Taking Action to Exclude Water
Activists must demand that water and water services are removed from the FTAA entirely. If this fails, they must demand that countries adopt specific options such as:

- The services chapter should include a schedule of commitments for National Treatment and Market Access rather than treating them as “general commitments.”

- The investment chapter should allow countries to exclude water and water services in the sections on scope and general exceptions.

- Water should be clearly excluded from any quantitative restrictions.

Does FTAA Include NAFTA’s Investment Power Tools? The answer is YES.
Tantamount to expropriation. The NAFTA provision on “tantamount to expropriation,” sometimes referred to as “equivalent effect,” is included in all bracketed options. A glimmer of hope is that one option includes “unless such measures are adopted in the public or social interest, on a non-discriminatory basis and in accordance with
due process of law.” This would allow countries to determine that the human right to water is in the public or social interest and should not be privatized.

Investor-To-State. This NAFTA power tool is also included in the FTAA. In fact most of the draft investment chapter pertains to this provision. Investment is defined far more broadly than in NAFTA. FTAA investments would include enterprises and their related shares, debts, loans; and intangible property.

Fair and Equitable Treatment. This language from NAFTA says investors must be provided “fair and equitable treatment” which sounds innocuous enough. However, the history of how NAFTA’s investor-to-state provision has been used is ominous. Foreign investors have used this vague language in all of the successful claims to date, according to the authors of the investment chapter

FTAA and CAFTA: Danger Ahead for the Americas 16 in The FTAA Unveiled. The authors continue, “This obligation is particularly problematic because investors have attempted to use it to expand the ambit of investor-state claims to include NAFTA obligations outside the agreement’s investment rules.”

Taking Action to Exclude Investment Power Tools
Activists should mobilize to prevent corporations from being given the right to sue under investor-tostate rules and to oppose inclusion of “tantamount to expropriation” or “equivalent effect” language. If unsuccessful, they should support the exclusion for “public or social interest.”

Domestic Regulation: The Noose Tightens
The second FTAA draft includes an unnumbered article on Domestic Regulation which is modeled on GATS Article VI-4. But the FTAA goes even further in setting out the rules, referred to as disciplines, needed to avoid “unnecessary barriers to trade in services.” For instance, the FTAA draft specifies that government must “avoid unnecessary regulations.” This could allow corporations to challenge a wide range of domestic regulations. FTAA Section 6.14(b) Far worse, section14(f) says such disciplines should be “aimed at stimulating the use of market mechanisms to achieve regulatory objectives.”

THIS REALLY LAYS OUT THE MARKET BIAS!!!

Other Ways to Protect Public Water Services

- Demand Clear Exclusion of Government Services. The second FTAA draft uses the weak and ill-defined language of GATS which the WTO has refused to clarify. Activists should demand that the FTAA exclude “services provided in the exercise of government authority” period.

- Demand Exclusion of Local Government. Local government should be specifically excluded from both the investment and services chapters because it is at the local level that many important rules and regulations on provision of water services are made.

- Demand that the FTAA in no way compromise the national right-to-regulate and local democratic authority.

- Demand that any language aimed at stimulating market mechanisms be removed.

CONCLUSION: Most Important, Say No to the FTAA and CAFTA
Despite the scattered efforts by some unnamed countries to constrain the reach of the FTAA, it remains a supercharged version of NAFTA which bodes ill for the protection of water resources and public services. CAFTA, which the U.S. wants on a fast track to completion, will be just as harmful for Central American countries. The only way to be sure that corporate water privatizers will not gain more power to profit from water and water services is to defeat the FTAA and CAFTA. This means mobilizing to oppose these engines for corporate water profiteering. Water activists should join with activists throughouth the hemisphere to defeat the FTAA and CAFTA, while at the same time mobilizing to strike water and water services from these dangerous agreements.

WTO New Issues: Danger Ahead for the World
At the Fourth WTO Ministerial in Doha, Qatar, the European Union pressed hard to begin negotiations on WTO agreements on the “new issues” of investment and competition. The developing countries did not want to negotiate these new issues because they were already finding that they were not benefiting as promised from existing
WTO agreements. Great pressure was placed on trade ministers from developing countries during an all-night meeting. As the last planes of the day were about to leave Doha, the trade ministers agreed that there would have to be “explicit consensus” at the next Ministerial in 2003 before the WTO members could proceed with negotiations on investment and competition.

INVESTMENT: Bill of Rights for Transnational Corporations
“They [investment agreements] are not aimed at regulating investment but to regulate governments so that they can’t regulate investments.”

Martin Khor, Third World Network

Like a ping pong ball, the idea of an investment agreement has bounced from the WTO to the Organization for Economic Cooperation and Development (OECD) representing the industrialized countries, where it emerged as the infamous Multilateral Agreement on Investment (MAI), and now back to the WTO after global trade activists
defeated the MAI in 1998.

