out that groups did not abandon their earlier arguments about the consequences of liberalization (especially the potential for downward harmonization)—indeed, the vast majority of groups remained opposed to liberalization. However, these arguments receded to the background and became overshadowed by arguments that were wholly built on the anticipated consequences of increased obligation (especially with regard to the treatment of foreign investors) and delegation (particularly investor-to-state arbitration instruments) which the further legalization of trade and investment would result in. This change in arguments, is in turn, arguably the result of the increased information provided by the precision of agreements such as the MAI (in terms of their rules and provisions). 154
The effects of precision can be seen vividly. American and Canadian civil society
groups repeatedly described the MAI as an “international commercial treaty empowering
corporations and investors to sue governments directly for cash compensation in
retaliation for numerous government policies or actions that undermine profits.”255 This description could not have been formulated with such a high degree of accuracy and certainty without access to the MAI draft text or the practical experience provided by the investor-to-state dispute settlement cases brought under NAFTA’s Chapter 11. The MAI case, however, requires an important adjustment to the theory of legalization’s effects expounded in chapter two.
While the MAI exhibited a high degree of precision in its rules and provisions, indicating what actions or behavior governments could and could not engage in with respect to the treatment of foreign investors and their investments, from the perspective of civil society groups, many of the MAI’s provisions were disturbingly imprecise, leaving them uncertain as to the actual boundaries of the MAI’s investor protections. For instance, the MAI text itself stated that a “lost opportunity to profit from a planned investment would be a type of loss sufficient to give an investor standing” to sue a government under the MAI’s investor-to-state dispute settlement instruments.
Confronted with such language (and the question of what precisely would constitute a
“lost opportunity to profit”), civil society groups were left to conclude that the MAI would severely curtail the regulatory autonomy of signatory governments (or at the very least, require them to compensate foreign investors when they wanted to enact new regulations which might interfere with an investor’s “right” to profit from an investment).
255 Comments of Lori Wallach and Ralph Nader in Barlow and Clarke 1998, vii.
155
Thus, to some degree, in the case of the MAI, imprecision gave groups even greater
reason to mobilize. Therefore, it would appear that once a group has been alerted to the consequences of legalized trade and/or investment agreements, the core dimension of
precision may operate on group mobilization in an alternative (and opposite) manner.
Specifically, imprecision in particular rules or provisions (i.e., phrases or clauses) of an
agreement may become a source of anxiety and uncertainty for groups, leaving them to
wonder what the precise range of behavior (required of their government) is covered by a
rule or provision. Moreover, if groups conclude that the lack of an explicit reference to or exemption for certain behavior (that is in their interest) represents a potential threat to
their shared interest in a strong state with regulatory autonomy, then they may be compelled to mobilize—either to block the entire agreement or achieve an exemption.256
By the end of 2001, roughly fifteen investor-to-state disputes had been filed under
NAFTA’s Chapter 11.257 After the Canadian government agreed to settle with the Ethyl
Corporation before the case was even decided by the arbitration panel established to hear
the case, civil society groups viewed the implications of this outcome as potentially
disastrous. A critic of Chapter 11 summed up the concerns which many civil society
groups held toward Chapter 11, the MAI, and the FTAA:
This year it’s Ethyl Corp.; next year it could be a company from Japan or Germany. If, like me, your stomach churns and your heart palpitates when you read and consider the implications for democracy [posed by NAFTA’s chapter 11], you’re starting to realize in a physically palpable way what the MAI is all
256 This discussion of the effects of an agreement’s “imprecision” on civil society mobilization is admittedly ad hoc. 257 The total amount of monetary damages sought from the American, Canadian, and Mexican governments under these investor suits is approximately $2,921,000,000 or nearly $3 billion (U.S. unadjusted dollars). 156
about. We may not have [fully] understood the implications of NAFTA before it was ratified. We cannot say the same thing about the MAI [or the FTAA].258
258 Janice Harvey. “Ethyl Corporation v. Government of Canada.” Telegraph Journal, New Brunswick, Canada; June 4, 1997. My emphasis. 157
CHAPTER 5
CONCLUSION
The phenomenon known as globalization continues to be a hot topic, garnering a
substantial amount of attention in the media, and preoccupying concerned observers from every corner of society, from ordinary citizens and businessmen to political leaders and academics. Scholars continue to disagree over what the exact, long-term consequences of globalization will be.259 Nevertheless, despite disagreement over the actual extent to
which globalization has occurred (or is occurring), its actual consequences, or whether or
not it has wrought irreversible changes, there appears to be a growing consensus among
scholars that the international political economy has indeed experienced a profound
transformation in the past quarter century, and that it is continuing to undergo important
changes.
Among the many questions that have arisen in reference to the effects and
consequences of globalization, one of the most important has been the question of whether or not the nation-state, confronted with the newly emergent, turbulent forces of globalization, has become powerless or obsolete. According to Geoffrey Garrett, there
are
[W]idely held beliefs about the fate of national autonomy in the global economy…[in which the]…nation-state is purportedly an outmoded and
259 See for instance, Garrett (1998) and Hirst (1997). 158
beleaguered institutional form, on a collision course with the ever more international scale of markets. Policy autonomy, if not de jure sovereignty, is considered the primary casualty. Governments competing for mobile economic resources are thought to have little choice but to engage in a policy race to the neoliberal bottom, imperiling the efficacy and legitimacy of the democratic process itself.260
Nowhere are these beliefs more discernible than in the ranks of civil society. Indeed, the continued preservation of national democratic sovereignty ranks among the primary concerns which civil society holds toward globalization. Labor, environmental, public- interest, and other citizen groups share an interest in ensuring that the state maintains its capacity to engage in protective action on behalf of the societal interests which they represent; it is this common interest which has brought such diverse kinds of groups together in the struggle against trade and investment liberalization over the course of the past decade and a half.
While academics continue to disagree over whether states have completely lost their autonomy, or whether they are, in fact, trapped in a so-called race to the bottom (in terms of national standards, policies, and practices)261, in their continued efforts to attract
investment, it would appear that states are caught in a classic “prisoner’s dilemma.”
Every state would be better off if no state granted incentives to transnational capital, yet
every state fears losing out if others grant them. In the end, all states (including sub-
260 Garrett 1998, 787-88, my emphasis. 261 For instance, there is a growing literature that suggests that globalization may not necessarily or inevitably lead to the convergence of national political economies toward a “standard,” liberal Anglo- American model of capitalism. Examples include Garrett 1995, 1998, Hicks 1999 (especially chapter 7); as well as the “varieties of capitalism” literature (see particularly, Hall and Soskice 2001; also Yamamura and Streeck 2003). 159
national units) feel compelled to provide some kind of incentives to attract investment.
To the extent that everyone does in fact provide them, everyone is made worse off.262
But while it is one thing to compete with others for investment flows, it is
something altogether different when a state willingly surrenders its sovereignty over that investment. Yet it is precisely this which North American civil society groups have rightly perceived their governments to be doing when they choose to participate in the creation of binding international agreements such as the MAI.263 What is more, these
groups see such actions as a desertion on the part of their respective governments—an
abandonment of the interests held by the majority of society in favor of and in service to
the interests of a small minority. Thus, many American and Canadian civil society
groups have reached the conclusion that globalization (at least in its trade and investment
dimensions) is not some inevitable or unstoppable process which states must submit or
yield to; rather, it is a process which states themselves are actively promoting and
facilitating (upon the urging of unaccountable corporate interests which owe their own
existence to these same states) through the creation of legalized international institutions.
