A final declaration for the fourth WTO Ministerial Session was finally issued on November 14 after negotiations that extended well past the original deadline.
It's time to ask "borderless" corporations: Which side are you on?
Nothing in modern times has symbolized the scourge of racism--and the potential for overcoming it--more than South Africa's recent history.
It should surprise no one that the European revolutionaries are not inspired by the American dream. Nobody, after all, expected the fighters for national liberation in the post-Napoleonic era to cherish the memory of Metternich, and the United States is now a much mightier pillar of the new Holy Alliance for the preservation of the status quo. It intervenes, directly or by proxy, wherever the social order is threatened, from Taiwan to Greece to Guatemala. Whenever they are under attack, profit and privilege can rely on the forces of "freedom." In Vietnam the American bombers spell out for the local population the bloody message "Better dead than red." The Green Berets are ready to jump in order to rescue the ruling oligarchies of the banana and other republics of Latin America (though the profits of US companies are now better insured by training local troops for the struggle against "subversion"). Like a black knight in nuclear armor the United States Navy patrols the seas, proclaiming that no more social revolutions will be allowed, that China's in 1949 was the last to be tolerated, while the Cuban affair was simply a misunderstanding. The Vietnamese resistance aroused enthusiasm far from Hanoi and Saigon because it challenged American presumption and proved that human courage still counted even in the world of nuclear balance. The Tet offensive in 1968 drove Western students to action because it revealed that the enemy was not invincible. Che Guevara, alive or dead, was hailed as a symbol of solidarity, of the international nature of the anti-imperialist struggle.
The salesmen of the American dream, and they are legion in Europe, prefer to bypass this role of international gendarme, or to justify it in terms of domestic achievement. They point to the democratic niceties, to the civil liberties the United States can still afford. They stress even more the economic achievement, the technological lead, the intellectual investment that vast accumulation has rendered possible, the level of research and management, the high productivity--in short, the superior wealth of the nation; and they turn to the young revolutionaries with the rhetorical question: Can you dismiss the American model in spite of all this? The answer is not in spite of it but because of it. The most frightening prospect, the American nightmare, is that with so much wealth man should not be able to build a different kind of society. In fact, the Europeans are merely echoing the indictment of America's New Left which, instead of being dazzled by the moon, points to the dark side of American society; its inequality and racism, its collective poverty and private plenty, its derelict health services, its belated discovery of pollution and urban chaos--and to the system responsible for it all.
To its admirers, the United States has discovered the secret of perpetual motion for capitalism. Advertising, as a new dynamic method of sales promotion, is a way of getting rid of industrial surpluses superior to that of coffee burning in agriculture. Above all, with military expenditures absorbing, even in official figures, about one-tenth of the national product, the state has a powerful lever to direct the rhythm of output. Advanced capitalism differs from its predecessor. The vagaries of the cycle are less pronounced, unemployment is relatively smaller, growth comparatively more regular. This is not the place to discuss whether this post-Keynesian equilibrium, resting on a militarization of the economy unprecedented in peacetime, is stable and lasting. The painful discovery of America's rulers is that even while the going is good, the system runs into new contradictions. American expansion meets resistance at home, as well as abroad. The outsiders rebel. The hitherto passive blacks refuse to continue being pariahs in the alleged land of plenty. The growing movement of protest among students and the radical part of the intelligentsia is a symptom of something deeper--the clash between the direction to which the expansion of productive forces is geared and the social needs of our age.
The "consumer society" is a misnomer suggesting that at least, as regards consumption, the average citizen is the uncrowned King. Though his material conditions have in many ways improved beyond recognition, modern man is still an alienated producer and a highly conditioned buyer of goods, a dissatisfied purchaser of leisure and pleasure with very little control over his environment. A producer society, guided by industrial and commercial profit, would be a much more accurate description. That problems such as pollution and urban decay are tackled only when they become unbearable is in the logic of things. Modern capitalism has changed enough in method and manner to face up to the unprofitable when it is under pressure. But it has preserved its essence. Profit remains its ultimate driving force, and it is intrinsically unable to confront the collective or individual problems of our society from any other angle. Consciously or unconsciously, this is what the protest is really about.
