Say what? Taxpayers must Pay Corporations for Clean Air and Water?

Great Debates
1

The latest Op-Ed published by TomPaine.com summarizes arguments from an article published in The Nation a couple of weeks ago, the importance of which has been obscured by understandable interest in war, anthrax, etc. (Sorry if this has been discussed and I missed it; I’ve been really busy of late.)

The gist is that a little discussed clause in NAFTA allows foreign corporations to sue US taxpayers if these corporations believe that public regulation (e.g., to safeguard air, water, occupational safety) hurts their future profits. That provision (which is referred to as Chapter 11, but has nothing to do with bankruptcy law) can be spread if the proposed Free Trade Area of the Americas treaty is adopted (FTAA). GE, GM, DuPont and other corporate giants are supporting this aspect of the treaty arguing that it “provides protection from regulations that diminish the value of investors’ assets.” In other words, taxpayers must pay multinational corporations not to pollute air and water, or mistreat workers.

Here is an excerpt from the opening of The Nation article.

"The case of Methanex v. United States originated in California in the mid-1990s, when people began to notice a foul taste in their drinking water, a smell like turpentine. Santa Monica had to shut down half its supply wells and purchase clean water from elsewhere. …The source was quickly identified as methyl tertiary butyl ether (MTBE), a methanol-based gasoline additive that creates leaner-burning fuel, thus reducing air pollution. But even small amounts of MTBE leaking from storage tanks, pipeline breaks or car accidents made water unfit to drink–and extremely difficult to clean up. …

"The state government acted promptly. …Up to this point, the story sounded like an alarming but fairly conventional environmental problem.

“Then, four months after Governor Davis’s order, a Canadian company from Vancouver, British Columbia, filed a daring lawsuit against the US government, demanding $970 million in compensation for the damage California was inflicting on its future profits. Methanex Corporation, which manufactures methanol, principal ingredient of MTBE, claimed that banning the additive in the largest US market violates the foreign-investment guarantees embodied in Chapter 11 of the North American Free Trade Agreement. Under Chapter 11, foreign investors from Canada, Mexico and the United States can sue a national government if their company’s property assets, including the intangible property of expected profits, are damaged by laws or regulations of
virtually any kind. Who knew?”

Please discuss.

Here is the Op-Ed which also has a link to related articles.
http://www.tompaine.com/opad/

The Nation article will take some time to read but it’s crucial for anyone interested in the (so-called) free trade debate.

http://www.thenation.com/doc.mhtml?i=20011015&s=greider

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I wonder if you could just clarify if the indemnification is for the effects of regulations that are currently in effect, or only for the effects of future regulations. If the former, I’m with you all the way. If the latter, I’m inclined to disagree. A company has to be able to have some certainty about the future in order to make investment decisions, and if the gov may suddenly change the rules and make the company’s investments worthless it makes sense to compensate them.

Of course I think the above should apply to small businesses and individuals as well. But that’s another issue…

3

While that is nice from the company’s point of view there is no reason for them to be able to demand it. The US has the benchmark currency in the world because of our stability. This stability to date has not come from guarantees that the US will pay up if this or that restriction hurts the profits of some foreign company.

Take DDT for example. Should US taxpayers have paid the company that manufactured the stuff once it was found to be poisonous? Sorry but I think the company should start watching its ass for a bevy of lawsuits likely to come its way. The US should not be held liable because it was determined that this or that manufacturing process or product is hazardous to the environment and the people who live in it.

4

IzzyR:
"A company has to be able to have some certainty about the future in order to make investment decisions, and if the gov may suddenly change the rules and make the company’s investments worthless it makes sense to compensate them."

So if a company invests its money in developing and marketing a toxic product we have to compensate them for their unwise investment? Bear in mind, the issue isn’t only that the company not be liable for the damage caused by its product. The state of California didn’t sue Methanex for the cost of the California clean-up; rather, it banned the product so that California would no longer have to spend taxpayer money cleaning up after Methanex’s product. Remember, the basis of Methanex’s suit against the US government is that Methanex has been harmed b/c it can no longer sell its (toxic) product due to the ban. So here Methanex’s “right” to profits trumps Californians right to a) drink clean water and b) defend themselves against paying for expensive clean-ups.

Underlying this almost absurd proposition is a scary new precedent. From the Nation article:

“The most disturbing aspect of Chapter 11, however, is not its private arbitration system but its expansive new definition of property rights–far beyond the established terms in US jurisprudence and with a potential to override established rights in domestic law. NAFTA’s new investor protections actually mimic a radical revision of constitutional law that the American right has been aggressively pushing for years–redefining public regulation as a government “taking” of private property that requires
compensation to the owners, just as when government takes private land for a highway or park it has to pay its fair value. Because any new regulation is bound to have some economic impact on private assets, this doctrine is a formula to shrink the reach of modern government and cripple the regulatory state–undermining long-established protections for social welfare and economic justice, environmental values and individual rights.”

