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How Free Trade Threatens Democracy
Published on Monday, April 9, 2001 in the Toronto Globe & Mail
How Free Trade Threatens Democracy
by Michael Valpy
 
Why protesters are going to Quebec City:

They're going to be marching on the streets at Quebec City's Summit of the Americas within a couple of weeks because, among other things, they oppose "investor-state rights." To free-trade critics, nothing more starkly illustrates the imbalance of power that transnational corporations have acquired over democratically elected governments.

The investor-state rights provision, Chapter 11, of the North American free-trade agreement, permits corporations to challenge governments' sovereignty to make policy regarding public health, the environment, labour standards and other public services.

Chapter 11 permits corporations to sue a foreign government -- claiming compensation for lost and future business -- on the grounds they have been denied "fair and equitable treatment" by government policy alleged to be tantamount to expropriation of their investment. The disputes are decided upon by tribunals that conduct their proceedings in camera.

While the Canadian government has stated its intention to oppose the inclusion of similar language in the proposed free trade area of the Americas, it is the fear of critics that Canadian objections will be hollow. Many corporations, including Canadian corporations, see investor-state rights as significantly beneficial in developing new hemispheric business opportunities.

Here is how Chapter 11 works:

The U.S. Ethyl Corp. sued the Canadian government for $250-million (U.S.) and obtained, in 1998, a settlement of $13-million for the government's ban on the gasoline additive MMT, labelled a known nerve toxin by reputed scientists. The ban was reversed.

In 1998, U.S.-based S. D. Myers Inc. filed a claim for more than $10-million against the Canadian government for losses it claims to have incurred during an 18-month ban on the export of PCB wastes from Canada. The government says it imposed the ban in accordance with international conventions on disposal of PCB wastes to which it says the company did not adhere. The case is before a court.

California-based Sun Belt Water Inc. is suing Canada for the decision of the British Columbia government to refuse consent for the company to export bulk water. Sun Belt's president, Jack Lindsay, has declared: "Because of NAFTA, we are now stakeholders in the national water policy of Canada."

The U.S.-based Pope and Talbot lumber company, which has operations in B.C., is suing for $510-million in damages, alleging discrimination in government quotas set on softwood lumber exports to the United States -- ironic, given that U.S. softwood lumber producers are claiming that Canadian softwood is unfairly subsidized.

U.S.-based United Parcel Service is claiming $230-million damages against the Canadian government, alleging that Canada Post provides unfair competition through its Purolator courier service. The Canadian Union of Postal Workers and the Council of Canadians have applied to a Canadian court to take jurisdiction away from the tribunal, arguing that constitutional Charter rights of Canadians are at stake and secret trade tribunals violate the independence of the Canadian courts to protect those rights.

Will the governments of Mexico and the U.S., Canada's partners in NAFTA, agree to narrow the interpretation of the investor-state provision? Will language in the draft FTAA text assure sovereignty for democratic governments? How much influence do corporations have on their governments? The public doesn't know. Which is why there will be protests.

Copyright © 2001 Globe Interactive

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