As Canadian activists Tony Clarke and Maude Barlow suggest, a “global economy built
262 This point is made by Neumayer 2001, 7-8. Citing a UNCTAD study, he notes that “since 1991 on average about 50 countries each year enacted on average about 100 regulatory policy changes every year, the vast majority of which were favourable towards FDI…the last 15 years or so have also seen an increase in incentives that are supposed to lure investment, especially FDI, into a specific location rather than elsewhere.” According to Neumayer, the study concludes that “the range of incentives available to [transnational corporations], and the number of countries that offer incentives, have increased considerably since the mid-1980s, as barriers to FDI and trade have declined.” As Neumayer points out, it “does not matter much that studies of the determinants of FDI flows generally indicate that incentives have only a very minor role to play in international investment decisions. This is for two reasons: first, these incentives can make a difference at the margin, and second, and more importantly, what matters is that, against the received wisdom of empirical studies, policy-makers apparently do believe in the power of incentives to attract investment.” 263 The MAI would have essentially been the ultimate incentive to attract foreign investment. 160
in the image of stateless capital is not inevitable;” it is a system created by states, and a
system whose loudest advocates are those “who have a great deal to gain from it.”264
Many civil society groups see the legalization of regional and multilateral trade and investment regimes as nothing less than the creation of a constitution for the global economy. While this may be an overstatement, it is not an entirely inaccurate assessment; for in creating legalized agreements whose purpose is to remove barriers to the free flow of international trade and investment and ensure that countries do not reestablish these barriers, those governments which have participated in the process of legalization have essentially sought to establish the rules of the game by which the behavior of states and private investors will be governed now and in the future.
Confronted with this situation, civil society groups have mobilized to counter or block this process. Ideally, many groups would like to see economic liberalization brought to a halt (at least, for the time being). However, recognizing that this may not be entirely possible, they have nonetheless struggled to ensure that, at the very least, their collective interests are represented at the negotiating tables where the rules of the game are being crafted.
Up to this point, I have said little about the relative success or failure of civil society groups in their efforts to effect political outcomes within the domain of international trade and investment policy. My primary purpose has been to explain why so many different kinds of groups, most of whom, with the exception of labor groups, were previously uninvolved in the politics of trade and investment, have mobilized in the domain of trade and investment policy over the course of the past decade and a half.
Thus, addressing the success or failure of civil society was not the chief motivation
264 Clarke and Barlow 1997, 172. 161
behind this study. Nonetheless, having now reached the end of this thesis, I would like to conclude by giving some attention to this issue. However, before doing so, it is necessary to provide a final evaluation of the argument developed in this thesis in order to see how it stacks up against the available evidence.
The Process of Legalization and the Mobilization of Civil Society
The primary question which this thesis has attempted to answer was this: How
can the mobilization of civil society groups in the domain of international trade and
investment policy be explained? In my effort to provide an explanation for this
phenomenon, I have examined the mobilization of North American—specifically,
American and Canadian—civil society groups in this policy area over the course of the
past decade and a half. I have focused my investigation on three kinds of domestic civil society actors—labor groups, environmental groups, and public-interest groups—and their struggle against liberal commercial agreements and institutions—including CUFTA,
NAFTA, the MAI, the WTO, and the FTAA.
In order to account for the mobilization of these groups within the area of trade and investment policy, it was necessary to answer the question of why these groups had come to believe that their collective interests were affected or threatened by international
trade and investment agreements. The answer to this question contains two parts. First,
civil society groups initially believed that the increased liberalization of trade and
investment flows which would be facilitated by early commercial agreements like
CUFTA and NAFTA would harm their interests. Second, after having time to undertake
a deeper analysis of the content of these early agreements and experiencing their actual
consequences as well as confronting new agreements such as the MAI, civil society 162
groups came to believe that the rules and decision-making procedures established by
these agreements posed an even greater and more direct threat to their interests.
Ultimately, this latter view, while not diminishing the strength of its precursor, has come
to overshadow it. How can we explain this change in views? The explanation which I have put forth throughout this thesis is this: it is the legalization of regional and multilateral trade and investment regimes which is primarily responsible for the mobilization of civil society groups in the domain of trade and investment policy.
Although legalization cannot fully explain the origins of civil society mobilization, it does explain the continuing mobilization of civil society and the apparent growth of this mobilization.
Throughout this thesis, the legalization of trade and investment regimes has been understood as a long-term process entailing changes within important core and procedural dimensions.265 First, the essence of legalization entails three crucial core
components: (1) obligation—the creation of binding international commitments and the
acceptance of these commitments by states who are adherent members of a legalized
trade and/or investment regime; (2) precision—the creation of precise rules and
provisions which serve to make the behavioral demands and obligations of a regime
transparent to those states and private actors whose behavior is to be governed by the
regime; and (3) delgation—the granting of significant decision-making authority to
265 Legalization can also be considered as a short-term process. For instance, the trade and investment regime that characterized Canada and the United States’ economic relationship was legalized by CUFTA. NAFTA merely expanded upon this legalization and extended it to Mexico’s economic relationship with both Canada and the United States. The MAI would have created a highly legalized investment regime that would have governed the investment relationship among and between the OECD countries. Likewise, the FTAA would create a highly legalized hemispheric trade and investment regime governing the economic relationship among and between the countries of the Western hemisphere. I have viewed legalization as a long-term process in that countries are engaged in multiple rounds of negotiations aimed at legalizing trade or investment regimes (or both) at either the regional or the multilateral level. 163
independent, centralized, and external institutions (i.e., trade dispute tribunals and
investor-to-state arbitration panels) which are endowed with substantial responsibility for
the implementation and/or interpretation of a regime’s rules and provisions.
Second, the larger, long-term process of legalization includes important
procedural dimensions: (1) the object of legalization—that is, the issue area (in this case,
trade or investment) that negotiating governments seek to legalize; and (2) the increased
scope and pace of legalization—the liberalization of more economic sectors, the
extension of liberalization to more countries, and the legalization of these efforts in a
relatively short amount of time. Together, changes along and within these dimensions—
core and procedural—have contributed to the mobilization of civil society within the
trade and investment policy sphere. Furthermore, it is important to remember that their
effects are largely interactive.
Before clarifying how changes in the dimensions of the legalization process have
contributed to civil society mobilization, it is worth undertaking an assessment of the changes observed in the dependent variable—mobilization. Given the puzzle posed in chapter one—namely, why groups who had previously not concerned themselves with the
foreign economic policy of their respective governments would suddenly mobilize in this
policy area—the primary purpose of this thesis has been to explain why existing civil
society groups went from a state of inactivity in the trade and investment policy realm to
a state of intense mobilization in this policy domain. Thus, in some respects, I have
implicitly treated mobilization as a broadly conceived, binary dependent variable (and the
variation in this variable which I have sought to explain is the occurrence of mobilization
where previously there was no mobilization). However, a secondary purpose of this 164
thesis has been to measure changes in the character of civil mobilization. In chapter two,
I proposed three measures for gauging the actual degree or extent of civil society mobilization in a particular case (i.e., against a particular commercial agreement): (1) the number of groups that are mobilized; (2) the kinds of groups that are mobilized; and (3) the range or amount of activities individual mobilized groups are engaged in. Taking these three measures of mobilization, how does the legalization explanation hold up? In chapter two, I hypothesized that as legalization increased—that is, as a regime moved from a state in which little or no obligation, precision, or delegation was present to a state in which all three of these core components were present266—the mobilization of civil
society should increase.
