More Information on “Trade” Pact Threats to the Environment

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The rules of the World Trade Organization (WTO), NAFTA and many other free trade agreements expose common-sense environmental policies to attack as illegal trade barriers. To date, the United States has lost trade-pact attacks on dolphin protections, the Clean Air Act and the Endangered Species Act and had to spend millions defending against attacks on mining, land use, and energy policies.

The investment chapters in agreements, such as NAFTA’s Chapter 11, have been used to attack scores of environmental and conservation policies. These terms grant multinational corporations and investors new rights to demand compensation from tax payers if environmental policies conflict with expansive rights the pacts’ provide. This investor state dispute settlement system, empowers corporations to sue the governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits. These foreign corporations need only convince the lawyers that an environmental law or conservation regulation violates their FTA rights. Their decisions are not subject to appeal and the amount awarded has no limit.  More than $392 million in compensation has already been paid out to corporations in a series of investor-state cases under NAFTA. This includes attacks on oil, gas, water and timber policies, toxics bans, health and safety measures, and more. In fact, of the 13 claims (for more than $36 billion) currently pending under NAFTA, nearly all relate to environmental, energy, financial, public health, land use and transportation policies – not traditional trade issues. Here are just some examples of the overreach of the ISDS system under NAFTA. To see a table of all NAFTA investor-state cases filed and their status, visit Public Citizen’s investor-state chart at:

The World Trade Organization (WTO) also has a long history of undermining laws and regulations aimed at environmental sustainability. Just in the United States, WTO rulings have directly led to the weakening of Clean Air Act regulations, dolphin protection laws, the Endangered Species Act, and more. Visit our WTO and Environment, Health and Safety page for more information. Perhaps most importantly, many progressive policy proposals aimed at mitigating the climate change crisis may conflict with WTO rules – a clear illustration of overreaching “trade” rules in direct conflict with much-needed public interest policy.