The
following are among the 15 resolves in the North American Free Trade Agreement
(NAFTA) preamble:
~Contribute
to the harmonious development and expansion of world trade and provide a
catalyst to broader international cooperation;
~Create
new employment opportunities and improve working conditions and living
standards in their respective territories;
~Undertake
each of the proceeding in a manner consistent with environmental protection and
conservation.
Unfortunately,
like the many biblical do’s and don’ts, whereby the only one we took to heart
was the command “to be fruitful and multiply,” the only NAFTA resolves that
have been heartedly implemented have been those relating to the expansion of
world trade; with little of no regard to environmental impact, health, safety
and working conditions and standards.
However,
what has really alarmed the non-governmental-organizations (NGO’s), critical of
the way economic globalization is developing, is the threat that it poses to
the hard-won progress that has already been made. The culprit is the language
embodied in NAFTA’s Chapter 11 which has given foreign investors the right to
sue governments directly for any partial loss of the value of their investment,
including the loss of future earning potential, resulting from any government
administrative measures, laws or policies that are “tantamount to
expropriation.” The cases to be heard and adjudicated by the U.N. International
Center for Settlement of Investment Disputes (ICSID) or the World Bank trade
tribunal under closed, virtually secretive proceedings, sans any due process. The expansive definition of what constituted
expropriation has alarmed many who see it as a diminution of their democratic
right to regulate their economic development.
The
following cases illustrate the reason for concern:
~Methanex,
a Canadian company, is suing the U.S. for $970 million because California is
banning the use of MTBE, a gasoline additive designed to reduce air
pollution. Methanex produces MTBE, a
major component of methanol. However,
MTBE is carcinogenic and has been associated with human neuron-toxicity,
causing dizziness, headaches and nausea.
California ordered the removal of MTBE from gasoline sold in the state
by December 31, 2002 after it was found to be contaminating ground and well
water. If the case is decided in favor
of Methanex, and California does not rescind its ban, the United States will
have to pay for the loss of future profits.
~If
it seems unlikely that the trade tribunal would rule against a country’s right
to protect its citizens and environment, please note that the Ethyl Corporation
sued the Canadian government winning a reversal of environmental laws banning
the gasoline additive MMT. All that the
Ethyl Corporation had to prove was that it was an “investor party” and that the
Canadian laws were “tantamount” to expropriation.
~On
September 1993 Metalclad, a U.S. corporation, purchased Coterin, a Mexican
company that had acquired a federal permit to build a hazardous waste landfill
in the La Pedrera valley of the State of San Luis Potosi. On May 1994, thinking it had all the
necessary permits Metalclad began construction. On October of that year, the city of Guadalcazur, supported by
concerned citizens, stopped construction citing Metalclad’s failure to obtain a
municipal building permit. While
believing that it did not need a local permit, nevertheless, Metalclad, as a
public relation matter, applied for the permit and resumed construction. Although ready for operations by March 1995,
due to local demonstration, the facility remained closed. Despite efforts by Metalclad to placate the
city council by contributing moneys to local civic organizations, providing
free medical services and discounting locally generated hazardous waste, it was
denied the local building permit. On
September 1997, the Governor or San Luis Potosi decreed the site a protected
natural area. Meanwhile, Metalclad,
claiming a violation of NAFTA chapter 11 requirements of “fair and equitable
treatment” and prohibiting actions “tantamount to expropriation” of their
investmnent filed a claim against Mexico for damages.
The
case was adjudicated by three arbitrators under the auspices of the ICSID, in
closed door proceedings, with no amicus (i.e. local community) input
permitted. Three years later the
arbitrators ruled that Metalclad was entitled to $16.5 million, plus interest
compensation from Mexico.
Environmentalists were perturbed by the decision, not on its merit, but
because of the tribunal’s failure to give some consideration to the third NAFTA
preamble resolve (cited at the beginning of this article) and Article lll4 of
Chapter 11 which reads, “ Nothing in this Chapter shall be construed to prevent
a Party from adopting, maintaining or enforcing any measure otherwise consistent
with this Chapter that it considers appropriate to ensure that investment
activity in its territory is undertaken in a manner sensitive to environmental
concerns.”
It
is to be noted, that NAFTA’s “investor protection” provisions have also been
incorporated in many other (bilateral) agreements and, are scheduled to be made
part of the proposed expansion of NAFTA to 31 Latin American nations if the
Bush administration is granted Fast Track negotiations authority without
change.
Art
Peracchio
2-25-02