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F U, FTA: NY Co. Is Causing Lead Poisoning in Kids and Suing the Peruvian Gov’t to Pay For It


A brilliant piece of investigative journalism from Andrew Martin of Bloomberg News exposes the dangers of global trade agreements and how they affect the sovereignty of nations.

As the U.S. pushes forward with the secretive Trans-Pacific Partnership (TPP) it is important to understand how such agreements allow multi-national corporations to operate above the law. Perspective is vital at this very second because the Obama administration has its heart set on keeping the American people in the dark with respect to the drawbacks of global trade.

The story focuses on a legal situation in Peru wherein New York-based Renco Group, Inc. has sued the government for $800 million after the country enforced pollution laws that eventually bankrupted their company, Doe Run Peru. Due to the nature of the trade agreement Peru entered into, the company doesn’t have to be on the defensive about its facilities causing lead poisoning in the region’s children. Instead, it can sue the government for enforcing laws that hurt their profits.

Lori Wallach, director of the Global Trade Watch division of Public Citizen, called the use of such agreements a “ quiet, slow-moving coup d’Ă©tat” and suggested that investors and corporations are “using this regime to have another front at trying to limit the governance authority of nation states.”

By enacting arbitration clauses, companies breaking national laws can appeal to a “court” with more authority than the nation in which the crime took place. Countries such as Australia and South Africa have ended their participation in future agreements of this nature due to these invincibilities. If we’re lucky, Australia’s current stance will prove a hindrance to the TPP. According to Andrew Martin:

Arbitration clauses were originally included in treaties to deal with the nationalization or a company’s assets. Now arbitrators hear claims for lost business or costs stemming from public-health laws and environmental regulation and financial policies, with billions of dollars at stake.

In some instances, investors are even demanding that national laws or court judgments be overturned.

Once a “shield of last resort,” arbitration has become a “sword of first resort,” according to a paper by Howard Mann, a senior law adviser at the International Institute for Sustainable Development, a Winnipeg-based nonprofit. “They were never meant to be the first recourse of a foreign investor to create or settle a dispute,” Mann said in an interview.

In Renco’s case, any financial penalties resulting from their negligence are thought to be the responsibility of the Peruvian government. These types of successful deflections from legal responsibilities already have some nations looking to back out of trade agreements.

Renco, a New York-based metals, mining and industrial conglomerate that owned the La Oroya plant through a subsidiary, contends the pollution-curbing demands Peru made were onerous and unfair, and kept escalating. The government says it was only trying to hold Renco to the terms of the agreement under which it bought Doe Run Peru in 1997.

In addition to $800 million, closely-held Renco wants arbitrators to compel Peru to pay for any damages that may arise from a pending lawsuit filed in federal court in St. Louis, Missouri, on behalf of more than 700 La Oroya children.

“This clause gives more power to foreign investors than the people of Peru,” said Conrado Olivera Alcocer, executive director of Joining Hands Network Peru, a group of charities that focuses on the environment and individual rights. A Peruvian has no right to file a claim in an international forum the way Doe Run does, Alcocer said.

While Peru says it still believes in investor-state arbitration, other nations aren’t so sure. Since 2007, Bolivia, Venezuela and Ecuador have withdrawn from the World Bank’s arbitration forum, which they said favored corporations over sovereign nations

Americans should demand an immediate halt to the trend of corporate giveaway through trade before any further trade agreements are entered into.


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