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The North American Free Trade Agreement (NAFTA) includes an array of new corporate investment rights and protections that are unprecedented in scope and power. NAFTA allows corporations to sue the national government of a NAFTA country in secret arbitration tribunals if they feel that a regulation or government decision affects their investment in conflict with these new NAFTA rights. If a corporation wins, the taxpayers of the "losing" NAFTA nation must foot the bill.
NAFTA included an array of extraordinary new rights and privileges for foreign investors that incentivized offshoring of jobs and exposed an array of our domestic environmental health, land-use and other laws to attack. These extreme rules have been replicated in various U.S. “free trade agreements” (FTAs), including CAFTA, the Peru and Oman FTAs, and the recently passed deals with Korea, Panama and Colombia.
Most stunningly, these new rights in a public treaty are privately enforceable. A little-known mechanism called “investor-state” enforcement allows foreign firms to skirt domestic court systems and directly sue governments for cash damages (our tax dollars) over alleged violations of their new rights before UN and World Bank tribunals staffed by private sector attorneys who rotate between serving as "judges" and bringing cases for corporations. Seriously!
If a corporation wins its private enforcement case, the taxpayers of the “losing” country must foot the bill. Over $350 million in compensation has already been paid out to foreign investors in a series of investor-state cases under NAFTA-style deals. This includes attacks on natural resource policies, environmental protection and health and safety measures, and more. In fact, of the over $12.5 billion in the 17 pending claims under NAFTA-style deals, all relate to environmental, public health and transportation policy – not traditional trade issues.
After having lost on the merits in Ecuador and U.S. courts, Chevron has turned to an ad hoc “investor-state” tribunal of three private lawyers to help the company avoid paying to clean up horrific contamination in the Amazonian rainforest.
Chevron is trying to get this private tribunal to suspend enforcement of or alter an $18 billion judgment against Chevron rendered by a sovereign country’s court system. The closed-door tribunal met in a rented room in Washington, DC Saturday and Sunday (February 11-12).
These unaccountable panels, from which no outside appeal is available, have issued perverse rulings in the past on behalf of corporate claimants. Recent U.S. trade agreements empower foreign corporations to use this system to skirt our domestic courts to directly use our government before these corporate tribunals to obtain payment of unlimited taxpayer funds when they claim domestic environmental, land use, health and other laws undermine their “expected future profits.”
Pacific Rim Mining Corp vs. Republic of El Salvador
Pacific Rim Mining Corp., a Canadian-based multinational firm, sought to establish a massive gold mine using water-intensive cyanide ore processing in the basin of El Salvador's largest river, Rio Lempa.
This proposed project as well as applications filed by various companies for 28 other gold and silver mines, generated a major national debate about the health and environmental implications of mining in El Salvador, a densely populated country the size of Massachusetts with limited water resources.
….In December 2008, the firm filed a claim under the Central America Free Trade Agreement (CAFTA), demanding hundreds of millions in compensation from one of the hemisphere's poorest countries. ….
….Tribunals have ordered over $200 million in payments to investors under similar terms in the North American Free Trade Agreement (NAFTA).
Commerce Group Corporation vs. Republic of El Salvador
The Commerce Group Corporation, a mining firm registered and based in Wisconsin, is the second multinational company to attack El Salvador’s environmental policies under the controversial investor rights of the Central America Free Trade Agreement (CAFTA). The company's environmental permits for its gold mining and milling operations in Northeastern Salvador were revoked after the company failed its environmental audit; in April 2010, the Salvadoran Supreme Court ruled that the company had been accorded due process during and after the audit.