Last week Mexico paid a U.S.-based corn processor, Corn Products International, Inc. (CPI) $58.4 million in accordance with a 2009 North American Free Trade Agreement (NAFTA) tribunal decision. The case illustrates the important intersection of U.S. trade policy with food and public health.
Corn Products International, Inc. provides corn “ingredients” to the global food, beverage, brewing and pharmaceutical industries. The company brought the 2003 case claiming that the Mexican government—by putting a tax on soft drinks sweetened with high fructose corn syrup instead of sugar—had discriminated against CPI in order to protect Mexican cane sugar producers. Ruling in CPI’s favor, the NAFTA tribunal required Mexico to compensate CPI for its lost revenue.
CPI is only one among many cases brought by corporations under NAFTA’s little known Chapter 11. Chapter 11 enables corporations, or individuals, to sue the three nations signing NAFTA—Canada, the U.S. or Mexico—when they believe an action by those governments adversely affects their present or future profits.
Chapter 11 imparts rights to international investors that go well beyond those present in existing international trade agreements (e.g., the GATT and WTO), and has important ramifications for public health. In one of the most well-known Chapter 11 cases, the Mexican state of San Luis Potosí refused to grant a permit to U.S.-based Metalclad Corporation to operate a hazardous waste treatment facility and landfill in La Pedrera. The Mexican state also created an ecological preserve in the area where the facility was located. Metalclad brought its case and in 2000 the NAFTA tribunal ruled that Mexico’s establishment of the ecological zone and failure to grant Metalclad a permit was “tantamount to expropriation,” requiring Mexico to pay Metalclad $15.5 million in compensation.
These Chapter 11 rulings also illustrate two relatively recent phenomena: 1.) the costs to Mexican farmers and consumers of the NAFTA-led, ever-increasing economic integration between Canada, the U.S. and Mexico [i], and 2.) the increasing legal rights granted to corporations relative to governments. NAFTA Chapter 11 makes it more difficult for governments to protect public health because corporations or individuals may legally challenge regulations they believe are adversely affecting their financial investments.
As costs of chronic disease rise, along with global challenges to public health, the public health community cannot afford to ignore the often subtle, yet powerful, influence of the legal and economic trends of globalization. For more information on such issues, check out the American Public Health Association’s Trade and Health Forum and the Center for Policy Analysis on Trade and Health.
[i] Sarah Clark, Corinna Hawkes, Sophia Murphy, Karen Hansen-Kuhn and David Wallinga, “Exporting Obesity: How U.S. Food and Farm Policy is Transforming the Mexican Consumer Food Environment,” International Journal of Occupational and Environmental Health [forthcoming]