Free Trade Area of the Americas - FTAA

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May 7, 2002

Original: English



Name (s) Amy N. Fairweather
Organization (s) Trauma Foundation [Fundación Trauma]
Country United States

Comments of the Trauma Foundation

The Trauma Foundation is a non-governmental organization dedicated to the prevention of injury and death from injury. The governing philosophies of the trade agreement are fundamentally flawed. The draft language favors the interests of business over all other social factors and poses a serious threat to public health. The following commentary points out some of the most troubling elements of the proposed draft of the Free Trade Area of the Americas (FTAA).

Investor to State Disputes

Investor to state disputes must be removed from the FTAA. The WTO dispute system, while flawed, does not allow for investor suits and neither should the FTAA. Investors have one overarching goal, to increase profits. Governments, on the other hand, have a myriad of economic and social interests which may temper the profit motives of the corporate litigant. As demonstrated under NAFTA, investor suits warp the democratic process by allowing corporations to bypass the legal systems of their host and home countries and challenge national and local law. This provision threatens local democracy and public safety. It will pit national and local governments against one another by demanding that the national government compensate corporations for losses related to local regulations. Investors’ rights provisions will chill the development of public health measures. When threatened with the prospect of costly international disputes, local government may simply choose not to regulate in the public interest.

Expropriation and Compensation

The FTAA draft, as well as the NAFTA language, calls for compensation where a host nation “directly or indirectly” nationalizes or expropriates property. This ‘regulatory takings’ language is far too broad and gives foreign investors the ability to demand compensation for obeying the laws of the host nation. The expropriation language should be changed to cover only the direct expropriation of physical property belonging to the foreign investor. Where compensation for losses is due to war, civil strife, and emergencies, compensation should be contingent on reinvestment in the host country and the host countries must retain the right to put off payment and prioritize spending in the public interest.

Burdens of Proof

Government public health authorities must be given flexibility over regulatory decision making. The current FTAA draft, agreement as well as NAFTA and WTO rules, require governments to show that their regulations are “necessary”. This language has been interpreted to require a showing that there are no alternative ways to meet stated public health or safety goals except through the disputed government regulation. This standard of proof is far too demanding and puts the public health at risk. Governments must not be burdened with the responsibility of showing that there is no less restrictive way to protect public health.

International trade dispute panels must give deference to the regulatory bodies which develop, enact and enforce public health standards. Litigants who challenge regulatory standards should bear the burden of proving the disputed regulation is unnecessary and fails to meet specified public health goals. Government regulation should stand if it is reasonable, if it is intended to address a legitimate state interest, and it is not arbitrary or capricious

Dispute Transparency

Dispute resolution proceedings must be more transparent and allow the stakeholders of the affected region full participation in the settlement process. Stakeholders include the local authorities responsible for the enactment and enforcement of the health, safety and environmental regulation and community leaders who represent those affected by the challenged regulation.

Trade in Services - Commitment and Scheduling

Negotiations for the trade in services and scheduling of each member should be opened up to public scrutiny. Civil society needs to be aware of the demands being made on service sectors in order to adequately protect public health. Member nations and local governments must retain control over public health delivery, water services, criminal justice, and social services. Nations must retain control to regulate the manufacture, delivery, advertising and use of dangerous products and to alter health policy standards as science and social factors necessitate.

Participation of Civil Society

Improvements in labeling and navigation of the FTAA web site would be very helpful. Corporate and industry comments should be presented separately from the comments of public heath, labor and community groups. In addition, the files should be clearly labeled with country of origin and some indication of the type of organization represented, and the web site should include better instructions on finding and downloading documents.

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