Consider the investment provisions in NAFTA, GATS and the FTAA for a taste of what could be down the road for all WTO countries and all investments if the world’s trade ministers agree to proceed with investment negotiations when they meet in Cancun in September 2003.

While there is some doubt whether the NAFTA/FTAA/MAI investor-to-state provision will fly in the WTO, it will certainly be on the table. It is more likely that the infamous NAFTA “tantamount to expropriation” provision will be included.

Requiring Binding Environmental and Social Rules for Corporations
In a July 2003 letter to U.S. Trade Representative Robert Zoellick opposing investment negotiations, the AFL-CIO joined with environmental and other public interest organizations to say:

“We believe that investment flows can facilitate sustainable development only when they are properly governed to deliver social and environmental benefits. WTO investment rules would likely strengthen the rights of corporations with respect to foreign

investment, without any corresponding obligations governing their behavior.

We believe, therefore, that negotiations on international investment agreements should not take place at a time when investors face no binding rules on their conduct developed by international environmental and social bodies.”

The need for binding rules to hold investors accountable for their environmental and social practices and the critical importance of not undermining democratic governments to act in the public interest are both directly relevant to concerns regarding water and water services.

Business Roundtable Says Now Is Not the Time
Much more surprising than the opposition of labor and public interest organizations, the Business Roundtable, which represents CEOs of leading U.S. corporations, is also opposing WTO investment negotiations. They are saying “now is not the time.” When these two often opposing sides agree, something is up! It is important to understand the basis for the Business Roundtable’s position and the implications for the FTAA/CAFTA negotiations. They make their position very clear in a May 2003 position paper. “…If negotiations were launched now, it is unlikely that a new binding investment agreement would offer members any more protection than what they currently enjoy under existing agreements. The resulting WTO international investment agreement would be more like the ‘stepchild’ of bilateral and regional agreements to which members are already a party.

“The contentious negotiation of a WTO investment agreement is more likely to distract from, rather than contribute to, the success of other ongoing WTO negotiations (e.g. agriculture, services and tariff liberalization).

“…A multilateral agreement that offers less protection to investors would not be useful to members who enjoy WTO New Issues: Danger Ahead for the World 18 greater protections through their respective bilateral and regional agreements. Second, there is great potential that contentious negotiations of a WTO investment agreement will disrupt ongoing bilateral and regional trade negotiations, which are proving to be especially successful in the comprehensive liberalization of investment regimes.”15

In other words, U.S. corporations believe they can get much more through investment chapters which are part of the FTAA, CAFTA and bilateral negotiations (called BITS) such as U.S.-Chile.

The ICC Road Map for Privatization
By contrast, the International Chamber of Commerce (ICC), the primary drafter of the defeated MAI, is still gung-ho and wants to bring back the very broad scope of the MAI. They call for a WTO investment agreement to include:

- Tantamount to expropriation

- Binding investor-to-state dispute settlement mechanism,

- Top down covering all investments, with strong constraints on any exceptions

- Broadest possible definition of Investment

The definition of investment would, according to the ICC, include strategic alliances, goodwill, any claims to money or performance under contracts, as well as shares, stocks, bonds and debentures s or any other forms of participation in a company, business enterprise or joint venture.16 So there you have it.

The return of the MAI, A DETAILED CORPORATE ROAD MAP for water and water services privatization.

The Big Fish Eat the Little Fish
“What is investment?” asked Yilmaz Akyuz, Chief Economist, UN Conference on Trade and Development (UNCTAD) at a public forum in Geneva in March 2003. He answered himself, saying that three quarters of investment is actually mergers and acquisition, rather than creation of productive capacity.17 This has clear implications for the ability of public systems to survive. Already in the U.S. Suez has bought United Water, Vivendi has bought U.S. Filter and RWE/Thames has bought American Waterworks, while Perrier/Nestle has been busy buying up local bottled water companies. In addition, these transnational corporations (TNCs), working hand-in-glove with the World Bank and IMF, are competing to take over public water/sewer systems in developing countries.

Taking Action
It would be foolish to sit back and assume the investment negotiations will not go forward. The corporations will be keeping all their options open. If the FTAA or CAFTA negotiations falter, they will be pushing hard for a WTO investment agreement.

Moreover, if they are successful with the FTAA and/or CAFTA, they will try to get these provisions applied to all countries through the WTO. For corporations it is just a matter of timing. Water activists should oppose the initiative of investment negotiations at the Cancun ministerial and remain vigilant whether or not negotiations are initiated in Cancun.

COMPETITION: Protecting TNCs not the Small Guys

WTO New Issues: Danger Ahead for the World
The European proposal for a new WTO agreement on competition is about protecting the competitive "rights" of foreign corporations operating in a member country, not about helping domestic enterprises compete with powerful transnational corporations. Rights for foreign corporations would take precedence over local economic development
and other social policy objectives a country might wish to pursue such as ensuring affordable supplies of drinking water for all.

