Environment and Trade: A HandbookUNEP/IISD   
7    Environmental aspects of regional trade agreements
   7.1  The North American Free Trade Agreement
   7.1.1  Investment: Chapter 11


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In NAFTA's Article 11 the parties promise that they will not try to attract investment by relaxing or ignoring domestic health, safety or environmental regulations. This is a laudable promise, but there is no enforcement mechanism to ensure that it is kept.

Other parts of Chapter 11 strive to ensure that foreign NAFTA investors will be safe from harassment by host governments. They do not allow expropriation without due process, for example, and in general oblige host governments to follow the same standards for foreign investors as they do for domestic ones. Recent research has shown, however, that these provisions have been defined in unintended ways, and have been used to attack environmental laws in all three countries. Investors have filed a number of suits against the three governments—few of which have yet been settled—alleging that their investment interests are damaged by environmental regulations. In one case a U.S. firm argued that a Canadian ban on exports of PCBs (a cancer-causing hazardous waste) violated the principle of national treatment, since U.S. waste processors were deprived of a source of business while Canadian waste processors were not.





 © 2000 United Nations Environment Programme,
International Institute for Sustainable Development