Another problem is the subversion of democracy here. These cases will be ruled on in secret tribunals with appointed arbitraters; not in courts of law with media coverage etc. Also of interest is how the provision became part of the law in the first place. Another excerpt:

“These now-controversial legal innovations were ostensibly adopted in broad daylight, yet the public never had a clue. Nor did the media, watchful policy experts or members of Congress. Yet the stakes are as fundamental to public life as the Constitution itself.”

Here are some other examples of how this might work:

"Chapter 11 lawsuits may be more valuable to multinationals as political weapons used to intimidate
governments with the mere threat that they might file for huge damage claims. …

*…"[One’s trade consultant’s] corporate clients include big tobacco–R.J. Reynolds and Philip Morris. …[She] warned [the Canadian government] to back off its proposed law to require plain packaging for cigarettes. If it didn’t…Canada would have to compensate [Big Tobacco]…under NAFTA. “No US multinational tobacco manufacturer or its lobbyists are going to dictate health policy in thiscountry,” the Canadian health minister vowed. Canada backed off, nevertheless. *

Now if Canadian citizens support a government policy that says that cigarettes should be sold in plain packages, then why should NAFTA be available to bypass Canadian or American courts in order to force Canadian taxpayers to pay for a government policy they support? (Or as in this case, to use that threat in order to dissuade Canadian officials from doing it in the first place.) Once again, this clearly puts R.J. Reynold’s “right” to make a profit ahead of Canadian citizens right to authorize their government to initiate a policy that helps to promote the health of other Canadian citizens. And since Canada has a national health system, that also means that Canadian taxpayers can’t act in their own economic as well as health interest, by discouraging other Canadians from getting cancer and therefore needing expensive public medical services.

Here’s what the author recommends, btw: “On the global front, if the Bush Administration wishes to keep America united, it can promptly defuse this fight–first by announcing that Chapter 11’s peculiar privileges for investors will not be proposed for any future trade agreements and, second, by suspending NAFTA’s “investor-state” enforcement mechanism in agreement with Canada and Mexico, at least until the subject is submitted to serious scrutiny and the full public debate it never received the first time around.”

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Ooops. Hadn’t yet seen what Whack-a-mole had written and so didn’t see he (she) had already answered some of this. Sorry, Whack.

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Mandelstam,

I am glad to see you bring this article up. After I read it in The Nation (and the subsequent op-ed at TomPaine.com … we seem to be reading the same stuff!), I was thinking of resurrecting one of the old, “What the hell are these anti-globalization protesters complaining about?” threads.

This is a good illustration of precisely what the problem is. Under the guise of “free trade”, corporations and the far (in the libertarian sense) Right are getting enacted into these free trade agreements things that they could not get enacted into law in the more democratic process of our individual nation’s governments.

As one of the people in Greider’s article says (someone who is apparently no liberal and was in fact a deputy negotiator for the U.S. government for NAFTA) in regards to language regarding “regulatory takings” currently being pushed for in the FTAA negotiations by major corporations including GM, Ford, GE, 3M, and Motorola:

One can only hope that “Middle America” wakes up to what is going on soon enough!

7

You guys make some good points. I’ll think about it some more.

I like the general idea of government compensating people (& corporations) for rendering their property useless via regulation. But what I hear you saying is that no one has any right to harm anyone, so maybe this shouldn’t apply in these instances. Unless I return with a new argument, I retreat from my previous position.

I certainly don’t see any justification for allowing this to foreign corporations only.

Also, I agree that the way these measures are enacted is undemocratic.

8

If the american government is supposed to pay for the wasted investment, is it supposed to receive a big share of the profits from companies whose investments turned up to be much more profitable than planned, due to a new law? I mean, if some chemical is banned, should the producer of this chemical be indemnized and the producers of the “cleaner” chemical which will replace it pay big bucks to the treasury for their unexpected gains?

9

Geez, here we go again.

Actually, no, that’s wrong. Methanex is suing because they allege that California is treating them differently than they’re treating an American company, Archer Daniels Midland. Methanex’s claim - which is pretty well supported - is that California banned their product as a political favour to ADM, primarily because ADM bribed Gray Davis and the Californai Democrats in the form of campaign contributions. The Methanex claims is that their product isn’t any more “toxic” than ADM’s ethanol additives, and yet California has banned Methanex’s additives but not ADM’s. It is NOT the basis of the suit that “the nasty environmental law cost us money!” That’s not a basis for a complaint under NAFTA. They’re complaining that they’re being discriminated against.

No. Wrong.

