Why do people say trade agreements are a threat to democracy?
A. A prime example of the threat to democracy is the “investor-state” mechanism incorporated into NAFTA and proposed for the FTAA. The investor-state mechanism permits foreign investors —— but not citizens —— to sue national governments for virtually any action that decreases their expected profits on the grounds that the measure is “tantamount to expropriation” of their assets. TNCs have used this clause to challenge a variety of measures designed to protect human health and the environment. In one case US-based Ethyl Corporation sued Canada for lost profits because of a ban on the toxic gasoline additive, MMT. Canada rescinded the ban and agreed to pay Ethyl $13 million in compensation.