First, with regard to the first measure, while I have repeatedly stated throughout
the course of this thesis that the mobilization of North American civil society has
increased over time, I have not given any precise numerical estimates on the actual
number of groups that have mobilized. How might this be done. Although it is difficult
to provide such estimates, one way of getting at this dimension of mobilization is to look
at various different international joint NGO statements on particular agreements (or other
specific, proposed occurrences in the trade and investment policy realm). In Table 5.1, I
provide numerical counts of the number of American and Canadian civil society groups
who endorsed three different joint NGO statements as well as the percentage increase in
266 As noted in chapter two, since none of the core dimensions of legalization can be fully operationalized, their effects must be treated in a binary manner, meaning regimes move from the absence of legalization or a low degree of legalization to a moderate or high degree of legalization. 165 the number of groups that endorsed the second statement over the first and the third over the second statement.267
TABLE 5.1: American and Canadian Civil Society Group Endorsements of Joint- International Statements
Canadian groups American groups Combined
1997 statement opposing 45 64 109 extension of NAFTA to Chile
1998 statement opposing the MAI 85 (89%) 142 (122%) 227 (108%)
1999 statement opposing “Millennium Round” at the WTO 78 (-8%) 241 (70%) 546 (140%)
Figures represent the number of groups who endorsed each statement. Percentages represent the percentage increase in the number of groups who endorsed that statement compared to the previous statement.
Table 5.1 confirms the expectations of my hypothesis. It suggest that the number of civil society groups mobilized in the trade and investment policy domain did increase over time—specifically that the number of groups increased from the period during which the first NAFTA Chapter 11 cases began to emerge (early 1997) through the anti-
MAI campaign (the latter part of 1997 and most of 1998) and ending with the WTO’s ministerial meeting at Seattle (at the end of 1999). The first statement can be taken indirectly as a rough measure of those civil society groups that had opposed CUFTA and
267 The first statement is a 1997 letter from citizen groups to the presidents of Chile, Mexico, and the United States, and the prime minister of Canada, opposing the extension of NAFTA to Chile. The second statement is a 1998 joint-international NGO statement opposing the MAI. Finally, the third statement is a 1999 joint-international statement (updated just prior to the WTO’s third ministerial meeting at Seattle) from members of international civil society opposing a “millennium round” of comprehensive trade negotiations at the WTO. A comparable statement on the FTAA was sought but not found. For a list of the organizations that endorsed each statement (and upon which the figures in Table 5.1 are based), see appendices two through four. 166
NAFTA.268 The third statement can be taken as a rough measure of the final number of
American and Canadian groups who opposed the MAI as well as the activities of the
WTO. The table shows that the number of mobilized Canadian civil society groups grew from 45 at the beginning of 1997 to 85 in 1998, an 89 percent increase.269 The number of mobilized American civil society groups grew from 64 in early 1997 to 142 in 1998 (a substantial 122 percent increase), and from 142 in 1998 to 241 at the end of 1999 (an additional increase of 70 percent). Finally, the combined number of both American and
Canadian civil society groups mobilized in the trade and investment policy sphere increased from 109 to 227, more than doubling from early 1997 to 1998 (a percentage increase of 108 percent), and grew from 227 in 1998 to 546 at the end of 1999 (again more than doubling), representing a massive 140 percent increase.270
Second, the number of different kinds of civil society groups has also increased over time as regional and multilateral trade and investment regimes have become more legalized. While labor groups were not the only groups mobilized in the earliest cases
(CUFTA and NAFTA) examined in this thesis, they were more heavily represented than other groups in terms of their numbers. However, since the conclusion of NAFTA, while
268 More accurately, it is probably a measure of those groups that remained mobilized in the trade and investment policy area after the conclusion of NAFTA. Regardless, because of its early date (February 26, 1997), it provides a good estimation of the number of groups mobilized in the trade and investment policy area immediately prior to the beginnings of the anti-MAI campaign. 269 While dipping slightly (from 85 to 78), the number largely remained at its high level. 270 While these figures largely conform to my expectations (as well as popular perceptions among the media and most academics concerned with the activities of civil society groups in the domain of international political economy), they should be regarded with some caution. Since I was unable to find comprehensive data on the number of groups who mobilized in the trade and investment policy domain for the entire period under investigation (roughly 1986-2001), any conclusions regarding the mobilization of civil society groups over time (specifically, that the number of groups who mobilize has gradually grown) must remain tentative at best. Furthermore, without measuring these numbers against long-term trends in the growth or decline of civil society groups in general (regardless of whether they are involved in trade and investment politics or not), there is no way to accurately assess the relative significance of any absolute increases in the number of civil society groups who have mobilized in the trade and investment policy sphere. 167
labor groups have remained a vital and important constituent of the civil society coalition,
they have largely been outnumbered by other kinds of groups, especially environmental
and public-interest groups.
Third, while I cannot provide systematic evidence that mobilized civil society
groups have engaged in a greater number activities as regional and multilateral trade and
investment regimes have become more legalized (which would suggest that they have
deployed a greater amount of their resources to their mobilization), there is at least some
evidence that some groups have intensified their efforts to combat legalized economic
liberalization by devoting more of their resources to political campaigns in the trade and
investment policy area. Many of the groups who have been mobilized in the trade and
investment policy realm the longest have clearly made trade and investment issues a
permanent part of their often-times wide-ranging political agendas. For instance, unlike
their labor union comrades, many of the vanguard environmental and public-interest
groups who first entered the arena of trade and investment politics, did so with the
liability of having no prior experience or expertise with trade and investment issues.
However, over time, these groups remained mobilized in this policy area and gradually began to devote more time and resources to trade and investment campaigns, hiring specialized staff with expertise in trade and investment policy. A prime example is the case of Public Citizen. Public Citizen’s initial entry into trade politics occurred during the negotiation of NAFTA. The organization’s anti-NAFTA campaign was largely carried out by its Congress Watch branch. After NAFTA, Public Citizen created a new branch—its Global Trade Watch—to deal exclusively with trade and investment issues, staffed by researchers and economists specializing in international trade and 168
investment.271 Other groups, such as the Council of Canadians, Friends of the Earth, and
the Sierra Club have largely followed Public Citizen’s lead, hiring their own trade
campaigners and trade specialists.
Thus, on all three measures of the extent or degree of civil society mobilization
proposed in chapter two—the number of mobilized groups, the variety of mobilized
groups, and, perhaps to a lesser extent, the devotion of individual mobilized groups’
resources to trade and investment issues—evidentiary support can be found for my
legalization hypothesis. However, it is important to remember that correlation is not
causation. How can we know whether or not the correlation between civil society
mobilization and the increasing legalization of regional and multilateral trade and
investment regimes is spurious? How can we be sure that civil society groups do not
have other reasons for mobilizing in the domain of trade and investment policy which
have nothing to do with the legalization of trade and investment regimes? Throughout
this thesis, I have suggested a means of checking the validity of the legalization
explanation. If legalization is actually responsible for the growth in civil society’s
mobilization in the domain of trade and investment policy, I have argued that we should
expect the arguments of civil society groups against liberal commercial agreements to
change over time as a result of legalization. Specifically, if legalization effects civil
society groups by providing them with more and better information about how liberal
commercial agreements affect their interests, thus reducing the information costs
associated with the decision to mobilize, then we would expect the arguments (i.e., the
reasons) groups give for mobilizing to become more-informed and specific, and less
271 Incidentally, Lori Wallach, the director of Public Citizen’s Global Trade Watch and one of the leading critics of legalized trade and investment liberalization, is herself a trade lawyer. 169 general or vague. Furthermore, we would expect civil society’s arguments for why they have mobilized to become increasingly focused on the actual content and details of commercial agreements, especially the legal aspects of agreements (i.e., the rules, provisions, and decision-making procedures of agreements). This is in fact, what we find.
