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When Chapter 11 Does Not Mean Bankruptcy

© Frank Monaldo

Essentially, the thesis of Moyers Special is that the corporations will be able to use the Chapter 11 provision of NAFTA to assert that any government action that might reduce profits is equivalent to expropriation. While such creative interpretations are possible by the tribunal, they are not likely to survive long. Either the tribunal's rulings will be consistently reasonable or the treaty will be re-negotiated.

The clause cited above specifically gives governments the right to regulate so long as the regulation is directed to a ``public purpose'' and ``nondiscriminator.'' Indeed, later in the NAFTA agreement, environmental regulations are specifically allowed.

``Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.''

It is always possible for creative lawyers to conjure up new interpretations of a law inconsistent with the original understanding of those who drafted the legislation. Indeed, that is the goal of much of modern interpretation of Constitutional law. It is the purpose of courts and other tribunals to dismiss interpretations that are too expansive. It was disappointing that Moyers did not discuss in greater details the other provisions of Chapter 11 relating to environmental regulation.

What was amusing was to see in the Now program, the solemn hand wringing of William Greider of the Liberal Nation magazine and Martin Wagner of Earthjustice Legal Defense Fund concerned about national sovereignty. I suspect that neither would shed a tear about national sovereignty if international environment agreements were used to compel compliance to stricter environmental regulations even if they US cost jobs and trumped local or national decisions.

There are very important and legitimate concerns about limitations of sovereignty in any international agreement. It is nice to see the Left learn such a concern. Possible unreasonable interpretations of NAFTA ought to be scrutinized. Nonetheless, it does seem that a dispassionate reading of the entire NAFTA agreement would preclude the problems cited in the Moyers special. If, however, the NAFTA tribunal makes consistently unreasonable or expansive interpretations, NAFTA should be reconsidered. The problem that Moyers focuses on is not a problem with the concept of free trade, but in the details in implementing a free trade protocol in the age of creative interpretation of the law.