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U.S.-Peru FTA Investor Rights: Lessons Learned and New Approaches Needed for TPP (available in Spanish)

By Public Citizen's Global Trade Watch

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During the debate surrounding the U.S.-Peru Free Trade Agreement (FTA) in 2007, many observers warned of the dangers associated with its extreme foreign investor rights and private “investor-state” enforcement that mirrored provisions in the North American Free Trade Agreement (NAFTA). These extreme investor provisions in the U.S.-Peru FTA empowered foreign firms to obtain compensation over any government action – health, environmental, zoning, labor, or other policies – that they claim undermined their “expected future profits”.

Unfortunately, the first “investor-state” claim brought against Peru under the U.S.-Peru FTA illustrates that the dangers of this system for Peru are not hypothetical. Renco Group Inc., a company owned by one of the richest men in the United States, is simultaneously using the investor-state system to demand $800 million from Peru’s taxpayers and to derail a U.S. court case seeking compensation for children in La Oroya injured by toxic contamination. The dispute relates to a metal smelter in La Oroya, Peru owned by Renco subsidiary Doe Run. La Oroya has been designated as one of the top 10 most polluted sites in the world. Particularly the community’s children are suffering from the effects of pollution levels far above international standards.