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Multinational agreement will make sovereign rights illegal

No limits to investment - the MAI leaves India with little choice.

A campaigning coalition is stepping up its fight against a proposed international accord which, it says, would undermine developing countries’ sovereignty and leave them open to exploitation by foreign investors.

The Multilateral Agreement on Investment (MAI) (see ‘Keynote’ NI 298) is likely to be tentatively approved in April by the 29 member nations of the Organization for Economic Co-operation and Development (OECD). It forbids signatory governments from placing restrictions on foreign investment in any sector other than defence, and from giving preference to domestic companies over foreign investors. Local authorities would also be barred from laying down investment conditions, such as labour quotas or environmental standards. Anything deemed discriminatory by an investor could result in a government being taken before an OECD arbitration panel, which could order it to back down or face punishment. In other words, the MAI would allow corporations to sue cities, states and national governments.

‘Clearly this is one liberalization too far,’ says Barry Coates, director of the London-based World Development Movement (WDM) – one of a 40-strong alliance of non-governmental organizations from Africa, Asia, Europe and North America opposing the accord. Coates points out that many countries have used the type of policies that the MAI would outlaw to develop their national industries.

South Korea, for example, jealously protected its car industry as it pursued heavy industrialization. When India allowed Pepsi Cola to invest in the Punjab in the early 1990s it imposed conditions that would benefit the local economy. These included guarantees of 50,000 new jobs and the construction of food-processing plants. Under the MAI, conditions such as these would be illegal.

‘There has never been a country that has developed itself under the conditions proposed by the MAI,’ observes Coates. ‘It restricts underdeveloped countries to a low-wage, commodity future, with no hope of diversifying their economies.’

The coalition criticizes the MAI for excluding developing countries from the negotiating table, and for undermining moves stemming from the 1992 Earth Summit to protect the environment and achieve sustainable development. Although the coalition opposing the accord has little chance of sinking it, campaigners are hoping to wring concessions before the final agreement is reached – particularly regarding local protection for labour and the environment.

Alan Martin/Gemini News Service

Money comes from trees
Money talks in the trees around the village of Ikodi in the Niger delta. The feathers of the African Grey Parrot are collected and sold. This has become a key economic resource for Ikodi villagers and one which is zealously guarded. Local laws forbid the trapping of parrots, the felling of palm trees and the use of firearms that might frighten the birds. Poachers face a beating if caught. Still, poaching remains a problem. The birds are highly prized by smugglers due to their ability to speak and whistle like a human. Ikodi is one of the few places where the birds are still numerous. Elsewhere numbers have dwindled due to poaching and tree-felling.

Sam Olukoya/Gemini News Service

Low-level radiation controls canned
Due to the relaxation of standards by the European Union’s nuclear agency (Eurotom), radioactive waste could end up in a range of household goods, including food cans. The directive, due to come into force by May 2000 will allow recycled radioactive materials that expose people to less than ten microsieverts of radiation a year to be sold without seeking Eurotom permission. Richard Bramhall from the Welsh Low Level Radiation Campaign states that the nuclear industry plans to treat radioactively contaminated materials for use in food cans. ‘They have been waiting open-mouthed for these exemptions,’ he said. But John Cooper, from the British National Radiological Protection Board said the regulations will only apply when ‘the risks are trivial and not worth regulating’.

New Scientist No 2096


Racism threatens German trade
Germany’s current reputation for racist attacks, xenophobia and unwelcoming bureaucrats has lead to a sharp decline in the number of foreign students – potentially damaging the national economy. Business leaders have realized with alarm that a fall in the number of foreigners, particularly Asians, enrolled in German universities and other institutions of learning could translate into lost trading opportunities. Asian students are seen as particularly valuable because they come from countries which, whatever their current economic problems, are thought to have great potential for growth. German industry is now anxious to reverse the decline and has urged the Government to take action.

Manik Mehta/Gemini News Service


Yak tax
Tensions between China and Tibet have escalated over alleged yak exploitation. Since 1959 the Chinese Government has been taking millions of yaks in taxes from Tibetans. Although a yak currently fetches over 1,000 Chinese yuan ($120), as tax they are only valued at 50 yuan ($6). Recently, China has flooded Western markets with low-cost, allegedly yak-leather shoes. China is reported to have labelled the leather as coming from a fictitious animal species from a remote region of China. Tibetan locals say that the increased slaughter of the animals is threatening the survival of the Tibetan yak population.

Tibetan Bulletin Vol 1 Issue 3


Herding and homework
High illiteracy causes problems for child cowherds

For a developing country, Lesotho has an unusual literacy problem – boys are less likely to read and write than girls. Normally, it would be the boys who had priority when it came to schooling. Parents tend to invest in sons rather than daughters who may marry and live elsewhere.

But here, most boys between the ages of seven and fifteen spend their time herding livestock. An old African proverb calls the cow a ‘god with a wet nose’ because it is vital to people’s survival in this small, mountainous southern-African kingdom. Herd boys, often from poor backgrounds, are compelled to work to assist their families. They are usually employed by wealthier people who have large herds to graze. A great deal of responsibility rests on their shoulders and their work is hard and dangerous. Severe weather, thieves and wild animals threaten their safety. The young herders leave home for weeks or months on end to tend their flocks.

