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Sierra Magazine
Lay of the Land

Multinationals | Change vs. Chainsaws | Little Engine That Couldn't | Garbage Out, Garbage In

All Hail the Multinationals

The secret trade deal that corporations hope you never hear about

If corporations are persons under the law, what do they dream about? Turns out it's just what we always thought: world domination. They're getting there via an international treaty you probably never heard of called the Multilateral Agreement on Investments. The MAI purports to "liberalize" the rules for international investing. It's sort of like the North American Free Trade Agreement (NAFTA), but global; like the General Agreement on Tariffs and Trade (GATT), but more powerful; like the Constitution, but for corporations, not people. You don't believe it? Listen to Renato Ruggiero, director general of the enforcement arm of international trade, the World Trade Organization: "We are writing the constitution of a single global economy." And he's not asking for your opinion.

Since 1995, representatives of the world's richest nations and mightiest corporations have been working on the agreement in a Paris hotel. The negotiators are members of the Organization for Economic Cooperation and Development, sometimes known as the "rich nations club." (Originally the agreement was to have been negotiated by the larger World Trade Organization, but the United States insisted on the exclusive OECD so as not to "water down" the agreement.) The rest of us might still be in the dark about the MAI had someone not leaked a draft copy of it a year ago January.

The ostensible purpose of the MAI is to protect the rights of international investors. It would do so by giving foreign corporations equal standing with domestic ones. For example, if your town is privatizing its water supply, a bidder can't be excluded just because it's from Latvia or Malaysia.

In effect, the proposed MAI would give corporations equal standing with nations, guaranteeing them the right to directly sue national governments. This might happen with some regularity, because among the MAI's many corporate bonbons are "takings" provisions even more extreme than those already rejected by the Senate: even a "lost opportunity to profit from a planned investment" would be grounds for mandatory compensation. For example, a foreign timber company owning land in the Pacific Northwest could sue the United States for damages if efforts to save the salmon prevented it from logging to the waterline. To resolve such disputes, countries would give their unconditional consent to go before an industry-friendly tribunal of the complainer's choice—the International Chamber of Commerce, for instance. Guess who would have the edge before that body?

Such cases are already being brought under current, weaker agreements. Under the "expropriation" language in NAFTA, the U.S.-based Ethyl Corporation is suing Canada for $251 million for banning the company's gasoline additive MMT, a suspected neurotoxin. Under the MAI, similar suits could become commonplace, forcing governments to pay dearly for the privilege of protecting their citizens.

The MAI would also relieve industry of "performance requirements," regulations like those mandating that manufacturers use certain percentages of recycled material. Threatened too would be state laws like those in Oregon and Idaho forbidding the export of raw logs. The United States would be allowed to shield certain environmental protections from the MAI's blowtorch—but only if it agreed not to pass any more such laws in the future, and to phase out the offending statutes.

The MAI would also spell an end to boycotts and trade sanctions against countries or businesses violating environmental, labor, and human-rights standards. Massachusetts' ban on buying from firms that do business in Burma, and Maryland's proposed restrictions on trade with Nigeria (already under attack as a violation of GATT) would be illegal. Had the MAI been in force in the early 1980s, there would have been no international sanctions against South Africa under apartheid, and Nelson Mandela might still be in jail.

Realizing somewhat belatedly that such provisions might be a hard sell to a Senate that would have to approve the treaty by a two-thirds margin, U.S. negotiators have made weak attempts to add environmental language. Business isn't having it. "We will oppose any and all measures to create or even imply binding obligations for governments or business related to environment or labor," declared Abraham Katz, president of the U.S. Council for International Business. For the MAI, there will be no NAFTA-like "side agreements" with even paper environmental protections: this time big business wants it all.

And they'll get it, too, unless you complain loud and long. Contact Dan Seligman in the Sierra Club's Washington, D.C., office at (202) 675-2387 or dan.seligman@sierraclub.org and ask for a "Don't Trade Away Our Environment" MAI action kit. Or explore the links at www.sierraclub.org/trade. As Lori Wallach of Public Citizen says, our advantage is that there's no way the MAI can pass the "Dracula test"—it can't stand the light of day. —Paul Rauber


Change vs. Chainsaws

Forest chief speaks softly, industry carries a big stick

From the vehemence of the backlash, you'd think Mike Dombeck was some kind of radical. Then again, maybe he is. He openly admits to wanting the U.S. Forest Service to be a responsible steward of America's national forests.

Dombeck, a low-key fisheries biologist from Wisconsin, has been raising hackles on Capitol Hill since he took over the Forest Service in January 1997, hinting at big changes at Big Timber's pet federal agency. In fact, the new frontier that so frightens timber hawks dates back more than a century. As the chief frequently feels obliged to point out, he's only following the course set by Congress in the 1897 Organic Act, the law that created the national forest system in the first place.

"Much has been said of the Organic Act's emphasis on timber production," Dombeck told agency staffers recently. "What is far less understood is the act's emphasis on watershed maintenance and restoration. [These] are perhaps the oldest and highest callings of the Forest Service and the agency is, and always will be, bound to them by tradition, law, and science."

