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Stephen KassStephen Kass (NYLJ/Rick Kopstein)

In my last column (“The Environmental Struggle Within the Trans-Pacific Partnership,” Jan. 8, 2015), I discussed the failure of the proposed Trans-Pacific Partnership (TPP) trade agreement to include sufficiently strong requirements for the parties (the U.S. and 11 other Pacific rim countries from Asia and the Americas) to comply with multilateral environmental agreements, resolve environmental disputes, protect fisheries and endangered species, address climate change and require responsible corporate conduct affecting the environment. On March 25, 2015, WikiLeaks also released the confidential draft “Investor Protection” chapter of the TPP, which raises a very different series of environmental issues.

Rather than encouraging effective environmental regulation by TPP Parties, the Investor Protection chapter as presently drafted could chill such regulation because of the threat of expropriation and other damage claims by affected “investors” from other TPP Parties. In addition, there remain significant policy issues concerning the mandatory arbitration procedures for resolving environmental disputes between those investors and TPP Parties.

This would repeat, with broader consequences, the same problem that arose under the investor protection provisions of Chapter 11 of the North American Free Trade Agreement (NAFTA). In NAFTA, similar, though less developed, investor protection provisions made it more difficult for Mexico, Canada and even the United States to enforce new environmental regulations against foreign investors who claimed that such regulations amounted to compensable takings or “inequitable treatment” under NAFTA.

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