Success or Failure: Does Civil Society Have a Chance in Achieving its Goals?
Having gained a better understanding of the dynamics of civil society mobilization in the realm of trade and investment policy, we are now in a position to ask the following question: Are the activities of civil society ultimately an exercise in futility? I do not wish to engage in a lengthy discussion of this question. However, I will offer a few brief comments that may help to put the mobilization of civil society in perspective.
In order to determine the ultimate significance of civil society mobilization, we must pose a counterfactual question: Would trade and investment policy outcomes have been any different in the absence of civil society mobilization? This question can probably be answered in the affirmative. The best evidence for this conclusion is offered by the case of NAFTA. It is probably safe to assume that labor groups would have mobilized against any trade agreement involving Mexico. However, had environmental and public-interest groups not mobilized on this issue, it is doubtful that either the Bush or Clinton administrations would have linked environmental issues to the NAFTA negotiations (much less pursued actual side negotiations on these issues). It is less clear, however, whether or not, the mobilization of civil society directly contributed to the failure of the MAI negotiations or the WTO’s failure to launch a Millennium Round of 170
trade talks at Seattle (despite such claims by numerous civil society groups themselves).
Nonetheless, it would appear, that if nothing else, the activities of civil society served to aggravate these initiatives, throwing more sand into the gears of processes which were apparently already plagued with significant difficulties and obstacles. Thus, it would appear that civil society groups have had a relatively significant impact on the politics of
trade and investment policy, but without a thorough examination of this issue, this
remains a tentative conclusion at best.
Legalized Neoliberalism vs. the Public Good: Civil Society’s Options
While national governments have always had to worry about interest groups
representing uncompetitive economic sectors (and similar domestic protectionist
elements) mobilizing to defend their economic interests against international commercial
agreements which they perceive to be potentially harmful (to their interests), the
emergence of civil society groups within this policy realm presents a new challenge to
governments who wish to pursue further international trade and investment liberalization.
Furthermore, because of their largely non-economic nature, the interests of such groups
are not easily reconciled with the substance of liberalizing agreements, nor can they
easily be assuaged through the use of compensatory side payments as can economic
actors. The emergence and strengthening of such groups in this policy arena could spell
trouble for governments committed to a more liberalized world economy. While it
remains to be seen whether such groups have the capacity to function as a viable,
sustainable, and politically significant opposition, their mobilization appears to have
grown significantly in recent years, begging the question of whether such groups have the
potential to act as a force which governments must seriously reckon with (or at least give 171
consideration to) when engaging in multilateral negotiations which are intended to further
legalize the international trade and investment regime.
The legalization of international trade and investment regimes exposes the grand
paradox posed by the globalization of capitalism. Although neoliberal economic theory
suggests that no set of rules or state intervention can equal the efficiency of a free and
unfettered global capitalist economy, rules and state intervention are precisely what is
required to supercede (or destroy) existing rules and state structures (e.g., tariffs,
regulations, investment restrictions, etc.) in order to achieve the freedom of global
markets. In other words, the new global economy is being created through laws jointly
formulated by governments themselves. In fact, in as much as the essence of agreements
such as NAFTA’s Chapter 11 or the MAI can be identified as the protection of private
property, these agreements represent a natural evolutionary advance in the modern
Lockean-inspired capitalist-legal infrastructure.272 Thus, it is paradoxical that
governments must institute international regulations in order to constrain their own
ability to regulate at the domestic level.
It is worth pointing out that though regional and multilateral trade regimes (and
their newly emergent, complimentary investment regimes) have become more legalized,
there is nothing that would prevent sovereign governments from breaking the rules
prescribed by these regimes. In other words, occasional violations of an international
regimes’ rules will not result in irreparable harm to a nation-state who chooses to engage in such violations but who otherwise adheres to the regimes’ prescriptions (although it may result in retaliatory measures by fellow states who also adhere to the regimes).
However, this being said, there are good reasons to expect that, in the long-run,
272 See Wood 2000 172
reputational considerations will come into play, leading states to exhibit more adherence to than defiance of a regime’s rules. It is this expectation that worries civil society groups.
While the American and Canadian governments have repeatedly demonstrated their willingness to break the rules of international commercial regimes over the past half century, they have also shown themselves to be more or less strongly committed to the furtherance of liberalism in the world economy. This commitment has become increasingly evident over the course of the past decade and a half as both governments have engaged in what seems like an unending series of commercial negotiations both with each other as well as with other nations. Confronted with this situation, civil society groups in both countries have felt compelled to push for substantial institutional change
in liberal commercial regimes. Unlike capital, civil society has no “exit” option. Civil society groups (and the citizens who belong to such groups) cannot simply move themselves to other countries who are less committed to liberal international economic policies (assuming such countries still exist). Nor should they want or have to. Instead, these groups have had to rely on their “voice” in order to ensure that their governments take into account their collective interests when formulating foreign economic policies.273
This is why civil society groups have increasingly taken to the streets to voice their displeasure at the direction of international trade and investment policies.
The rules of the game which domestic and international institutions establish are of crucial importance for explaining the kinds of politics which we observe (at either the domestic or international level). They essentially form and define the structure within which domestic and international actors must operate, either promoting or constraining
273 On the distinction between “exit” and “voice,” see Hirschman 1970. 173
certain courses of action. This is a lesson which North American civil society groups
have slowly but surely learned as they have become aware of the significance and
implications of international commercial institutions for the regulatory autonomy of their
respective governments. Thus, we are left with the final question that arises from this
investigation: What are the available options or courses of action which civil society
groups can adopt in pursuit of their goal to protect their countries’ regulatory
sovereignty?
Civil society groups have essentially three options which they can pursue in
pursuit of institutional change in the international political economy (options which may
or may not be mutually exclusive). First, they can demand that international trade and
investment regimes be dismantled and rebuilt from scratch. Such an extreme outcome is,
however, highly unlikely. Second, they can push for changes in the rules of trade and
investment regimes by seeking the incorporation of protective rules which exempt or
allow for certain kinds of regulatory behavior (directed at achieving specific, desirable,
public-interest goals) on the part of governments who adhere to these regimes. This,
however, will be contingent upon groups gaining representation in the policymaking
apparatuses of international economic institutions, which leads to the final option: Civil
society groups could push for representation in the decision-making and procedural
institutions of trade and investment regimes.274 It would seem that these last two options
are perhaps the most realistic courses of action that civil society groups could pursue if
274 For instance, in the realm of investment, civil society groups could demand that they be given legal standing to defend government practices when these are challenged by foreign investors under investor-to- state dispute resolution instruments. This would be similar to the role played by interest groups in domestic judicial fora when such groups submit amicus curiae briefs. There is at least some evidence that this proposal has been given serious consideration in the FTAA negotiations as well as proposed revisions to NAFTA’s Chapter 11. 174
they want to ensure that their interests are represented in the global trade and investment
policymaking process. However, whether or not they do, in fact, pursue these strategies
depends on the willingness of groups to bargain and/or compromise. Many groups, at the
present time, appear completely unwilling to compromise with proponents of
liberalization. If civil society groups are unwilling to compromise on trade and
investment issues, then their future success in achieving their goals will instead depend
on their capacity to exert significant political pressure on their respective governments,
and this will depend on their ability to increase their numerical strength and their ability
to sway or capture public opinion in their respective countries.
