Book review by Daniel Belanger (Faculty of Law)- Book review - "International investment and the environment: an analysis of the MAI" by Michelle Lee-McIntosh
Description
The need for multilateral rules protecting Foreign Direct Investment (FDI) is one of the most debated aspects of the international trade law system. World Trade Organizations (WTO) negotiations for an agreement regulating the area, the Multilateral Agreement on Investment (MAI), aborted in 1997. Public pressure and internal WTO dissent condemned a near-completed draft of the Agreement. Environmental groups, coordinating their efforts with the help of the Internet, fueled a lot of the opposition against MAI.
For this assignment, I reviewed a 1999 thesis, by U of C Law student Michelle Lee-McIntosh, entitled AInternational investment and the environment: an analysis of the MAI.@ The author evaluates the potential effect of this Agreement on the environment. She evaluates the FDI rules of the aborted MAI, to determine if they could have led to sustainable development - by encouraging FDI with adequate protection rules - or if it would accelerate environmental disregard under WTO rules.
Lee-McIntosh establishes three criteria to evaluate her thesis. Firstly, does the MAI provide a certain, liberalized and non-discriminatory legal framework for international investment? Secondly, does the MAI govern international investor behavior? Finally, does the MAI allow countries the latitude to govern international investment when it becomes clear such investment is having a deleterious effect upon the environment?
She divides her book in four chapters: the concept of international investment; the concept of sustainable development versus international investment; a general description of the MAI; an analysis of the environmental provisions of the MAI draft. The latter contains the main argument in answering her thesis. After reviewing the MAI environmental provisions, Lee-McIntosh concludes it would not promote sustainable development.
Appreciation
The author writes in a clear and concise way. Her choice of words is appropriate and non-technical. Accordingly, the book reads smoothly and the main argument is easy to follow.
The conceptual development is equally simple and well articulated. The opening chapters - with extensive explanations on the concepts of international investment and sustainable development - define crucial aspects of the MAI debate. Proper knowledge of international investment and sustainable development is necessary to understand the author=s argument regarding the MAI effect on the environment. Lee-McIntosh=s crescendo development of her work, from a basic expose of simple concepts to a more complicated argument involving the interaction of these concepts with the MAI, makes it accessible to a large audience. It ensures that readers unfamiliar with all the aspects and implications of the MAI issue understand the whole argument. For those more familiar with the MAI debate, Lee-McIntosh=s book also provides valuable information in chapter 4 and the conclusion.
After evaluating the environmental provisions of the MAI, chapter 4 specifically establishes how they threaten the environment. She demonstrates why these environmental provisions are insufficient to ensure sustainable development.
Her conclusions are that: the preamble=s commitment to sustainable development, associated with the weak Rio declaration and Agenda 21, is likely to be useless in light of the interpretation given to such a concept in GATT/WTO case law; the text of the not lowering standards provision allows cheating by lack of enforcement of the environmental standards; the Achilling effect@ prevents countries from raising their environmental standards according to NAFTA case law; there is a need for a general environmental exception in the Agreement (the Agreement only includes an environmental exception to the prohibition on performance requirements).
Unlike most WTO critiques however, Lee-McIntosh supports her conclusions with valuable recommendations for an agreement on investment capable of promoting sustainable development. The author acknowledges the benefits of international trade and the potential benefits of liberalized investment (she gives the example of monetary injection in developing countries). Accordingly, her recommendations are moderate and could produce reforms acceptable to trade advocates. Her most interesting suggestions are: a stronger environmental commitment in the words of the preamble; a general environmental exception provision or at least a stronger commitment to sustainable development in the environmental exception to the prohibition on performance requirements; a tax on international investment that would serve to compensate foreign investors adversely affected by environmental protection.
The main weakness of this book is the evaluation of the MAI on international investor behavior. This second criterion is irrelevant to her thesis. A positive answer to her first criterion - would the MAI liberalize international investment - automatically provides a negative one to the second. If the MAI liberalizes international investment, it cannot govern it at once. It would be illogical. Asking both was useless and contradictory. Only national regulations can ensure sustainable development along with liberalized international investment. The Agreement must provide countries with strong environmental protection tools and not worry about investor behavior. Fortunately, the author=s contradictory logic in the establishment of her criterion does not divert the reader from the main thesis - would the MAI provide sustainable development. The reader easily keeps track of this main goal throughout the book, despite this second criterion contradiction.
Overall, I strongly recommend Lee-McIntosh's book to individuals interested in the MAI debate. It is accessible and insightful. It provides a detailed legal critique of the environmental provisions of the MAI. It allows a reader to understand why, despite an apparent commitment to sustainable development, this agreement would be detrimental to the environment. Since the debate is both old and new - I believe the WTO will devise new ways to include international investment to the international trade law scheme - a correct understanding of these issues is crucial for individuals interested in influencing the debate in a better direction. The recommendations offered in conclusion of this book represent a valuable step in that direction.