Expert claims ISDS provisions in NAFTA 2.0 are neo-colonial and could undermine action on climate change

January 30, 2020: An article by Manuel Perez-Rocha, an associate fellow at the Institute for Policy Studies, argues that the ISDS provisions in the new NAFTA agreement are neo-colonial and give extensive powers to big polluters, which could restrict government’s ability to act on climate change.

The United States-Mexico-Canada Agreement, known as the NAFTA 2.0, was approved by the US Senate on January 16. The agreement is an improvement on the original NAFTA, with stronger protection for labour rights and no extension of medicine monopolies. Investor-State Dispute Settlement (ISDS) provisions, which give corporations the right to sue governments for policy decisions that impact on their investment, have been removed between the US and Canada and Canada and Mexico and have been limited between the US and Mexico, but still include the energy sector, transport, communications and other infrastructure.

He also notes that Canada and Mexico are parties to the Trans-Pacific Partnership (CPTPP) which has ISDS provisions.

Perez-Rocha argues that the removal of ISDS provisions between US and Canada but not for Mexico  highlights the neo-colonial nature of these corporate courts. He points to the history of ISDS, which “was established primarily to allow corporations based in high-income countries to sue governments in the Global South.” He argues that Mexico provides an example of the disproportionate impact of ISDS cases for Global South countries. Since 1994, Mexico has had to pay $242.94 million to companies as a result of ISDS cases. In contrast, there are no Mexican companies that have had successful ISDS cases against the United States or a country in the EU.

Perez-Rocha highlights the environmental risks of ISDS, arguing that ISDS cases have been used by fossil fuel companies in Mexico and throughout Latin America to challenge environmental regulation and community resistance to mining projects. He also argues that the inclusion of ISDS for Mexico will also make it more difficult for the Mexican government to reverse legislation implemented in 2013 that facilitated the privatization of the energy sector.