If the WTO ministers agree, again purportedly by “explicit consensus,” to begin negotiations on this competition agreement when they meet in Cancun, transnational corporations like Suez, Vivendi, Thames/RWEand Bechtel can be expected to benefit at the expense of public and community-based systems for supplying and treating water and sewage.

Once again, the Business Roundtable is not enthusiastic about an agreement in Cancun to proceed with negotiation of this competition agreement, saying:

“...a binding multilateral competition policy agreement could create more friction between WTO members than it would resolve.”18

But this agreement is far from dead. The November 2001 Doha Ministerial Declaration called for an examination of the application of the three “core principles” of transparency, procedural fairness and legal nondiscrimination in commerce in the context of the interaction between trade and competition policy. Nondiscrimination

Given that national treatment and most-favored nation provisions address nondiscrimination, why is another agreement needed? The answer is that this agreement would proactively require WTO member countries to move toward conforming all their laws to the standards set by the agreement, rather than addressing inconsistencies on a case by case basis. The EC says:

“for those WTO Members who have yet to adopt domestic competition laws, a WTO agreement would provide important guidance for the drafting of such laws. Finally, a WTO Agreement would help lock Members into these principles, making their legal regimes transparent and predictable and at the same time limiting the possibility of
recourse to formal discriminatory treatment at a later point in time.”20

Transparency
Likewise, the EC admits that there already are transparency requirements in GATT, GATS, and at least one other WTO agreement. So why more? The EC explains:

“The obligation would be for WTO members to ensure public availability in a comprehensive and timely manner — be it in print or on a publicly accessible web site — of all laws, regulations and guidelines of general application.”21

Given that the U.S. wants transparency extended to provide corporations with the opportunity to comment on proposed regulations and to require that the government agency take into consideration such comments, this could give corporations significant leverage for influencing government regulations.

Procedural Fairness
This, the EC says, includes the right of foreign corporations “to appeal such administrative decisions by competition authorities and to have them reviewed by a judicial body.” Of course, it would also provide “protection of confidential information, including business secrets.”22 Again this would apply to all laws. What would this mean for citizens’ right to know the terms of contracts with Suez or Vivendi? Domestic courts would be expected to enforce “procedural fairness” by levying penalties against domestic enterprises, public and private, and administrative bodies whose practices and policies restrict the ability of transnationals to compete with domestic businesses in local markets. If these corporate rights are not enforced, there would be recourse to a secret WTO trade tribunal with the power to levy economic penalties.

Conclusion
Now it is clearer why the USTR has been lukewarm on both the competition and investment agreements. With the lack of consensus in the business community about how best to proceed with the investment and competition agreements and with the USTR less enthusiastic than the EC, there is important political space for water activists to
mobilize public opinion against these agreements. At the same time, the Business Roundtable gives activists every reason to be concerned about the push by the business community for a very strong investment agreement as part of the FTAA and CAFTA.

Taking Action in Miami
Mobilization for the FTAA ministerial in Miami November 20-21, 2003, is essential to keep corporations pursuing privatization of water and water service from getting more power to pursue their profit-making agenda.

Now it should be clear why activists around the world say that the FTAA and WTO is a twoheaded monster which must be slain. Like Dracula, it will not be able to survive the light of day. Activists are also mobilizing to Stop the GATS Attack. With the information in this guide, you have the basic facts you need to...

- Alert your municipal water/sewer authority and your municipal government to the dangers ahead to their autonomy.

- Prepare short fact sheets that focus on local issues and use them for public education. Leave them in your libraries. Taken them to meetings. Use them to write Op Eds for your local papers.

- Join with other concerned citizens and hold a public forum to alert your community about the dangers ahead with the WTO and FTAA negotiations.

- Keep pressure on the USTR and Congress not to cave in on the EC’s GATS requests on water.

- Support from your local unions and municipal water/sewer authority is key.

Activists and workers are mobilizing for the FTAA ministerial in Miami November 20-21. There is time to raise funds locally so you can join the mobilization and make sure the water issue is heard loud and clear. For up-to-date information, go to http://www.FLFairTrade.org.

