Soenke Zehle on Fri, 22 Mar 2002 20:17:08 +0100 (CET)

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<nettime> Int'l Day of Water: TOXIC TRADE ON NAFTA CHAPTER 11

The good deed of the day (one of these days is, if I'm not mistaken, the
International Day of Water, see below for the MTBE case): just say not to US
Fast Track, the de facto expansion of NAFTA to some 30 countries in Latin

Resistance to the investor protection provisions in NAFTA and their global
extension via a  Multilateral Agreement on Investment (which has,
temporarily, moved out of the limelight, but whose individual provisions are
quietly being pushed into the bylaws of other
international/intergovernmental orgs and agreements) seems as urgent as


Public Citizen writes:

Even though the House passed Fast Track with one vote in December, we will
still have another chance to stop this detrimental trade legislation once
and for all. Fast Track now has to go trough the Senate and we expect the
debate and vote to come up sometime in April. The bill then has to go back
to the House for a conference committee and then be voted on again in the
full House sometime this spring.

NAFTA's Chapter 11 is just one of the reasons why using Fast Track to expand
these trade agreements is a really bad idea. Corporations should not have
the right to sure a country over environmental and health standards. You can
send off a copy of the Time Magazine article below to your favorite Congress
Critters, and also urge them to watch the Bill Moyers PBS documentary that
aired on Chapter 11 called "Trading Democracy". Urge them to oppose any Fast
Track that allows for these undemocratic provisions to be included in trade

On our web-page you can find some sample letters-to-the-editor which we
encourage you to personalize and localize and send off to your local paper.
You can also go on our web-site and e-mail a letter directly to your
Representative and Senators
( Finally - organize
a house party or a screening of "Trading Democracy" by Bill Moyers. We have
some extra copies here at Public Citizen which we would be happy to share
with you if you drop us an e-mail explaining how you plan to use the tape.


Global Business/Environment

A Canadian chemical firm says California's pollution controls violate NAFTA

Monday, Mar. 25, 2002

In Santa Monica, a beach town known for its movie stars, the sun shines
almost every day, palm trees sway on the boulevards--and the groundwater is
poisoned. All over town, ugly drilling rigs mounted on trucks are boring
300-foot holes to trace the plumes of a pollutant that has leaked from the
underground tanks of gasoline stations. The culprit: methyl tertiary butyl
ether (MTBE), an additive that makes gasoline burn cleaner but one the U.S.
Environmental Protection Agency has classified as a potential carcinogen.
Half of Santa Monica's water supply is undrinkable--MTBE makes water taste
like turpentine--and the city (pop. 85,000) faces a $300 million cleanup
that could take as long as 30 years. As lawsuits against 18 oil companies
drag on, California has ordered a phaseout of the chemical, and a dozen
other states have followed suit.

If this were an ordinary tale of one more controversial pollutant, it could
be resolved in U.S. courts. But the MTBE conflict has exploded into an
international fistfight, a test case for globalization and a key issue in
President Bush's effort to win new trade-negotiating powers from Congress
next month. That's because METHANEX, the Canadian company that makes a key
ingredient of MTBE, is challenging California's ban under the 1993 North
American Free Trade Agreement. The case has raised doubts about whether a
state can protect its drinking water as it sees fit. Do such health
regulations amount to a trade barrier?

Methanex wants U.S. taxpayers to compensate it for $970 million in profits
it would lose as a result of a California MTBE phaseout. CEO Pierre
Choquette asserts, "We believe the ban of MTBE was politically motivated" to
favor the U.S.-made gasoline additive ethanol "and has no scientific merit."
The company's director of investor relations, Brad Boyd, says, "California
should make sure its underground gas tanks don't leak. That's what would
protect the public."

The issue will be decided, under terms of international treaties, by a panel
of arbitrators, chosen in this case by the U.S. State Department and
Methanex, meeting behind closed doors. A U.S. loss could be challenged in
federal court--but only on narrow procedural grounds. Critics fear that a
Methanex win would upend the principle that "the polluter pays." Instead,
the polluter would be paid. A California senate committee questioned whether
hundreds of state and local laws--from fishing-fleet fees to
truck-inspection rules to a preference for recycled paper--could be
challenged by foreign investors. Says state senator Sheila Kuehl: "A secret
tribunal is going to decide whether a private company can trump laws passed
by a democratically elected government."

