The United States and Mexico have agreed to a Canadian request to begin talks about reforming the controversial chapter of the North American free-trade agreement that allows corporations to sue states.
Trade Minister Pierre Pettigrew said Monday that he will meet early next month in Washington with U.S. Trade Representative Robert Zoellick and Mexican Economy Minister Luis Ernesto Derbez to talk about what he sees as the failings of NAFTA's Chapter 11. The meeting would be followed by the establishment of a trilateral commission to look into the chapter.
Mr. Pettigrew has previously said he would not sign a proposed free-trade agreement of the Americas if it contained clauses similar to those contained in Chapter 11. The chapter was set up to prevent countries from discriminating against foreign companies, but has also been used to force countries to change their environmental and cultural policies.
"They know my position very well I can tell you," Mr. Pettigrew said of his U.S. and Mexican counterparts.
However, a trade expert said he didn't expect the commission would accomplish very much. Toronto-based international trade lawyer Barry Appleton noted that neither Mexico nor the United States have expressed any interest in reopening any part of NAFTA.
"I think the NAFTA governments are being very polite to Mr. Pettigrew," Mr. Appleton said. "The President of Mexico has made it very clear Mexico is not going to allow any changes to NAFTA."
Mr. Pettigrew's statement follows on the heels of an announcement by the American owners of Vancouver-based West Fraser Mills Ltd. that they intended to use Chapter 11 to sue Canada for discriminatory treatment under the recently expired softwood lumber agreement.
Environmentalists and civil rights groups have protested Chapter 11, which they say puts corporate rights ahead of national sovereignty and can interfere in a government's ability to protect its environment.
In one of the few Chapter 11 decisions to date, a NAFTA tribunal ruled that S.D. Myers Inc., an Ohio-based waste disposal company, was damaged by a Canadian law that banned the export of polychlorinated biphenyls (PCBs), a toxin and suspected carcinogen. The award could be as high as $50-million (U.S.) in that case.
The chapter has also been used by Virginia-based Ethyl Corp. to force Canada to overturn a ban on gasoline additive MMT that had been motivated by environmental concerns. The Canadian government also paid Ethyl $13-million in an out-of-court settlement.
Mexico is currently disputing a NAFTA tribunal's decision to award a U.S. hazardous waste disposal company, Metalclad, $17-million because the Mexican government submitted to local pressure and stopped construction of a Metalclad facility.
Mexico's case is being heard in Vancouver, and Canada has thrown its support behind the country.
"There are problems [with Chapter 11] and obviously I want to solve those problems, clarify the elements that are not acceptable to Canada," Mr. Pettigrew said.
While he supports the idea of protecting investments, Mr. Pettigrew said the chapter has had "consequences that are really not the ones we intended to have."
Mark MacKinnon