North American Free Trade Agreement: U.S. Experience With	 
Environment, Labor, and Investment Dispute Settlement Cases	 
(20-JUL-01, GAO-01-933).					 
								 
The North American Free Trade Agreement (NAFTA)which went into	 
effect in 1994, was intended to spur trade and investment	 
throughout North America. Separately, the three NAFTA		 
countries--the United States, Canada, and Mexico--negotiated and 
entered into two side agreements, the North American Agreement on
Environmental Cooperation and the North American Agreement on	 
Labor Cooperation. The side agreements allow citizens and	 
governments to raise questions about failures to effectively	 
enforce environmental or labor laws in any of the three 	 
countries. This can be accomplished through both a submission	 
process and a government-to-government dispute settlement	 
process. NAFTA also provides protections for investors, such as  
nondiscriminatory treatment and the right to freely transfer	 
funds related to an investment, as well as a mechanism to settle 
investor-state disputes through the agreement's chapter 11. This 
report provides information on the institutional structure,	 
principles, process, cases, and outcomes associated with (1) the 
environmental side agreement's submission process, (2) the labor 
side agreement's submission process, and (3) NAFTA's		 
investor-state dispute settlement mechanism. This report includes
information on fines and trade sanctions under the side 	 
agreements, as well as summary date on cases filed under both the
side agreements and chapter 11. 				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-933 					        
    ACCNO:   A01415						        
  TITLE:     North American Free Trade Agreement: U.S. Experience With
             Environment, Labor, and Investment Dispute Settlement Cases      
     DATE:   07/20/2001 
  SUBJECT:   International trade				 
	     Environmental law					 
	     International agreements				 
	     Dispute settlement 				 
	     Labor law						 
	     North American Free Trade Agreement		 
	     NAFTA						 
	     Mexico						 
	     North American Agreement on			 
	     Environmental Cooperation				 
								 
	     North American Agreement on Labor			 
	     Cooperation					 
								 

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GAO-01-933
     
A

Report to the Chairman, Subcommittee on Trade, Committee on Ways and Means,
House of Representatives

July 2001 NORTH AMERICAN FREE TRADE AGREEMENT

U. S. Experience With Environment, Labor, and Investment

Dispute Settlement Cases

GAO- 01- 933

Letter 3 Results in Brief 4 Agency Comments and Our Response 5

Briefing Section I: 7

Environmental Side Slide 2: Key Principles 9

Slides 3 and 4: Citizen Submission and Review Process 13 Agreement

Slide 5: Citizen Submissions Filed and Status of Cases Against the United
States 15 Slide 6: Key Citizen Submissions Filed Against the United States
17 Slide 7: Outcomes 19

Briefing Section II: 21

Labor Side Agreement Slide 9: Key Principles 23

Slide 10: Submission and Review Process 25 Slide 11: Citizen Submissions
Filed and Status of Cases Against the

United States 27 Slide 12: Submissions Filed Against the United States and
Labor

Principles Involved 29 Slide 13: Outcomes 31 Slide 14: Background 33 Slide
15: Key Principles and Structure 35 Slide 16: Investor- State Dispute
Settlement Process 37 Slide 17: Claims Filed and Status of Claims Against
the United States 41 Slides 18 and 19: Claims Filed Against the United
States 45 Slide 20: Outcomes 47

Appendixes Appendix I: Monetary Enforcement Assessments and Trade Sanctions
in the North American Free Trade Agreement?s Labor and Environment 48

Appendix II: Citizen Submissions Under the North American Agreement on
Environmental Cooperation 51

Appendix III: Submissions Under the North American Agreement on Labor
Cooperation 55

Appendix IV: Cases Filed Under NAFTA's Chapter 11 Investor- State Dispute
Settlement Mechanisms Through May 2001 60

Appendix V: Objectives, Scope, and Methodology 65 Appendix VI: GAO Contacts
and Staff Acknowledgments 67

Abbreviations

BITS bilateral investment treaties ICSID International Centre for Settlement
of Investment Disputes NAFTA North American Free Trade Agreement UNCITRAL
United Nations Commission on International Trade Law

