Mexico ordered to pay US company
By Danielle Knight
Washington, DC, Aug. 31 (IPS)— An international
trade tribunal based here has ruled that Mexico violated the
North American Free Trade Agreement (NAFTA) and ordered the
government to pay 16.7 million dollars to a US company.
The tribunal found that Mexico violated NAFTA’s
Chapter 11 investor provisions by not allowing California-based
Metalclad Corporation from opening a hazardous waste treatment
and disposal site in San Luis Potosi, a state in central Mexico.
Local government opposition to the project, says the tribunal,
amounted to expropriation of the company’s profits.
The tribunal’s decision is increasing concern
that trade accords and institutions like the World Trade Organization
(WTO) can be used to trump local and national laws.
“It’s a nightmare,’’ said Dan Seligman, director
of the Sierra Club’s sustainable trade campaign.
Seligman, who helped organize the protests last
year in Seattle against the WTO, said the tribunal’s decision
is a “wake-up call’’ to anyone who cares about environmental
While the provisions in Chapter 11 were designed
to ensure a corporation’s investment would not be expropriated,
they have become a strategic offensive weapon against environmental,
public safety and health laws, he said.
“What we’ve seen in this case is that a corporation
can sue governments successfully under NAFTA rules,’’ said Seligman.
In the early 1990s Metalclad received approval
from the Mexican federal government to build a disposal plant
capable of handling up to 360,000 tons of hazardous waste a
The facility was ready to begin operation in 1995
but public protests against the plant prompted local authorities
to begin investigating the potential environmental impacts of
the treatment site.
Local residents said they were never consulted
about the facility by either the federal or state governments
or Metalclad, and vehemently opposed locating a toxic waste
dump in their backyard.
When an environmental impact assessment revealed
that the site lies atop an ecologically sensitive underground
alluvial stream, the Governor refused to allow Metalclad to
reopen the facility. Eventually, the Governor declared the site
part of a 600,000 acre ecological zone, despite federal support
for the project.
Metalclad claimed that this action effectively
expropriated its future expected profits and sought 90 million
dollars in damages. Local environmental activists note that
this figure is larger than the combined annual income of every
family in the county where Metalclad’s facility is located.
The company filed its NAFTA claim in January 1997.
Hearings were held last year and since then nothing was heard
until the announcement Wednesday.
The three-judge NAFTA tribunal, under the International
Center for Investment Dispute Settlement, an arm of the World
Bank, gave the Mexican government 45 days to begin making the
16.7 million dollar payment to Metalclad. If it does not pay
by that time, six percent interest, compounded monthly, will
be added to the award.
Grant S. Kesler, president and chief executive
of Metalclad, said the 16.7 million dollars was a token amount
of money and did not reflect the value of the project.
“The biggest losers of all are the people of
Mexico who continue to have to live in a country that produces
10 million tons of hazardous waste a year and had only one facility
in the whole country to handle it,’’ he told reporters.
The Metalclad case is just one of several cross-border
disputes between companies and the three NAFTA countries. So
far, at least seven cases challenging domestic environmental
policies have been filed by corporations under the Chapter 11
clause in the three NAFTA countries.
In one instance, the Canadian-based company Methanex
Corporation filed against the United States, claiming the state
of California’s decision to phase out the use of its gasoline
additive methyl tertiary butyl ether (MTBE) cost the company
970 million dollars.
California’s governor, Gray Davis, ordered the
use of MTBE halted by the end of 2002 after studies revealed
unusually high --and potentially harmful -- levels of MTBE in
California’s drinking water supply. Methanex’s claim is still
In another case, the US-based Ethyl Corporation
attacked a Canadian ban on the inter-provincial sale and import
of a gasoline additive it produces known as MMT.
Ethyl originally claimed 250 million dollars
in damages for expropriation, or seizure of its potential profits.
In July 1998, Canada withdrew the ban and paid the company 13
million in damages.
“Anytime any investment is infringed upon by regulation,
anytime any worker safety protection puts any burden on a company,
these companies may use this Chapter 11 system to directly sue
sovereign governments -- it’s crazy,’’ said Mary Bottari, with
Global Trade Watch, an advocacy group affiliated with Public
Unfortunately, added Seligman, the provisions
under Chapter 11 are likely to be expanded in new trade accords,
including the Free Trade Area of the Americas Agreement, or
Report shows national forests
more valuable alive than dead
Washington, DC, Aug. 31— A new report released
today disproves the myth that rural communities need to chop
down their local National Forests in order to enjoy a healthy
economy. In fact, the report, conducted by the independent economic
analysis firm ECONorthwest and commissioned by the Sierra Club,
found that recreation in our National Forests generates 25 times
more money for the American economy than does logging on those
“This report proves what many rural business owners
have known for years -- our National Forests are too valuable
to chop down,” said Sierra Club Executive Director Carl Pope.
“As an engine for a strong economy, recreation in healthy National
Forests dwarfs commercial logging. Logging has destroyed some
of our best areas for recreation and clean drinking water. Repairing
the damage done by decades of clearcutting will create jobs
and restore our forests to be healthy, natural and provide even
more economic benefits for future generations.”
ECONorthwest reached four major conclusions --
and exploded some long-standing myths -- in their study:
*National and regional economies are not dependent
on logging National Forests;
*Recreation, clean water and wildlife habitat
in National Forest are worth much more than logging in economic
benefits and jobs;
*Logging has badly hurt the National Forests’
ability to provide money-makers like recreation and clean water;
*Investing in restoration can provide immediate
and long-term ecological and economic benefits.
According to the report, “Seeing the Forests for
Their Green -- The Economic Benefits of Forest Protection, Recreation
and Restoration,” recreation in National Forests generates $108
billion for the national economy annually, employing 2.6 million
Americans. Additionally, fish and wildlife contribute $14 billion
per year, and 330,000 jobs. The timber industry in National
Forests, in contrast, is worth just $4 billion and 76,000 jobs.
Moreover, commercial logging actually takes away other economic
benefits by reducing healthy habitat and decreasing recreation
The report details the case of the Pacific Northwest,
where logging on federal lands fell 91 percent from 1988 to
1998, but total employment in the region rose 31 percent.
“The old myth that rural communities need logging
to survive is just that -- an old myth,” Pope said. “The timber
industry predicted doom and gloom when National Forest logging
plummeted in Oregon and Washington, but in fact employment shot
up and the economy became stronger and more diverse.”
National Forests are some of Americans’ favorite
places to hike, hunt, fish and camp. They provide habitat to
more than 3,000 species of fish and wildlife, and clean drinking
water to over 60 million people in 33 states. Unfortunately,
logging an area for a single season can wipe out its recreation,
habitat or clean-water value for years into the future. Logging
ruins recreation areas, destroys homes for wildlife, and chokes
streams with silt, clogging municipal drinking supplies.
“As developments gobble up America’s remaining
wild lands, the places where we can hunt, hike and fish become
even more valuable,” Pope said. “Anyone who sells outdoor gear,
guides hunting trips or owns a tackle shop can tell you that
our National Forests are worth more alive than dead. It’s time
we ended commercial logging in our National Forests and got
to work restoring the damage that’s been done, for our families
and our future.”
For more information: www.sierraclub.org