Mad Cow Digest #53

CONTENTS:
1. MAI: GATTzilla Sequel in the Works (from Steven Heim, Rural Vermont Report)
2. Hunger Mountain Co-op Workers Seek Union (from Ken Burns, The Northern Spy)
3. Nonprofits Under Attack (from Patrick Lemmon, OMB Watch and Let America Speak Coalition)

1. MAI: GATZILLA SEQUEL IN THE WORKS (from Steven Heim, Rural Vermont Report)
   At the time of the GATT debate in 1994 Rural Vermont received national attention for its GATTzilla monster parody that "Eats family farms, the environment, and state and local laws." But a new treaty creature has surfaced recently as an even worse threat to democracy, workers, and the environment than NAFTA or GATT: the MAI, "NAFTA on steroids" according to Lori Wallach, director of Public Citizen's Global Trade Watch.
   The Multilateral Agreement on Investment (MAI) is a new international treaty under negotiation by the U.S. and other countries that would subvert national and local sovereignty in the name of free flow of capital across borders and give new rights for foreign corporations and investors. The treaty would give them the ability to force national, state, and local governments to drop laws and regulations that favor local businesses and harm their profits or pay them damages for their lost profits. Developing countries had blocked similar provisions during the GATT World Trade Organization (WTO) negotiations as threats to their sovereignty and ability to encourage local industry.
   The director general of the WTO has described the MAI frankly: "We are writing the constitution for a single global economy." The MAI is a Magna Carta for the largest corporations to rule the world. Like most treaties, the MAI lists rights and responsibilities, however, the MAI grants the rights, vast new powers, to foreign corporations and investors and the responsibilities, that gut their ability to protect their citizens, to governments.
   The MAI would enshrine the absolute right to establish an investment, such as buying land, natural resources, telecommunications, and services, under deregulated terms spelled out in the treaty. Governments are given the obligation to ensure "effective enjoyment" of such investments that includes "protection from strife." Strife could mean labor strikes, boycotts, or public protests, and so endanger rights we have long enjoyed.
   Under the MAI, foreign corporations and investors are explicitly given new powers that before were only held by national governments. They would have the same legal standing as national governments to enforce MAI treaty provisions. Corporations could sue governments for losses they claim from government regulations or programs, termed "expropriations," and demand compensation. Even under current WTO rules, these disputes are handled nominally between governments, such as the dispute between the U.S. and Mexico regarding the U.S.'s dolphin-free tuna regulations. Further, the MAI would allow corporations to sue for loss of even hypothetical profits or lost opportunities due to government policies or actions.
   The recent pending case of the U.S.-based Ethyl Corporation suing Canada is an example of how the MAI could be used by foreign corporations and investors. Ethyl Corporation has sued Canada under the more limited expropriation provisions of the North American Free Trade Agreement (NAFTA). In 1997, Ethyl sued Canada for US $251 million in damages for banning Ethyl's fuel additive MMT in Canada for human health and environmental reasons.
   MAI provisions could be used to overturn, block, or dismantle a huge number of federal, state, and local laws and policies. For example, the MAI threatens state and local purchasing programs favoring local businesses, country boycotts for human rights abuses such as those for Burma or South Africa, and policies for worker health and safety, and environmental protection.
   The Western Governors' Association did an in depth analysis of the MAI and found many ways the MAI would undermine state and local sovereignty, such as in incentives for pollution prevention, economic development, land use controls, and local business development. (Their report is available at their web site at www.westgov.org). At risk in Vermont from the MAI may be Act 250, the Northeast Interstate Dairy Compact, and the Vermont Sustainable Jobs Fund.
   Also forbidden under the MAI would be limits on foreign ownership of land or services, performance requirements for foreign corporations, authority to regulate capital flows that could lead to currency crises, or U.S. government ability to enforce arms control, human rights, or other international objectives.
   MAI promoters claim countries could negotiate exemptions or "carve outs" for certain MAI provisions. France and Canada, for example, want exemptions to protect their culture from foreign domination and control. But the MAI itself requires "Rollbacks" by governments to dismantle their policies that do not conform to the MAI over time.
   The U.S. Government, with the corporate lobby U.S. Council on International Business and its overseas partners, have led the drive for the MAI, with support lately from the Netherlands, Germany, and Japan. France, Canada, and New Zealand have pushed recently to delay the MAI, following unprecedented international campaigning by non-governmental organizations to alert the public and legislators about the MAI during the past year.
   Since 1995, the MAI has been negotiated at the Organization for Economic Development and Cooperation (OECD) in Paris, an association of the world's 29 wealthiest countries. After it is adopted by the OECD the MAI must be ratified by each country's legislature. Once a country enters the MAI, it is bound to all MAI obligations for a minimum of 20 years, including the obligation to pay foreign investors and corporations charging that government policy has undermined their profits, said Wallach.
   The negotiations at the OECD have been conducted in secret, with no public discussion or debate, and by the U.S. government, without consultation or authority from Congress. Only recently have U.S. Congressional representatives even heard about the MAI. (In January, 1997 a secret text was leaked to the public).
   The OECD arguments promoting economic globalization with the MAI are "pathetic," said Maude Barlow, president of the 100,000 member Council of Canadians, a leading citizens group fighting the MAI. According to an OECD MAI document, "OECD Members have a major stake in the investment rules, accounting for 85 percent of FDI (foreign direct investment) outflows and 60 per cent of inflows."
   Concerned citizens around the world are organizing to stop the MAI treaty. Over 600 non-governmental organizations (NGOs), including Rural Vermont, signed a statement issued in February, 1998 calling for the OECD MAI treaty negotiations to include binding provisions to protect labor and human rights, the environment, and local and national sovereignty. The NGOs also called for delay of further negotiations until 1999 to allow time for the public to participate and debate MAI provisions.
   In the U.S., state and local government officials are starting to speak out against the MAI as well. San Francisco recently voted to be an "MAI Free Zone." Many cities are considering MAI Free Zone resolutions. "It's spreading like crazy," said Chantell Taylor, Public Citizen's MAI campaign coordinator. Taylor encourages Vermonters to pass MAI Free Zone resolutions in their cities and towns. Sample resolutions are available from her at Public Citizen or from their Internet web site (see contact information below).
   In the face of mounting public opposition to the MAI, the MAI negotiators at the OECD's April, 1998 meeting issued a "new" text of the MAI treaty, but the NGOs' recommendations "have been flatly ignored," said Wallach. She vowed "we will continue to expose the MAI to the disinfecting sunlight of public scrutiny. The MAI, like a political Dracula, does not fare well in sunshine."
   For more information read the new book Multilateral Agreement on Investment and the Threat to American Freedom, by Maude Barlow and Tony Clarke, available for $10 from Public Citizen. To order call 1-(800) 289-3787 or send a check to Public Citizen, 1600 20th St., N.W., Washington, D.C., 20009. Also check out Public Citizen's Global Trade Watch web site, www.citizen.org/pctrade/MAI. -- from Rural Vermont Report (summer 1998); 223-7222; ruralvt@plainfield.bypass.com.