The entire point to NAFTA is that everyone should be treated the same economically, no matter which NAFTA country they’re from. That’s it. There is no basis in NAFTA for “corporations” to “sue” over losing investments. Furthemore, Article 11 of NAFTA clearly states that a government MAY expropriate investments for the public good with due process of law (Article 1110, 1(a) and ©) providing the treatment is equitable and non-discriminatory.

With all due respect, I don’t think anyone in the thread actually understands what NAFTA says, what its purpose actually is, or how it’s being applied.

Underlying this almost absurd proposition is a scary new precedent. From the Nation article:

Funny that this came from The Nation. It sounds as if they plagiarized it from the Council of Canadians.

Anyway, it simply isn’t true. There no “expansive new definition” of property rights in NAFTA.

Of course, you could say this about ANY LAW. If the government breaks the law, you should be allowed to sue them. Why not? The government lives under the threat of complaint, lawsuit and appeal all the time. Always has.

This is a remarkably dishonest version of events. Plain packaging most certainly would not have been a complainable action under NAFTA, assuming they applied the rules equitably. They certainly could have (and likely might have) tried, but they’ve got no leg to stand on. The unnamed lawyer can say the sky is pink if she wants but this hardly constitutes evidence NAFTA is preventing tobacco regulations. If NAFTA does inhibit this sort of thing, then where are the NAFTA suits again warnings on tobacco products, or rules about kids buying them?

In any case, Canada most certainly did NOT back off plain packaging because of the threat of a NAFTA suit. Very simply put, that’s a lie. In fact, the threat of a NAFTA suit had virtually no impact at all. The trade experts The Nation cited (Carla Hills and Julia Katz) were, in fact, totally disregarded by the committee they were testifying before, and legal opinions were presented that effectively rebuffed them. NAFTA never entered into the equation.

Because the NAFTA angle failed; the tobacco companies lobbied the government not to do it with the same tool they’ve always used before and after NAFTA; money. They threatened job cuts and reductions in campaign contributions. Plain packaging became politically bothersome and had only been proposed to appease health groups furious over the 1994 reduction in tobacco tariffs. Once public sentiment wore off, it became more difficult to wage war with the tobacco lobby that it was worth to the government; they didn’t really case about reducing tobacco consumption in the first place. Then, the Supreme Court of Canada struck down the existing legislation that banned tobacco advertising based on the Charter of Rights and Freedoms, adding more political hot water. So the issue was dropped out of convenience. It had absolutely nothing to do with NAFTA.

10

Well I can’t speak for anyone else in this thread, but it is certainly true of me. I retract everything I’ve said, and apologize for having posted on a subject about which I apparently know nothing.

11

Yeesh. Now I feel bad. I didn’t mean to drive anyone out of the discussion and I shouldn’t have phrased it that way. I merely mean to point out that there’s a huge amount of disinformation about the content of NAFTA.

12

Rick you got anymore on this? Not that I doubt you, but I remember all the hype going on about MTBE, as well as seeing many gas stations removing their original wells and replacing them with newer one that wont let MTBE leak into ground water.

I also seem to remember California wishing to backout of ethanol additives as well and that Davis basically accused the Bush II administration of backing ADM due to campaign contributions.

I’ll try and find cites for both of those. Oh in case anyone’s intersted here’s a link I found with the text to chapter 11.

13

Aforementioned cites:

This page contains all my cites (note to mods, for some reason I couldn’t code this to link the items I want directly).

The executive order banning MTBE is first on the page. The second item on the page is a press release regarding Ethanol. Near the halfway point are very PDF downloadable reprots on MTBE and why it was banned and how.

14

First of all, remember that this is what Methanex is claiming. I don’t pretend to know the real environmental impacts of MTBE, though I do know that tank replacement is, in fact, what Methanex wanted (their argument being that the appropriate step was to replace old leaky tanks, not ban MTBE.)

So my point is merely that Methanex’s claim is based on discriminatory treatment (the intent of the NAFTA treaty), not willy-nilly “you cost us money” arguments (not the intent of the NAFTA treaty.) Whether they’re telling the truth or full of crap is another matter entirely. But you will never hear this from NAFTA opponents. Although the complaint makes it extraordinarily clear that Methanex is complaining about discrimination, that’s never, ever mentioned by the anti-free-trade crowd when referring to this case.

The full claim can be found here. The interesting part is that Davis flew to Decatur to meet with ADM in 1998 shortly after a campaign contribution was made from ADM to Davis, followed by an additional $155,000 in contributions. That might be coincidental and Methanex may just be spinning it, but you have to admit it sounds fishy.

First of all, CA wanted a waiver from federal oxygenate regulations; they weren’t planning on banning ethanol a la MTBE. Anyway, the feds shot down the waiver. Frankly, this hurts Methanex’s case against California, but creates a viable case against the federal government; from their perspective it doesn’t much matter if it’s Washington or Sacramento who’s fellating ADM. But that’s their problem.