Sengoara Nthonyana, 15, single-handedly looks after 700 sheep and 72 cattle, earning only 700 maloti ($140) or one cow a year – ‘that is if I stay on duty until the end of the last month of the year,’ he points out. ‘If the boss decides to fire me before that, then it’s hard luck.’ He adds that ‘if a boy slackens in his watch he may wake up to find that two or more of his animals have been killed in the night.’ This means deductions from his pay, ‘or even worse – deduction and dismissal’.

Loneliness and poor wages are not the only challenges. In 1996, when strong winds and heavy snowfall battered the highlands, seven boys perished after being stranded with their animals. They died of cold and hunger, isolated from families and friends. More than 75 others suffered seriously from exposure.

There are other problems too. When they grow older and finish herding, many former herders face difficulty finding work because they have few skills to fall back on in a country of high unemployment. The illiteracy rate for males over 15 is as high as 60 per cent in some areas compared with 11 per cent for females.

The Lesotho Distance Teaching Centre aims to increase the literacy rate by 20 per cent by the end of the decade. It runs a scheme which encourages young boys with a little education to take basic teaching materials into the hills to share with their friends. About 700 boys graduated from the program last year.

Change is essential as former herders can no longer rely on jobs in neighbouring South Africa, which has been cutting back on the use of foreign labour. More boys will need to be able to read and write if they are to survive in the new Lesotho.

Tsitso Rampuku/Gemini News Service

Big bad world Polyp cartoon


Kava craze
Transnational corporations to monopolize ceremonial plant

From a trickle to a flood: patents threaten small farmers.

A ceremonial plant used in the South Pacific has become the target of multiple patents (see NI 293 on genes). Over 100 varieties of kava are grown by many South Pacific nations as a cash crop as an ingredient in an important ceremonial drink. But now corporations from the US, Europe and Japan are filing patents for the exclusive use of the plant for commercial purposes, and for methods of processing and preparing it.

French company L’Oreal, for example, has patented the use of kava to reduce hair loss and stimulate hair growth. Owned by Nestlé, one of the world’s biggest food and drink companies, and France’s richest woman, Liliane Bettencourt, L’Oreal has obtained or is seeking patents in the US, Canada, Japan, China, Germany, France, Italy, Britain, Spain, Hungary and Poland. In North America and Europe, kava is being aggressively promoted for a variety of uses – including its anti-stress and tranquillizing effects.

In Europe alone, extracts are being sold by at least 14 drug companies. The German company Willmar Schwabe has patented its use in treating strokes, insomnia and Alzheimer’s disease. Another German company, Krewel-Werke has patented its system for extracting medicinal compounds from kava for oral use.

These patents for the use, processing and preparation of the plant are raising concern in the South Pacific. Small farmers fear that large companies are taking control of the kava market, and that the import of cheap foreign plants may eventually threaten local sales. Farmers also fear that larger-scale plantations will take over their small allotments and that they will become cheap labour for companies making Western kava-based pharmaceuticals.

Industrial interest in farming the plant is considerable. Australians have sought kava germplasm from Samoa to plant 10,000 hectares in Australia. Plans for kava plantations have also cropped up in Hawaii and Mexico. This has strengthened calls for the regulation of access to such natural resources in the South Pacific.

Rural Advancement Foundation International (RAFI) Communiqué, September/October 1997

A debt-free millennium
A growing international campaign to cancel the debts of the world’s poorest nations is gathering steam. Jubilee 2000 is creating a petition to be presented to the 1999 G-8 conference in Germany. It is also asking for people to send letters to politicians and to the IMF urging their support for debt relief.

‘Jubilee 2000 is a time to say, “My God, what have we been doing?”’ says John Patrick, a Catholic priest in Nigeria . ‘Can we look on the debt as a purely financial affair when millions of people are dying for want of medicine, children not going to school, people dying of hunger, simply because they have to pay their debts?’ Organizations from 40 countries are currently involved in the campaign.

For more information contact Jubilee 2000, PO Box 100, London SE1 7RT, Tel: +44 171 401 9999,
e-mail: [email protected]

Murray MacAdam/Jubilee 2000

Tyre extract - A new soft drink flavouring?

Chewing rubber
A chemist from the University of Northern Iowa has discovered how to make lemon oil from discarded tyres. Kirk Manfredi produces limonene, which is the main ingredient of many citrus oils, from tyre rubber. Although the oil is from an artificial source, its chemical structure matches the oil obtained from lemons. Manfredi’s extraction technique produces about two per cent of the tyre’s weight in limonene. Manfredi hopes to improve the process so that nearly ten per cent of the tyre can be converted into purified lemon oil. He says in the future lemon oil from tyres may be used to scent soaps and cleaners and to flavour soft drinks. He hopes to isolate other useful compounds in tyres that could be used in chewing gum, mouthwash and insect-repellent candles.

Down to Earth Vol 6 No 9


‘People don’t steal. They just borrow. And then we borrow back.’

Patrick Tairua of Tupuna Jeep Safari, offering insight into why French Polynesia’s
island of Bora Bora has only eight municipal police and a low crime rate.

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New Internationalist issue 299 magazine cover This article is from the March 1998 issue of New Internationalist.
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