Lett er

July 20, 2001 The Honorable Philip M. Crane Chairman, Subcommittee on Trade
Committee on Ways and Means House of Representatives

Dear Mr. Chairman: The North American Free Trade Agreement (NAFTA) went into
effect on January 1, 1994, and was intended to facilitate trade and
investment throughout North America. Separately, the three NAFTA countries-
the

United States, Canada, and Mexico- negotiated and entered into two side
agreements, the North American Agreement on Environmental Cooperation and
the North American Agreement on Labor Cooperation.

The side agreements provide mechanisms that allow citizens and governments
an opportunity to raise questions regarding failure to effectively enforce
environmental or labor laws of any of the three countries. These mechanisms
include both a submission process and a

government- to- government dispute settlement process. NAFTA also provides
protections for investors, such as nondiscriminatory treatment and the right
to freely transfer funds related to an investment, as well as a mechanism to
settle investor- state disputes through the agreement?s chapter 11. In
preparation for considering future free trade agreements, we recently

briefed your staff on the U. S. experience to date with cases brought under
the environmental and labor side agreements and with chapter 11
investorstate dispute settlement. In this report, we provide information on
the institutional structure, principles, process, cases, and outcomes
associated with (1) the environmental side agreement?s submission process,
(2) the

labor side agreement?s submission process, and (3) NAFTA?s investor- state
dispute settlement mechanism. In addition, this report includes information
on fines and trade sanctions under the side agreements, as well as summary
data on cases filed under both the side agreements and chapter

11 (see app. I to IV). To address these objectives, we interviewed officials
from eight U. S. agencies with program responsibility for environmental,
labor, or trade issues. In conducting the work, we examined the
institutional structure and principles of the side agreements and chapter 11
on investment, the processes that are used to investigate and settle
disputes, the cases that

have been initiated under the side agreements and investment provisions, and
the outcomes and disposition of these cases. We also talked to
representatives from nongovernmental entities with knowledge of the

environment and labor submission processes, as well as those familiar with
NAFTA?s investor- state dispute settlement mechanism. A more detailed
description of our scope and methodology is contained in appendix V.

Results in Brief The environmental side agreement created the Commission for
Environmental Cooperation to implement that accord?s principles and includes
a process whereby citizens or nongovernmental groups can raise questions
regarding the failure to effectively enforce environmental laws in all three
member countries. This process is coordinated at the Commission

by the Secretariat, which receives submissions from individuals or groups
raising such questions. To date, 31 submissions have been filed with the
Secretariat. Of these submissions, 8 were against the United States, 13 were
against Mexico, and 10 were against Canada. These submissions have raised a
wide range of concerns, from narrow questions of a government?s failure to
effectively enforce environmental laws in a particular instance, to broader
concerns about enforcement in general. The submission process can lead to
the publication of a ?factual record,? a report that outlines the

history of the issue, a Party?s obligations under the law in question, and
the facts relevant to assertions made in the submission. Of the submissions
made to date, only two have resulted in completed factual records, and
neither of those completed factual records has involved the United States.
The Commission recently finalized a review of the submission process. More
detailed information on the submissions and process can be found in

briefing section I and appendix II. The labor side agreement established the
North American Commission for Labor Cooperation to implement that accord?s
principles and includes a process whereby citizens, groups, or governments
can raise questions of labor law enforcement in all three member countries.
The Commission, through a network of National Administrative Offices in each
country, coordinates the submission process, which can, in some cases,
directly result in initiation of the government- to- government dispute
settlement mechanism. To date, 23 submissions have been filed, with 7
against the United States, 14 against Mexico, and 2 against Canada. Although
these

submissions have covered a broad range of issues, a majority of them have
raised concerns about freedom of association. Thus far, no submission has
reached the dispute settlement phase. A review of the entire labor side
agreement is scheduled for 2002. Additional information on the labor

submissions and process can be found in briefing section II and appendix
III.

