Volume 2, Number 37
4 March 2002

NAFTA & Ideological Literature

Dear Friends,

Last month Bill Moyers appeared on television to condemn multinational corporations (MNCs) and NAFTA (the North American Free Trade Agreement). Our local Peace and Justice Center sent a notice urging all peace-loving people to see it, as did other anti-globalization, anti-MNC, and pro-peace groups. So I watched the show, taped it, and invited my students over to my house to see it with me. We then discussed it.

Bill Moyers charged that Canadian MNCs are using Chapter 11 of the NAFTA to demand millions of dollars in redress when an environmental protection law, or other law, is passed that infringes on the their right to do business in the United States. The principal case was that of Methanex, whose profits were reduced because California passed a law forbidding its product, MTBE, to be added to gasoline. California had discovered that MTBE leaked out of the tanks and poisoned the water supply.

NAFTA provides for progress toward free trade among Canada, Mexico, and the United States, so that ultimately the goods from any of the three countries will be treated alike in all three. Economically, it would be like a United States of Mexico, US, and Canada. As part of this effort, Chapter 11 was written to protect foreign investment from expropriation. Thus all investment across the "United States" of Mexico, US, and Canada will be treated alike, no matter in which country it originates.

This is set forth in Article 1102 of Chapter 11: "Each Party [i.e., Canada, United States, and Mexico] shall accord to investments of investors of another Party treatment no less favorable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments."

As I read NAFTA, Methanex would lose its case, because California was applying the same rules to U.S. corporations as to Methanex. It would also lose because of Annex III of the NAFTA agreement, which reserves for the home government the "transportation, storage and distribution up to and including first hand sales of the following goods: crude oil; natural and artificial gas; goods covered by Chapter Six (Energy and Basic Petrochemicals) obtained from the refining or processing of crude oil and natural gas; and basic petrochemicals." If not covered by other clauses, it seems to me that California's right to protect gasoline and other oil products is reserved by this clause.

Case open and shut, it seems to me. But Bill Moyers did not mention that so far, no decision has been reached. He said only that Methanex had filed suit. He also implied that the company could collect millions from the United States government. In fact, only one of the many cases he cited has reached a NAFTA tribunal decision. Now, if you accidentally push me aside, with no harm to me, I can sue you for a million dollars. But I wouldn't win. Likewise, Methanex is widely expected to lose its case. Why would not Bill Moyers say so?

Bill Moyers made quite a point of the fact that a NAFTA tribunal decision cannot be appealed to the Supreme Court of the United States. But why would a disagreement between, say, Mexico and the United States, be tried in a court of the United States? He also did not say that any government may ignore a judgment against it. NAFTA has no army; it will not invade us and put George Bush in jail if the US refuses to pay a judgment it deems unfair. All that would happen would be that the plaintiff government would have the right to retaliate with trade or other sanctions, just as if there were no NAFTA to prevent that from happening.

The only case in the Bill Moyers show that has been decided by a NAFTA tribunal was that of a U.S. company that had signed an agreement with the Government of Mexico to clean up and manage a sanitary landfill. But the villagers next to the landfill objected — even rioted — so the Mexican Government broke the contract. Whose fault was it? Clearly, the Mexican government, because they should have known how their own villagers would feel. But they didn't, so they misled the corporation. This case seemed to me to be a simple breach of contract, so the American company should be compensated for its investment. But Bill Moyers made it seem that the big, bad American company was harassing the poor people of Mexico.

Bill Moyers was right in one respect. The NAFTA tribunals should be more open. But this would be easily corrected. It is not necessary to shout down NAFTA.

Much ideological literature surrounds NAFTA, globalization, and multinational corporations. It also surrounds literature from the Christian Right, or others who proclaim "causes." The characteristics of ideological literature are: (1) It does not approach its topic with an open mind. Thinking (though not necessarily writing) starts with a preconceived conclusion. (2) It perceives only information that supports its cause, ignoring any other side. (3) The truth of a proposition seems less important than defeating those who take an opposing belief. (4) Often it makes extreme, emotional statements, exaggerating the ill effects of the opposite cause. (5) Sometimes it contains outright lies. Since all these characteristics can be expressed strongly or weakly, any literature can be more or less ideological.