15

Thanks Rick You’ve confirmed what I believed to be true. FTR, I’m not an NAFTA opponent. I was essentially confused about Methanex’s claim, based on the cites I provided earlier. I agree completely that the Feds action hurts their case against Cal. I’m not completey sure that they can make a viable case againt the Feds though. They didn’t ban MTBE.

16

Well, **RickJay **, these are some pretty serious challenges against William Greider’s article, an award-winning journalist, who’s been around for decades and written several books on politics and economics, and who has never, so far as I know, been accused of reporting lies.

With so much bluster you must have had a lot of authoritative sources do back up your claims, right? Um, let’s see now…

Actually…Methanex is suing because they allege that California is treating them differently than they’re treating an American company, Archer Daniels Midland. [bribery allegation] …It is NOT the basis of the suit that “the nasty environmental law cost us money!” That’s not a basis for a complaint under NAFTA. They’re complaining that they’re being discriminated against."

Okay, here from this site:

"After California chose to phase out MTBE because of research documenting public health risks, Methanex, a Canadian corporation which produces MTBE, brought a 970 million dollar law suit against the US government.
"Methanex claims that California’s ban on MTBE undermines its future profitability which is protected under the North American Free Trade Agreement’s “investor rights” provisions."

http://urbana.indymedia.org/front.php3?article_id=1866&group=webcast

This annotated paper by what appears to be either a law student or a lawyer concurs:

“Methanex claims that it is entitled to approximately $1 billion dollars in compensation for the loss of its investments expropriated by California’s action. Methanex claims that, as a result of the California ban, it has suffered a loss of a substantial portion of its customer base and market for methanol, goodwill, reduced global demand and global price for methanol, and a reduction in the price of its stocks.”

http://www.kentlaw.edu/perritt/honorsscholars/steffen.html

Now perhaps you don’t like indymedia sources or law schools, so here’s the same thing from an online publication for the energy industry:

“An international tribunal last week began consideration of
Methanex Corp’s $970-mil compensation claim for the business it would lose because of California’s plan to phase out the use of MTBE in the state.”

The use of the word “expropriated” in the following excerpt from the same source shows that Greider’s description of the “takings” doctrine is entirely applicable here.

“The US contended in its filing to the tribunal that Methanex had failed to identify any investment that had allegedly been expropriated.”

No mention was made of your counter-story about bribery, or about not being treated the same as ADM whatsoever. Could it be perhaps that Methanex has another suit and that you are confused?

Rick again:“The entire point to NAFTA is that everyone should be treated the same economically, no matter which NAFTA country they’re from. That’s it. There is no basis in NAFTA for “corporations” to “sue” over losing investments.”

Well, unfortunately, Rick, there is no shortage of sources on the web that suggest that you are entirely wrong on this point. I took a look at the link provided to Chapter 11, and article 1110 seems to be relevant aspect, dealing with “Expropriation and Compensation.” However, I know enough about reading statutes to know that a cursory glance isn’t sufficient; moreover, Greider makes clear that the devil was in the details. That is, the article explains that Chapter 11, especially the “investor-state” provisions, were imported under cover of providing US investors with an insurance policy against Mexico’s corrupt courts. However, Rick, if you want to provide us with an alternative legal interpretation to support your claim, my time is yours…

“With all due respect, I don’t think anyone in the thread actually understands what NAFTA says, what its purpose actually is, or how it’s being applied.”

With all due respect, I see little evidence that you understand anything about this entire issue. Do not misunderstand me: I make no claims to not relying primarily on Greider’s interpretation. But the preponderance of evidence suggests that his way of explaining the case is beyond dispute, while yours is so obscure as to be utterly absent from published accounts.

Bear in mind too, that there’s clearly room for argument here. Methanex hasn’t won it’s case yet.

Here’s the law student on the subject: “If Methanex’s case
proceeds to final arbitration, arbitrators, using the customary rules for treaty construction and applicable rules of international law, must find that Methanex’s claim for compensation based on California’s regulatory action is not sanctioned by Chapter Eleven of the NAFTA because the term “expropriation,” as used in Chapter Eleven of NAFTA, does not include regulatory takings claims that are based upon legitimate, non-discriminatory environmental regulation aimed at protecting the public welfare.”

Clearly, this could go either way. But that’s why the secret nature of the tribunal and the appointed members of it begins to look especially problematic, no? Or do you think Greider was lying about that too?

[I paraphrased and cited Greider’s *Nation* article on the radical implications of the new doctrine]

Rick replied: “Anyway, it simply isn’t true. There no “expansive new definition” of property rights in NAFTA.”