The similarity of some of its manifestations on both sides of the Atlantic is quite natural. The Englishman, the Frenchman or the German traveling in the United States is less struck by contrasts than by resemblances. He has the strange impression of making a journey through his own country's more or less distant future. For the most political among them, however impressed they may be by the technological progress, it is a journey to night's end. They know that this is their inevitable prospect unless Europe can forge a different kind of society. The bitter controversies between "Europeans" and "anti-Europeans" are really irrelevant in this context. The conflict that has begun cuts across continental as well as national frontiers. The European protesters who look ahead are joining hands with America's New Left. In Western Europe the real division is between those who seek socialism and those who opt for the American model. "Et tout le reste est littérature." It was no accident if during the French May crisis the United States authorities trembled for the fate of Gaullism. They sensed, quite rightly, that the forces then launching the assault against Gaullism are the same that are waging the struggle against Europe's American future.
The conflict is now intercontinental, and so is the solidarity. Revolutionary "grouplets" across Western Europe used to look exclusively to the Third World, to the Vietnamese or the Latin American guerrillas fighting against imperialism from without. They are now also looking to America's young radicals, who are beginning to carry on the same struggle from within. By the same token, they have discovered their own independent and intermediate role.
In mood at least, there are some parallels between the present period and the middle of the 19th century in Europe. Then, too, solidarity was the order of the day, and during the so-called "Spring of the People," fighters for national liberation journeyed from country to country battling "for your freedom and ours." Now, whatever policemen may think, direct intervention is still rare. The community of purpose and struggle is nevertheless growing. Europe's young students and workers salute their fellows across the Atlantic with the new message: "Against your present and our future."
West wind, east wind.... There is nothing new in the violent reaction of Europe's radicals against American interventionism nor in their hostile rejection of the American model. The real novelty is that the Soviet Union has practically vanished as a counter-attraction. During the French crisis there were many references to the Bolshevik October, but none, apart from contemptuous dissociation, to the bureaucratic rule of Stalin's heirs. This antagonism or indifference to the Soviet model--revisionist for some, Stalinist for others, irrelevant for most--characteristic of the May movement, was one of the reasons why orthodox Communists viewed it from the start with deep mistrust. Yet even the orthodox in the West are by now highly discreet about citing the Soviet Union as an example. They are particularly reticent about dwelling on the prospects of the Soviet bloc since the invasion of Czechoslovakia.
Spring in 1968 flourished in unison in Paris and Prague, but hopes faded separately. The French crisis was over, at least temporarily, by the time the Russian tanks rolled into Prague on August 21, and their invasion marked the beginning of the end of the unique experiment of Czech students and workers. The epilogue in Prague came after the French act, and thus could not affect it. But it has affected the European horizon. The Czech tragedy throws a new light on the problem of the dismantlement of Stalinism in Eastern Europe. It makes it necessary to reassess the hope of a Socialist revival within the Soviet bloc and, by the same token, the chances that inspiration in Europe may once again come from the East.
This past March, the Zapatista National Liberation Army (EZLN) made history with a march on Mexico City from its jungle stronghold in the poor southern state of Chiapas, demanding acceptance of its peace plan, the San Andrés Accords [see Al Giordano, "Zapatistas on the March," April 9]. But within six weeks, the accords--constitutional amendments recognizing the autonomy of Mexico's indigenous peoples--were gutted by federal legislators, causing the rebels once again to break off dialogue. At the heart of the debate over the plan is the question of who will control the fate of the Chiapas rainforest, the Selva Lacandona--where real indigenous autonomy has been in place ever since the 1994 Zapatista uprising.
The UN-recognized Montes Azules Biosphere Reserve holds the Selva's last, threatened heart of virgin forest. Despite President Vicente Fox's pledges to withdraw troops from Zapatista territory, many military positions remain in the Selva. Barred by the cease-fire from attacking the Zapatistas, the troops are ostensibly policing Montes Azules against drug traffickers and protecting it from deforestation. But the Selva's Maya inhabitants, the Zapatista base communities, say that--in defiance of both UN guidelines and the San Andrés principles--Montes Azules is not being protected for the resident indigenous peoples but for transnational biotech corporations that hope to profit from the region's genetic wealth.
