Nafta and the Debate Around Mmt Essay

2066 Words Aug 28th, 2013 9 Pages
The Debate Around NAFTA’s Chapter 11:
The Case of MMT and Canada

The North American Free Trade Agreement (NAFTA) is an agreement liberalizing trade and investment between Canada, the United States, and Mexico. From the moment it took effect on January 1, 1994, the agreement has sparked controversy and fiery debate from groups across the political spectrum regarding its benefits and costs.[i] Much of this debate revolves around Chapter 11, the section of the agreement that deals with investor-state relations. Chapter 11 gives foreign investors the right to sue the host government for damages if they believe they have been treated unfairly. In 1996, the Ethyl Corporation filed a $250 million claim against Canada under
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• The Legal Context

In 1997, the Canadian Parliament adopted a law banning both the import of MMT into Canada and the trade of MMT between provinces.[ix] While the law did not directly ban the sale of MMT in Canada, it would have had this effect since Ethyl was the only source of MMT, and it produced MMT only in the United States. The government had two main concerns about the product: first, the public health concerns, which were still not fully known; and second, that MMT caused car exhaust systems to malfunction.[x] On September 10, 1996, while the Canadian Parliament was still discussing the law, Ethyl initiated a complaint against the government of Canada. Ethyl sought $250 million in damages and lost revenues due to the ban. The legal framework under which it made this claim was NAFTA’s Chapter 11.

Chapter 11: A Primer

While NAFTA is called a “free trade agreement,” it is also an investment agreement. While investment agreements have been around since the 1950s, the push for investment liberalization in the 1980s greatly expanded their scope. For the first time, investment obligations began to appear in trade agreements, including the Canada-United States Free Trade

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