Well, interestingly, our law student poses this as another question that has yet to be determined:

"If direct expropriation is actual interference with physical property and indirect expropriation involves “disguised” takings, what are “measures tantamount to expropriation?” Could it be that the NAFTA intended this
phrase to include a new, broader category of expropriation?"

[Another Greider quotation]“Chapter 11 lawsuits may be more valuable to multinationals as political weapons used to intimidate governments with the mere threat that they might file for huge damage claims.”

Rick replies:"Of course, you could say this about ANY LAW.

Perhaps so, but it is not “ANY LAW” that attempts to force citizens to compensate foreign corporations for the privilege of exercising their rights to self-governance.

[Another Greider quotation involving consultants said to have warned the Canadian government to bacck of a proposed law to require plain packaging for cigarettes]

Rick: "This is a remarkably dishonest version of events. Plain packaging most certainly would not have been a complainable action under NAFTA, assuming they applied the rules equitably.

Sorry Rick, you clearly don’t know your NAFTA the way you claim to. Greider doesn’t say that the suit would have been won by Big Tobacco; only that the consultants threated to file the suit under NAFTA. NAFTA clearly opens the possibility for a “takings” suit under “expropriation” clause–without any respect to equitable application of rules–and you’re just about the only person denying it. Any sources here, btw, or just more blowing of smoke?

Rick: “If NAFTA does inhibit this sort of thing, then where are the NAFTA suits again warnings on tobacco products, or rules about kids buying them?”

Good point. That’s one of Greider’s main questions: would this imply too radical a revision of existing domestic regulation. Perhaps the “takings” doctrine can only be applied to new (post-NAFTA) investors. In any case, most cigarettes sold in the US are also produced in the US and therefore aren’t covered by NAFTA. Your question is interesting, in other words, but hardly casts doubt on the legitimacy of Greider’s analysis.

“In any case, Canada most certainly did NOT back off plain packaging because of the threat of a NAFTA suit. Very simply put, that’s a lie.”

Very simply put–where’s your evidence of the lie?

“In fact, the threat of a NAFTA suit had virtually no impact at all. The trade experts The Nation cited (Carla Hills and Julia Katz) were, in fact, totally disregarded by the committee they were testifying before, and legal opinions were presented that effectively rebuffed them. NAFTA never entered into the equation.”

And you know this because why?

“Because the NAFTA angle failed…”

Hold on a sec. Just a moment ago “NAFTA never entered the equation.” Are we now to understand that it entered but failed?

So the issue was dropped out of convenience. It had absolutely nothing to do with NAFTA."

Well I look forward to reading your authoritative source on the subject. Otherwise, it sounds to me as though Greider’s version of the story is, at worst, guilty only of neglecting to mention some other contributing factors.

In a subsequent post Rick, finally posted a link. Unfortunately, the link has errors in it and, after two tries, I wasn’t able to open it. Care to repost it Rick? I did a google search and what you appear to want to post is “rejoinder” statement made by Methanex. But there are literally dozens–maybe hundreds–of sources that support Greider’s version of events.

Hey, Rick, usually I get paid for doing this kind of research. But for confident guy like you who just happens to know it all…anytime :wink:

17

Rick,

I would be inclined to oppose Chapter 11 even if all it did was protect companies from unequal treatment. Why? Canada, the US and Mexico have much different economies; they also have a much different policy regarding economic regulation as a consequence, and social policy as an associated area. NAFTA makes the assumption that each nation is a carbon copy of the others. I think that’s a problem, because it doesn’t reflect reality.

A direct consequent of all this is that if a given government, even on a state (provincial up here) level, feels like instituting some new regulation, this change has to be coordinated with concurrent changes in the other two countries. Considering the vital importance of environmental (and other) regulation, I think that throwing a legal spanner into the works is entirely counterproductive.

As for the idea that government should be staying out of business’ way, I don’t buy it. Government is mandated to enact legislation in the public interest. Sometimes that means letting business run its course and reaping the economic rewards, and sometimes it means placing limits. NAFTA allows businesses to override that capacity. It is therefore a grant of a certain measure of popular sovereignty to a totally non-representative body.

That’s just my take on it.

Someone Else

18

Perhaps he’s not lying. Perhaps he’s mistaken.

Let’s be really, really clear here, Mendlestam. You’re quoting a journalist. I CITED METHANEX THEMSELVES! Now, who do you think is the best authority on what Methanex Inc. is claiming? William Grieder… or Methanex?

I’d place my ten bucks on Methanex. Their claim might be bullshit or it might not, but it’s THEIR claim, and I read the claim. Linked to it, too. Whether it’s a good claim or a bad one doesn’t change the argument in the claim, and they’re the authorities on what they’re arguing. It is clearly a claim of discriminatory expropriation, not just “expropriation will cost us money.” Quoting directly from the claim:

I’m sorry, but this is what the claim actually says. Not my opinion, not yours, and not William Grieder’s. It’s straight from the document. Read the claim - it’s all about favouritism and discrimination.

