Trade Policy and Foreign Investment

Under NAFTA, CAFTA and other agreements, corporations can use closed trade tribunals to privately enforce an extreme set of investor rights by directly suing the United States over the actions of state or local governments which restrict the profitability of their investments. NAFTA’s investment chapter (Chapter 11) contains a variety of new rights and protections for investors and investments in NAFTA countries. If a company believes that a NAFTA government has violated these new investor rights and protections, it can initiate a binding dispute resolution process for monetary damages before a trade tribunal, offering none of the basic due process or openness guarantees afforded in national courts, and shuts states out of the tribunal system altogether.

These so-called “investor-to-state” cases are litigated in the special international arbitration bodies of the World Bank and the United Nations, which are closed to public participation, observation and input. A three-person panel composed of professional arbitrators listens to arguments in the case, with powers to award an unlimited amount of taxpayer dollars to corporations whose NAFTA investor privileges and rights they judge to have been impacted.

Find out more about NAFTA’s Chapter 11.