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Great Lakes Article:

NAFTA dispute resolution flawed, experts

Kaptur leads ONU forum on trade-pact concerns
Jon Chavez
Toledo Blade


ADA, Ohio - While other aspects of the North American Free Trade Agreement get the most attention, the dispute resolution mechanisms have raised red flags in the way they can be used to supercede environmental and commerce laws, experts said yesterday.

In Canada, the dispute resolution that deals with foreign investment ‘‘has been fairly controversial because foreign investors have taken advantage of [it] in ways the countries didn’t anticipate,’’ said Gilbert Winham, a fellow at the Woodrow Wilson Center for International Scholars in Washington.

Mr. Winham, a professor of government and political science at Dalhousie University in Halifax, Canada, and five other experts on NAFTA, including U.S. Rep. Marcy Kaptur (D., Toledo), gathered yesterday to discuss the workings of the trade accord for America, Canada, and Mexico at an Ohio Northern University symposium.

Miss Kaptur, the featured speaker, said NAFTA has many flaws but the dispute resolution’s biggest defect is that individuals can’t use it if they are harmed by trade actions. Only countries, industries, or firms can use it.

‘‘There’s no way for a picture-tube plant worker in Ottawa, Ohio, to oppose working conditions in Mexico where his job is being moved to,’’ Miss Kaptur said. LG Philips Display decided last year to close its Putnam County television-tube factory this year and move 1,200 jobs to a new plant in Mexico.

Mr. Winham said the regular dispute mechanism - which provides for a five-judge panel to settle disagreements over subsidies and tariffs - has worked well and allayed Canadian fears that disputes would heavily favor U.S. trade interests. But another section of the trade agreement that deals with investment has not produced such good results, he said.

Canada banned the sale of a vehicle fuel additive, MMT, in 1998, calling it toxic and harmful to public health. But the law was rescinded and $13 million in damages were paid to the American producer, U.S. Ethyl Corp., through a trade accord protest.

Miss Kaptur said she fears the same loophole could allow foreign investors to skirt U.S. environmental laws or even siphon Great Lakes water for resale.

A U.S. company, Metalclad Corp. of New Jersey, has used NAFTA to deposit toxic waste in Mexico that could contaminate ground aquifers, said Gustavo Vega-Canovas, a professor at the Colegio de México and a visiting professor at Brown University. The company received permits from the Mexican government to build a toxic-waste facility, but was blocked when a state there tried to halt construction over environmental concerns. The firm appealed and a trade panel ruled in its favor.

But, he said, of the 75 cases brought for dispute resolution under the trade agreement, 80 percent have been decided unanimously.

Miss Kaptur said her research indicates the agreement is not working. She said the accord is even more troubling in that the overall standard of living in Mexico has declined.

The prime benefactors, she said, are foreign investors, especially China, who use Mexico as an entry point to flood the Canadian and U.S. markets with products and take the profits to other continents.

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