Methanex could be lying or deluded as to what actually happened - but their claim is clearly based on the claim of discriminatory treatment, and nobody who actually read their claim could possibly think otherwise.

Grieder either doesn’t know what he’s talking about or (likelier still) he’s writing what people want to read. It’s true that Methanex is suing for damages based on the loss of business. No doubt about it. What Grieder has conveniently forgotten to mention is what their basis for claim is - it’s not just that they’ve lost money it’s that they say they were discriminated against. It’s dishonest to leave that part out, because that’s the crux of the whole complaint.

I linked to the suit; if you don’t like primary sources, don’t blame me.

There you have it. Please read the entirety of Chapter 11.
But why not read 1110 a little more closely?

It seems to me that the article clearly spells out here that expropriations CAN indeed be carried out - provided they’re non-discriminatory and done in accordance with the law. As to whether (d) would constitute automatic payment - that is not Methanex’s claim - they’re saying they got screwed under (b.) That said, were it to be ruled under (d) that expropriation included any conceivable loss I’d be concerned too, but it hasn’t happened yet, and you can make any damn fool claim you want, I suppose.

I should also point out that if you go just a little further and read Article 114 you will find:

Anyway, read their complaint. I linked to it. It’s right there for you.

I’m sorry, but given that I used the Methanex complaint itself as my source, and you used a secondhand source that obviously left our a rather key part of the story, I’d say your accusation of obscurity here is silly. If you can read the Methanex complaint itself, which I helpfully linked to, and get through three pages without it becoming forehead-slappingly obvious what the basis of their complaint is, I’m afraid there’s not much more than could be done. But don’t take my word for what the complaint is, and don’t take Grieder’s. READ THE COMPLAINT.

Well, I must admit that I do find the claims of “Secrecy” somewhat at odds with my being able to find a list of the full texts of all decisions made by the panel. The decisions are certainly not the slightest bit secretive. But I would be willing to enter into a discussion as to how the complaints process could be better handled. What are your thoughts?

That’s fine rhetoric, but NAFTA does not seek to punish the exercise of self-governance. It’s a voluntary agreement. The United States, Canada or Mexico could, after all, abandon NAFTA if they wanted to. Foreign corporations could sue those governments before NAFTA existed for any number of reasons, and I’m sure they won on many occasions. So again; how is NAFTA any different from any other law? The government has always been subject to lawsuits and legal challenges of all kinds by interests both foreign and domestic.

Rob Cunningham’s Smoke and Mirrors has an excellent rundown of the plain packaging issue in Canada.

As to the NAFTA point, I will say it again; the fact that it was raised once in committee doesn’t change the fact that it WASN’T the reason it was dropped, and it’s dishonest of Greider to imply otherwise. His implication is clearly that it was the NAFTA threat that killed plan packaging, which is simply not true. The issue was pursued by Health Canada long after the possibility of a NAFTA suit was dismissed.

If that’s his main point it’s not a very good one, because seven years after NAFTA was mentioned in the plain packaging hearings, the tobacco companies have yet to try it out to have tobacco advertising laws stricken down. Yet they HAVE gotten one set of laws stricken down by using the Charter of Rights and Freedoms. I don’t see anyone complaining that the Charter of Rights and Freedoms can be used by corporations to strike down health legislation, but it has.

I invite you to read Cunningham’s account. The fact of the matter is that the threat of NAFTA suit was NOT the reason Health Canada dropped the issue, and anyone who says otherwise is either ignorant or dishonest. After Health Canada rebuffed the idea of a NAFTA suit and provided expert testimony that such a suit would never succeed, Philip Morris changed tack, threatening to cut jobs in their related industries (especially Kraft Foods) in Canada. This was a PR disaster of the first order - hell, I can still remember people scremaing for a boycott of Kraft. The tobacco industry then pulled everything else out of their hats - contrary testimony, delays, getting associated industries and unions in on it, the whole nine yards. The NAFTA issue was long forgotten.

Now, as for your bizarre and childish tone and accusations, not to mention a wide variety of deliberately out-of-context quotes I just deleted, I’ve no time for that crap. If you want to engage in a spirited debate about NAFTA, please do join in. If you want to flame me, take it to the Pit. But for your edification, I did post a direct link to the Methanex claim itself. It’s their formal complaint as it most recently stands, THE primary source, and the link works perfectly (although you need Acrobat Reader, I think. Sorry, I can’t find it in another format.) You’re welcome to follow it. I’ve posted Cunningham’s summary of the plain packaging issue in Canada in 1994, and since you like second hand accounts, here is the National Post article on what the tobacco companies were really up to. If there are any specific items you’d like cites for (like, say, the Supreme Court ruling that struck down anti-tobacco-ad legislation in 1995, effectively killing the plain packaging initiative) please ask.