NAFTA?s chapter 11 is based in large part on previous international
agreements, such as U. S. bilateral investment treaties and U. S. domestic
legal principles applicable to investment (foreign and domestic). Chapter 11
includes specific protections of investor rights in the three NAFTA
countries, as well as a mechanism for settling investor- state disputes.
This

dispute settlement process makes use of the international arbitration rules
of the International Centre for Settlement of Investment Disputes (ICSID),
ICSID Additional Facility, and the United Nations Commission on
International Trade Law. The parties to the dispute are allowed to choose
the arbitral tribunal. The process allows disputing parties to seek to
revise, set aside, or annul an award on limited grounds. To date, 13 claims
have been filed under this dispute settlement mechanism. Of those claims,
four were against the United States, five were against Mexico, and four were
against Canada. Only five cases have resulted in a final outcome- either
settlement or award. Of these cases, two decisions were brought before
Canadian courts for review of the arbitral panels? decisions; one is still
pending and the other was partially upheld. Further details on the cases and
process are described in briefing section III and appendix IV.

Agency Comments and We obtained comments on a draft of this report from the
Department of

Our Response Commerce, the Environmental Protection Agency, the Department
of the

Interior, the Department of Labor, the Department of State, the Department
of Justice, the Department of the Treasury, and the United States Trade
Representative. Their comments were predominately technical in nature, and
we generally incorporated them as appropriate throughout this report. As
arranged with your office, unless you publicly announce the contents
earlier, we plan no further distribution of this report until 30 days after
its issue date. At that time, we will send copies to interested
congressional committees and the Secretary of Commerce; the Administrator,
Environmental Protection Agency; the Secretary of the Interior; the

Attorney General; the Secretary of Labor; the Secretary of State; the
Secretary of Treasury; and the U. S. Trade Representative. Copies will also
be made available to other interested parties upon request.

If you or your staff have any questions about this report, please call me at
(202) 512- 4347. Additional contact and staff acknowledgments are listed in
appendix VI. Sincerely yours,

Loren Yager, Director International Affairs and Trade

Briefing Section I: Environmental Side Agreement

Briefing Section I Environmental Side Agreement: Institutional Structure

Commission for Environmental Cooperation The Council

Minister of Environment - Canada Environmental Protection

Agency (EPA) Administrator - United States Secretary of Environment and

Natural Resources - Mexico

Joint Public Advisory Committee

15 members (5 appointed by each country)

Secretariat

Executive Director 50 professional and support staff

Briefing Section I Environmental Side Agreement: Key Principles

*Key principles

Protect, conserve, and improve the environment Provide citizens and
nongovernmental organizations an opportunity to raise questions regarding a
Party?s enforcement of environmental laws

Provide governments an opportunity to raise questions regarding a Party?s
enforcement of environmental laws

Government- to- government process includes provisions for fines and trade
sanctions

Slide 2: Key Principles The environmental side agreement aims to protect,
conserve, and improve the environment through increased cooperation and
transparency among

the three governments and greater public participation. Since the
agreement?s first full year of operation in 1995, member governments have
worked cooperatively on a number of projects-- producing reports on
environmental topics of common concern such as conservation of biodiversity,
holding symposia on topics such as understanding the

linkages between trade and the environment, and implementing the Sound
Management of Chemicals Program.

In addition, the agreement provides citizens and nongovernmental
organizations an opportunity to raise questions about and shed light on a
Party government?s effective enforcement of its environmental laws through
the submission process. 1 Party governments may also raise questions
regarding another Party?s enforcement of its environmental laws through the
government- to- government dispute settlement mechanism; however, no
government- to- government disputes have been initiated to

date. The latter process includes a provision for the assessment of fines
and trade sanctions. 2 1 For more information on the cooperative work
programs of the Commission for Environmental Cooperation, as well as the
citizen submission process, visit the Commission?s Web site at http:// www.
cec. org .

2 While we do not provide specific information on the government- to-
government dispute settlement mechanism in this report, appendix I provides
a description of the monetary enforcement assessments and trade sanctions
available under the North American Agreement on Environmental Cooperation.

