Marketocracy, Part Three - NAFTA is Coming To Get You

This is the third diary in a series on The Marketocracy.  You can read The Marketocracy, Part One and The Marketocracy, Part Two - GATS is Coming to Get You if you choose.

Environmental Crimes

The primary harm is to the sustainability of the world - diminishing the carrying capacity of the earth, approaching  the limits to growth faster with increasingly inequitable distributions of qualify of life factors, increasing degradation of environment, life, increasing environmental harm.  Deforestation, mudslides, loss of fish, farmland, forests, air quality, biological diversity, water, the means of survival, and human freedom result from environmental crimes.  The enclosure movement of 18th century England has as its descendant the privatization of public resources.  There is no greater devastation.  

"The environment," wrote the late Ken Saro-Wiwa in a letter smuggled from his Nigerian jail cell, "is man's first right."  

But in 1997, the Organization for Economic Cooperation and Development finished negotiating the Multilateral Agreement on Investments (MAI).  Once ratified, all economic sectors of the signator nations are opened to foreign investment.  

The MAI could be characterized as a "bill of rights" for transnational corporations.  It gives foreign corporations the right to challenge national or local environmental, health, or worker protection laws they construe as unfairly burdensome. The agreement establishes a court system that allows a company to sue a government.  

But there is no place in those courts for citizens who have been harmed by corporate misconduct to lodge their complaints.  The MAI agreement provides corporations with an unprecedented list of rights and is silent about their responsibilities. Corporations are not required to abide by international fair labor standards promulgated by the International Labor Organization.  MAI is silent about operating in an environmentally sound way.

Under the
North American Free Trade Act (NAFTA), corporations' use of private courts - called tribunals - has harmed environmental, health, and worker protection laws in Canada, the United States and Mexico.

Under NAFTA, U.S.-based Ethyl Corporation threatened to file a $200 million claim if the Canadian parliament passed a law preventing them from importing the toxic fuel additive MMT.  When the Mexican State of San Luis Potosi blocked the U.S.-based Metalclad Corporation from operating a hazardous waste treatment facility, Metalclad filed a grievance.  (Metalclad v. United States of Mexico, International Center for Settlement of Investment Disputes Case No. ARB(AF)/97/1).  

The NAFTA tribunal - not court -  found in favor of Metalclad, and issued an award in favor of Metalclad in the amount of $16.7 million. Mexico petitioned the Supreme Court of British Columbia to set aside the award on the grounds that the Metalclad tribunal exceeded its jurisdiction and that enforcing the award would violate public policy.  The British Columbia court set aside the award in part.

The U.S. State Department filed a Submission - the parallel of an amicus curiae brief in a US federal court - with the NAFTA tribunal.  It specifically states that the position of the United States is that NAFTA requirements involving restraint of trade apply to local governments.

This means that the United States government has handed over to a NAFTA tribunal the authority to find in favor of a corporation for restraint of trade if your state, county, or city tries to impose environmental, health, safety, or labor regulations on the corporation.

    That seems to be what what it means, folks.
    That is the marketocracy.

Here, read it for yourself.

NAFTA Coverage of Actions of Local Governments, Including Municipalities

3. One question that was addressed in oral argument was whether, as a general rule, the actions of local governments, including municipalities, are subject to the NAFTA standards. The United States believes that there is no
general exclusion from the NAFTA standards for local government action. At the hearing, an argument that local government actions are generally not subject to these standards was made based on Article 105 of the NAFTA, which does not use the term "local governments" in describing the extent of the obligations set forth in the Agreement. According to this argument, the NAFTA Parties
deliberately excluded the term "local governments" from Article 105 to signal a departure from otherwise applicable customary international law, which provides that a State is liable for the acts of all its political subdivisions, including local governments. Again under this line of argument, Article 201(2) ("unless otherwise specified, a reference to a state or province includes local
governments of that state or province") means that it is only when state or provincial governments are specifically mentioned in a particular obligation that
the obligation covers local governments' acts.