In conclusion, civil society groups in North America have mobilized in the
domain of international trade and investment policy in response to important changes in
the institutional infrastructure that governs the global economy. They have mobilized in
order to ensure that their interests are not ignored by these institutions (as well as their
own governments). Proponents of liberalization claim that liberalization of the world
economy is itself a public good, and that, over the long-term, it will provide enormous
benefits to everyone involved. Furthermore, they claim that international institutions are
necessary to ensure that the benefits of liberalization are realized. Civil society groups
challenge this claim, arguing that, if left completely unfettered or unconstrained,
international markets could easily result in numerous public ills. Moreover, they have
argued that legalized institutions designed and intended to constrain the capacity of governments to interfere with global markets will result in the inability of these
governments to protect their citizens from the potentially harmful effects of these
markets. Thus, civil society has mobilized to ensure that such institutions do not render 175 their governments impotent, and that the goal of liberalization does not consume their own interests in job security, a cleaner environment, and numerous other social objectives. A sign held by a protestor at the FTAA protests in Quebec City goes a long way toward capturing the essence of civil society’s motivation. The sign read: “No
Globalization Without Representation.”
176
APPENDIX 1: A LIST OF CANADIAN ORGANIZATIONS WHO MOBILIZED
AGAINST THE CANADA-UNITED STATES FREE TRADE AGREEMENT
(CUFTA)∗
1. Alliance of Canadian Cinema, Television & Radio Artists (ACTRA) 2. Assembly of First Nations 3. Canadian Conference of the Arts 4. Canadian Council of Retirees 5. Canadian Labour Congress 6. Canadian Teachers’ Federation 7. Canadian Turkey, Broiler & Egg Producers Associations 8. Coalition of Senior Citizens’ Organizations 9. Confederation of National Trade Unions 10. Congress of Canadian Women 11. Consumers Against Rising Prices 12. Council of Canadians 13. Council of Canadian Unions 14. Dairy Farmers of Canada 15. GATT-Fly 16. Jesuit Centre for Social Faith & Justice 17. Law Union of Canada 18. National Action Committee on the Status of Women 19. National Anti-Poverty Organization 20. National Farmers Union 21. Ontario Federation of Agriculture 22. Ontario Working Women 23. Playwrights’ Union of Canada 24. Pollution Probe 25. Quebec Farmers Union 26. Quebec Federation of Labour 27. Quebec Teachers’ Federation 28. The Artists Union 29. Toronto Disarmament Network 30. Toronto Union of Unemployed Workers 31. United Church of Canada 32. Voice of Women
∗ This list is taken from Warnock 1988, 117; it is not a comprehensive listing of all organizations who opposed the CUFTA. 177
33. Women Working with Immigrant Women 34. Writers’ Union of Canada 178
APPENDIX 2: A LIST OF CIVIL SOCIETY ORGANIZATIONS WHO ENDORSED
THE NGO STATEMENT OPPOSING EXPANSION OF THE NORTH AMERICAN
FREE TRADE AGREEMENT (NAFTA) TO CHILE∗
Canada (Total number of groups = 45)
1. Action Victoria 2. Action Canada Network 3. Action Nova Scotia 4. Alliance of Canadian Cinema, Television & Radio Artists (ACTRA) 5. Alternative North 6. Assembly of First Nations 7. Canadian Auto Workers 8. Canadian Centre for Policy Alternative 9. Canadian Federation of Students 10. Canadian Peace Alliance 11. Canadian Environmental Law Association 12. Canadian Labour Congress 13. Canadian Union of Public Employees 14. Canadian Union of Postal Workers 15. CHOICES Manitoba 16. Communication, Energy & Paperworks Union 17. Common Front—Alberta 18. Confederation des Syndicats Nationaux 19. Confederation of Canadian Unions 20. Congress of Union Retirees of Canada 21. Council of Canadians 22. CUSO 23. Ecumenical Coalition for Economic Justice 24. Fredericton Coalition for Social Justice 25. Graphic Communications International Union 26. Inter-Pares 27. Latin American Working Group 28. National Action Committee on the Status of Women 29. National Anti-Poverty Organization 30. National Federation of Nursers’ Unions
∗ This list (as well as the statement) can be found at http://dkd.net/davekidd/politics/nafta.html. Political parties have been excluded from the list. Total number of groups (Canadian and American) equals 109. 179
31. National Farmers Union 32. National Pensioners & Senior Citizens Federation 33. National Union of Provincial & General Employees 34. Newfoundland Coalition for Equality 35. Ontario Coalition for Social Justice 36. Oxfam—Canada 37. Public Service Alliance of Canada 38. Rural Dignity 39. Saskatchewan Coalition for Social Justice 40. Solidarite Populaire Quebec 41. Transportation-Communications International Union 42. United Church 43. United Fisherman & Allied Workers’ Union 44. United Food and Commercial Workers 45. Voice for Women
United States (Total number of groups = 64)
46. Alabama AFL-CIO 47. Americans for Democratic Action 48. Animal Welfare Institute 49. Center for Concern 50. Chicago Coalition for the Homeless 51. Church Women United 52. Citizen Action on Long Island 53. Coalition for Justice in the Maquiladoras 54. Conversion for Reclaiming Earth in the Americas (CREA) 55. Council on International and Public Affairs 56. Development GAP 57. Doris Day Animal League 58. Economics Working Group 59. Eighth Day Center for Justice—Chicago 60. Friends of the Earth—United States 61. Global Exchange 62. Government Accountability Project 63. Highlander Research & Education Center 64. Illinois Fair Trade Campaign 65. Independent Voters of Illinois 66. Institute for Agriculture & Trade Policy 67. Institute for Food and Development Policy 68. Institute for Policy Studies—Global Economy Project 69. Inter-Hemispheric Resource Center 70. International Brotherhood of Teamsters 71. International Forum on Globalization 72. International Labor Rights Fund 73. International Union of Electrical, Salaried, Machine & Furniture Workers 180
74. International Union of Food Workers—North America 75. Laborers’ International Union of North America 76. Long Island Progressive Coalition 77. Maryknoll Justice & Peace Office 78. Midwest Center for Labor Research 79. Minnesota Fair Trade Campaign 80. National Consumers League 81. National Family Farm Coalition 82. National Farmers Union 83. New York Fair Trade Campaign 84. Oil, Chemical & Atomic Workers International Union 85. Pesticide Action Network—North America 86. Pittsburgh Labor Action Network of the Americas (PLANTA) 87. Prairie Fire Rural Action 88. Priests of the Sacred Heart—JPIC Office 89. Project South—Institute for the Elimination of Poverty & Genocide 90. Public Citizen 91. Pure Food Campaign 92. Rainforest Action Network 93. Research & Education Project of Long Island 94. Rural Coalition 95. Sierra Club 96. Society for Animal Protective Legislation 97. Southeast Regional Economic Justice Network 98. Southwest Network for Environmental & Economic Justice 99. Southwest Organizing Project 100. Southwest Public Workers Union 101. Tennessee Industrial Renewal Network 102. Texas AFL-CIO 103. The Women’s Office--Chicago 104. United Auto Workers 105. United Electrical, Radio, & Machine Workers of America 106. United Methodist Church—General Board of Church & Society 107. United Needle-trades, Industrial & Textile Employees (UNITE!) 108. Wisconsin Fair Trade Campaign 109. Witness for Peace 181
APPENDIX 3: A LIST OF CIVIL SOCIETY ORGANIZATIONS WHO ENDORSED
