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[Bill Jones <billj AT harborside.com>]

I realize some people will never see a politican for what he truly is, 
as long as he's a guaranteed chextamper (what a great pun; I just 
couldn't resist the image of government employess filling cereal bowls 
with carcinogenic fluff, and tamping it down to fit more in).

Here's a Sierra Club update from October 2004 on the effects of the 
"Non-Tariff Trade Barriers" section of (what should be called) Slick 
Willy's North American Investor Rights Treaty:


 NAFTA's Investor Rights: a Threat to the Environment and our Democracy

The North American Free Trade Agreement (NAFTA), implemented on January 
1, 1994, is an agreement to remove most barriers to trade and 
investments among the United States, Canada, and Mexico.

The Sierra Club and several other environmental organizations opposed 
NAFTA from the beginning. While there was some 
"environmentally-friendly" language, it was non-binding and failed to 
require adequate levels of environmental protections, even considering 
the broad scope of the agreement. Looking back at NAFTA's 10-year track 
record, it is evident that many of the Club's initial concerns were correct.

One of the most controversial parts of NAFTA is the section outlining 
investor rights. These rights give broad privileges to transnational 
corporations at the expense of environmental and other public interest 
protections. Under these investment provisions, companies can bypass 
domestic courts and sue a government directly for cash compensation if 
they think an environmental or public health law might interfere with 
their ability to profit Through this so-called investor-to-state 
mechanism, companies are not required to first bring their claims forth 
in domestic courts; instead, the NAFTA suits are arbitrated in 
international tribunals that operate outside a nation's regular legal 
system and are extremely limited in regard to public participation and 
observation.

These sweeping investor rights have already had a harmful effect on the 
environment. After more than ten years of NAFTA it is clear that the 
Chapter 11 provisions favor corporate profits over environmental 
protections and undermine the very basis of our democracy.

Both Mexico and Canada have already lost cases under Chapter 11 and 
there are currently over one billion dollars worth of Chapter 11 
environmental suits pending. Below are some examples.

# Metalclad v. Mexico
In October 1996, Metalclad Corporation, a U.S. waste-disposal company, 
accused the Mexican government of violating Chapter 11 when the state of 
San Luis Potosi refused to grant the company permission to re-open a 
waste disposal facility. The Mexican State Governor shut down the site 
after a geological audit showed the facility would contaminate the local 
water supply. The Governor then declared the site part of a 600,000-acre 
ecological zone. Metalclad claimed this constituted an act of 
expropriation and sought $90 million in compensation to the company. The 
NAFTA tribunal ruled in favor of Metalclad, ordering the Mexican 
government to pay $16.7 million in compensation to the company.

# Glamis v. United States
After California placed cleanup requirements for highly controversial 
mining operations that would harm the environment and destroy sacred 
Native American sites, Glamis, a Canadian gold mining company, sued the 
U.S. under Chapter 11. Glamis claims that the California laws and 
regulations will destroy their profit margin. Glamis is seeking a total 
of $50 million in compensation ($15 million from actual investment and 
$35 million in compensation for "lost profits") from the U.S. government.

# S.D. Myers v. Canada
In 1995, Canada stopped allowing the export of polychlorinated biphenyls 
(PCB), from Canada to the U.S. Exporting PCB could violate Canada's 
obligation under the Basel Convention, a multinational environmental 
agreement governing trade in toxic waste. PCBs were used as coolants and 
lubricants in electrical equipment. In 1977 PCBs were banned for 
production in the U.S. because of evidence that they built up in the 
environment and caused harmful health effects. In 1998 S.D. Myers, a 
leading American waste treatment company, sued Canada under NAFTA's 
investment rules for monetary compensation for the 16-month duration of 
the ban. The NAFTA tribunal ruled in favor of S.D. Myers, ordering the 
Canadian government to pay over $8 million in compensation to the company.

