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Big Box Backlash: The Stealth Campaign at the World Trade Organization to Preempt Local Control Over Land Use

December 1, 2005

As communities across the United States and elsewhere are increasingly successful in their effort to limit "big box" store expansion and destructive retail practices through transparent and accountable measures at the local level, Wal-Mart and other retailers have pursued rules at the World Trade Organization (WTO) which threaten to preempt, or at the very least chill, these local laws. These rules are part of the General Agreement on Trade in Services (GATS). In 1994, the United States committed retail and wholesale distribution, as well as the hotel and restaurant sectors, to the terms of the GATS, one of 17 Uruguay Round agreements enforced by the Geneva-based World Trade Organization (WTO). The GATS expansive "market access" rules are geared toward facilitating the entry of foreign service providers into the U.S. market by incorporation or acquisition of U.S. firms. These GATS rules forbid limits on the number of services suppliers, as well as measures that would reduce the value of a service transaction or limit the number of employees. Policies containing economic needs tests, like that in the city of Los Angeles for very large retail operations, are explicitly forbidden. Unless the United States takes action to fix this problem in the current round of negotiations, local governments could see challenges to state and local land use laws brought before WTO tribunals, which are empowered to authorize trade sanctions against countries that refuse to conform their domestic policies to WTO dictates. Across the country, state and local officials are working to put laws in place to protect their communities, their environment, their wage base and tax dollars by putting land use limits on "big box" retailers, as well as retail chains and other development projects they deem destructive to the community or the environment or out of step with local needs and planning.

NAFTA Chapter 11 Investor-State Cases: Lessons for the Central America Free Trade Agreement

February 1, 2005

This report describes how Canadian cattle producers are using NAFTA to demand $300 million in compensation from U.S. taxpayer funds, claiming that the Canadian cattle import ban instituted after mad cow disease was found in Canada violates their NAFTA rights. In addition, a Canadian tobacco company is using the private NAFTA tribunals to attack the U.S.tobacco settlements. These claims are among the 42 cases filed thus far by corporate interests and investors under NAFTA's "Chapter 11" investor provisions, which grant foreign interests more expansive legal rights and privileges than those enjoyed by U.S. citizens or corporations. With only 11 of the 42 cases finalized, some $35 million in taxpayer funds have been granted to five corporations that have succeeded with their claims. An additional $28 billion has been claimed from investors in all three NAFTA nations. The U.S. government's legal costs for the defense of just one recent case topped $3 million. Seven cases against the United States are currently in active arbitration. The report documents how "fixes" to the NAFTA investor protection model required by Congress in the 2002 "Fast Track" legislation were not included in the proposed CAFTA. CAFTA's investment provisions include several cosmetic, ineffective tweaks to the NAFTA investor protection language, but otherwise expand the system of new privileges and private enforcement to investors in six additional nations. These rights include the ability to demand compensation when public health and environmental policies -- even when applied equally to domestic and foreign firms -- might undermine a foreign firm's profitability. On this ground and others, CAFTA fails to meet Congress' most significant Fast Track requirement regarding investment rules in future pacts by granting foreign firms greater rights when operating within the United States than U.S. firms or residents enjoy under constitutional property rights interpreted by the U.S. Supreme Court. CAFTA was signed in 2004 but has not yet been brought up for congressional consideration; support for the deal is limited, in part because of its investment provisions. The United States has not yet lost a case, thanks to an array of lucky technical breaks -- such as an investor relocating into the United States and thus losing foreign investor standing under NAFTA. However, with the overall win-loss ratio of NAFTA investor-state cases running around 50-50, it is just a matter of time before a NAFTA claimant is successful against the United States.

The WTO Comes to Dinner: U.S. Implementation of Trade Rules Bypasses Food Safety Requirements

July 1, 2003

A Special Report By Public Citizen's Global Trade Watch and Critical Mass Energy and Environment Program. A review of U.S. government "system" audits of five nations (Brazil, Mexico, Argentina, Australia and Canada) reveals that the U.S. Department of Agriculture (USDA)'s Food Safety and Inspection Service (FSIS) deemed "equivalent" systems with sanitary measures that differ from FSIS policy, and in some cases, violate the express language of U.S. laws and regulations. Because FSIS has refused to respond to Public Citizen Freedom of Information Act requests for correspondence and other documentation regarding these equivalency decisions, it is impossible to determine what is the current status of these issues and whether they have been resolved by regulators. - The U.S. law requiring meat to be inspected by independent government officials was violated by Brazil and Mexico and they retained their eligibility to export to the United States. - The USDA's zero tolerance policy for contamination by feces was repeatedly violated by Australia, Canada and Mexico. - U.S. regulations requiring monthly supervisory reviews of plants eligible to export be conducted on behalf of USDA by foreign government officials were violated by Argentina, Brazil, Canada and Mexico, several of whom are seeking to avoid this core requirement of U.S. regulation. Monthly reviews are vitally important to remind the meat industry that the meat inspector who works the line in the plant is backed by the weight of the government and to double-check the work of meat inspectors on a regular basis. - Even though U.S. regulations requiring that a government official -- not a company employee -- sample meat for salmonella microbial contamination, the USDA approved company employees performing this task as part of an equivalency determination with Brazil and Canada. - Even though U.S. regulations require certain microbial testing to be performed at government labs, the U.S. approved testing by private labs as part of the equivalency determination with Brazil, Canada and Mexico. - Unapproved and/or improper testing procedures and sanitation violations have been re-identified by FSIS year after year for Australia, Brazil, Canada and Mexico, but the countries have retained their eligibility to export to the United States. - After its regulatory systems was designated "equivalent," Mexico began using alternative procedures for salmonella and E. coli that had never been evaluated by FSIS, yet the country retained its eligibility to import to the United States. - Australia and Canada were allowed to export to the United States while using their own methods and procedures for such matters as E. coli testing, postmortem inspection, monthly supervisory reviews and pre-shipment reviews while awaiting an equivalency determination from FSIS. - FSIS auditors and Canadian food safety officials continue to disagree about whether particular measures have already been found "equivalent" by FSIS, yet Canadian imports remained uninterrupted. - The regulatory systems of Brazil and Mexico have been rated equivalent even though the countries plead insufficient personnel and monetary resources to explain their inability to carry out all required functions.