In 1998 the California firm Diversa signed a three-year "bio-prospecting" deal with the Mexican government. Diversa, which has a similar deal with the US government for Yellowstone National Park, is granted access to Mexico's biodiversity in exchange for $5,000 to train and equip personnel from the National Autonomous University of Mexico, who are to collect the samples; $50 per sample; and royalties of between 0.3 and 0.5 percent of net sales on products derived from them. In contrast, Yellowstone National Park got $15,000 of equipment, royalties of from 0.5 to 10 percent--and $100,000.
The terms of both deals had been secret. Environmental groups went to US federal court to try to get the Yellowstone terms released--but they were eventually reported in the Salt Lake Tribune. The terms of the Mexican deal were leaked to the daily La Jornada, which lambasted them as "bio-genetic plunder."
The University of Georgia, the Britain-based company Molecular Nature Ltd. and El Colegio de la Frontera Sur have launched a similar five-year project. This one, titled Drug Discovery and Biodiversity Among the Maya of Mexico, specifically targets Chiapas. Tapping the vast reservoir of Maya herblore, the program will receive $2.5 million from the International Cooperative Biodiversity Groups (ICBG), a consortium of US government agencies, including the National Science Foundation and the Department of Agriculture. The Chiapas Council of Traditional Indigenous Midwives and Healers (COMPITCH) is urging Indians not to cooperate with the researchers, charging that "the pact was developed without notifying or informing indigenous communities and organizations." The US program has developed its own partnership with local Indian communities, called ICBG-Maya. Director Brent Berlin of the University of Georgia told the Associated Press that the project has received the consent of nearly fifty communities and forged profit-sharing deals with them. But Berlin said he warned them that financial windfalls were a long shot.
Since 1993 the ICBG has awarded eleven bio-prospecting grants totaling $18.5 million worldwide. Commercial partners include GlaxoSmithKline, Dow Agroscience, American Cyanamid (recently acquired by BASF) and, until recently, Monsanto Searle. The revenues at stake contrast sharply with the agonizing poverty of Chiapas villages. A unique geyser-dwelling microbe collected from Yellowstone in 1966 was the source for enzymes widely used in DNA research and sold to Hoffman-LaRoche for $300 million. Rather than bring wealth to impoverished villages, new patents may impose economic burdens by requiring farmers to pay royalties to foreign corporations to grow their own indigenous maize. The Mexican government has expressed concern over DuPont's recent patenting of all corn varieties with certain oleic acid levels, including many originating in Mexico.
Beth Burrows of the Seattle-area-based Edmonds Institute, one of the litigants in the Yellowstone case, is still waiting for a court-ordered impact study on the bio-prospecting program there. Says Burrows: "To privatize living organisms, whether it is Mexican maize or Yellowstone microbes, may serve corporate interests, but it does not serve our social contract or our duties to steward the land and support farmers. Farmers all over the world save seeds and trade them with neighbors. But Monsanto has taken farmers to court for violating their property rights. Farmers have to go to the corporations like to masters on the manor."
This system is now supported by the "trade-related intellectual property rights" provisions--or TRIPs--of NAFTA and the WTO, instating international recognition of patents on life. In contrast, the United States still resists ratifying the Biodiversity Treaty, unveiled at the 1992 Rio de Janeiro Earth Summit, which would recognize indigenous peoples' intellectual property rights. Adds Burrows: "We're creating a social disruption which I'm not sure people are seeing."
Some people are seeing it. In April representatives from more than 100 Chiapas Indian communities held a Maize Meeting in the highlands city of San Cristóbal de Las Casas, vowing not to plant bio-tweaked corn. In mid-June COMPITCH held an international anti-bio-piracy Forum for Biological and Cultural Diversity, in San Cristóbal. And on June 24, when the Biotechnology Industry Organization met in San Diego, Diversa's hometown, activists held their own "BioJustice" counterconvention.
