With NAFTA renegotiations about to begin, Public Citizen has compiled the latest information on how NAFTA’s outcomes measure up to its proponents’ promises. This is the second of a four-part expose.
The key provision in NAFTA grants new rights to thousands of foreign corporations to sue the U.S. government before a tribunal of three corporate lawyers. These lawyers can award corporations unlimited sums to be paid by American taxpayers, including for the loss of expected future profits. These corporations need only convince the lawyers that a U.S. law or safety regulation violates their NAFTA rights. The corporate lawyers’ decisions are not subject to appeal. This system is formally called Investor-State Dispute Settlement.
More than $392 million in compensation has already been paid out to corporations in a series of investor-state cases under NAFTA. This includes attacks on oil, gas, water and timber policies, toxics bans, health and safety measures, and more. In fact, of the 14 claims (for more than $50 billion) currently pending under NAFTA, nearly all relate to environmental, energy, financial, public health, land use and transportation policies – not traditional trade issues.
While this shadow legal system for multinational corporations has been around since the 1950s, just 50 known cases were launched in the regime’s first three decades combined. In contrast, corporations have launched approximately 50 claims in each of the last six years. ISDS is now so controversial that some governments have begun terminating their treaties that include ISDS.
As corporations and law firms become emboldened and more creative in their uses of ISDS, it is likely only a matter of time before U.S. taxpayers are on the hook: as long as NAFTA is in effect, more than 8,500 corporate subsidiaries from Canada and Mexico are empowered to use ISDS to challenge our policies.
To read more about how these tribunals of three corporate lawyers have been operating under NAFTA, please click here.