PROMOTING DEMOCRACY
THROUGH TRADE AND INVESTMENT
March 5,
2002
Dear
Colleague:
I am writing to call
your attention to an excellent op-ed article in the February 18,
2002 Washington Post by Sebastian Mallaby entitled “A Slanted Take
on Trade.” The op-ed clarifies the current debate over
investor protections in trade agreements and Chapter 11 of the
North American Free Trade Agreement (NAFTA)(see
reverse).
Opponents of investor
protections in trade agreements argue that NAFTA’s Chapter 11
undermines America’s laws to protect the environment and public
health. PBS showcased the critics’ attacks on February 5 in
a Bill Moyers program titled “Trading Democracy.” The
enclosed op-ed by Mr. Mallaby points out the misleading character
of the Moyers report and highlights the factual errors and
sensationalism which rendered that report “unfair and damaging to
the public interest.”
The investment
safeguards in Chapter 11 are not new or unprecedented. These
standards are also found in 45
U.S. bilateral investment treaties, in more than 1,850 treaties
concluded worldwide, and are essentially the same as those
found in the U.S. Constitution. Specifically, foreign
investors in the United States, just as U.S. investors, are
protected under the Takings, Due Process and Equal Protections
provisions of the U.S. Constitution, the Administrative Procedures
Act, and other U.S. laws. Weakening investment protections
in trade agreements hurts U.S. investors abroad who operate in
countries that may have underdeveloped or biased legal
systems. Why wouldn’t Congress want to protect U.S.
investors overseas?
U.S. companies,
entrepreneurs, workers and shareholders are by far the biggest
beneficiaries of Chapter 11-style investment rules. Despite
all the commotion raised by opponents of Chapter 11, many cases
they cite are still pending and not a single U.S. environmental
or public health law has been successfully challenged by a foreign
investor. One point I would add to Mr. Mallaby’s
argument is the fact that Chapter 11 expressly affirms the ability
of countries to adopt and enforce measures that they consider
appropriate to ensure that investments “are undertaken in a manner
sensitive to environmental concerns.”
Mr. Mallaby also
recognizes that NAFTA’s Chapter 11 is not perfect. This is
why the TPA bill approved by the House last December calls for
several improvements in negotiating investor-state dispute
settlement procedures, including greater transparency and a
mechanism to review aberrant decisions.
Investor protections
in Chapter 11 embody our constitutional principles and protect
U.S. investors against arbitrary, discriminatory, and confiscatory
treatment by foreign governments. Mr. Mallaby got it
right: these protections do not trade democracy; they
promote our democratic values -- rule of law, respect for private
property, and safeguarding against arbitrary government
action. All the fear-mongering and hype about international
investment protections is out of place, and Mr. Mallaby’s piece
goes a long way toward setting the record straight.
Sincerely,
Philip M.
Crane
Chairman