The San Andrés Accords would create a formidable obstacle to corporate designs on Mexico's Indian lands: uncooperative Indian communities with greater control over their turf. Which is why peace is likely to remain illusory in southern Mexico as long as the government remains beholden to corporate globalization. But the issues raised by the Zapatista autonomy demands have implications for indigenous peoples, farmers and environmentalists worldwide.
Toward a North American economic community.
Maude Barlow's analysis of the FTAA is available in four languages on the council's website, www.canadians.org.
George Orwell would have appreciated the irony of President Bush and other hemispheric leaders declaring in Quebec their intention to spread democracy, as chain-link fences, tear gas, water cannons and mass arrests prevented citizens from getting anywhere near the April 20-22 Summit of the Americas. George W. Bush and the leaders of thirty-three other nations who agreed to establish a Free Trade Area of the Americas by the year 2005 claimed that their action would improve the lives of citizens from Alaska to Argentina, but their proclamations rang a bit hollow to those arrested for advocating democracy and the alleviation of poverty.
Meanwhile, inside the fortress, even some of the summiteers admitted to doubts about the magic of free trade; at one point when the leaders apparently thought public transmission of their comments had ended, Canadian International Trade Minister Pierre Pettigrew remarked, "It is not the market or trade per se that can eliminate inequality."
Why are so many people so dubious about the FTAA? The experience of NAFTA, which was recently condemned by Human Rights Watch for creating structures that are consistently biased against the protection of working people, has made skeptics of citizens who can see that a corporate-defined free-trade regimen only enriches corporations. In Mexico, even by the government's conservative estimates, manufacturing wages dropped to $1.90 from $2.10 per hour between 1994 and 1999, after NAFTA came into effect. In the United States, more than 300,000 workers have qualified for training programs set up for those laid off because of NAFTA. It is realities like those that led to the protests in Quebec and to rallies in cities from Buffalo to San Diego. In Chicago, Service Employees Local 1 president Tom Balanoff asked workers: "We know what NAFTA did--why would we want to make the same mistake" with the FTAA? In St. Paul, Senator Paul Wellstone told a crowd that included truckers and teaching assistants, "We speak for a global economy that doesn't just work for greedy multinational corporations."
The broad-based coalition that was so effective in Seattle and that reasserted itself in Quebec will play an important role in the "fast track" fight that will soon stir in Congress. Bush will not have an easy time putting together the majority he needs to win fast track negotiating authority, which would allow the Administration to craft an agreement that could then be only voted up or down by Congress. But he doesn't lack leverage: Obliquely acknowledging the legitimacy of the protesters' demands, he has copied business's newfound rhetoric of sensitivity to labor and environmental concerns in an effort to win the votes of "centrist" Democrats, and there is talk that the Administration might be willing to cut deals with some labor and environmental groups in order to buy off opposition. On the GOP side, Bush faces possible defections among those concerned about home-state industries like steel and those from farm states, as well as a core group of traditional anti-free traders.
In 1997 and 1998 a labor, environmental and human rights coalition defeated Clinton in the House on fast track at a time when the opposition was not nearly as broad-based or well organized, and it can prevail again this year. To win, however, in a way that is viewed as a step forward for citizens everywhere, that effort should focus not only on what's wrong with the FTAA but also on the fact that its critics have developed responsible alternative visions to "globalization at any price" that include such things as right-to-know legislation that would require US multinationals to collect and disclose vital data on environmental damage and workplace conditions in their overseas production.
Canadian Prime Minister Jean Chrétien dismissed the thousands who came to Quebec City with the words On va protester et blablabla (they're coming to protest and blah blah blah). But as Naomi Klein wrote, "Quite the opposite. They're coming to Quebec to protest because they've had it with the blah blah blah." The demonstrators bore witness for those who weren't in Quebec--the people on the wrong end of globalization.
The protesters have done their job well, making it clear to the world that the spirit of Seattle is not only alive but growing stronger. Now it's up to US activists to make sure Congress gets the message.