“THE NGO STATEMENT ON THE MULTILATERAL AGREEMENT ON
INVESTMENT (MAI)”∗
Canada (Total number of groups = 85)
1. Albernai Environmental Coalition 2. Alliance for Public Accountability 3. Antigonish Coalition for Economic Justice 4. The Area Clamdiggers Association 5. Borrowers’ Advocate 6. Calancan Bay Villagers’ Support Coalition 7. Canadian Association for the Study of Adult Education Peace Group 8. Canadian Catholic Organization for Development & Peace 9. Canadian Centre for Policy Alternatives 10. Canadian Consortium for International Social Development 11. Canadian Council for International Cooperation 12. Canadian Environmental Law Association 13. Canadian Environmental Networks 14. Canadian Institute for Environmental Law and Policy 15. Canadian Labour Congress 16. Canadian Parks and Wilderness Society 17. Canadian Union of Public Employees 18. Canadian Voice for Women and Peace 19. Costa Rica Saskatchewan Twinning Project 20. Council of Canadians 21. Council of Canadians—British Columbia Chapter 22. Council of Canadians—Cowichan Valley Chapter 23. Council of Canadians—Mid-Island Vancouver Chapter 24. Council of Canadians—Montreal Chapter 25. Council of Canadians—Saskatoon Chapter 26. Council of Canadians—Windsor Chapter 27. Distributed Knowledge Project 28. Earth Rainbow Network 29. Eco-Materials Group 30. Enviro Clove
∗ This list (as well as the statement) can be found in Jackson and Sanger 1998, 319-337. Political parties have been excluded from the list. Total number of groups (Canadian and American) equals 227. 182
31. Falls Brook Centre 32. Federation Nationale des Associations de Consommateurs du Quebec 33. Friends of Temagami 34. The GAIA Project 35. Georgia Strait Alliance 36. Global Compliance Research Project 37. Greenpeace Canada 38. Greenways Committee 39. Guideposts for a Sustainable Future 40. Indonesia—Canada Alliance 41. Inter-Church Coalition on Africa 42. Inter-Church Committee on Human Rights in Latin America 43. Island Natural Growers 44. Lifecycles Project Society 45. Malaspina Students Union Local 61, Canadian Federation of Students 46. Manitoba MAI Awareness Coalition 47. Manitoba Federation of Labour 48. Manitoba Future Forest Alliance 49. Montreal Raging Grannies 50. Nanoose Conversion Campaign 51. National Action Committee on the Status of Women 52. Nipissing Environmental Watch 53. North Island Students Association 54. Northwatch 55. North-South Institute 56. Nova Scotia Public Interest Research Group 57. Nova Scotia Voice of Women 58. Ocean Voice International 59. Ottawa Local Employment and Trading System 60. Ontario Public Interest Research Group—Ottawa 61. Ontario Public Interest Research Group—Carleton 62. Oxfam—Canada 63. Pacifica Institute 64. Polaris Institute 65. Power River Greenways 66. Powell River Regional District 67. Quality of Life Network 68. Reach for Unbleached Foundation 69. Results-Canada 70. Rogers Environmental and Educational Foundation 71. Saskatchewan Environmental Society 72. Sierra Club of Canada 73. Sierra Youth Coalition 74. Social Justice Committee of Montreal 75. Solution to Pollution 76. Toronto Environmental Alliance 183
77. Turtle Island Earth Stewards 78. West Coast Environmental Law Association 79. Western Canada Wilderness Committee 80. Windsor Arena MAI-Day Coalition 81. Women’s International League for Peace and Freedom 82. The World Federalists of Canada 83. World Interaction Mondiale 84. University of British Columbia MAI-Not Group 85. University of Victoria Students’ Society
United States (Total number of groups = 142)
86. 4D Manifestations 87. 8th Day Center for Justice 88. Alliance for Democracy 89. Alternatives in Action! 90. Animal Welfare Institute 91. Arizona Toxics Information 92. Asia Pacific Environmental Exchange 93. Border Ecology Project 94. Boulder Independent Business Alliance 95. California Fair Trade Coalition 96. Campaign for Labor Rights 97. Carolina Interfaith Task Force on Central America 98. Center for Sustainable Systems 99. Center for International Environmental Law 100. Center for Popular Economics 101. Chicago Religious Leadership Network of Latin America 102. Chicago Metropolitan Sanctuary Alliance 103. Chicago Local of the Democratic Socialists of America 104. Citizen’s Alliance of Santa Barbara 105. Coalition for Forests 106. Comboni Missionaries, Justice & Peace Resource Center 107. Community Nutrition Institute 108. Cornell Greens 109. Cornucopia Network of New Jersey 110. Cross-Border Network for Justice and Solidarity 111. Culture’s Edge 112. Cumberland Counties for Peace & Justice 113. Defenders of Wildlife 114. Democratic Reform News 115. Development GAP 116. EarthWINS 117. Employment Research Association 118. Epicenter 119. Fair Trade Coalition of Colorado 184
120. Federal Land Action Group 121. Fifty Years is Enough 122. Friends of the Earth—United States 123. General Board of Church & Society of the United Methodist Church 124. Global Exchange 125. Global Corporate Accountability Issue Group 126. Greater Kansas City Fair Trade Coalition 127. Green Table 128. Ground Work for a Just World 129. Guatemala News & Information Bureau 130. Hightower & Associates 131. Howard County Friends of Central America and the Caribbean 132. Institute for Agriculture and Trade Policy 133. Institute Justice Team for Sisters of Mercy of the Americas 134. Institute for Food and Development Policy 135. Inter-Hemispheric Resource Center 136. Interfaith Center on Corporate Responsibility 137. International Law Center for Human, Economic and Environmental Defense 138. International Forum on Globalization 139. International Union of Electricians, Local 1140 140. International Brotherhood of Teamsters 141. International Labor Rights Fund 142. International Society for Gandhian Studies 143. International Rivers Network 144. International Peoples Health Council—North America 145. Jobs with Justice—Portland Chapter 146. Jobs with Justice—Mid-Willamette Valley Chapter 147. Kansas Farmers Union 148. Klamath Siskiyou Wildlands Center 149. Latin American Energy Response Network 150. Leadership Council of Sisters, Servants of the Immaculate Heart of Mary 151. Long Island Progressive Coalition 152. Maryknoll Education Center 153. McKeever Institute of Economic Policy Analysis 154. Medical Mission Sisters’ Alliance for Justice 155. Midwest Center for Labor Research 156. Mining Impact Coalition of Wisconsin 157. Minnesota Fair Trade Coalition 158. Mountcastle International 159. National Family Farm Coalition 160. National Wildlife Federation 161. National Farmers’ Union 162. National Commission for Economic Conversion & Disarmament 163. Native Forest Council 164. Network for Environmental & Economic Responsibility 165. NETWORK: A National Catholic Social Justice Lobby 185
