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Corporations are already suing local governments under trade deals like NAFTA. It's not a hypothetical outcome of these trade deals, it's happening now. Local governments that stand up to trans-national corporations for things like pollution or food labeling are order to pay muli-millions in "Trade Court" adjudicated lawsuits.

In October 1996, Metalclad Corporation, a U.S. waste-disposal company, accused the Mexican government of violating NAFTA's Chapter 11 when the state of San Luis Potos refused it permission to reopen a waste disposal facility.

The state governor ordered the site closed down after a geological audit showed the facility would contaminate the local water supply. The governor then declared the site part of a 600,000-acre ecological zone. Metalclad claimed that this constituted an act of expropriation and sought US$90 million in compensation.

Other Chapter 11 Cases

In 1997 the U.S. chemicals giant, Ethyl Corp, used NAFTA's Chapter 11 to sue the Canadian government for a ban imposed on MMT, a gasoline additive produced by Ethyl which is toxic and hazardous to public health. Ethyl claimed that the ban "expropriated" its assets in Canada and that "legislative debate itself constituted an expropriation of its assets because public criticism of MMT damaged the company's reputation."

Ethyl sued the Canadian government for US$250 million. A year later, in June 1998, the Canadian government withdrew environmental legislation banning MMT, and paid Ethyl Corp US$13 million to settle the case.

Three more suits are outstanding against the Canadian government, three against the Mexican government and two against the U.S. government.

The case against the United States by a Canadian corporation, Mexthanex, also gained attention with a September 5 article in The National Post announcing that Methanex will seek US$970 million in compensation for environmental laws in California which are "tantamount to expropriation."

All of these cases are based on the "rights" of investors guaranteed in NAFTA's Chapter 11, where a broad definition of "expropriation" is combined with the right of investors to directly sue governments for compensation (under "investor-to-state" dispute resolution).

And just last week the Mexican government sued the US government in the WTO (really, the US government subject to the authority if WTO?!?!?) to overturn Federal country of origin labeling for fresh foods.

Unfair to Mexican tomatoes and beef. It seems the US consumer prefers American vegetables and beef when they can find it.

How long before it's against the law to label baby formula with country of origin? We ALL trust China and Viet Nam to ensure the highest cleanliness and safety for baby formula, right?