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NAFTA codes
2.01.02
Politics and Economy:
Trading Democracy
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Page 2

The Other Chapter 11

Everyone's heard about NAFTA — the North American Free Trade Agreement — and all the talk about jobs. But almost no one heard about one obscure section of NAFTA — Chapter 11 — except for multinational corporations who are using it to challenge democracy.

Chapter 11 is only one provision in the 555-page North American Free Trade Agreement — negotiated to promote business among the US, Canada and Mexico. It was supposedly written to protect investors if foreign governments tried to seize their property.

But corporations have stretched NAFTA's Chapter 11 to undermine environmental decisions — the decisions of local communities — even the verdict of an American jury. The cases brought so far total almost four billion dollars.

William Greider
William Greider, THE NATION magazine

WILLIAM GREIDER: What offends me most is that these lawyers understood that public laws were gonna come under attack in this system, and they just walked right past the question of where's the American public in this?

BILL MOYERS: They now have the right to sue governments?

WILLIAM GREIDER: Right, and sue them directly, without having to get the approval of their own government. And that's one of the features of NAFTA which is distinctively different from all previous trade agreements.

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Sheila Kuehl
Sen. Sheila Kuehl, Chair, California International Trade Policy Committee

SEN. SHEILA KUEHL: (Chair, California International Trade Policy Committee): First, I was astounded because I really knew nothing about Chapter Eleven. And you know the kind of reaction that you get from people when you say, did you know that one investor in a foreign company can sue the United States because of an environmental protection law in California? People are astounded once they kind of grasp it.

BILL MOYERS: Senator Sheila Kuehl chairs a committee examining the impact of US trade agreements on California laws.

SEN. SHEILA KUEHL: I think it's just the tip of the iceberg because, in a way, it opens the idea to foreign investors that wherever they might suffer, as they imagine, under some regulation, under some law, statute passed by a state, all they have to do is file a claim and, you know, it's taken seriously and the United States has to defend itself and the state has to defend itself.

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The California case in point began with a chemical — MTBE — that was added to gasoline to help the state clean up its air. But MTBE was found to cause cancer in laboratory animals. And in 1995, it began to show up in drinking water.

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