Todd Tucker
Corporations pushing Peru trade deal to push out democracy
On Monday, we dealt with the basic politics of Bush’s NAFTA expansion to Peru. Now, we’ll launch into the substance.
The Peru FTA, just like NAFTA and CAFTA, contains a wide range of measures that give incentives for companies to off-shore jobs. A major one is the expansive regime of rights for foreign investors (and foreign subsidiaries of domestic companies) to challenge public interest laws that they feel is sorta kinda (but doesn’t really have to be) expropriation of their property in the country. Except that it doesn’t have to be real property – it can be “future expected profit,” shares, or other imagined creatures. And they don’t even really have to have an investment in the country, so long as they wish they did badly enough. Oh, and foreign tribunals at the World Bank and UN get to decide whether said investor wished hard enough. Did I mention the challenged measure may not even have to be a government action, but could also include such things as the surliness of private citizens serving on a jury? (An additional basis for an investor-state challenge is discrimination against foreign investors, and, you guessed it, the measures don’t even have to hold foreigners to a different standards than nationals! Is your head spinning yet? Is any policy not subject to a challenge?)
I recall growing up that some schoolmates of mine from the south end of Louisville lived in homes that were demolished to make way for an airport expansion at Standiford Field. Their parents got compensated for a government action that destroyed the total value of a real asset. That’s takings, democracy-style, in the sense that it’s consistent with what a free people, our elected officials and our judges would find acceptable if we/they had to live with it, vote on it, or rule on it in court.
NAFTA and its various expansions turn takings on its head, and give corporations a way to end-run around such messy democratic strictures.
We did a big report looking at the nearly 50 cases brought by investors against governments under NAFTA, for measures and claiming standing and for sums that would be laughed right out of any domestic court. Some of the stuff in there is just outrageous, including challenges of California environmental regulations, Canadian bans on toxics trade, Mexican state-level zoning laws, and even the prickliness of a Mississippi jury in a private contract dispute. (Which brings up another point – the feds are required to take all actions necessary to force compliance with NAFTA-style rules at the state and local level too, even though states aren’t consulted and they have to trust the feds to defend challenged public interest policies that they may oppose at the federal level.)
All these insane rules are extended to Peru. Here are just two nasty implications:
Peru privatized its social security system under the autocratic Fujimori regime – something that Bush tried to do here and Democrats and advocates helped defeat. The masses down there have been fighting for 15 years to reverse the privatization, because it’s been a total failure. But it turns out that big congressional campaign donor Citibank is an investor in Peru’s privatized system. Under the Peru FTA, Citibank could sue Peru’s taxpayers for cash compensation if they restore the public system. As you can imagine, retiree groups in both countries are up in arms.
Here's another shocker. America’s imported food safety system is full of gaping holes – this ain’t a secret. Not as widely reported is the fact that our trade agreements put limitations on how much we can inspect imported product, our ability to target problem countries, and even what kind of food safety regime we can have. Enter the Peru FTA. Peru is the world’s top fish catcher, after China, and no small producer of produce and meats. And, Peru is a major exporter of fish and shrimp to the U.S. market. There’s lots of evidence of health problems with Peru’s fish and produce, which we document in our report. Punchline: If NAFTA is expanded to Peru, thousands of Peruvian food exporters can challenge U.S. food safety regulations, if we ever get them up to snuff.
Tomorrow, we’ll talk about more of the problems with Bush’s NAFTA expansion plans.
Todd Tucker: Author Bio | Other Posts
Posted at 11:55 AM, Oct 03, 2007 in
Economy
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