166. Network for Environmental & Economic Responsibility of the United Church of Christ 167. New Economic Foundation 168. New Jersey Citizen Action 169. New Jersey Work Environmental Council 170. New Jersey State Council of YWCAs 171. New York Citizen Action 172. New York State Labor-Religious Coalition 173. New York Student Environmental Action Coalition 174. Nicaragua Network 175. Northern Sanitiam Watershed Council 176. Pacific Environment & Resources Center 177. Pax Christi—Maine 178. Pax Christi Michigan State Council 179. Peace Action of San Mateo County of California 180. Peace and Justice Center of Vermont 181. Pennsylvania Fair Trade Campaign 182. Pesticide Action Network North America 183. Pittsburgh Labor Action Network for the Americas 184. Prairie Rural Action 185. Presbyterian Church 186. Progressive Review 187. Project Biodiversity in Public Forests Network 188. Project South: Institute for the Elimination of Poverty & Genocide 189. Project Underground 190. Public Citizen’s Global Trade Watch 191. Pure Food Campaign 192. RAFI-USA 193. Rainforest Action Network 194. Resource Center for the Americas 195. Robert F. Kennedy Memorial Center for Human Rights 196. Rural Vermont 197. San Francisco Labor Council for Latin America Advancement 198. Sane Distribution 199. Sierra Club 200. Sisters of the Holy Cross, Notre Dame 201. Society for a Clean Environment 202. Southeast Regional Economic Justice Network 203. Student Environmental Action Network Montana 204. Sustainable Alternative to the Global Economy (SAGE) 205. Synapses 206. Texas Center for Policy Studies 207. Texas Fair Trade Campaign 208. The Edmonds Institute 209. Tourism Industry Development Council 210. U.S. Catholic Mission Association 186
211. United for a Fair Economy 212. United Church Board of World Ministries 213. United Church of Christ 214. United Electrical, Radio & Machine Workers of America 215. United Labor Council of Redding & Berks County 216. University Conversion Project 217. Upavim Crafts 218. Values Project 219. Washington Office on Latin America 220. Western Ancient Forest Campaign 221. Wetlands Preserve 222. Witness for Peace 223. Woodstock Institute 224. Workgroup for People’s Health & Rights 225. World Hunger Year 226. Worldview 227. WorldWise
187
APPENDIX 4: A LIST OF ORGANIZATIONS WHO ENDORSED “THE
STATEMENT FROM MEMBERS OF INTERNATIONAL CIVIL SOCIETY
OPPOSING A MILLENNIUM ROUND OR A NEW ROUND OF COMPREHENSIVE
TRADE NEGOTIATIONS”∗
Canada (Total number of groups = 78)
228. Aboriginal Tourism Authority 229. Action & Communication Network for International Development 230. Alberta Aboriginal Tourism Alliance 231. Alberta Wilderness Association 232. Alternatives 233. Ao! Espaces de la Parole, Revue Quebecoise d’Analyse et de Critique Sociale 234. Association for Iran’s Peace & Freedom—Canada 235. Barnard-Boecker Centre Foundation 236. British Columbia Young New Democrats 237. Blackfoot Treaty Voices 238. Blue-Green Society 239. Canadian Catholic Organization for Development & Peace 240. Canadian Council for International Cooperation 241. Canadian Environmental Law Association 242. Canadian Parks and Wilderness Society—Edmonton Chapter 243. Canadian Union of Postal Workers—Syndicat des Travailleurs et Travailleuses des Postes (CUPW-STTP) 244. Canadians for Mercury Relief 245. Centre for Research on Latin America and the Caribbean (CERLAC)—York University 246. Citizens’ Council on Corporate Issues 247. Coalition for Better Access to Social Services (CBASS) 248. College Institute Educators Association 249. Comite Environnement de l’Ecole Polytechnic de Montreal 250. Concordia Student Union 251. Confederation of Canadian Unions 252. Cortes Ecoforestry Society
∗ This list (as well as the statement) can be found at http://www.foeeurope.org/trade/civil_society_signatories.htm. Political parties have been excluded from the list. Total number of groups (Canadian and American) equals 319. 188
253. Council of Canadians 254. Council of Canadians—Vancouver Chapter 255. CUSO 256. Defense of Canadian Liberty Committee 257. Democracy Watch 258. Earth Action 259. Ecumenical Coalition for Economic Justice 260. Education & Training Employees Association 261. Enviro-Care 262. Equiterre 263. Falls Brook Centre 264. FarmFolk-CityFolk Society 265. FoodShare Metro Toronto 266. Friends of the Christmas Mountains 267. Friends of the Oldman River 268. Gaia Preservation Coalition 269. Grassroots United First Nations of Canada 270. Guideposts for a Sustainable Future 271. Happy Planet Foods 272. Inter-Pares 273. International Institute of Concern for Public Health—Canada 274. Island Residents Against Toxic Environments (IRATE) 275. KIN International 276. LETS Victoria, British Columbia 277. Manitoba MAI Awareness Coalition 278. Mining Watch 279. National Centre for Sustainability 280. Native News Network of Canada 281. Nova Scotia Public Interest Research Group 282. Operation SalAMI 283. Pacific Policy Cooperative 284. People Against the MAI (PAMAI) 285. People Against Nuclear Energy & for a New Perspective on Energy (PANE) 286. Pueblito Canada 287. Science for Peace 288. Shuswap Barter Network 289. Sierra Club of Canada 290. Sisters of Mercy—British Columbia 291. Social Justice Committee—Montreal 292. Students Against the MAI—University of British Columbia 293. Sussex Society for the Public Interest 294. Travail Social—UQAM 295. United First Nations 296. University of Victoria Students’ Society 297. Vancouver Island Public Interest Research Group 298. Victoria MAI-DAY Network of British Columbia 189
299. Waterview Publishing 300. West Coast Raging Grannies 301. Windsor Area MAI-day Coalition for Human Rights 302. Windsor & Area Coalition for Social Justice 303. Winnipeg-Transcona New Democratic Party of Canada Constituency Association 304. Women’s International League for Peace & Freedom (WILPF) 305. Yethka Getaways
United States (Total number of groups = 241)
306. 180-Movement for Democracy & Education Clearinghouse 307. 8th Day Center for Justice 308. Action for Community & Ecology in the Rainforests of Central America (ACERCA) 309. Active Students for a Healthy Environment 310. Africa Policy Information Center (APIC) 311. Alaska Action Center 312. Alliance for Democracy 313. Alliance for Democracy—Austin, Texas Chapter 314. Alliance for Democracy—Delta County, Colorado Chapter 315. Alliance for Democracy—Greater Sacramento Chapter 316. Alliance for Democracy—Indiana Chapter 317. Alliance for Democracy—Metro Detroit Chapter 318. Alliance for Democracy—Mokan-Kansas City Chapter 319. Alliance for Democracy—Portland, Oregon Chapter 320. Alliance for Democracy—Rhode Island Chapter 321. Alliance for Global Justice 322. American Lands Alliance 323. Americans for Democratic Action 324. Americas Update Editorial Collective 325. Anarchist Action of Rochester 326. Anarchist Now! 327. Arctic to Amazonia Alliance 328. Asia Pacific Center for Justice & Peace 329. Asia Pacific Environmental Exchange 330. Baja Ecotopia Earth First! 331. Baltimore Action for Justice in the Americas (BAJA) 332. Bank Information Center 333. Blackfoot Confederacy 334. Burma Forum 335. Burma Refugee Relief Coalition 336. California Fair Trade Campaign 337. Campaign for Food Safety 338. Campaign for Labor Rights 339. Campaign to Abolish Poverty 340. Campus Democracy Collective—University of Arkansas 190
341. Center for Social Justice & Global Awareness 342. Center for Sustainable Systems 343. Center for Balanced Development 344. Chiapas-Albany Solidarity Alliance 345. Chicago Religious Leadership Network on Latin America 346. Christian Center for Financial Responsibility 347. Circle of Life Foundation 348. Citizens’ Alliance of Santa Barbara 349. Citizens’ Reaction Against Pollution 350. Coalition for Justice in the Maquiladoras 351. Coalition on Women, Religion, & Spirituality 352. Commission on Religion in Appalachia (CORA) 353. Committee in Solidarity with the Central American People (CISCAP) 354. Concerned Citizens’ Coalition—West Virginia 355. Concerned Citizens’ Coalition of Roane, Calhoun & Gilmer 356. Conference of Social Justice Coordinators of Southern California 357. Conference of Social Justice Coordinators of Northern California 358. Congregation of the Sisters of the Good Shepherd 359. Corporate Agribusiness Research Project 360. CORE Collective—Pensacola 361. Council on Hemispheric Affairs 362. Craft Center 363. Dakota Resource Council 364. Dan A Ceud Docha Collective-Denver—The United Anarchist Front-Colorado 365. EARTH—James Madison University 366. Earth Ministry 367. Earthjustice Legal Defense Fund 368. East Timor Action Network—Arizona 369. East Timor Action Network—Los Angeles 370. ECO-action 371. EcoLogic 372. Economic Justice Now 373. ECO-store 374. Edmonds Institute 375. Environmental Law Association of McGill 376. Environmental Law Caucus of Portland, Oregon 377. Environmentally Sound Promotions 378. Envirowatch Inc. 379. Epicenter 380. EQUAL 381. Essential Action 382. Fair Trade Federation 383. Fellowship of Reconciliation—Racial & Economic Justice Program 384. Fifty Years is Enough: U.S. Network for Global Justice 385. Food First—The Institute for Food & Development Policy 386. Free Burma Coalition 191