Non-ideological literature, on the other hand, perceives all the information that intelligent observers would agree pertains to a question, states arguments pro and con, and explains why, on balance, it arrives at its conclusion. Although my own books often open with their conclusion (to alert the reader), my thinking did not start that way — it built up as I have gathered facts about international economics and history, over the past fifty years.

Nevertheless, one of the biggest problems for me is to define my ideology (for everyone has an ideology). I must constantly test my conclusions and try to prove myself wrong. Even with that, I can never be sure. So, if you find a TQE that tends to be ideological, please admonish me (email address given below).

Ideological literature emanating from CEOs of multinational corporations usually neglects the ways in which they have tried to bribe or overthrow foreign governments, how they have falsified their accounts to deceive stockholders and banks, and how they have bargained, cajoled, or threatened governments to influence political decisions. It neglects the ways MNCs have deceived their employees while catering to the interests of their management elites (See TQE #34 on Enron.) It also neglects the attempts of MNCs to damage the environment, such as by promoting oil wells in the primeval forests of Alaska. Nor does it always tell the truth about the quality of its products or their effects on human health.

The literature condemning MNCs, on the other hand, usually neglects that, on average, they pay higher wages than their domestic counterparts in any country or that they provide safer working conditions and better health care, and education and housing where it would otherwise be unavailable. All the above has been shown by different researchers, including the International Labor Organization.

The anti-MNC literature usually "forgets" that the United States and Europe have signed agreements to make bribery a criminal act, and that American MNCs have supported these agreements (to bring the Europeans in line). This literature also "forgets" that multinational corporations bring capital, technology, and training that would otherwise be unavailable to many countries in which they invest. Especially in less developed countries, jobs with MNCs are a plum, widely sought.

Literature opposing profits — calling them "greed" — usually neglects that many firms operate on the margin of loss; that often bosses are not greedy, or that usually a firm finds that profits are enhanced by good working relations with staff, workers, and community. Mostly, this literature neglects the economic theories that show how profits determine which goods will be produced in response to consumer demand, as well as how the technology to produce them will be selected to consume a minimum of resources. It neglects that every other system — socialism, dictatorship, feudalism, etc. — has failed to create a viable economy.

Ideological literature supporting globalization often neglects the job losses as industries move from country to country, the towns that suffer deeply when the principal employer moves away, and how whole industries become lost, as would be the future for shipbuilding, steel, textiles, and maybe even farming, in the United States.

On the other hand, the literature opposing globalization usually neglects that trade barriers infringe on the liberties of producers to seek the most profitable markets, and, above all, trade barriers slow job formation in poorer countries where jobs are most needed. Indeed, some of the literature argues that globalization harms the poor, even though both history and economics show overwhelmingly that globalization leads the poor out of their penury. (See my book, Centuries of Economic Endeavor, for case study after case study).

Ideological lies are told even in the highest circles. A few years ago the Pentagon opened the Office of Strategic Influence "... to provide news items, possibly even false ones, to unwitting foreign journalists to influence public sentiment abroad." (New York Times, 2/27/02). To his credit, the President asked that it be closed, rightly fearing for the credibility of the U.S. government.

As readers of TQE know, my ideology lies in favor of globalization and MNCs which, I believe, will together be the major forces lifting the poor from their poverty the world over. By insisting that the full story — both sides — be told in each controversy, I recognize the problems that my positions engender. In each case, however, the question is: do we overthrow the system, or seek corrections in it?

One final comment: I have often said that in TQE I set forth only my position and do not try to persuade. I have been told there is a very thin line between the two. Perhaps. But I find that if I try to persuade, I tend to be ideological. If I just set forth my position, I can be objective. The thin line broadens into one between ideology and objectivity.

What do you think?

Thank you, and Peace,


Readers' Comments:

Please send comments on this or any TQE, at any time. Selected comments will be appended to the appropriate letter as they are received. Please indicate in the subject line the number of the Letter to which you refer! The email address is tqe-comment followed by @quaker.org. All published letters will be edited for spelling, grammar, clarity, and brevity. Please mention your home meeting, church, synagogue (or ...), and where you live.

