shell raising hell in mexico
wto investment treaty threatens
communities
In 2002, the oil giant Shell
announced its plan to develop a gigantic
new gas facility in a delicate marine
ecosystem in Costa Azul, Mexico. Local
residents are opposing the project due to
the projected severe social and
environmental impacts. This project is just
one among many unwelcome intrusions that
communities would find harder to change if
the WTO investment treaty is agreed to in
Cancun. And Shell is just one of the
companies, many of them grouped in the
influential International Chamber of
Commerce, that would benefit from this new
investment regime.
In 2002, Shell Gas and Power announced a
US$500 million plan to develop an enormous
Liquefied Natural Gas (LNG) facility along
the pristine coastline of Baja California,
Mexico. The project aims to build a
receiving terminal and re-gasification
facility, a port and pipelines (one of
which will be 200 kilometres long) near the
Bajamar tourist resort. Most of the gas
produced will probably be exported to
nearby powerhungry California.
Costa Azul is one of the last spots of
wilderness on the Baja California coastline
– an area renowned for its unique flora and
fauna, as well as for the population of
grey whales that swim from Alaska to calve
in the warm waters of the Gulf of
California. By choosing this site for an
LNG plant, Shell risks not only obstructing
the path of the whales, but also creates
the danger of collisions between whales and
ships.
Some 5,000 local people work in the
thriving tourist industry up and down this
coast. An LNG plant just a stone’s throw
away from the resorts threatens to wipe out
their jobs, small businesses and
livelihoods. Shell has not offered
compensation for the potential loss in
tourist revenue, and very few jobs will be
created by the investment. The local people
have proposed an economically viable
alternative that moves the pipeline
offshore and keeps the grey whale’s
migratory routes clear. Shell, however,
remains determined to carry out its initial
plan.
As with the MAI, the Commission has
explicitly sought to engage industry in
developing its investment proposals.
Between 1999 and 2000, the European
Commission conducted a comprehensive survey
of 10,000 large EU businesses to ascertain
their ambitions with regard to a WTO
investment agreement. The Commission also
championed the ‘Investment Network’, a
corporate-heavy body that it clearly
created to generate direct, executive-level
support for its WTO investment
campaign.
The International Chamber of Commerce
(ICC) -- a heavyweight corporate proponent
of the failed MAI which brings together
companies including Shell, Unilever, BASF,
Nestle, Norsk Hydro and BP, is one of the
most powerful corporate backers of EU moves
towards a WTO investment agreement. In the
corporate world, the ICC has unparalleled
access to all levels of government as well
as a great deal of influence at the WTO. As
Stefano Bertasi, former head of the ICC
Working Group on Trade and Investment
states, “We’ve always had, throughout the
years, a very close working relationship
with the WTO, because obviously they deal
with issues which are central to business
interests. The ICC has always been a vector
for business influence into WTO work.”
There is a steadily revolving door
between the ICC and the WTO, which allows
ideas and influence to be exchanged and
cemented. Lars Anell, the current chair of
the ICC’s Trade and Investment Committee,
was chair of the Council of the GATT (the
predecessor to the WTO) between 1986 and
1992. Arthur Dunkel, a former head of the
ICC’s Trade and Investment Committee, was
Director General of the GATT during the
Uruguay Round.
investment treaty puts
communities at risk
In 1998, an uprising by global civil
society caused the OECD’s proposed
Multilateral Agreement on Investment (MAI)
to be scuttled. This widelycelebrated
victory for people and the environment may
be temporary, however, as the current
proposal for a WTO investment agreement is
yet another attempt to develop a bill of
rights for global corporations. Together
with the WTO’s services agreement (GATS)
currently being negotiated, the proposed
investment agreement would provide
transnational corporations with greatly
expanded rights to invest when and where
they want.
European corporate lobby groups are
working hand-in-hand with the European
Commission to force investment onto the
WTO’s agenda. Echoing the corporate lobby
groups, the Commission embellishes its
arguments for a WTO investment agreement
with a huge amount of ‘pro-development’
rhetoric. The vast majority of developing
countries are however opposed to an
investment agreement in the WTO. This is
understandable: even the most basic
agreement would greatly undermine the
rights of communities to regulate the entry
and performance of foreign investors.
The crux of an investment agreement will
be increased access for investors to all
countries and reduced government
regulations to control these investors.
It’s not clear exactly what form the
agreement will take, but all indications
are that a full-scale investment agreement,
as supported by corporations and their
lobby groups, could endow investors with
significant legal protection, incorporate
mechanisms by which the investor can
directly challenge state legislation and
seek compensation, and require that
investing companies receive the same
treatment as domestic companies. The
agreement will also likely lock
liberalization in permanently and prevent
performance requirements – which aim to
share some of the benefits and jobs created
through investment with the local
population – for foreign investors.
For companies like Shell, an investment
agreement like the one being discussed in
the WTO would be liberating. For the
communities in Costa Azul, Mexico, as well
as in countless other places around the
world, however, greater investment rights
for corporates would likely be accompanied
by countless social and environmental
woes.
