Wealthy Countries Have Cleaner Environments

Commentary, Environment, Frontier Centre

TV personality David Suzuki swooped through town last week on his crusade against the Multilateral Agreement on Investment, the stalled treaty that clarifies trading rules between nations.

His apocalyptic message resonated well with those hardcore pessimists – evil Multinational Corporations, chasing the almighty dollar, will use the MAI to make profits at the expense of the planet’s health.

Whew! But will the MAI really promote a "race to the bottom" and destroy mankind as we know it? Sorry, but no.

The major provisions of the treaty need no defence. They are simply common sense rules of fairness. The pact codifies a hodgepodge of 1,600 agreements that all basically say the same thing:

  • Foreign and domestic investors in the signing countries will be subject to the same set of rules.
  • The signing countries will not discriminate between foreign investors.
  • Investors who may have received unfair treatment will have recourse to impartial and binding arbitration to settle disputes.

These principles, already entrenched in existing and successful treaties like NAFTA, offer investors protection from the arbitrary behaviour of national governments.

Many of our immigrant grandparents left the old country because their assets had no protection. They sewed valuables into their clothing since they never knew when the Cossacks would ride over the hill and pillage their possessions. MAI reins in the modern Cossacks, rogue governments that confiscate or attach investors’ resources.

As such, MAI reduces the power of national governments. That’s why it has become a lightning rod for old-style Canadian nationalists who still grump about their failure to defeat NAFTA. They repeat the same arguments. Our education and healthcare systems will be compromised. Environmental protection will collapse. Wages will fall to the lowest common denominator. Manufacturing plants will head for Third World countries. One troubled nationalist recently felt compelled to say "the MAI will lead to fascism."

None of these things happened under NAFTA, and none of them will happen under a future MAI. Sidebars to the agreement provide sufficient hedges against any efforts to disembowel national policies.

Why should friends of the environment be concerned with Dr. Suzuki’s anti-trade message? Free trade creates prosperity. Prosperous countries pollute less. They have more money to protect the environment, for example, through modern sewer and water treatment systems. Moreover, the community and the environment both benefit as cleaner, energy-efficient technologies quickly disperse in an open trading economy.

Ironically, by attacking one of the key factors in wealth creation, free trade, Dr.Suzuki prolongs the environmental degradation imposed by unnecessary poverty. Why? Poor countries pollute more. Their rivers are open sewers. Keeping families warm and sheltered means denuding forests. And closed societies have weak incentives to discard stinking old technologies and horrific economic policies that produce spectacular environmental disasters like the nuclear meltdown at Chernobyl and the destruction of the Aral Sea.

Canada is a trading nation. We benefit from the open economy, and so does our environment. Thousands of jobs depend on the integrity of contracts protected by the rule of law. Almost $200 billion of our business assets are invested in other countries, even more than others have chosen to invest here. MAI reduces the risk that unwise national governments can compromise their people’s welfare by confiscating those investments, whether here or abroad.

Negotiations failed because Canada and France insisted on nationalistic protection for their cultural industries. The fear that our culture cannot stand on its own in the marketplace reflects a view based on weakness and pessimism.

Canada won’t collapse without MAI. But we’re giving up a chance to make it a better place to live, work and invest.

And remember: it’s easier to keep the environment you live in clean when you’re rich than when you’re poor.