2. HUNGER MOUNTAIN COOP WORKERS SEEK UNION (from Ken Burns, The Northern Spy)
   After enduring unreasonable working conditions for more than a year, many employees at the Hunger Mountain Food Co-op in Montpelier have had enough. In early March, a group of workers began an organizing drive to gain union representation with the Industrial Workers of the World (IWW). Approximately thirty percent of non-management workers have signed union authorization cards. Organizers hope to avoid going through the National Labor Relations Board and have been told by management that a union would be recognized voluntarily if a majority of employees request it.
   The IWW was chosen because of its democratic organization and local autonomy as well as its low dues and minimal bureaucracy. "A lot of employees come to the co-op looking for a democratic workplace and end up being disappointed when the reality doesn't match their image," said union organizer Bob Heald. "That's why we went with the IWW. Our union will be run completely by the employees themselves."
   In addition to a desire for a more democratic work environment, union supporters cite several reasons for organizing which are common to union drives. The need for more respectful treatment by management and a safer workplace seem to top the list. Also mentioned as goals are improved wages, better training, and grievance procedures which are clearer and more consistently administered.
   Some of the causes of worker dissatisfaction at Hunger Mountain Co-op have been around for many years. Other problems began after May 1996 when the co-op moved from its long-time home in a cozy but cramped storefront to a much larger, brand new building. The move resulted in significant increases in sales and staff size. Many employees feel the organization wasn't prepared for such a drastic expansion.
   "I hate to say it, but management seem to be in over their heads," said Heald. "What's interesting is that, even before the union drive began, a lot of co-op members were saying the same thing. Maybe that's why many members have been sympathetic to our effort."
   Discontent among staff reached serious levels in January 1997 when several employees were dismissed. These dismissals were presented as layoffs based solely on financial need, but many workers saw a political motivation. All those dismissed had been publicly critical of management. Also, their positions were soon refilled.
   Other employees who have criticized management say they have experienced unfair treatment. Employees say this treatment is part of a larger problem of lack of respect in the workplace. This disrespect, combined with inadequate compensation, an alarming injury rate and the stress caused by high turnover, led some workers to act. They began meeting in June 1997 to discuss ways of improving their working conditions. In March of this year, their organizing effort transformed into a union drive. One reason for this was to gain legal protection from retaliatory harassment and discrimination. Organizers express surprise at the hostile response they have received from some quarters. They are especially puzzled since they have consistently emphasized their openness to other ideas, including alternatives to unionization.
   "We're trying to build a consensus around how to address the problems at the co-op," said organizer Guido Mase. "We believe unionization is a viable approach, but there may be others. The best solution will be one that really looks at the issues and has broad support."
   Organizers say they would welcome other suggestions as long as they lead to substantive progress. "Almost everyone at the co-op agrees about the problems," Mase points out. "What we need are some proposals that won't leave us with business as usual." Union supporters insist that they are working toward improving the co-op and that they share its goals.
   Organizer Rachel Lamagna-Malloy sums it up this way, "We hope to come up with a system for addressing workers' concerns that everyone can agree on. The co-op has tremendous potential and giving staff a real voice will help fulfill that potential. Once that missing piece is in place, this organization will be that much stronger."

