Defending Civilization: The Threat of NAFTA Chapter 11

NAFTA Chapter 11 presents the most persistent, pernicious attack on civilization since Atilla the Hun. What is the threat, and how do we deal with it?

Originally published 2002

Thank God for Bill Moyers and the Public Broadcast System (PBS). Without them, most of us would never know just how thoroughly the North American Free Trade Agreement (NAFTA) threatens to undermine civilization. The situation is critical. Even as we speak, corporate lobbyists are manipulating congress, in order to expand the agreement to include 31 other countries. The consequences of the current agreement border on the egregious. The consequences of expansion could be disastrous

The issue is NAFT’s Chapter 11, which gives a foreign corporation the right to sue the government in the event of any loss that stems from a government action which is “tantamount to expropriation”.

When originally designed, that clause was intended to make companies feel that it was safe to invest. That way, if a foreign government decided nationalize your oil well just when it started producing, the company wouldn’t lose everything it had invested to create the well.

That all sounded good at the time, so Chapter 11 went into NAFTA without so much as a whisper of public debate. The problem, though, is that in giving foreign companies the right to sue, we have in effect, given up our sovereignity. With a stroke of the pen, we have traded away the sovereignity that so many men fought and died for. It is nothing less than a unconscionable act of treason.

Here are some of the consequences of that provision:

  • A Candadian company is sueing the U.S. for restricting MTBE additives in gasoloine.
    MTBE is a proven carcinogen, and it has already seeped into much ground water in the United States. Legislating against it was the only prudent action. In fact, since the science was known beforehand, the act of approving it was reprehensible. Despite, those facts the Candadian company is suing for the “lost profits” that have resulted from the restriction.
  • A U.S. company is suing Mexico because the local democratic govenment insisted that their toxic dump be cleaned up before it was reopened.
    They had a federal permit, they say. But the local population had horrible, rampant attacks of cancer, all stemming from the time that the dump wsa first opened. They insisted that the dump be cleaned up before being reopened for business. According to the federal government, the company had 5 years to clean up — while adding additional toxic chemicals in the meantime. But the local population stuck to their guns, insisting on action, rather than promises.
  • A U.S. tobacco company sued Canada for adding a warning to cigaratee packs.
    The Canadian government paid $13m in “compensation” for the lost business, and immediately took the warning off the labels.
  • Louisiana mortuaries won a lawsuit, but taxpayers pay the price.
    A Canadian corporation started buying up the small family-owned mortuaries in a small southern town. Then they started selling at deep discounts. To the locals, it looks very much as though they working to get a monopoly — after which they are pretty sure they can say goodbye to the low prices. The largest of the local mortuaries sued, and the jury awarded $500m. The Canadian company settled for something like $125m, rather then engage in a lengthy appeals process. Sounds a lot like a justice at work. But now they are sueing for $750m under NAFTA Chapter 11. And should they win, it is taxpayers who will foot the bill.

To make matters even worse, NAFTA lawsuits do not take place in our court system — or in any country’s court system. NAFTA is a body unto itself, and it is has it’s own “courts”. Those courts are not open to public review, however. The press is not invited. Even the people who passed the laws are not invited! The people suffering from cancer have no opportunity to plead their case.

The implications of these lawsuits are staggering. What they mean is that a democratically elected government cannot act to protect its citizenry. As one Candadian official said, “If someone puts plutonium into baby formula, we can’t pass a law against that, because then we would have to “compensate” them for their lost profits”.

Since no one can afford to pay for every “lost profit” that any creative lawyer can dream up, the net result is that a country — and it’s otherwise soverign constituent entities (for example, states, municipalities, or territories) are no longer able to pass any laws! The only kind of law that can be passed, in such circumstances, is one that meets with the approval of all the foreign companies doing business in that country.

In other words, each country cedes its sovereignity to foreign commercial interests. Ridiculous!

But it gets a lot worse. The legislators who designed the bill may not have had much inkling of the consequences. But it is a sure bet that the multinational corporations did — especially the ones who helped to design and promote the agreement.

You see, a company in this country has no right to sue the government if a law is passed which causes it to lose profits. But a company in another country can, if it is doing business here. Similarly, a company in that country can’t sue its own government. But a company here can easily do so.

You see the potential? Multi-national corporations have been handed a huge sword that they can weild to achieve unprecedented nfluence on government policy. It is bad enough that they can afford to hire full time lobbyists to enact favorable laws, while the people who are impacted by them are often too distracted by making a living to rise up adequately in their own defense.

But now corporations have the capacity to impose severe financial retribution on any government which is foolhardy enough to impede the potential for profits — no matter how wise that decision may be. With cross-border lawsuits, they can achieve what they could never could achieve in their own countries. They have been granted an enormous power — one with a greivous potential for harm.

The absolutely amazing thing in this scenario is that governments will have a very hard time suing back! If you have read Justice: Paying the Real Costs and The Need for Lawyers you know that the only reasonable way to restrict the harm that corporate products do is to make the companies responsible for the costs.

So, if those companies were paying compensation for the cancers they produce — paying the medical costs, paying the families for lost wages and emotional scars — then maybe, just maybe, they would decide not to do these things in the first place. At the very least, maybe as a result of the suit/counter-suit process, the cost of the damage they produce would be seen as easily offsetting the profits they claim to have lost.

But as matters stand now, a U.S. tobacco company has already won $13m from the Canadian government, for the profits they lost when Canada tried to protect its citizens from tobacco-induced cancer. So the measure of profits appears to be the only yardstick in use in NAFTA’s proceedings.

But if profits are the only measure, and costs are not taken into account, what will be the result? If local and even national governments have, in effect, ceded sovereignity to foreign commercial interests, what will be the outcome? Finally, under what conceivable delusion that this is a good idea can we possible consider extending the arrangement to 31 additional countries?

Copyright © 2002-2017, TreeLight PenWorks

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