February 1, 2002

Dirty Little Trade Secrets: How corporations are overturning laws

Bill Moyers Reports: Trading Democracy
PBS Documentary, Tuesday February 5th at 10 p.m., EST (Check local listings)

If the hundreds of thousands of American job lost under NAFTA (North American Free Trade Agreement) isn't enough to make your blood boil, maybe this will heat things up.

A little-known provision of NAFTA, called Chapter 11, has allowed corporations to directly challenge government regulations and policies that interfere with their profitability -- even when the government action is to protect public health and safety. Foreign investors in the U.S. are provided with broader rights by NAFTA than U.S. citizens and domestic firms.

Under Chapter 11, multinational corporations now have the right to demand compensation if laws enacted to protect the environment or public health harm them financially. What's more, the companies pursue their claims outside the U.S. court system in secret tribunals.

UAW President Stephen P. Yokich has had harsh words for Chapter 11, which gives corporations (but not citizens) the right to directly sue governments.

In a statement released last April, Yokich said the NAFTA provision has "seriously weakened the ability of democratically-elected municipal, state, provincial and national governments to protect the interests of their citizens."

"Chapter 11 of NAFTA is an outrageous shift of power away from citizens and their governments to multinational corporations," Yokich added.

In an hour-long PBS documentary, "Bill Moyers Reports: Trading Democracy," Moyers and producer Sherry Jones examine the Chapter 11 provision that usurps the laws of our country, as well as those of Canada and Mexico.

Several cases are the focus of the documentary:

• Methanex, a Canadian company and the world's largest producer of the key ingredient in the gasoline additive MTBE, which was found to be a carcinogen. In 1995 MTBE began turning up in wells throughout California, and by 1999 had contaminated thirty public water systems. The state ordered that the additive be phased out. Methanex filed suit under NAFTA's Chapter 11, seeking $970 million in compensation for loss of market share and, consequently, future profits. With regard to the Methanex case, environmental attorney Martin Wagner tells Moyers, "they're saying that California either can't implement this protection or that they get a billion dollars. People should be outraged by that."
  
  
• A U.S. company, Metalclad, sued Mexico when it was prevented from reopening a toxic dump by Mexican state and local officials. Mexican citizens feared the site was making them sick. Metalclad claimed it was tantamount to expropriation. The company was awarded $16 million in compensation.
  
  
• The Ethyl Corporation, an American manufacturer of another gasoline additive called MMT, successfully sued Canada over a ban on the product. William Greider of The Nation, tells Moyers: "Governments are already being intimidated by the mere threat of a claim being filed against some regulatory action. If you're a civil servant, or even a political leader, you've got to think twice when a corporate lawyer comes to you and says, quite forcefully, we're going to hit you for a half a billion dollars if you do this."
  
  
• In Mississippi, a Biloxi funeral home owner was awarded damages in a civil suit against a Canadian corporation called the Loewen Group. The local funeral home owner alleged that the Loewen Group had engaged in "fraudulent" and "predatory" trade practices. The jury agreed with this allegation, awarding him $500 million. Three years later, the Loewen Group filed a Chapter 11 claim against American taxpayers, arguing the jury was biased against Canadians and seeking $725 million in compensation. The NAFTA tribunal has declared it a legitimate accusation.
  

Chapter 11 subverts our democratic rights to choose our own laws to protect the environment and our health and safety. This travesty must not be allowed to continue. Since the same language is in the FreeTrade Area of the Americas (FTAA) for 34 countries of the Western Hemisphere, Chapter 11has important ramifications for our future.

On February 6, there will be a national call-in day to your senators.

Urge your Senators to oppose these outrageous "investor-to-state" provisions in trade and investment agreements, and demand that they vote against the Baucus/Grassley Fast Track bill. Its weak language would lead to further corporate assaults on the environment and on health and safety regulations. Tell your senators that Chapter 11 investor rules undermine our democratic rights to choose our own laws to protect the environment, as well as our health and safety, and that a meaningful and substantial revision of this terrible NAFTA provision is necessary.

To contact your senators, call the U.S. Capitol switchboard at 202-224-3121.

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