Copyright 2002 The Washington Post

The Washington Post
February 23, 2002 Saturday
Final Edition
SECTION: EDITORIAL; Pg. A19

LENGTH: 774 words

HEADLINE: Talking Trade In Secret

BODY:


Sebastian Mallaby's Feb. 18 op-ed column, "A Slanted Take on Trade," attacked my documentary "Trading Democracy" -- an investigation of the obscure but powerful Chapter 11 provision in NAFTA, which has created a private legal system for corporations that wish to challenge public laws, a system that operates outside the U.S. court system in a forum where U.S. citizens cannot even listen.

Mallaby says my documentary was one-sided. I offered U.S. trade representative Robert Zoellick not one but several opportunities to come on camera and discuss Chapter 11. He declined, as did other supporters of the provision. But the arguments Mallaby employs in his attack are exactly their arguments, as well as those of Washington's legal-business lobby, which apparently is upset that the documentary has helped bring public scrutiny to the issue.

Contrary to Mallaby's claims, I did point out in the program that "good reasons" exist for some sort of protection for investors, and Mallaby is right that it is not unreasonable to seek clear rules of engagement for U.S. companies. But what has happened, as the documentary reports and Mallaby ignores, is that corporations are stretching NAFTA's notion of investor protection to mount attacks on all kinds of public policy.

Corporations in all three NAFTA nations are using their one-sided privileges to claim compensation from taxpayers if they believe normal government activity affects their profits. In one case we investigated, the people of the Mexican state of San Luis Potosi were alarmed because an American company intended to reopen in their back yard a toxic waste facility that they believed was making their children ill. The community had blockaded the plant and brought an end to the dumping when it had had Mexican owners. These people and their elected representatives wanted the site cleaned up and demanded that the American company obtain the proper local permits. But under NAFTA, the foreign owners, who ignored the need for the local permit, had special rights to file a claim that was heard before a secret tribunal and win millions of dollars in compensation from the Mexican government.

Mallaby writes, "Far from being an attack on American democracy, [Chapter 11 privileges] are an effort to spread the American idea of legal rights to other countries." He should tell that to the people of San Luis Potosi.

Mallaby also goes after our story about the Canadian funeral conglomerate the Loewen Group, which is using NAFTA to demand $ 725 million in compensation from the U.S. Treasury. Loewen argues that a verdict and punitive damages awarded by a Mississippi jury violated its NAFTA privileges, and Mallaby accepts on its face Loewen's claim that the trial was "filled with xenophobia." But the jury foreman was born and raised in Canada. The Canadian company, he said, "was entitled to the same treatment as U.S. companies. And that is what they received. They acted like crooks and were found liable."

Trade representative Zoellick could avoid our questions. He couldn't avoid the questions of the House Ways and Means Committee, where, in response to the documentary, he was asked by Rep. Lloyd Doggett: Do you "subscribe to the view that foreign investors should have more rights with regard to property than American citizens do?" He answered,"No."

I rest my case. Now let's have a real public debate.

-- Bill Moyers

*

Sebastian Mallaby makes some fair criticisms of Bill Moyers's documentary on NAFTA's Chapter 11. If the measures protecting foreign companies' investment rights seem extreme, it is in part because business hates competition and companies lobby hard to protect themselves against newcomers to their industry.

Nonetheless, he fails to get to what must be the central point: Should a company like Methanex, producing a chemical known to be damaging to human health, have the right to sue for compensation when its toxic product is taken off the market? Do we wait for the NAFTA tribunal to rule and then decide if Chapter 11 is a problem? Or do we go back to the laws that regulate trade and investment and ensure public health concerns are given priority?

It is fair enough for companies to seek assurance that their investments abroad will not be expropriated. But surely companies waive their right to protection when they sell products that damage our health. It is time to get back to asking why we seek trade and investment in the first place, and making sure these tools serve our goal -- improved human welfare.

-- Sophia Murphy

The writer is director of trade programs

at the Institute for Agriculture and

Trade Policy in Minneapolis.

LOAD-DATE: March 2, 2002