-- The Northern Spy is a new independent radical/anarchist newspaper being circulated in Central Vermont (P.O. Box 1285, Montpelier, VT 05601; 229-1719; wcpc@igc.org.

3. NONPROFITS UNDER ATTACK (from Patrick Lemmon, OMB Watch and Let America Speak Coalition)
   The Istook Amendment Reintroduced Rep. Roy Blunt (R-MO) has filed an amendment to the campaign finance reform legislation which is virtually identical to the original 1995 Istook anti-advocacy amendment that would have silenced America's charities. The amendment would restrict the amount of privatelyraised funds a federal grantee can use to do advocacy and lobbying. If a federal grantee spends more than the specified threshold, it would be barred from receiving federal grants. These same restrictions would not apply to federal contracts, loans, or tax subsidies.
   The Blunt amendment has been filed with the House Rules Committee as a non-germane amendment and must receive approval from the Committee for it to be considered during floor debate of campaign finance reform which begins June 3.
   Except for one minor clause, the Blunt amendment is identical to language -- supported by Reps. Ernest Istook (R-OK), David McIntosh (R-IN), and Robert Ehrlich (R-MD) -- that was attached to the FY 1996 Labor-HHS Appropriations bill. That language passed the Houseafter an effort to stop it by Rep. David Skaggs (D-CO) failed by a vote of 187-232. Other versions were added to two other appropriations bills. Ultimately, the Istook amendment was stopped in conference committee when the Senate and White House expressed strong opposition.
   The Blunt amendment is being offered at a time when nonprofits are realizing that other campaign finance reform amendments, such as those dealing with "paycheck protection" may affect them. Some "paycheck protection" proposals, such as one that was offered during the campaign finance reform debate this spring and in initiatives in California (Proposition 226) and Colorado (Paycheck Protection of Worker Rights), have enormous implications for advocacy rights of nonprofits. Conservatives have vowed to use whatever means possible to attack charities. While "paycheck protection" efforts may have unions as their targets, nonprofits could also be affected.
   This means that nonprofits not only must monitor whether the Blunt amendment is ruled in order for the upcoming campaign finance reform debate, but they must also follow the various "paycheck protection" proposals. Since some of these "paycheck protection" proposals will be considered germane, the amendments will not need to be approved ahead of time by the Rules Committee. Thus, there will be little or no advance warning. In addition to the Blunt amendment and the "paycheck protection" proposals, other non-germane amendments have been filed with the Rules Committee that may affect nonprofits. For example, an amendment filed by Rep. David McIntosh (R-IN) has implications for nonprofits, though we are still studying its effects.