Briefing Section I Environment: Citizen Submission and Review Process

Submission filed with Secretariat Secretariat evaluates submission

based on specific criteria Meets criteria

Does not meet criteria Secretariat decides if response from

Submitter refiles submission Party is warranted

If yes, response requested If no, process terminated

Secretariat decides if factual record warranted

If yes, notification to Council

Briefing Section I Environment: Citizen Submission and Review Process

Decision by Council to prepare a factual record

If yes, Secretariat drafts factual record If no, process terminated

Comments from Parties Secretariat prepares final factual record Decision by
Council whether to make

factual record public If yes, publication of factual record

Slides 3 and 4: Citizen The process for making a submission to the
Commission for Environmental Submission and

Cooperation begins when a citizen or nongovernmental group files a
submission with the Secretariat. The process can then move through Review
Process

various decision points, which can culminate in the public release of a
factual record on the issues raised in the initial submission. According to
the Commission?s guidelines, a factual record outlines the history of an

issue and the facts relevant to the assertions made in the submission. In
the two factual records prepared to date, the Secretariat has also included
information on the obligations of the Party under the law in question and
the actions of the Party in fulfilling these obligations. Depending on the
point of the process, the decision to proceed rests with

either the Secretariat or the Council. The Secretariat is guided by criteria
laid out in formal guidelines for implementing the submission process.
Documentation of some of the Secretariat?s determinations, as well as a
Party?s response to a submission, is generally available to the public. 3
For example, the Council recently resolved to amend the guidelines to
reflect a requirement that the Secretariat make public its reason for
recommending a factual record 5 working days after the Secretariat has
notified the Council of such a recommendation. A vote of at least two-
thirds of the Council is required to proceed at two key points of the
process- whether

to instruct the Secretariat to prepare a factual record and whether to
publicly release the factual record. 3 Making files on the citizen
submissions and related documents public is subject to the confidentiality
provisions of the environmental side agreement and of the guidelines.

Briefing Section I Environment: Citizen Submissions Filed and Status of
Cases Against the United States

31 Total submissions

8 against the United States

13 against Mexico

10 against Canada

19 Submissions closed and 12 under review

8 Submissions against the United States

5 have been terminated or the process halted

1 was withdrawn

1 has been recommended for a factual record

1 is under review

Slide 5: Citizen There have been a total of 31 citizen submissions filed
with the Submissions Filed and Commission for Environmental Cooperation
alleging violations of environmental laws against all 3 member governments.
Of these 31 Status of Cases Against

submissions, 8 were against the United States, 13 were against Mexico, and
the United States

10 were against Canada. Nineteen submissions have been closed. Of these
closed submissions, 17 were closed for several reasons, including that the
submission did not meet specific requirements; and two are considered

closed because a factual record was prepared. Twelve are currently under
review and in various stages of the process. Submissions have covered a
broad range of concerns, from specific

questions of a government?s failure to effectively enforce a particular law
in a particular situation, to others alleging a more general failure to
effectively enforce environmental laws. For example, an early submission,
known as the Cozumel Pier case, alleged that in one instance, the Mexican
government had failed, among other things, to effectively enforce its
requirements for conducting an environmental impact assessment of the
Cozumel pier project. A more recent submission, known as the Migratory

Bird case, involves a complaint alleging that the U. S. government fails to
effectively enforce a law that prohibits the taking of migratory birds
without a permit with respect to loggers and the logging industry. Eight
submissions were filed with the Commission alleging that the United States
failed to effectively enforce its environmental laws. Of these eight
submissions, one is currently being considered by the Council for
preparation of a factual record, one is being reviewed in light of the U. S.
government?s response and additional information provided by the United
States at the request of the Secretariat, and six are no longer being
considered. A summary of all citizen submissions made under the
environmental side agreement can be found in appendix II.

Briefing Section I Environment: Key Citizen Submissions Filed Against the
United States

MIGRATORY BIRDS GREAT LAKES

Submitters: Submitters:

Center for International Environmental Department of the Planet Earth Inc.,
et al.

