NAFTA Chapter 11 Investor-to-State Cases:Bankrupting DemocracyLessons for Fast Track and the Free Trade Area of the AmericasSeptember 2001© 2001 by Public Citizen. All rights reserved. No part of this document may be reproduced orutilized in any form or by any means, electronic or mechanical, including photography, recording, orby information exchange and retrieval systems, without written permission from the authors. ISBN 1-58231-027-0Public Citizen is a nonprofit membership organization in Washington, D.C., dedicated toadvancing consumer rights through lobbying, litigation, research, publications and informationservices. Since its founding by Ralph Nader in 1971, Public Citizen has fought for consumer rightsin the marketplace, for safe and secure health care, for fair trade, for clean and safe energysources, and for corporate and government accountability. Visit our web page athttp://www.citizen.org. Acknowledgments: Research and writing of this report have been provided by Mary Bottari andLori Wallach of Public Citizen, as well as David Waskow of Friends of the Earth. Additionalinvaluable assistance was provided by Angela Bailey, Amanda Ballantyne, Angela Bradbery,David Desrosiers, Darshana Patel, Paul Levy, Michael Stein and Patrick Woodall. In addition,Public Citizen would like to extend its thanks to Nathalie Bernasconi, Aaron Cosbey, JimGrieshaber-Otto, John Nichols, Steve Schrybman, and Martin Wagner for their contributions to thisreport.Additional copies of this document are available from:Public Citizen’s Global Trade Watch215 Pennsylvania Ave SE, Washington, DC 20003 (202) 546-4996Other Titles by Public Citizen’s Global Trade Watch:Down on the Farm: NAFTA’s Seven-Years War on Farmers and Ranchers in the U.S., Canadaand Mexico (June 2001)The Coming NAFTA Crash (February 2001)Purchasing Power (October 2000)The Clinton Record on Trade-Vote Deal Making: High Infidelity (May, 2000)Whose Trade Organization?: Corporate Globalization and the Erosion of Democracy (1999)The WTO: Five Years of Reasons to Resist Corporate Globalization (1999)A Citizen’s Guide to the WTO: Everything You Need to Know to Fight for Fair Trade (1999)Deals for NAFTA Votes II: Bait and Switch (1997)Deals for NAFTA Votes: Trick or Treat? (1997)NAFTA’s Broken Promises: Fast Track to Unsafe Food (1997)NAFTA’s Broken Promises: Failure to Create U.S. Jobs (1997)NAFTA’s Broken Promises: The Border Betrayed (1996)NAFTA’s Broken Promises: Job Creation (1995)Trading Away U.S. Food Safety (1993)NAFTA’s Bizarre Bazaar (1993)Executive Summary..........................................................................................................................iBackground.......................................................................................................................................1Investors and Their New NAFTA Rights and Privileges............................................................2NAFTA Corporate Dispute Resolution: Private Enforcement of a Public Treaty......................6Major NAFTA Chapter 11 CasesEthyl v. Canada.......................................................................................................................8Metalclad v. the Municipality of Guadalcazar, Mexico..............................................................10S.D. Myers v. Canada............................................................................................................14Loewen v. Mississippi Jury.....................................................................................................18Pope and Talbot v. Canada.....................................................................................................21Sun Belt v. British Columbia....................................................................................................23Methanex v. California..........................................................................................................25Mondev v. City of Boston.......................................................................................................28UPS v. Canadian Postal Service..............................................................................................30ADF Group v. Buy America...................................................................................................32Other NAFTA Chapter 11 CasesAzinian v. Mexico..................................................................................................................34Waste Management v. Mexico................................................................................................36Karpa v. Mexico....................................................................................................................36Ketcham Investments, Inc. et. al. v. Canada............................................................................36Adams, et. al. v. Mexico........................................................................................................36Conclusion and Recommendations..............................................................................................37Endnotes..........................................................................................................................................44TABLE OF CONTENTSBankrupting DemocracyiEXECUTIVE SUMMARYIn the spring of 2001, President George W. Bush asked the U.S. Congress to delegate to him a6-year chunk of Congress’ constitutional authority over international trade through a process called FastTrack. Bush seeks Fast Track trade authority (which his Administration is attempting to rename “TradePromotion Authority”) to expand the 1994 North American Free Trade Agreement (NAFTA.) Theproposed NAFTA expansion, formally called the Free Trade Area of the Americas (FTAA), wouldspread NAFTA’s rules to an additional 31 Latin American and Carribean nations by 2005. The publicized goal of the FTAA proposal is to facilitate trade and deepen economic integrationby expanding the NAFTA provisions that eliminate tariff and nontariff barriers to trade and investmentthroughout the hemisphere. Careful consideration of NAFTA’s record therefore becomes central to1discussions of Fast Track and the FTAA.Thus, this year, Public Citizen is releasing a series of reports on NAFTA’s actual performanceover its seven years in existence. This report, NAFTA Chapter 11 Investor-to-State Cases:Bankrupting Democracy, analyzes NAFTA’s
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