An odd thing has happened in the obscure but spirited fight activists are waging against NAFTA’s notorious Chapter 11 and the exclusive legal privileges it gives to multinational investors. The Chapter 11 opposition is going mainstream and respectable. Not so long ago, the only folks raising the alarm were globalization critics like Public Citizen’s Global Trade Watch or the Sierra Club–people the Wall Street Journal likes to describe as “Luddite wackos.” But what will the Journal‘s editorial writers say about the National Association of Attorneys General? Or the National League of Cities, the US Conference of Mayors and the National Conference of State Legislatures? These organizations and some others have studied what the critics say about Chapter 11’s true meaning and concluded, Good grief, they’re right! This so-called “investor protection” poses a fundamental threat to state and local governments’ ability to enact laws that protect the public’s health and general welfare.
The issue is currently in play again because the Bush Administration (and all right-thinking free-trade cheerleaders) is pushing to expand the same doctrine in the proposed Free Trade Area of the Americas and asking Congress for blank-check authority to negotiate (better known as “fast track”). But this time Congressional skepticism is alive and growing, stoked partly by the prestigious, bipartisan expressions of concern. Chapter 11 was a sleeper provision in NAFTA that essentially established a private court for capital–secretive arbitration tribunals where corporations can bring suits for huge damage claims against the United States, Canada or Mexico over new regulatory laws or other actions that may crimp their profit-making. Chapter 11 borrows property-rights language from the US right wing’s domestic “takings” movement and goes far beyond settled US legal doctrine [see Greider, “How the Right Is Using Trade Law to Overturn American Democracy,” October 15, 2001]. That is what alarms the state and local officials. The Conference of Chief Justices from state Supreme Courts is also expected to weigh in on the sovereignty issue.
Senator John Kerry is leading the fight for a corrective fast-track amendment that would instruct the Administration not to negotiate any new agreement that gives foreign investors greater rights than US citizens. As a possible presidential candidate, Kerry has a big problem–he has been an unblinking supporter of trade agreements, so he has to show environmentalists and labor that he’s not totally owned by the multinationals. If his measure prevails, fast track must go back to the House, where it was passed by only one vote in December. The legislative action in any case educates and builds momentum for the longer fight against these investor-dictated rules stealthily imposed by so-called free-trade agreements.
The trouble with Kerry’s amendment–and with fast-track authority in general–is that these legislative instructions are really no more than limp-wristed guidance. The negotiators can ignore Congress, as they have in the past, and probably get away with it. A pending amendment with much more bite, first proposed by Charles Rangel and Sander Levin in the House, would create a mechanism for genuine Congressional leverage over trade negotiations: the right of either chamber to force a vote on withdrawing fast-track approval if the negotiators are straying from their instructions. That would begin to bring daylight and accountability to the murky politics of globalization. It would also restore responsibility to where the Constitution says it belongs–in Congress, not the White House.