# Methanex v. California
In 1999, California decided to phase out MTBE, a gasoline additive 
believed by the World Health Organization to be carcinogenic. MTBE has 
seeped into groundwater supplies of hundreds of communities throughout 
California, making the water undrinkable. The ban took effect on January 
1, 2004. The Canadian corporation Methanex, which manufactures one of 
the components of MTBE, has brought a $970 million suit under NAFTA's 
Chapter 11 against the U.S. Methanex demands compensation for profits 
and business opportunities it claims to have lost because of the 
environmentally based ban.

Expanding the Flawed Model to the Hemisphere
Instead of learning a lesson from the flaws of the investor rights 
provisions under NAFTA, the Bush Administration wants to expand this 
model to even more countries. The proposed U.S. - Central America Free 
Trade Agreement (CAFTA) and the Free Trade Area of the Americas (FTAA), 
currently under negotiation, threaten to expand the NAFTA trade model, 
along with its controversial investment rights provisions, throughout 
the hemisphere.

Astoundingly, CAFTA's investment rules go even further than NAFTA. For 
example, it specifically allows transnational corporations the right to 
challenge government policies about natural resource agreements, such as 
mining and offshore oil contracts. The potential threat to the 
environment of this Chapter 11 expansion can be seen in the Harken Oil Case.

Harken Costa Rica Holdings, a transnational corporation with close ties 
to Harken Energy of Texas, obtained an agreement to drill off the coast 
of Costa Rica, contingent on the outcome of an environmental assessment. 
When it was found that the drilling would pose a serious threat to the 
rich marine ecosystems of the Talamanca region, the Costa Rican 
government decided the drilling was contrary to its environmental law, 
and Harken was denied the right to drill. In response, Harken tried to 
bring an international suit against Costa Rica. It demanded the 
outrageous sum of $57 billion to compensate for profits Harken would 
have made from the drilling. A stipulation in the contract forced the 
company to taken their suit to domestic courts in Costa Rica, but had 
CAFTA's investor rules been in place, Harken could have bypassed the 
domestic court system and taken the case straight to a NAFTA-style tribunal.

Additionally, for the small developing nations of Central America and 
the Dominican Republic, the mere threat of similar suits could keep 
these nations from creating and adopting environmental laws.

USTR Ignoring Congressionally Mandated "No Greater Rights" Standards
In 2002, during the debate over whether to grant the President so-called 
Trade Promotion Authority (a.k.a. Fast Track), both the House and Senate 
debated the track record of Chapter 11 in undermining public interest 
policies. Dissatisfaction with the performance of the Chapter 11 
provision led to a series of demands that trade negotiators were 
supposed to must meet before including similar investor rights 
provisions in future trade agreements. Congress's primary concern was 
that foreign investors should have "no greater substantive rights with 
respect to investment protections than U.S. investors in the United 
States." Unfortunately, the United States Trade Representative (USTR), 
which is in charge of our trade negotiations, has not implemented this 
Congressional demand in any meaningful way.

CAFTA, FTAA and other bilateral trade agreements, contain investor 
rights provisions that continue to create greater rights for foreign 
investors than what domestic companies enjoy in the U.S. The definition 
of what constitutes an investment is still extremely broad, covering not 
only actual property, but also "the commitment of capital or other 
resources, the expectation of gain or profit, or the assumption of 
risk." Companies can still force a government to pay compensation for 
incidental effects on its business that result from an environmental, 
labor, or other public interest regulation. For example, while the U.S. 
Supreme Court has ruled that a government has the right to regulate a 
public nuisance (such as a pollution released from a property) or to 
take actions that affect personal property (such as banning the sale of 
a hazardous chemical) without paying compensation - CAFTA and other free 
trade agreements would allow exactly such suits.

We can do better!
The Sierra Club supports trade agreements that promote a higher quality 
of life for all, not trade that simply serves as a vehicle to increase 
corporate profits.

The investor-to-state mechanism is fundamentally flawed and should not 
be part of any trade agreement. If trade agreements contain this 
provision, the investment rules should not give foreign companies 
greater rights than domestic companies, and companies should be required 
to exhaust all reasonably available domestic legal remedies before 
having the right to bring claims before an international tribunal.

We must learn our lessons from the failed trade agreements of the past 
and stake out a different course for the future, where peoples' lives 
and livelihoods are protected and respected.

>