19

RickJay: "Let’s be really, really clear here, Mendlestam. You’re quoting a journalist. I CITED METHANEX THEMSELVES!
Now, who do you think is the best authority on what Methanex Inc. is claiming? William Grieder… or Methanex?"**

Let’s be really clear here, Rick. My name is Mandlestam, not Mendelstam. :wink:

Okay, first off, I don’t mind in the least approaching this debate in more amiable fashion.

That said, what you’ve just proposed is a false antithesis. I should believe Methanax more than a prominent journalist writing for an a publication of longstanding repute? On the same grounds perhaps I should believe what Richard Nixon said rather than The Washington Post. Or even what Osama bin Laden says rather than the CIA, the US government, CNN, or The New York Times. My point: any sophisticated commentator on the sidelines, as we both are, has to recognize that when the picture is complicated the idea is get the clearest picture you can and even to keep an open mind if and when sources seem to conflict. In addition, I see no reason whatsoever to assume that Methanax is the most reliable source since Methanax has a billion dollars at stake in diffusing public alarm.

Rick, I have tried again and I can’t read your link (or the similar one I found on google). I have Adobe software but my computer (thank god!) is new so there may be some problems there. As soon as I have the chance I will download fresh software and see if I can take a look. jshore, if you’re still reading, perhaps you can take a look?

Actually, in the excerpt from the legal analysis I posted (which you rather bizarrely dismissed as “out-of-context”), the writer makes clear than “discrimination” is going to be the key to the expropriation or “takings” suit. That is, Chapter 11 okays “non-discriminatory” environmental regulation, as you yourself pointed out. So it may well be the case that Methanax suit has to hinge on their proving discrimination. But that would not change the fact that the primary basis of the $1billion claim is expropriation. Nor does it neutralize Greider’s point about far-reaching ramifications as a consequence of this provision. Undoubtedly Methanax now has every desire to shift attention from expropriation to discrimination: both for public relations reasons, and to make their NAFTA case more winnable.

Understand: when I said that the preponderance of evidence supports Greider’s version and not your own, what I meant is that there are dozens of independent sources who are citing the suit’s invocation of the expropriation clause (1110). Methanax may well be invoking other clauses (e.g., 1102) in NAFTA–I would expect their suit to do so since Chapter 11 begins by defining basic terms with reference to those clauses. This is as best as I can make out without being able to read Methanax’s press release: but I think it’s quite unlikely that dozens of independent sources (from journalists, to law scholars, to trade publications) have decided to take up the same entirely fabricated story about Methanax’s case, as you want to allege. Where there’s smoke, there’s fire.

You wrote: “I must admit that I do find the claims of “Secrecy” somewhat at odds with my being able to find a list of the full texts of all decisions made by the panel. The decisions are certainly not the slightest bit secretive.”

Well, I just took a look at the link you posted and there isn’t even a mention of the Methanax case under the Chapter 11 summary. Perhaps there is some other link you observed there. Regardless, the point is that journalists (and citizens) want more than just the texts of decisions.

Here is Greider in an interview commenting on the extent of the secrecy problem. He’s just been asked how many expropriation cases are now pending.

He replies: "Well, it’s impossible to give a precise number, because, believe it or not, they’re not even required to disclose the cases to the public when they are filed. Now most if them we find out eventually. Some people count 16. I
counted, what I thought were 18, and there may be more."

Rick: “…NAFTA does not seek to punish the exercise of self-governance. It’s a voluntary agreement.”

Yes, but the great majority of Americans aren’t familiar with its terms or its effects. And in this particular case–as jshore pointed out–the effect is potentially to subvert longstanding precedents in domestic law.

Here is Greider explaining the potential ramifications in a nutshell: “If a company can collect damages for some kind of partial injury from some new regulation, then it’s going to be a real noose around government’s ability to regulate anything. Because, essentially, the idea is, ‘Okay, the government can regulate clean air, clean water, safe factory conditions or so forth, but it’s going to have to pay us to do that.’ And the mere threat of losing huge, multi-million dollar lawsuits, will naturally intimidate the people in government, including political leaders, from acting on public interest issues.”

Clearly, what is different about NAFTA (which you asked) is that Americans would not sanction this doctrine in their domestic legislation and existing laws wouldn’t provide a framework for such lawsuits. These provisions got in through a backdoor fashion–under cover of dealing with corrupt Mexican courts, not American or Canadian courts.