Didn't you mean to say that the Office of Strategic Influence opened and closed a few days ago, rather than opened years ago?

— Maurice Boyd, Friends Meeting of Washington.

Thank you for the correction. It opened shortly after September 11, according to the New York Times, 2/27/02. — Jack

This kind of direct commentary on general debates is really helpful for your readership. For laymen, it's good to get an economist's viewpoint, especially one that runs counter to the main tenor of debate.

— Geoffrey Williams, Bethesda (MD) Friends Meeting.

It is comforting to hear that you think Methanex will lose its case, but obviously Methanex itself does not think so or they would not invest in the trouble and expense of making their case. They must believe that they have at least a fighting chance of winning. Why do they believe that?

— Roger Conant, Mt. Toby Meeting, Leverett (MA).

Reply: My intent in CLQ #37 was more to show how an ideological presentation can be made than it was to predict what would happen in the Methanex case - though you are right, I think Methanex will lose. Sebastian Mallaby in the Washington Post (February 18) thinks the same (Look up his article on www.washingtonpost.com).

I wondered why Moyers mentioned only California. So I looked up MTBE on the web and found that it is used widely in other states, and there are even concentrations in Denver, right near where I live. Why haven't other states forbidden it?

To answer your question: Methanex may believe that MTBE is not sufficiently harmful to be banned and California is merely trying to protect its own producers of alternative products. If the court so decides, Methanex would win. Another possibility is that Methanex knows that defending the case will be costly and it wants the US Government to settle simply to avoid having to pay that cost.

I really don't know the answer. All I can judge is that Bill Moyers presented a very one-sided case, and that is what TQE #37 was about.

I'm delighted to hear a balanced evaluation of the charges of the anti-globalization people, especially with regard to the Methanex situation. I hope you will send this issue of TQE to Bill Moyers.

— Virginia Flagg, San Diego (CA) Friends Meeting

Tom Coyner kindly forwarded TQE #37 to me (on Ideological Literature). Beautifully put. I didn't know of you until now, and have hastened to subscribe. What a refreshing tone you manage. A still, small voice, amid the babel of shrieks and chatter. I tend to shrillness and polemic myself; but should learn from you.

— Aidan Foster-Carter, Hon. Senior Research Fellow in Sociology and Modern Korea, Leeds University, England.

That's the first time, ever, anyone said anything like that to me. — Jack

I am not certain whether I am a Classic Liberal Quaker or not. I am on some issues: I like local involvement. But locals must live up to some standards of civility which often need some pressure to achieve anything like equity (the civil rights movement). I have no idea how small communities can effectively influence the use of undue force that is often applied by the national government, especially when it seems so many want what is now being offered as patriotism and security. Which puts me in the ... "I wish big government weren't so big" camp.

— Charlie and Jeannine Thomas, Pima (AZ) Friends Meeting

What I've noted about the positions of the "liberal left", as you call them, is that instead of asking 'What is wrong to have caused such poverty?' (for example), their question is 'Who is wrong ...?', and they usually find some answer in WTO, NAFTA, Corporate America, the Republicans — not a charitable answer, not an understanding that (as the Dali Lama states it) 'Almost all men strive for what they understand is the good', but a demonizing answer which doesn't help at all.

— John Janda, Orange County (CA) Friends Meeting.

Reply to Asa Janney, who questioned whether the Olympics are worth the cost: As a rabid sports fan and a college student majoring in sports management, this is a subject near to my heart. My reaction is that whatever it takes to help your team win, within the bounds of legal and ethical behavior, is worth the cost as long as you are turning a profit. Obviously this is nothing profound; it is just good business. When your team is winning, people want to spend money to watch the team in person. In the case of the Olympics, that would spill over into other international sports events like the Goodwill Games and Pan-American Games, and also national competitions. These competitions bring the USOC, as well as the national governing bodies for each sport, more revenue. Considering ticket prices at the Olympics, I'm sure they made more than $20 million. In addition to that, they profit from sale of hats, sweatshirts, and other paraphenalia. Business-wise it makes sense. And make no mistake, as much as the Olympics want us to think they are about "lighting the fire within," they are a business.