The idea of a Forest Service that cares for forests-even one that promises, as Dombeck has, to maintain "a stable wood supply and jobs" via continued logging-is heresy to the lumber lobby. For decades, the industry has feasted on profits from below-cost sales on national forests-federal giveaways that have drained the U.S. Treasury of hundreds of millions of dollars annually. Moreover, the harvest-happy Forest Service has spent lavishly on roadbuilding on remote public lands, a unique brand of corporate welfare in which taxpayers underwrite the plunder of their own resources.

Dombeck's first year at the helm brought only such incremental change as the ousting of some pro-timber lieutenants. But when Dombeck launched his second year by proposing a limited, 18-month "time out" on roadbuilding, the empire struck back. Though the moratorium fails to cover Alaska's Tongass National Forest and much of the Pacific Northwest, it would defer some timber sales and keep chainsaws out of millions of acres the industry has been itching to cut.

Logging proponents countered with bloated job-loss projections and legislation by Representative Bob Smith (R-Ore.) that promoted clearcuts under the guise of restoring forest health. Even the GOP-controlled House, however, said "no sale" to Smith. Now hostile congressional leaders, who made a habit of calling Dombeck on the carpet earlier in the year, are threatening to pull the rug out from under his entire agency.

In a February letter, four key timber-state Republicans warned of busting the Forest Service to a "custodial role" if its chief persisted in trying to manage the nation's forests for purposes other than logging. "The time has come," mused the authors darkly, "to consider ways to reduce the investment of billions of dollars each year in light of the increasingly diminished returns on that investment."

The letter-writers-Alaska's Senator Frank Murkowski and Representative Don Young, and Idaho's Senator Larry Craig and Representative Helen Chenoweth-all chair congressional panels that control forest legislation. And they seem to regard the Forest Service chief as a perfect foil for their long-held outrage at ecosystem preservation, especially as it affects timber-industry profits in their home states.

Besides making noises about forcing the Forest Service to limp along with "significantly reduced budgets" and "far fewer employees," they've invoked the prospect of an outside board to take charge of its finances. Young, who heads the House Resources Committee, and Chenoweth, chair of the forests subcommittee, have also raised legal questions about an agency memo that recommended using Al Gore's clean-water initiative to promote forest reforms.

"The simple answer is that time is up," says Chenoweth, who accuses Dombeck of politicizing "this once-proud agency." Adds Craig, more bluntly: "The gloves are off."

"Dombeck's talking about the value of forests versus the value of timber, and that terrifies them," says Melanie Griffin, director of the Sierra Club's lands program in Washington, D.C. "He's the wasp at the timber industry's picnic." But she also sounds a cautionary note: despite overwhelmingly favorable comments from the public, the road ban is not yet in place. And where backbone is an issue, the record of the Clinton administration is spotty at best.

Despite his rising profile, Dombeck remains low-key. He wants to lead, he has said, "by using the best available scientific information based on principles of ecosystem management that the Forest Service pioneered. And we can use the laws that guide our management to advance a new agenda-an agenda with a most basic and essential focus: caring for the land and serving people."

For those more interested in serving the agenda of the lumber barons, them's fightin' words. —B.J. Bergman


The Little Engine That Couldn't

Sorry, say the Big Three automakers, but we just won't be able to meet federal clean-air standards; we're selling too many sport utility vehicles. Sound familiar? That's because you've heard the song before: when it comes to technical innovation, Detroit's "can't do" spirit shines through every time.

1959  "We felt that [installing seat belts] was an unnecessary imposition and unnecessary cost...because the belt would do the customer no good unless used." —Paul Ackerman, vice president of Chrysler. Seat belts became mandatory in 1964.

1966  "Many of the temporary standards are unreasonable, arbitrary, and technically unfeasible...If we can't meet them when they are published we'll have to close down." —Henry Ford II on federal safety requirements for laminated windshields, collapsible steering assemblies, enhanced door locks, and lap and shoulder safety belts. Ford survived.

1971  "But the shoulder harnesses, the headrests are complete wastes of money . . . and you can see that safety has really killed all of our business. We are in a downhill slide, the likes of which we have never seen in our business. And the Japs are in the wings ready to eat us up alive." —Lee Iacocca, then-president of the Ford Motor Company, in (taped) conversation with President Richard Nixon. Ford survived again.

1972  "It is conceivable that complete stoppage of the entire production could occur." —Earnest Starkman, vice president of General Motors, on the introduction of catalytic converters. Production continued.

1974  Fuel-efficiency standards "would restrict the industry to producing subcompact-size cars, or even smaller ones, within five years." —Alan Loofburrow, vice president of engineering, Chrysler. His company continued to produce standard-size cars.

1997  "If [the proposed global warming treaty is] adopted, the U.S. can expect soaring production costs and significantly higher driving costs." —Andrew Card, president and CEO, American Automobile Manufacturers Association. Some things never change.

(For more examples, see the Environmental Working Group's Web site at www.chickenlittle.org.) —Paul Rauber

Garbage Out, Garbage In

Because of Michigan's relaxed standards for siting landfills, the state has become a garbage magnet. In a deal last year worth as much as $100 million, trash giant Browning-Ferris Industries signed a five-year contract to dump all of Toronto's municipal garbage in a landfill just outside Ann Arbor. Sierra Club members there were especially outraged to learn why their city has so much landfill space to sell off: Ann Arbor is a model recycling city, with an amazing 1997 recycling rate of 52 percent. The more Michigan saves, the more others can dump. —P.R.


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