"Phanzi, Pfizer, Phanzi!" "Get out, Pfizer, go!" At rallies they sing the old liberation songs, replacing the names of apartheid leaders with those of multinational pharmaceutical companies. On the streets they chant demands, no longer for the vote or a living wage or freedom, but for fluconazole and cotrimoxazole and nevirapine. Their leaders and organizers might well be human rights lawyers and healthcare professionals, but most of the foot soldiers of the Treatment Action Campaign (TAC)--which has spearheaded the campaign for affordable medicine for HIV-related illnesses in South Africa--are ordinary South African men and women, HIV-positive but too poor to afford the drugs needed to keep them alive.
For most of us, globalization remains an abstract and troubling concept, but for the TAC's activists the pharmaceutical industry's cynical abuse of international trade agreements to keep its profit margins high has meant that globalization is literally killing them. What makes their activism so compelling is that their battle for access to treatment has brought them up against the consequences of the global economy--and that they appear to be triumphant.
In mid-April, after a three-year fight, thirty-nine multinational pharmaceutical companies agreed to settle a suit against the South African government to prevent it from purchasing brand-name drugs from third parties at the cheapest rates possible. This, Big Pharma had claimed, was in violation of international trade and property agreements the South African government had signed. The withdrawal was brokered directly by UN Secretary General Kofi Annan, who had been asked by the five biggest companies to help them find a way out of what had become a public relations nightmare. Annan called South African President Thabo Mbeki, whose officials drafted a last-minute settlement that committed the country to negotiate with the multinationals before implementing its policy. The victory, however, was the TAC's: Not only had it proved that the suit was unwinnable, it had brilliantly mobilized a broad spectrum of support at home and abroad against the drug companies, which were shamed into the settlement--in effect, an honorable withdrawal.
The icon of this victory, broadcast all over the world, was the image of a large African man in the courtroom popping a bottle of champagne in a circle of jubilant celebrants. This man was Zwelinzima Vavi, the general secretary of Cosatu, South Africa's largest labor federation and the backbone of the "Revolutionary Alliance" that brought the African National Congress to power--and that keeps it there. Surrounding him was a fascinating mix of working-class activists, high-powered lobbyists from international organizations like Médecins Sans Frontières and Oxfam, and ecstatic government officials reliving, for one brief moment, the euphoria of activism.
The TAC has managed to put together the first seriously effective social movement since South Africa's transition to democracy in 1994. The keynote speaker at its first national conference, in March, was Cosatu president Willie Madisha. "There is no urgency from government," he told an audience of 500 delegates from more than 169 organizations, including major religious and healthcare groups. "Sometimes it drags its feet, at other times its HIV/AIDS work is incoherent. Broader social mobilization is essential to engage government constructively."
In 1994 most antiapartheid activists either went into government and became enmeshed in the workings of the new state or set off for the private sector to exercise their newfound freedom and follow their own interests. The result was that the broad-based social movements that brought apartheid to its knees in the 1980s ossified into bureaucracy or withered into nonexistence. The TAC offers a cogent example of the consequences: In the early 1990s, AIDS activists played a major role in the drafting of an exceptional National AIDS Plan, which was adopted by the African National Congress. But instead of mobilizing mass support to achieve the demands of the plan, AIDS activists found themselves inside the system and thus bound by the inevitable constraints of government, relying too heavily on what the TAC calls "the politics of access." Outsiders became insiders, and without the oxygen of a mass movement to keep it alive, the plan was suffocated by red tape.
But just a week before the victory against Big Pharma, TAC's chairman and chief strategist (himself a product of the antiapartheid movement), Zackie Achmat, publicly accused two senior government officials--both medical doctors and former healthcare activists themselves--of having the blood of children on their hands because they were retarding the implementation of antiretroviral programs for pregnant mothers with HIV. "We face a greater tragedy than the acts of omission of the drug companies," he said, "and that is the failure of government officials to act with courage, humility and urgency."