The Methanex case is complicating Bush's efforts to win "trade promotion
authority," which would require Congress to vote yes or no, without
amendment, on any treaty the President offered. The idea is to protect
hard-bargained agreements from pork-barrel politicking. The bill passed the
House by only one vote last December, as even longtime free traders worried
about the potential threat to the U.S. of the Methanex case and other
investor challenges. Waving 5,000 pages of trade agreements, Representative
Robert Matsui, a California Democrat, argued that new treaties could affect
federal laws on matters from food safety to monopolies. "Trade is no longer
primarily about tariffs and quotas," he said. "It's about changing domestic
laws." In the Senate, Massachusetts Democrat John Kerry wants to amend the
bill to make it harder for companies to file claims. "NAFTA was never
intended to infringe on U.S. sovereignty in such a way," he said.

The stakes are high. The Administration wants to extend NAFTA to 31 more
countries in Latin America. If investor protections are also offered through
the World Trade Organization, Methanex-style suits could spread through the
global trading system. That would open the U.S. to corporate claims from
scores of countries, but the effect on Third World nations might be even
more dramatic. Could a developing country stand up to a timber giant wanting
to clear-cut the rain forest? A multinational retailer flouting labor laws?
Says Mary Bottari, of Public Citizen's Global Trade Watch, a liberal
activist group: "The mere threat of a vast damage award could make poorer
nations concede before the fight."

American businesses want trade treaties to protect their property from
seizure abroad. Says Stephen Canner, vice president of the U.S. Council on
International Business (USCIB): "If there's a taking of property, a
government has to pay." NAFTA's investor clauses were strengthened partly
because American investors did not trust Mexico. "The idea was to protect
factories from being taken over in some banana republic," says Segundo
Mercado-Llorens, a labor lobbyist. "No one contemplated these provisions
would be used to invalidate our environmental laws."

Methanex further disputes California's reasons for banning MTBE, saying
benzene and other gasoline components are "more hazardous." It accuses
California Governor Gray Davis of ordering the ban because he received
campaign contributions from a U.S. manufacturer of ethanol. Davis denies the
charge. State officials cite studies showing that MTBE causes cancer in lab
animals and symptoms such as headache and nausea in humans. The federal EPA
is also considering a ban. Unlike other gasoline components that stick to
the soil when they leak, MTBE is unusually solvent, escaping from even
reinforced tanks and moving rapidly into nearby water wells. Water experts
say ethanol, a corn derivative, would be less harmful, but California is
lobbying Congress to let gasoline be sold in the state without either MTBE
or ethanol. 

The U.S. State Department says the Methanex claim "does not remotely
resemble the type of grievance" envisioned under NAFTA. But the Canadian
firm is only one of more than a dozen multinationals that have taken
advantage of the treaty's broad provisions. The LOEWEN GROUP, a Canadian
funeral conglomerate, wants the U.S. government to pay $725 million in
damages because a Mississippi jury harbored what Loewen claims were
"anti-Canadian, racial and class biases" when it found the company guilty of
contract fraud. METALCLAD, a California firm that was prevented from opening
a toxic-waste plant in Mexico, won $15.6 million from that country. UPS is
seeking $160 million from Canada because its public postal service competes
"unfairly" against the Atlanta-based firm.

The USCIB's Canner calls investor rights "leveling the playing field." But
if the global field is leveled, can Mississippi punish fraud? Can Canada
subsidize its postal service? Can Mexican towns ban toxic waste? These
questions go to the heart of the debate over globalization. And they're
being decided right now, behind closed doors.

ALSO AVAIL AT TIME WEB:,9171,1101020325-218330,00.html

Jessica Roach
Field Organizer
Public Citizen's Global Trade Watch
215 Pennsylvania Ave SE
Washington, DC 20003
ph: 202-454-5111
fx: 202-547-7392

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