Key Elements of the Blunt Amendment

The Blunt amendment covers any entity receiving a federal grant, including grants to individuals (e.g., Pell grants, Fullbright scholarships). Contracts, loans, entitlements, and other forms of assistance are not covered by the amendment. The definition of "grant" is so broad that it potentially includes the beneficiaries of government programs (e.g., children receiving school lunches, families receiving WIC vouchers). The amendment has five main features:

IT PROHIBITS USE OF FEDERAL GRANTS FOR "POLITICAL ADVOCACY."
Federal grantees are already prohibited from using grant funds for lobbying purposes. This amendment expands the prohibition to include nearly any type of public policy work at the local, state, or federal level -- even if permitted by statute. "Political advocacy" includes attempts (both direct and grassroots) to influence legislation, agency actions, litigation (including friend of the court briefs), or political campaigns at the local, state, or federal level. The definition of "agency action" includes involvement in the regulatory process at the local, state, or federal level and may include other attempts to influence agency decisions. (It is ironic that commenting on the activities of our government -- a process that is central to our democratic way of life -- would be considered political advocacy.)
Political advocacy does not include making available nonpartisan research or providing technical advice to government in response to a written request. Communications with bona fide members would not be considered political advocacy unless the communication directly encouraged the member to take action either directly or through grassroots initiatives to influence a legislative or agency action.
IT BARS ENTITIES FROM RECEIVING FEDERAL GRANTS IF THEY USE TOO MUCH OF THEIR PRIVATE FUNDS ADVOCACY ACTIVITIES.
If during any one of the previous five years, an entity spends 5% or more of its non-federal grant expenditures on advocacy, it will be prohibited from receiving a federal grant. (Larger organizations get slightly less than 5%.) This will force many community groups into a difficult decision: continue advocating on behalf of the people and causes they serve or take federal grants to provide services -- both activities consistent with their missions.
Example: Organization X spends $1 million, 80% of which is from federal block grants to states. Organization X must subtract the $800,000 from overall expenditures, leaving $200,000. Take 5% of the remaining $200,000, which equals $10,000, and that is the maximum amount of money Organization X can spend on advocacy without being barred from receiving federal grants.
IT LIMITS ANY ASSOCIATION WITH OTHER ENTITIES THAT USE 15% OF THEIR MONEY FOR ADVOCACY ACTIVITIES.
A federal grantee cannot do business (e.g., rent space or purchase goods) with an entity that spends 15% or more on advocacy activities. Additionally, if the grantee associates with such entities -- even with its private funds -- it will be engaging in advocacy activities itself. This will limit the ability to create coalitions and work with other organizations.
IT REQUIRES FEDERAL GRANTEES TO FILE A NEW ANNUAL REPORT.
If a federal grantee engages in advocacy, it must disclose information about the grant and about the organization's political advocacy activities. Federal grantees will be required to provide a"brief description" of how non-federal money is used for political advocacy and a "good faith estimate" of the amount spent. Only federal grantees will be required to provide such information; powerful business lobbyists, for example, are not required to do so. This information is to be "available to the public through the Internet."
IT CREATES NEW ENFORCEMENT PROCEDURES, INCLUDING LICENSING BOUNTY HUNTERS TO FIND GROUPS IN VIOLATION OF THE AMENDMENT'S PROVISIONS.
Anyone can bring a lawsuit against a grantee for up to ten years after the violation. Those organizations found not in compliance with the amendment may be fined $5,000 to $10,000 plus three times the value of the grant. The bounty hunter can collect up to 25% of the recovery.

Since the Blunt amendment covers federal grants that pass through the state or local government (and may be commingled with state or local funds), many nonprofits may not even know that they receive federal grants and are covered by the provisions of the amendment. If a grantee is challenged, the burden of proof is not on the government to demonstrate that the grantee is not in compliance with the bill. Rather, the burden is on the federal grantee to demonstrate with "clear and convincing evidence" -- a standard not part of normal accounting terminology -- that they are in compliance with the requirements.
For more information: OMB Watch, Patrick Lemmon, lemmonp@ombwatch.org; 202-234-8494.