GREEN PAPER 3: Freedoms
That Are Abolished
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Dispute Settlement Body: Long Live Corporate Rule
The Investor-to-State Dispute Resolution, expected to be included in the FTAA investment package, would basically grant corporations judiciary power. Under the WTO's Dispute Settlement Body, the judicial body of the WTO, any member nation may challenge another member nation if a law, program, or ban is not WTO compliant. Gerber Products Company enlisted the United States government to challenge a Guatemalan law that did not conform to the WTO's Agreement on Trade-Related Intellectual Property Rights (TRIPS). Under the guidance of the World Health Organization (WHO), Guatemala outlawed advertising and packaging techniques that displayed chubby, healthy babies on infant formula. The Guatemalan government and WHO believed these marketing practices encouraged women to use infant formula, which is more expensive and less nutritious, than breast milk.15 After the implementation of the law, the Guatemalan infant mortality rate decreased substantially.16 However, a WTO tribunal made up of trade officials and lawyers overturned it, because the law violated Gerber's trademark (an intellectual property right) and impeded their right to investment.
Chapter 11 of NAFTA enables corporations to sue member countries directly, at the municipal, state and national level, if laws impede trade or a corporation's potential for investment. Since the actual draft of the FTAA has yet to be released, it is not certain that the FTAA will include an investor-to-state dispute settlement provision like that of NAFTA, but it seems quite likely. This would allow corporations to by-pass the bureaucracy involved in the WTO dispute settlement process and directly challenge government rules and regulations that obstruct their profits.
Under the WTO, corporations must appeal to their governments to present their case to the WTO tribunal. While it is still a closed process, having to ask governments for assistances leaves a small space for public opposition and an opportunity for people to apply pressure on their governments. In the Guatemalan case cited above, Gerber Products Company could not have proceeded without receiving U.S. government support. However, under the FTAA, Gerber would likely be able to challenge Guatemala (or any other country) directly. Providing corporations with this kind of power will result in the nullification of environmental, human rights, and labor laws throughout the entire Western Hemisphere. As seen with NAFTA rulings under Chapter 11, the risk of investment is placed on municipal, state and national governments not the money-hungry, polluting corporations, even though they are the actual investors.
Investor-to-state dispute settlement is apparently quite controversial. Former USTR Charlene Barshefsky has stated that the FTAA dispute settlement body will most likely include investor-to-state suits, not just state-to-state suits.17 However, Canadian Trade Minister, Pierre Pettigrew, has said that Canada will not sign the FTAA, if it contains dispute settlement provisions like NAFTA's Chapter 11.18 We will have to wait and see who has the louder voice and larger boxing gloves at the FTAA table, the U.S. or the Canadian Trade Minister (or the voice of the people, which would terminate the entire FTAA).