The accusation may have been unduly harsh--Achmat himself could be accused of understanding neither the constraints of bureaucracy nor the choices that the ill-resourced government must make--but he has a significant mass-based constituency behind him when he makes it. The TAC's brilliance was in recognizing that it had an issue that would appeal to the broad left wing of South African society not only because of the government's manifest ineptitude in the face of a horrifying pandemic (4.7 million infected out of a population of 40 million) but because the battle for treatment was a perfect vehicle for taking on the heartlessness of global capital and the perceived wrongheadedness of the ANC government's neoliberal macroeconomic policy. South Africa has been the good boy of the World Bank, the IMF and the WTO, Achmat says, and we're sicker and poorer than we've ever been.
The reason Cosatu and the left like the treatment access issue so much is that it allows them to say this; it puts flesh on their critique of the government's quest for a balanced budget in line with the World Bank's specifications, a quest that means less funding for programs like the provision of lifesaving medication. Globalization, finally, has a face. TAC activists appeared at court wearing ghostly, leering masks of Big Pharma's mandarins. Globalization is itself on trial: The masked activists were in handcuffs.
Just last year, Mbeki accused the TAC of actually being in the employ of Big Pharma because of its strident criticism of the government's AIDS policy. Now, despite the brief and effective courtroom alliance between activists and government, the same battle lines are drawn again, sharper than ever. Minister of Health Dr. Manto Tshabalala-Msimang held a press conference after the courtroom celebration at which she made it clear that providing AIDS drugs was not a government priority; the TAC shot back that it would do whatever was needed--including confronting government head on--to bring "real drugs to real people."
It remains to be seen whether the victory against Big Pharma is anything more than symbolic, whether it will have any effect at all in bringing affordable drugs to the ailing masses of South Africa. Its significance, rather, is in its creation of a mass-based, independent, critically minded social movement that takes the best of South Africa's tradition of struggle and engages it, in a sophisticated and tangible way, in a battle against the negative consequences of the global economy and the manipulation of institutions like the WTO by multinational corporations. The TAC's battle could provide the same brand of moral leadership in the global struggle that the antiapartheid movement did in decades past.
When NAFTA was adopted in 1993, Chapter 11 in the trade and investment agreement was too obscure to stir controversy. Eight years later, it's the smoking gun in the intensifying argument over whether globalization trumps national sovereignty. Chapter 11 established a new system of private arbitration for foreign investors to bring injury claims against governments. As the business claims and money awards accumulate, the warnings from astute critics are confirmed--NAFTA has enabled multinational corporations to usurp the sovereign powers of government, not to mention the rights of citizens and communities.
The issue has exquisite resonance with the present moment. On April 20 thirty-four heads of state gather in Quebec City to lead cheers for a Free Trade Area for the Americas. The FTAA negotiations are designed to expand NAFTA's rules to cover the entire Western Hemisphere. The Quebec meeting should provide good theater but not much substance. Tony Clarke of the Polaris Institute, in Ottawa, says the meeting is intended to be "a face lift for the whole global agenda, by portraying free trade as democracy." Protesting citizens will be in the streets, challenging 6,000 police and Mounties, with an opposite message: Democracy is threatened by the corporate vision of globalization.
Chapter 11 of NAFTA should become a defining issue for FTAA negotiations. Many, including Clarke, vice chairman of the Council of Canadians, believe corporate governance was and is the FTAA's intent. "There is a conquering spirit at the heart of all this," he says, adding that the corporations' attitude is: "We have to get into every nook and cranny of the world and make it ours."
Chapter 11 provides a model of how this might be accomplished. The operative principle is that foreign capital investing in Canada, Mexico and the United States may demand compensation if the profit-making potential of their ventures has been injured by government decisions--"tantamount to expropriation." Thus, foreign-based companies are given more rights than domestic businesses operating in their home country. For example:
§ California banned a methanol-based gasoline additive, MTBE, after the EPA reported potential cancer risks and at least 10,000 groundwater sites were found polluted by the substance. Methanex of Vancouver, British Columbia, the world's largest methanol producer, filed a $970 million claim against the United States. If the NAFTA panel rules for the company, many similar complaints are expected, since at least ten other states followed California's lead. The federal government would have to pay the awards. California State Senator Sheila Kuehl and others have asked the US Trade Representative to explain how this squares with a state's sovereign right to protect health and the environment.
