The Political Economy of NAFTA Chapter Eleven: Equality Before the Law and the Boundaries of North American Integration

5 Pages Posted: 9 Dec 2013 Last revised: 28 Mar 2014

See all articles by Frederick M. Abbott

Frederick M. Abbott

Florida State University - College of Law

Date Written: February 26, 2000

Abstract

Issues regarding the NAFTA Chapter 11 investment dispute mechanism are part of a larger context of issues that arose in connection with the transformation of the GATT dispute settlement mechanism into the WTO Dispute Settlement Understanding, and were reflected in the breakdown of the OECD negotiations on a Multilateral Agreement on Investment (MAI) and the Seattle Ministerial Conference (SMC). These issues relate to multilateral and regional governance: who is authorized to make decisions, and how are those decisions made and carried out on behalf of international society? In short, there are increasing public demands for transparency, democratic representation and account-ability that, on the one side, are legitimate and useful but, on the other side, are creating tremendous stresses on multilateral governance mechanisms. At the moment, we are reaching something of a crisis point reflecting the inability of governments to make and execute policy -- a situation that demands close attention and creative solutions.

The question under NAFTA is whether we have the proper institutions to serve the ECJ-type function. It is very questionable whether we do. Are we comfortable with three private arbitrators ruling on critical questions of public health, even if their decisions only involve compensation, and not changes to legislation? I suspect not, because there are no adequate provisions for transparency, continuity or appellate review (except under New York Convention public policy exceptions).

The NAFTA investment chapter attempted to provide financial risk guarantees that would be attractive to the investment community, but did not build a framework strong enough to accommodate social policies. As such, there is a need to limit how far the scope of investment-related review should extend until the juridical framework of the NAFTA is made more complete.

Keywords: NAFTA, Chapter 11, Investment Disputes, Social Welfare

JEL Classification: F15, K33

Suggested Citation

Abbott, Frederick M., The Political Economy of NAFTA Chapter Eleven: Equality Before the Law and the Boundaries of North American Integration (February 26, 2000). Hastings International and Comparative Law Review, Vol. 23, pgs. 303-309 (2000). Available at SSRN: https://ssrn.com/abstract=2364995

Frederick M. Abbott (Contact Author)

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States
850-644-1572 (Phone)
850-645-4862 or 917-591-3112 (Fax)

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