How NAFTA's Chapter 11 Overrides Environmental Laws

Opening Pandora's Box: NAFTA Initialing Ceremony, October 1992. From left to right (standing) Mexican President Carlos Salinas de Gortari, US President George H. W. Bush, Canadian Prime Minister Brian Mulroney. (Seated) Jaime Serra Puche, Carla Hills, Michael Wilson. NAFTA's Chapter 11 provisions unexpectedly opened the door for massive corporate lawsuits that have undermined democracy and environmental protections. (Photo courtesy of UNCTAD)Opening Pandora’s Box: NAFTA Initialing Ceremony, October 1992. From left to right (standing) Mexican President Carlos Salinas de Gortari, US President George H. W. Bush, Canadian Prime Minister Brian Mulroney. (Seated) Jaime Serra Puche, Carla Hills, Michael Wilson. NAFTA’s Chapter 11 provisions unexpectedly opened the door for massive corporate lawsuits that have undermined democracy and environmental protections. (Photo courtesy of UNCTAD)

A host of international trade treaties and agreements are now being negotiated globally, many of which, say critics, stand to enrich investors at the expense of the environment and democracy by exposing member nations to the Investor-State Dispute Settlement system, better known as ISDS. Jen Huizen explains how an alliance of investors, corporations, and lawyers gamed the system; used NAFTA’s Chapter 11 investment provisions to tip the playing field to their advantage; and repeatedly won against governments, citizens, and environmentalists.

By the time NAFTA (the North American Free Trade Agreement) went into effect on January 1, 1994, the foundation for an environmental policy firestorm had been laid.

The agreement, say NAFTA critics, included investment provisions that inherently created an uneven playing field, allowing corporate investors to directly sue national governments for mega-millions and ultimately sidestep domestic environmental laws. ISDS, the Investor-State Dispute Settlement mechanism, established in 1966, isn’t exclusive to NAFTA, but is built into thousands of trade agreements. And as discussed in Part One of this Mongabay series, ISDS wasn’t originally meant to be the weapon of mass environmental destruction that many experts say it has become.

In fact, some, like former US Trade Representative Carla A. Hills, still claim ISDS provisions are still key to maintaining global trade order: “Dispute settlement systems are in all US trade deals because without [them] the law of the jungle ensues,” said Hills. “You need a…

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