NAFTA dispute resolution flawed, experts
say Kaptur leads ONU forum on trade-pact concerns Jon
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
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
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But the law was rescinded and $13 million in damages were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
But, he said, of the 75 cases brought for dispute resolution
under the trade agreement, 80 percent have been decided
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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