— Beth Stevenson, Boulder (CO) Meeting of Friends, now living in Tulsa (OK).

Also for Asa Janney: Good questions. I believe that sports is a substitute for real wars. As such, I support them. Perhaps the real discussion needs to be about what sports is doing to colleges and universities around the country. Why are they paying coaches millions of dollars to "teach" football and basketball?

— Free Polazzo, Anneewakee Creek Friends Worship Group, Douglasville, GA.

The emphasis [Bill Moyers] seemed to take was that any law which threatened profits, which could be challenged, was an outrage. There was no discussion of the criteria the tribunal would use for its finding other than government action amounted to a substantial taking.

He emphasized that the threat of challenge by the party suffering loss was enough to prevent environmental laws from passing. This would depend on the criteria the tribunal is to use, which was not emphasized. Maybe the laws are not based on good science, and need to be challenged.

— Jim Booth, Red Cedar Meeting, Lansing (MI).

I read most of your letters yesterday and today and enjoyed them. I feel you truly advocate an open discussion and it is a pleasure to see these issues discussed with an air of openness, acceptance of others, desire for peace, and feeling of love for humanity. Thank you.

— Milton Janetos, Agate Passage Friends, Bainbridge Island (WA)

In response to your final paragraph in TQE #37: Some people think there is a fine line between setting forth your position and trying to be impartial. The way I see it is a well-reasoned position is very persuasive if only people will open their eyes.

— Dennis Bentley, Morganton NC

I attended a legal seminar on NAFTA. It was suggested there (by me) and confirmed (by one of the lecturers) that the Chapter 11 provision may lead (and by now surely has led) to an American corporation, desiring to do business in America, forming a wholly-owned Canadian or Mexican subsidiary organized especially to conduct this business with the intent to benefit under Chapter 11. (And, of course, it can go the other way as well).

The essence of Ch. 11 is (a) the treaty-language was stuck into NAFTA (and other similar trade agreements) by special interests such as oil and chemical businesses, much as VP Cheney allowed the same sorts of groups to "write" US energy policy recently; (b) the Ch. 11 dispute-resolution mechanism has neither "common law" precedents nor "civil law" rules to govern its outcomes, nor any court (or other mechanism) to review its outcomes; (c) it places governments and perhaps especially local governments "in terrorem," fearing any sort of regulation whatever; (d) it does not treat all companies the same, because any company can make use of the non-treaty legal system but only foreign companies can use the Ch 11 mechanism, giving the foreigners more legal possibilities than are given to local companies or non-company citizens.

— Peter A. Belmont, Brooklyn (NY).

We have dozens of cases now and environmental protection laws and civil court rulings overturned. The problem is NAFTA Chapter 11. If Chapter 11 was removed from NAFTA or modified, then NAFTA could be what it was meant to be. As it is NAFTA is dangerous and anti-democratic. Bill Moyers is not raising a false alarm. Chapter 11 and fast track are unjust and undemocratic. And why the secret tribunals? Justice demands open and transparent proceedings.

— Greg Austin


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Publisher: Russ Nelson, St. Lawrence Valley (NY) Friends Meeting

Editorial Board

  • Roger Conant, Mount Toby Meeting, Northampton, MA.
  • Virginia Flagg, San Diego (CA) Friends Meeting.
  • Merlyn Holmes, Boulder, Colorado.
  • Janet Minshall, Anneewakee Creek Friends Worship Group, Douglasvillle (GA).
  • Jack Powelson, Boulder (CO) Meeting of Friends, Principal Editor.
  • J.D. von Pischke, a Friend from Reston, VA.
  • Geoffrey Williams, Attender at New York Fifteenth Street Meeting.

Members of the Editorial Board receive Letters several days in advance for their criticisms, but they do not necessarily endorse the contents of any of them.

This newsletter was formerly known as The Classic Liberal Quaker.

Copyright © 2002 by Jack Powelson. All rights reserved. Permission is hereby granted for non-commercial reproduction.

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