by Robert Naiman, Sep 29, 1998

On September 17, the House voted against the Administration's request to add $15 billion to the Foreign Operations Appropriation for an increase in the U.S. quota to the IMF.

Nonetheless, the House leadership is under tremendous pressure to agree to the Senate version of the appropriation, which approves $18 billion for the IMF, including the quota increase.

If the quota increase is added, it will trigger a provision of the authorizing language in the appropriations bill that requires the IMF to become an enforcer of trade agreements such as NAFTA and GATT/WTO, as well as of potential future investment and trade agreements such as the proposed Multilateral Agreement on Investment (MAI).

Many Members of Congress are not aware that this language is in the bill. The presence of this language should be very controversial, as it creates a large opening for advancing agreements such as NAFTA and the MAI without Congressional votes. Last week the House rejected granting fast-track authority the President to negotiate free trade agreements such as NAFTA by a margin of 180-243.

Section 601 (a) of the recently passed Foreign Operations Appropriation bill contains investment deregulation conditions that would automatically apply if a deal is made appropriating the $14.5 billion quota increase to the IMF.

This section conditions the quota increase appropriation on requiring that the IMF board of directors "publicly agree" to require borrowing countries to: "liberalize restrictions on investment" and establish the equivalent of the MAI standard of national treatment on investment through "guarantee[ing] nondiscriminatory treatment in insolvency proceedings between domestic and foreign creditors"

Section 601 (a) will have the effect of encouraging plant closings in the U.S., since the IMF will be guaranteeing conditions that multinational corporations seek when they transfer capital from the U.S. to developing nations. Those conditions are also now the subject of multilateral negotiation in the MAI.

Note that, unlike the unenforceable "voice and vote" provisions of the IMF appropriations on worker rights, the trade and investment liberalization conditions of the bill are a requirement which the IMF must meet to receive the quota increase. (See analysis of the language by Rob Weissman of Essential Action).

WHAT YOU CAN DO: Call your Representative toll-free at 800-335-4949 or 888-898-7717, or at 202-225-3121 and ask him/her to oppose the quota increase and the MAI/NAFTA/WTO enforcement provisions of the appropriation. If your Representative is a Republican, ask him/her to ask Bob Livingston, Chair of the Appropriations Committee, to remove 601(a) from the bill and oppose adding the quota increase. If your Representative is a Democrat, ask him/her to ask Representative David Obey, Ranking Member on Appropriations, to remove 601(a) from the bill and oppose adding the quota increase.

Note that even if your Representative has been a supporter of adding the quota increase (like Obey) he/she may be receptive to striking the trade liberalization language.