Leaked FTAA Investment Chapter Cause for Concern

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Leaked FTAA Investment Chapter Cause for Concern

CANADA, Apr. 20 -/E-Wire/-- A leaked draft of the FTAA's negotiating text on investment does nothing to reassure critics that governments have learned from the mistakes of NAFTA, according to the Winnipeg-based International Institute for Sustainable Development (IISD). The draft text, posted to the Internet on Wednesday by a U.S. non-governmental organization, ignores the lessons outlined in an exhaustive analysis of NAFTA's investment provisions â Chapter 11 â released this week in the lead up to the Quebec City Summit of the Americas by IISD and WWF-U.S.: Private Rights, Public Problems: A guide to NAFTA's chapter on investor rights.

The leaked text is almost entirely in brackets, the negotiating tool for indicating that there is no consensus yet. In effect the draft is just a conglomerate of what the various governments have proposed to date. So it is difficult to say what the final agreement will contain.

But where something does not appear in the draft, it is a safe bet it will not appear in the final version. Several such "missing elements" are worrying, according to Aaron Cosbey, Associate and Senior Advisor with IISD.

"There's nothing here to convince me that the negotiators understand the need for balancing public policy objectives," says Cosbey. "Sure, we strive for increased investment and economic growth, but we also want environmental integrity, human health and safety, and scores of other non-economic goals. The problem with the Chapter 11 cases to date is that the tribunals have been unable to find that kind of balance. They've promoted increased investment, but with terrible consequences for the environment."

In a recent Chapter 11 case, now under appeal in Victoria, B.C., a tribunal ruled that any government measure that had a significant impact on a foreign investor could constitute an expropriation of its investment. The Tribunal in that case ordered the government of Mexico to pay a U.S. waste management firm US$16.7 million. "Whatever the merits of that particular case," says Cosbey, "the precedent that governments must now pay the polluter not to pollute is a frightening one."

Other specific omissions in the draft text include any obligations to publicly release the notices of intent to arbitrate cases, the final awards in any case, or other key court documents. Neither is there any proposal to allow for public participation or observation in the proceedings. Both of these omissions have been controversial in the NAFTA context. As well, the draft text does not propose limiting the broad definitions given in the NAFTA context to what constitutes an investment, what constitutes a measure, or to how to interpret the key legal obligations on expropriation, minimum standards of international treatment, national treatment or performance requirements. All of these obligations have been interpreted in the NAFTA context in troubling ways, as documented in IISD's recent analysis (produced in collaboration with WWF-U.S.), Private Rights, Public Problems: A guide to NAFTA's chapter on investor rights.

The book, launched on Tuesday in Quebec by the two institutions, suggests among other recommendations that the NAFTA governments draft an "interpretive statement" to clarify these kinds of uncertainties. Such a statement would be binding on all future Chapter 11 tribunals. According to the book, greater transparency in the proceedings is also a key to improving the current process. The book warns that future agreements such as the FTAA should carefully study the lessons of the NAFTA investment experienceâa warning that seems to have been ignored.

International Institute for Sustainable Development

http://http://www.iisd.org/pdf/trade_citizensguide.pdf

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