Footnotes
1 UN World Water Development Report, pp. 193-4
2 Ibid. p. 102
3 See Peter Gleick et al, The New Economy of Water, p. 16
4 Ibid.
5 Quoted in Gleick, p. 18
6 Ibid.
7 Article 1110: Expropriation and Compensation
1. No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment (“expropriation”), except:
(a) for a public purpose;
(b) on a nondiscriminatory basis;
8 See Ellen Gould, Briefing Paper, Jan. 2003
9 See U.S. schedule of Commitments in GATS S/C90 p. 38-40, 43, 49-50, 52-53, 73-74
10 Gould, Jan. 2003
11 EC Communication to Working Party on Domestic Regulation
12 Gould, Jan. 2003
13 Press release at http://www.brt.org/press.cfm/929
14 See “Methods and Modalities for Negotiations” derestricted in October 2002
15 “A Business Roundtable WTO Policy Paper: How The WTO Can Promote The Benefits Of International Investment,” May 2003, emphasis added.
16 “ICC’s Expectations Regarding a WTO Investment Agreement,” Commission on Trade and Investment Policy, 7 March 2003
17 http://www.investmentwatch.org/files/GenevaNotes.doc
18 “A Business Roundtable WTO Policy Paper: The WTO’s Role In Maintaining Competitive Markets” 5/03
19 WTO Ministerial Conference, Ministerial Declaration, WTO Doc WT/MIN(01)/DEC/1 (20 November 2001)
20 Communication from the European Community and its Member States,19 November 2002, WT/WGTCP/W/222
21 Ibid., emphasis added
22 Ibid.

Resources
Key websites on trade agreements:
GATT..http://www.wto.org/english/docs_e/legal_e/gatt47_e.pdf (Acrobat)

GATS..http://www.wto.org/english/docs_e/legal_e/26-gats_01_e.htm

NAFTA...........http://www.sice.oas.org/trade/nafta/naftatce.asp

FTAA/2nd draft ..http://www.ftaa-alca.org/ftaadraft02/eng/draft_e.asp

EC GATS requests ....http://www.polarisinstitute.org/gats/main.html

U.S. Schedule of Commitments for GATS ...ftp://ftp.usitc.gov/pub/reports/studies/GATS97.pdf

U.S. Schedule-Initial GATS Offers http://www.ustr.gov/sectors/services/2003-03-31-consolidated_offer.pdf

Websites for background on water privatization and trade agreements:

www.thealliancefordemocracy.org/water. Alliance for Democracy website includes power point on “Water for People and Nature: The Story of Corporate Water Privatization” which can be used for public presentations.

www.citizen.org/cmep/water. Excellent resources including backgrounds on corporate water grabs in U.S.

www.polarisinstitute.org . Polaris Institute Canada has GATS requests and excellent background material

www.canadians.org . Click on Water Campaign for Council of Canadians materials including “Canada on Tap: The Environmental Implications of Water Exports” March 2002

www.PSIRU.org .Public Services International ResearchUnit has invaluable research

www.GATSWatch.org.Keep up-to-date on GATS

www.tradewatch.org. Public Citizen site with up-to-date information on trade agreements

www.waterobservatory.org . Covers wide range of water issues for activists

Key references for background on water:

Blue Gold, Maude Barlow & Tony Clarke, The New Press, New York 2002 (also translated into Spanish, Portugese, Japanese and many other languages)

Financing Water for All, Michel Camdessus (former head of IMF sets out the privatizers formula for success at Third World Water Forum in Kyoto 2003)

Global Water Grab, Polaris Institute, January 2003 (excellent booklet for activists)

The New Ecoconomy of Water, Peter H. Gleick et al, Pacific Instutute, February 2002

Promoting Quality, Equity, and Latino Leadership in California Water Policy, Latino Issues Forum
http://www.lif.org/publications/reports.html

Water Follies, Groundwater Pumping and the Fate of America’s Fresh Waters, Robert Glennon, Island Press, 2002

Water for People, Water for Life, UN World Water Development Report, UNESCO Publishing, 2003

Water In Public Hands, David Hall, Public Services International Research Unit, 2001

“Water in the Current Round of WTO Negotiations on Services,” Briefing Paper Series V. 4 N. 1 Ellen Gould, January 2003, Canadian Centre for Policy Alternatives

The Water Barons, International Consortium of Investigative Journalists, Public Integrity Books, DC 2003

Thirst for Water, Stephen Shrymban, January 2002, Council of Canadians
http://www.canadians.org/documents/campaigns-tfc.pdf

Whether it is bulk water exports or pumping springs for bottled water or taking over municipal water and sewer facilities, water privatizers may come knocking in your community. Now you can warn your local officials and educate your community members about how these trade agreements will take away their ability to regulate these corporations and explain how the corporations have gained vast new rights backed up by economic penalties.

Keeping the Privatizers from Invading Your Community

Key references for background on trade:

Making the Links: A Citizens’ Guide to the WTO and FTAA, Maude Barlow & Tony Clarke (very good on the politics leading up to Cancun and Miami) http://canadians.inline.net/documents/making_links_web.pdf

The FTAA Unveiled, by members of the Hemispheric Social Alliance, www.art-us.org

ALLIANCE FOR DEMOCRACY
760 Main Street
Waltham, MA 02451
781-894-1179
www.thealliancefordemocracy/water