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FTAA investment chapter confirms worst fears

by Gumisai Mutume

Quebec City, 19 Apr (IPS) - Civil society groups here say a leaked copy of the investment chapter of the draft text of the agreement of the Free Trade Area of the Americas confirms their worst fears.

“This text is top-down, heavy-handed and retains the worst features of NAFTA’s Chapter 11, “ says Maude Barlow of the Council of Canadians. “It appears that governments have learned nothing from the NAFTA experience.”

The draft text, which has not yet been approved by the 34 governments of the proposed Free Trade Area of the Americas (FTAA), is heavily bracketed, reflecting a lack of consensus on many aspects.

But, as widely expected by civil society opponents of the agreement, the investment chapter proposes to give corporations (but not citizens or NGOs) the ability to sue governments for discrimination, if they act in ways that hinder their investments.

Such a provision is also contained in the investment chapter of the North American Free Trade Agreement (NAFTA) - widely known as Chapter 11. The NAFTA provision has so far resulted in claims for more than $18 billion in compensation sought by corporations against the governments of Canada, Mexico and the USA.

“Investor-state (dispute) is the most pernicious element of the entire free trade edifice,” says Toronto-based trade lawyer Steven Shrybman. “This is a triumph of investor and corporate rights over human, labour and environmental rights.”

Provisions of NAFTA’s investment chapter have been invoked on at least 15 known occasions to challenge laws and regulations designed to protect the environment, health and safety measures.

The 42-page investment chapter of the FTAA is one of nine chapters of an agreement that should come into force by 2005, and which is one of the subjects of the Third Summit of the Americas being held here on 20-22 April. At the summit, 34 heads of state from the hemisphere are expected to endorse the negotiations.

“Despite the promises of Canadian trade minister Pierre Pettigrew not to sign onto an agreement that had NAFTA-style investor-state dispute settlement provisions, the leaked text contains the same basic architecture for investor-state suits and some proposals go much further,” notes a civil society statement signed by participants of the alternative People’s Summit, which runs concurrently to the Americas summit.

A media official in Pettigrew’s office said the minister would stick to his promise, but refused to comment further on the leaked document. Until now, only corporate advisers to the negotiators have participated with government officials in drawing up proposals for negotiations towards creating what will become the world’s biggest free trade area - encompassing more than 750 million people. In the Americas, only Cuba will be excluded.

“Making this FTAA chapter on investment public on the world wide web is a small but real next step in the long process of bringing democracy and transparency to trade negotiations,” says Mark Ritchie, president of the Institute for Agriculture and Trade Policy (IATP), which has posted the document online.

“We hope that the rest of the secret text will be released by governments today or tomorrow so citizens and taxpayers can see what is being proposed in our name.”

The leaked investment chapter proposes that none of the parties to the agreement be allowed to recommend that foreign investors carry a certain level of domestically produced content in any of the products they manufacture in a given country.

It also proposes the removal of capital controls to enable investors to transfer their monies “freely and without delay [into and out of its territory]”.

“Each Party (state) shall accord to the investors of another Party and to the investments of investors of another Party treatment no less favourable than that it accords [in like circumstances] to its own investors,” reads the text of the FTAA investment chapter.

The investment chapter brings to the negotiating table the issue of whether investor rights should take precedence over labour, human and environmental rights. This is a burning issue among environmentalists, human rights groups and trade unions congregating here to either oppose or seek to make an input into the negotiations.

Robin Rosenberg of the North-South Centre says that civil society and governments seem to be speaking past each other, with governments clearly not placing sustainable development at the top of their priorities.

“The politics of economic growth have become their priority. They don’t win elections by talking about the kind of things we are talking about,” says Rosenberg, who was attending a three-day environmental symposium here hosted by the International Institute for Sustainable Development, the World Conservation Union and the UN Environment Programme.

Canadian government officials remain silent on when or whether the rest of the draft text of the FTAA agreement will be released officially to the public.

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