Anti-NAFTA protestors are gassed at a WTO rally in Montréal
A decade ago the North American Free Trade Agreement (NAFTA) burst onto the scene in North and Central America. The complex trade pact between Canada, the United States and Mexico has become a perennial issue of quite heated debate during, and between elections, in all three countries, and its initial ratification ignited vocal dialectical deliberation.
But amid the din of voices fighting to be heard in the struggle something was missed. Overlooked by NAFTA opponents and proponents alike, and something virtually ignored in deliberations on the agreement, was one inconspicuous provision: Chapter 11. In essence, Chapter 11 spells out the terms under which multinational corporations can be compensated (with our tax monies) for losses incurred by government expropriation.
If a government wants to build a highway or sports arena and your home happens to be in the way, the government can force you out but they have to compensate you for your loss. Chapter 11 recognizes this precedent and goes much further.
Under Chapter 11, the signatory nations are prevented from “directly or indirectly nationaliz[ing] an investment” or taking measures “tantamount to nationalization or expropriation”, and therein lies the distinction. By expanding government responsibility for compensation beyond direct takings, the architects of Chapter 11 enabled foreign corporations doing business in Mexico, Canada, or the U.S. to seek reimbursement for any government law, rule, or regulation that impinges upon the company’s profits. This represents a significant departure from past practice.
Dan Seligman, director of the Sierra Club’s Trade Programme, argues that Chapter 11 may lead to a “fundamentally different world in the degree of power corporations hold on democratic governments.”
Ontario attorney Todd Weiler has created a web site where you can obtain information about NAFTA investor-state dispute settlement, obtain copies of recent NAFTA Claim documents, and contact an appropriate person in order to learn more about bringing a NAFTA investor-state claim.
For more background, read Justin Gerdes’ article on the Environmental News Network web site, and for an even more detailed understanding of NAFTA, have a look at the full text of the NAFTA agreement.
The diabolical truth of Chapter 11 is that it takes away all rights of any signatory government – at this moment Canadian, United States, and Mexican, but later likely all of those within The Americas, to protect their citizenry from the predations of any private corporation. Let’s say, for example, that a company has developed a market for a product later found to be toxic and therefore posing a serious poisoning risk to any consumer, or to it’s population at-large – as in the case of certain petroleum additives – the obvious reaction of a responsible government would be to block the product from entry. Under the provisions of Chapter 11, such a government doesn’t have any legal right to do this, and if it nevertheless insists on doing so is compelled to pay massive damages to the corporation responsible for marketing the product (to say nothing of it’s possible lethal effects) as compensation for lost business. How did we ever sign off on such a deal?