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Colombia FTA’s Investor-State System Expands on CAFTA’s Definition of Government Activities Subject to “Regulatory Takings” Claims

By Public Citizen's Global Trade Watch

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  • The Colombia FTA’s investment chapter text is nearly identical to CAFTA’s, except that the definition of investments subject to investor-state enforcement extends even beyond CAFTA.

    Electronic comparison of the CAFTA and Colombia-U.S. “free trade” agreement (FTA) investment chapters shows that regarding sensitive issues, such as expropriation and compensation, minimum standard of treatment, and the definition of investment, no changes have been made to address concerns raised by many in Congress regarding the extensive nature of CAFTA’s foreign investor rights. One aspect of the text that has remained unchanged is the investor-state enforcement mechanism, which allows foreign investors to demand compensation in UN and World Bank tribunals for U.S. laws that foreign investors believe are an “indirect” expropriation of their investment. Consider the Dear Colleague from New Democrat Coalition member Jane Harman and other California representatives:

“We wanted to draw your attention to the attached Los Angeles Times article, describing the threat that the investor rights rules in the Central America-Dominican Republic Free Trade Agreement (CAFTA) pose to important state and local laws and regulations that protect the environment and public health. Like Chapter 11 of NAFTA, the investor rights provisions of CAFTA give foreign corporations the power to demand payment from the U.S. when public interest protections affect a company’s commercial interests. Our state has witnessed the impact of these rules: foreign companies have brought NAFTA suits totaling more than $1 billion challenging a California law phasing out the toxic gasoline additive MTBE and one regulating mining operations to protect the environment and Native American sacred sites. The State of California has now joined state and local government groups in saying that U.S. trade negotiators failed to heed the lessons of NAFTA in their negotiation of the investor rights rules in CAFTA. We hope you will join us in opposing CAFTA.”