By Robert A. Vella
Here’s an excerpt from the fourth installment of BuzzFeed‘s investigative series on free trade, titled A HOMEGROWN DISASTER:
The crisis was setting off alarms at the highest levels of Bill Clinton’s White House. If the administration got this wrong, it could lose hundreds of millions of taxpayer dollars and spark a backlash against one of the president’s hard-won achievements, the North American Free Trade Agreement.
The Justice Department even warned that failure “could severely undermine our system of justice.”
All of this over a small-time spat in Mississippi between funeral home companies.
It was not the sort of thing that ordinarily catches the attention of top officials in the federal government, let alone causes them to panic. But one of the companies was based in Canada, and it had taken a groundbreaking step: It had filed the very first case against the US under a little-known provision of NAFTA that empowers foreign businesses to sue entire nations before a panel of private arbitrators, usually elite corporate attorneys. Designed to protect international companies when rogue governments seized their assets or flagrantly discriminated against them, this worldwide private justice system has morphed into a tool companies can use to force nations to fork over hundreds of millions or even billions of dollars for enforcing ordinary laws or regulations.
Since the Mississippi funeral home case ended in 2004, the stakes have only grown. The US is staring at a new ISDS suit demanding more than $15 billion. If the US loses major cases — which ISDS lawyers told BuzzFeed News is only a matter of time — then it could find itself grappling with the same grim choice other nations hit with massive ISDS judgments have faced: pay out tens of billions of dollars to private companies or roll back democratically enacted laws.
“I think the US fooled itself into thinking that it wouldn’t be sued because its laws were so investor-friendly,” said José Alvarez, a former State Department lawyer. “The US didn’t anticipate just how creative investment lawyers can be.”