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The Political Economy Of The Multilateral Agreement On Investment
Alan M. Rugman

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The Power of NGOs

The NGOs are a new and powerful actor on the stage of international business. In the 1997 to 1998 period NGOs assumed a more effective role than previously observed, leading to the defeat of the MAI. Prominent in orchestrating the NGOs was Canada's self promoting Council of Canadians, chaired by economic nationalist Maude Barlow. In a clever campaign of misinformation and half truths, exhibited in the Clark and Barlow propaganda booklet on the MAI (Clark and Barlow, 1997), the Council filled the web sites of NGOs with anti-MAI hysteria which was influential with the media.

With the U.S. and Canadian governments treating the MAI on a technical rather than political level and Ministers being poorly briefed by second rate trade bureaucrats, there was little political will to counter the gross distortion of the MAI offered by unelected and unaccountable NGOs. In addition, business leaders were unwilling to speak out on the advantages of the MAI, leaving defence of the MAI to a handful of industry association spokespeople. Finally, the academic world (with a few exceptions) had not researched the issue (this being especially true of economists who have no parallel theory of free trade to apply to liberalization of investment). Consequently almost none were available or willing to publicly debate the substantive issues of the MAI while engaged in their full-time professional duties. The absence of informed government, business and academic commentary left the media open to the distorted propaganda of unrepresentative NGOs.

The success of the NGOs in defeating the MAI builds upon less spectacular but consistent progress in the capture of the environmental agenda of international organizations. The first notable success of environmental NGOs (entirely U.S. and Canadian) occurred in NAFTA when the first Clinton administration in 1993 made the mistake of inserting two side agreements after NAFTA has been successfully negotiated over the 1990-1992 period by the Bush administration. These side agreements set up an environmental body, the CEC (in Montreal) and a labour standards one (in Dallas.(4)

The UNCED Rio Summit was a jamboree for environmental NGOs, leading to an unbalanced agreement with sets of commitments which the governments were unable to deliver on. Despite these lessons, the Kyoto Summit in December 1997 resulted in standards for reduction of greenhouse gas emissions that, again, most countries will not themselves meet. Indeed, ratification of the Kyoto protocol is unlikely, as only the E.U. appears to have the political will to sign it, whereas the United States, Canada, Japan and many other countries are highly unlikely to. In Canada's case this is due to the federal nature of the country, where the provinces have power to control natural resources. Thus, Alberta as the largest energy producing province, will need to agree to implement Kyoto in order for the Government of Canada to recognise the treaty.

4. For discussion of the political process in the United States at the time of approval of NAFTA see Susan Liebler in Rugman (1994).

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