4. However, the United States believes that there is no such general exclusion from NAFTA standards for the actions of local governments. Rather, the U.S. intended, and we believe the Parties intended, that, except where specific exception was made, the action of local governments would be subject
to the NAFTA standards. We made this clear in our Statement of Administrative Action submitted to the U.S. Congress with the text of the Agreement and proposed implementing legislation. In that Statement, the U.S. Government
explains that NAFTA Article 105 "makes clear that state, provincial and local governments must, as a general rule, conform to the same obligations as those applicable to the three countries' federal governments, subject to the same exceptions." U.S. Statement of Administrative Action 4, in Message from The President of the United States Transmitting North American Free Trade Agreement, Text of Agreement, Implementing Bill, Statement of Administrative Action and Required Supporting Statements, H.R. Doc. No. 103-159, Vol. 1(1993)

Vancouver-based Methanex Corporation sued the U.S. over California's ban on a carcinogenic gas additive, MTBE. The company, which manufactures the additive's key ingredient, claims that the ban fails to consider its financial interests. Commencing in July 2001, a three-man panel held closed hearings in Washington, D.C., to determine whether a democratically elected governor's executive order to protect the public should cost the U.S. $970 million in fines.

Many of the worst cases of ecological damage occur in undemocratic countries under the control of dictatorial regimes - Burma/Myanmar, Irian Jaya/Indonesia, Nigeria, Columbia, to name a few.   If U.S.-based companies are involved, it's possible to bring suit in U.S. courts, but not for violation of U.S. environmental law.  Actions can be brought under the Alien Tort Claims Act.

In 1997 a number of Indonesian tribal leaders filed a class-action suit in Louisiana against the mining giant Freeport-McMoRan for its actions in Irian Jaya. The suit is Beanal v. Freeport-McMoran, Inc..  The Indonesians charged that gold and copper extraction at Freeport's Grasberg mine daily dumped 100,000 tons of rock waste into local rivers, poisoning the water and food supply of several thousand indigenous people.

Indonesian tribal leader Tom Beanal charged that, through its mining operations, Freeport forced his people, the Amungme, to relocate by destroying the environment and habitat. The mine's vast discharge has ruined these rivers the Amungme traditionally used for drinking water and bathing. The operations also generate mountains of toxic overburden that are dumped into local waters, creating landslides and profoundly acidic conditions in a major local lake.

Beanal based the environmental part of his case on the  Alien Tort Claims Act. It reads: "The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States."   He argued that several sources of international environmental law exist which would condemn Freeport's environmental destruction and allow the case to go forward under the Alien Tort statute.

He relied on the Principles of International Environmental Law I: Frameworks, Standards and Implementation (1995, Philippe Sands, ed.) and the Rio Declaration on Environment and Development.

Sands identifies three fundamental environmental law principles.  They are the Polluter Pays Principle; the Precautionary Principle; and the Proximity Principle. The Rio Declaration lists 27 environmental principles, on which Beanal also relied.

Beanal sought to show that the harm suffered by his people at the hands of Freeport violated these consensus international principles. He lost.

Holding that the Alien Tort statute only "applies to shockingly egregious violations of universally recognized principles of international law," the federal District Court in New Orleans found that the allegations made by Beanal did not deserve a hearing because "Freeport's mining activities [did not] constitute environmental torts or abuses under international law."

Stating that the Sands principles and the Rio Declaration were too abstract and "devoid of articulable or discernable standards," the Court worried that the environmental laws of the United States, which Beanal cited, should not be used to displace a sovereign country's environmental practices, particularly where the harm was confined to the boundaries of that country.

The court dismissed, citing the lack of international environmental standards. The court suggested that the suit focus instead on the killing of an estimated 2,000 indigenous protesters by Indonesian soldiers, soldiers who receive housing, food, and transportation from Freeport in return for "security" services. A human-rights approach, the judge wrote, would almost certainly guarantee the court's acceptance of the complaint.

The judge was wrong.  The Fifth Circuit Court of Appeal found that Beanal did not present a sufficient case, and upheld the District Court's rejection of Beanal's complaint.  The Fifth Circuit Court concluded:

In light of the gravity and far ranging implications of Beanal's allegations, not only did the court give Beanal several opportunities to amend his complaint to conform with the minimum requisites as set forth in the federal rules, the court also conscientiously provided Beanal with a road-map as to how to amend his complaint to survive a motion to dismiss assuming that Beanal could marshal facts sufficient to comply with the federal rules. Nevertheless, Beanal was unable to put before the court a complaint that met minimum pleading requirements under the federal rules. Accordingly, we AFFIRM the district court.

More tomorrow.