§ In Mexico, a US waste-disposal company, Metalclad, was awarded $16.7 million in damages after the state of San Luis Potosí blocked its waste site in the village of Guadalcazar. Local residents complained that the Mexican government was not enforcing environmental standards and that the project threatened their water supply. Metalclad's victory established that NAFTA's dispute mechanism reaches to subnational governments, including municipalities.
§ In Canada, the government banned another gasoline additive, MMT, as a suspected health hazard and one that damages catalytic converters, according to auto makers. The Ethyl Corporation of Virginia, producer of MMT, filed a $250 million claim but settled for $13 million after Canada agreed to withdraw its ban and apologize.
§ The Loewen Group Inc., a Canadian operator of far-flung funeral homes, lodged a $750 million complaint against the United States, claiming that a Biloxi, Mississippi, jury made an excessive award of $500 million when it found Loewen liable for contract fraud against a small local competitor.
§ Sunbelt Water Inc. of California has filed the largest and most audacious claim--seeking $10.5 billion from Canada for revoking its license to export water by supertanker from British Columbia to water-scarce areas of the United States.
§ Canada's Mondev International is claiming $50 million from the United States because the City of Boston canceled a sales contract for an office building with a shopping mall. Boston invoked sovereign immunity against such lawsuits and was upheld by a local judge and the Massachusetts Supreme Court. The US Supreme Court declined to hear the appeal. So the company turned to NAFTA for relief.
"When just the threat of a Chapter 11 action may suffice to wrest a financial settlement from a government, investors have unprecedented leverage against states," Lydia Lazar, a Chicago attorney who has worked in global commerce, wrote in Global Financial Markets magazine. Mexico, Canada and the United States effectively waived the doctrine of sovereign immunity, she explained, when they signed NAFTA.
As many as fifteen cases have been launched to date, but no one can be sure of the number, since there's no requirement to inform the public. The contesting parties choose the judges who will arbitrate, choose which issues and legal principles are to apply and also decide whether the public has any access to the proceedings. The design follows the format for private arbitration cases between contesting business interests. With the same arrogance that designed the WTO and other international trade forums, it is assumed that these disputes are none of the public's business--even though public laws are under attack and taxpayers' money will pay the fines. The core legal issue is described as damage to an investor's property--property in the form of anticipated profits. The NAFTA logic thus establishes the "regulatory takings" doctrine the right has promoted unsuccessfully for two decades--a retrograde version of property rights designed to cripple or even dismantle the administrative state's regulatory powers. "NAFTA is really an end run around the Constitution," says Lazar.
The fundamental difference in Chapter 11, unlike other trade agreements, is that the global corporations are free to litigate on their own without having to ask national governments to act on their behalf in global forums. Clearly, some of the business complaints so far are more exotic than anyone probably anticipated. These initial cases will set precedents, however, that major global firms can apply later. If nobody stops this process, the national identity of multinationals will become even weaker and less relevant, Lazar points out, since they have status to challenge government as "an open class of 'legal equals.'"
In Canada a private lawsuit was filed recently challenging the constitutionality of Chapter 11, since Canada's Constitution states that the government cannot delegate justice to other bodies. The Canadian government, itself embarrassed by the cases against it, expressed doubt that Chapter 11 should be included in the hemispheric agreement, though it appears to be backing away from outright opposition. In US localities, the cases are beginning to stir questions, but lawmakers and jurists are only beginning to learn the implications.
Does George W. Bush understand what he is proposing for the Americas? Did Bill Clinton and Bush the elder understand the fundamental shift in legal foundations buried in NAFTA's fine print? They knew this is what business and finance wanted. As the public learns more, the smoking gun should become a focal point in this year's trade debate, confronting politicians with embarrassing questions about global governance. Who voted to shoot down national sovereignty? Who crowned the corporate investors the new monarchs of public values?