387. Friends of Daugherty Creek and Big River 388. Friends of the Bitterroot 389. Friends of the Earth—United States 390. Front Range Fair Trade Coalition 391. Full Employment Coalition 392. Genesis Farm 393. Global Exchange 394. Global Resource Action Center for the Environment (GRACE) 395. Global Response 396. Globalization Challenge Initiative 397. Goucher College Students for Peace & Non-Violent Action 398. Grand Canyon Trust 399. Gray Panthers of San Francisco 400. Gray Panthers of Seattle 401. Greater Kansas City Fair Trade Coalition 402. Green Choice 403. Green Onion Resource Center 404. Hawaii Wildlife Fund 405. Hawaii Pesticide Project 406. Hawaii Sustainable Lifestyle Network 407. Heartwood 408. Hightower Radio 409. Houstonians Against U.S. Military Involvement 410. Institute for Agriculture & Trade Policy 411. Institute for Global Education 412. Institute Justice Team—Sisters of Mercy of the Americas 413. International Advocates for Health Freedom 414. International Alliance for People’s Movements 415. International Brotherhood of Teamsters 416. International Center for Peace & Justice 417. International Forum on Globalization 418. International Longshoreman & Warehouse Union 419. International Society for Ghandian Studies 420. International Tranquility 421. Kalmiopsis Audubon Society 422. Kentucky Appalachian Ministry 423. Latin America Emergency Response Network 424. Leadership Council of Peace Action of San Mateo County, California 425. Leavenworth Audubon Adopt-a-Forest 426. LightHawk 427. Living Earth 428. Long Island Progressive Coalition 429. Lost Coast League 430. MAGIC 431. Marion County Water Watch 432. Mattole Salmon Group 192
433. McDowell Mountain Monitors 434. Memphis Audubon Society 435. Mercy Consolidated Asset Management Program 436. Milwaukee Pledge of Resistance 437. Minnesota Fair Trade Coalition 438. Morgantown Fair Trade Coalition 439. National Family Farm Coalition 440. Native Forest Council 441. Native Forest Network 442. Nautilus Institute for Security & Sustainable Development 443. Neighborhood Action Committee of Northside, Cincinnati, Ohio 444. Network of Environmental & Economic Responsibility of the United Church of Christ 445. New Raza Left 446. Nicaragua Network 447. NICCA 448. Northwest Environmental Defense Center of Portland 449. Northwest International Health Action Coalition 450. Observe Respect & Compassion for Animals (ORCA) 451. Ohio Fair Trade Campaign 452. Oregon AFL-CIO 453. Oregon State Industrial Union Council 454. Organic Consumers Association 455. Pacific Environment & Resource Center 456. Paper, Allied-Industrial, Chemical & Energy Workers’ Union (PACE) 457. Peace & Justice Center of Southern California 458. Peace & Justice Task Force—United Church of Christ Rocky Mountain Conference 459. Pennsylvania Consumer Action Network 460. People Against Racist Terror (PART) 461. Portland Central America Solidarity Committee 462. Portland Unitarian-Universalist Young Adult Group 463. Positive Futures Network 464. Preamble Center 465. PRLDEF Institute for Puerto Rican Policy Inc. 466. Progressive Alliance of Humboldt State University 467. Project South: Institute for the Elimination of Poverty & Genocide 468. Project Underground 469. Protect Biodiversity in Public Forests Network 470. Public Citizen’s Global Trade Watch 471. Rainforest Action Network 472. Redwood Action Team 473. Regional Environmental Action League 474. Resource Center of the Americas 475. Rethinking Tourism Project 476. Rocky Mountain Peace & Justice Center 193
477. Ruckus Society 478. Rural Coalition 479. Rural Education Action Project—Rural Vermont 480. San Diegans Against Biotechnology (SAB) 481. San Diego Environmental Coalition 482. San Diego MAI Alert 483. San Mateo County Peace Action 484. Santa Barbara Earth First! 485. Santa Cruz Action Network (SCAN) 486. Save Endangered Wilderness 487. Save the Redwoods—Boycott the Gap Campaign 488. Sea Turtle Restoration Project 489. Seattle Institute for Social Autonomy 490. Silicon Valley Toxics Coalition 491. Sisters of Mercy—U.S. Province, California 492. Sisters of the Holy Cross—Notre Dame 493. Sisters of the Holy Names—California Justice & Peace Committee 494. Sisters of the Holy Names—California Leadership Team 495. Sisters of Benedict—Oklahoma 496. Site for Social Action 497. Social & Environmental Entrepreneurs (SEE) 498. Social Justice Committee of the Olympia Unitarian-Universalist Congregation 499. Socially Responsible Investment Coalition 500. Southern Appalachian Biodiversity Project 501. Southern Neighborhoods Network 502. St. Louis Inter-Faith Committee on Latin America 503. Student Environmental Action Coalition—New York 504. Student Environmental Action Coalition—Pennsylvania 505. Students for a Free Tibet 506. Students for a Responsible Global Environment (SURGE) 507. Survival Center—University of Oregon 508. Sustainable Alternatives to the Global Economy (SAGE) 509. Sustainable America 510. Sustainable Development Group—Colorado State University 511. Tennessee Industrial Renewal Network 512. Texas Committee on Natural Resources 513. Think Again! 514. TRANET 515. Transnational Resource & Action Center 516. TUC Radio 517. Students of Color for Environmental & Economic Justice—University of California at Berkeley-Nindakini 518. United Church of Christ Network for Environmental & Economic Responsibility 519. Unitarian-Universalist Social Justice Committee—Olympia, Washington 520. United for a Fair Economy 521. United Steelworkers of America 194
522. United Steelworkers of America—Los Angeles-Orange County Legislative Committee 523. United Steelworkers of America—Local 6163-Albany, Oregon 524. United Steelworkers of America—Oregon Legislative Education Committee 525. United Students Against Sweatshops 526. University Coalition in Defense of Mumia Abu-Jamal—Minnesota 527. University of Wisconsin—Madison Greens 528. University-Young Women—Minnesota 529. Ustawi 530. Utica Citizens in Action 531. V.P. Cross Border Network for Justice and Solidarity 532. Video Activists’ Network 533. Visions in Action 534. Voter Encouragement Foundation 535. Washington Biotechnology Action Council 536. West Coast Environmental Law Association 537. Whispered Media 538. Wisconsin Fair Trade Campaign 539. Wisconsin Coordinating Council on Nicaragua 540. Wisconsin National Organization for Women 541. Witness for Peace 542. Women, Food & Agriculture Network 543. Women’s Intercultural Network (WIN) 544. Women’s International League for Peace & Freedom—United States 545. Working Against Toxin-Sludge 546. WorkSafe! 195
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