Document Type


Publication Date



The proposed Multilateral Agreement on Investment (MAl) represents a major step in the evolution of "sovereignty," which includes the power of a nation-state to govern without external controls. A panelist at the 1998 Cornell International Law journal Symposium introduced the MAl as an example of "multilateral sovereignty" to achieve commonly held goals of global economic integration. This perspective posits that the MAl is an exercise in sovereignty by subtraction, aiming to limit governing power rather than promote its joint exercise.

Its critics call the MAl a "slow motion coup d'etat," a "bill of rights for investors," a threat to sovereignty, and a "corporate rule treaty," because it (1) empowers foreign investors to challenge the law-making authority of nation states and subnational governments, (2) is composed of a fifty-page text of fourteen investor-protection standards that exceed the scope of any existing agreement/ (3) and acts through an international forum with the power to award monetary damages against the offending government. U.S. negotiators counter that the MAl protects foreign investors from discrimination by giving them rights analogous to those they already enjoy under the U.S. Constitution. In addition, U.S. negotiators maintain that an agreement that poses significant limits on U.S. sovereignty is unacceptable.

This article suggests a more modest analogy than a virtual coup d'etat. It simply seeks to explain that the MAl would have a greater impact on U.S. law making power than acknowledged by MAl supporters, who claim that it merely repeats domestic principles of non-discrimination. For example, the MAl aims to limit U.S. States' traditional powers to discriminate.

The first objective of this article is truth in advertising: the MAl would disrupt state and local lawmaking capacity. The capacity of cities, counties, and states to serve as our "laboratories of democracy" hangs in the balance. States act as successful laboratories for testing future national policy in virtually every sector of governance, including banking regulation, economic development, government purchasing, consumer protection, working conditions, health and medical insurance, and environmental law.

The second objective is to bring some order to the MAl sovereignty debate. Previous writers have brought conceptual order to the comparison of state sovereignty and international law under NAFTA and the WTO agreements. This article extends the analysis to the MAl to (1) inform the bottom-up view of the MAl from the perspective of those who would lose power if it is implemented, and (2) shape positive policy options to maintain the constitutional balance between federalism and private investor protection.

Publication Citation

31 Cornell Int’l L.J. 491-598 (1998)