Here’s Greider again on what is different: “[T]his sets up exclusive rights for foreign investors, who plant capital and built factory production and so forth, in a foreign country. **[These are] rights that domestic businesses, not to mention domestic citizens, do not have.” **

Your position on this is a bit frustrating (for you). That is, Greider is basically saying that the Methanax suit is, or could be, just the tip of the iceberg. You want to define Methanax’s claim so narrowly that for you there is no iceberg. And you dismiss any source that points to the iceberg as irrelevant, focusing your eyes narrowly on the tip as described Methanax’s point of view. Do you think that’s wise?

[Canadian tobacco - used by Greider as example of NAFTA provision’s potential to intimidate government regulation]

The Smoke and Mirrors citation you posted is a publisher’s blurb. The book “exposes the industry’s deception and tactics and describes in fascinating detail the bitter campaigns to maintain high tobacco taxes, ban tobacco advertising, eliminate tobacco sponsorships, require plain packaging, mandate clear health warnings, and prohibit smoking in public places and workplaces.” Sounds interesting. And it does sound as though plain packaging has a long history. But there’s nothing here to say that the threat of NAFTA suit wasn’t instrumental so I’ll stand with my earlier comment. Greider has perhaps exaggerated the unique importance of that threat as he spends a paragraph or two using this an example of how intimidation might work. But the point stands: I believe the provision could be used to chill certain kinds of regulation. Do you doubt it?

I had explained that Greider’s main point wasn’t Methanax or Canadian tobacco but the possible implications form domestic regulation. Rick replied:

“If that’s his main point it’s not a very good one…” (emphasis mine)

Let me get this straight. You haven’t actually read Greider’s article?

As to your argument–that the tobacco example shows that NAFTA will not have major domestic implications in Canada–I can only reply that Greider isn’t writing about Canada. He’s writing about the US: where five members of the US Supreme Court (the same five that made the controversial ruling for Bush) have exhibited a leaning towards the contoversial “takings” doctrine. So this may well be a much more pressing issue for Americans than it is for Canadians.

"Now, as for your bizarre and childish tone and accusations, not to mention a wide variety of deliberately out-of-context quotes I just deleted, I’ve no time for that crap."

Deliberately out-of-context legal analyses, journalistic accounts and trade publication accounts that directly comment on the case under question? I can’t imagine anything less out-of-context.

Look, Rick, I also resent having my time wasted on the SDMB. But there is no call here for you to lecture me on my netiquette. You entered a discussion based primarily on the legitimacy of an article that you appear not have read in full even at this moment. You called the author of that article a liar, and you claimed that no one in the thread (such as myself and jshore) understood NAFTA. This is hardly the way to model exemplary debate. One can hardly occupy the high ground of decorum when one’s own decorum, to be frank, blows chunks.

That said, I also prefer to debate decorously. But I hope you’re not going to continue to dismiss anything that doesn’t substantiate your view of things as irrelevant “crap”.

20

Still no joy with Adobe, alas, but here is an important link to a Public Citizen report on the subject of Chapter 11:

http://www.citizen.org/publications/release.cfm?ID=7076

It’s discussion of other Chapter 11 cases, some of which have already been ruled on, should put to rest any doubts that the investor provisions do not (as Rick has alleged) exist.

For example:

"NAFTA’s investor-to-state tribunals provide a way for foreign litigants to seek government compensation for damages ordered by U.S. courts. In one NAFTA case, a huge Canadian funeral conglomerate called the Loewen Group is using NAFTA’s investor protections to, in effect, “reverse” a Mississippi jury’s ruling in favor of a small funeral home operator who sued the conglomerate for breech of contract. …[T]he jury found that Loewen had engaged in a variety of fraudulent actions and applied $500 million in punitive and compensatory damages. Loewen claims that it was then “forced” to settle the case for $150 million, because the Mississippi Supreme Court would not waive the normal rules of civil procedure for the company. …Loewen is suing the U.S. taxpayers for $725 million under NAFTA to compensate the company for this “expropriation,” almost five times the amount of the settlement. The U.S. defense in this case was that a jury ruling in a civil contract case was not a “government action” against which foreign investors were granted special NAFTA protections. Remarkably, the NAFTA tribunal in the Loewen case has ruled that not only is a Mississippi jury award in a contract case a legitimate target of a corporate suit under NAFTA, but to date the panel has placed no limits on what types of court decisions could be open to challenge. If Loewen prevails in its NAFTA case, the corporation will be able to push the “bill” for its illegal behavior onto the U.S. taxpayers, another “privilege” not allowed U.S. corporations. Moreover, this case shows how NAFTA provides an incentive for foreign investors to resist reasonable settlement discussions with the prospect that any final unfavorable court orders or damages could be evaded using NAFTA.

Note: Just in case anyone is wondering, not all of these cases involve Canadian companies suing US taxpayers. One of the cases involves Metaclad, a US company, who has sued Mexican taxpayers under NAFTA for their refusal to allow a toxic waste site.