Law, et al. Claim:

Claim: Regulations and programs adopted to

Migratory Bird Treaty Act (MBTA) not control airborne emissions of toxic

effectively enforced as it relates to substances from solid and medical
waste

loggers, logging companies, and incinerators violate and fail to effectively

logging contractors; logging operations enforce U. S. domestic laws and U.
S. Canada

exempted from the MBTA as a matter Treaties

of U. S. internal policy U. S. Response:

U. S. Response:

Submission does not meet applicable

No policy to exempt logging requirements

Agency discretion allows for current

Allegations inaccurate enforcement policy

Section of Clean Air Act misunderstood

Resource allocation decision Status:

Status:

Additional information requested and

Preparation of a factual record received from United States

recommended by the Secretariat

Secretariat reviewing submission in light of

Council will consider whether to response and additional information
approve preparation of a factual record

Slide 6: Key Citizen The United States was named in eight submissions.
However, two stand

Submissions Filed out as significant- the Migratory Birds and the Great
Lakes submissions- because they have gone the furthest in the submission
process, resulting in Against the United

a U. S. response, and, in the Migratory Birds case, a recommendation from
States

the Secretariat to the Council to prepare a factual record. 4 Currently,
both submissions are pending, and it is not known in either case whether a
factual record will be prepared and made public. 4 A third submission, the
Fort Huachuca submission, also reached the point in the process where a
response was prepared by the U. S. government and was submitted. However,
the submitters withdrew their filing, and the process was terminated before
the Secretariat

made a decision about whether to recommend the preparation of a factual
record.

Briefing Section I Environment: Outcomes

Two factual records have been prepared and made public

Submission against Mexico in Cozumel case

Submission against Canada in BC Hydro case

Another factual record is being prepared

Secretariat recommended and is preparing a factual record in a submission
against Mexico (Metales y Derivados case)

History of submissions and submission process reviewed by the Joint Public
Advisory Committee

Briefing Section II: Labor Side Agreement

Briefing Section II Labor Side Agreement: Institutional Structure

North American Commission for Labor Cooperation

Permanent structure Temporary bodies Ministerial Council Evaluation
Committee

of Experts

Secretariat

Executive Director Arbitral panel

15- member support staff Canada NAO U. S. NAO

Mexico NAO

Briefing Section II Labor Side Agreement: Key Principles

Key principles

Improve working and living standards through compliance with, and effective
enforcement of, 11 labor principles

Eleven labor principles fall into three categories:

Group I-- union- related activities

Group II-- workers? rights

Group III-- child labor and workplace safety

Provide citizens and governments an opportunity to address questions
regarding enforcement of labor laws

Includes provisions for fines and trade sanctions that only apply to
violations of Group III labor principles

Slide 9: Key Principles The goals of the labor side agreement are to improve
working conditions and living standards in each country, encourage the
exchange of information regarding pertinent legal issues, foster
transparency in administration of labor laws, and pursue cooperative labor-
related activities among the three countries. 1 In addition, under the labor
side agreement, the three governments committed themselves to promote
compliance with and effectively enforce

(subject to domestic laws) 11 labor principles. These labor principles are
generally grouped into three categories.

Group I Freedom of association and right to organize,

Right to bargain collectively, and

Right to strike Group II Prohibition of forced labor,

Elimination of employment discrimination,

Equal pay,

Compensation for occupational injuries and illnesses, and

Protection of migrant workers Group III Child labor protections,

Minimum wage technical standards, and

Prevention of occupational injuries

The agreement also allows citizens and groups to file submissions
questioning implementation of labor laws. In addition, fines or trade
sanctions may be imposed when a government is found to have failed to
effectively enforce its labor laws related to group III principles.

1 For additional information see the U. S. Department of Labor's National
Administrative Office Web site: http:// www. dol. gov/ dol/ ilab/ public/
programs/ nao/ main. htm.

Briefing Section II Labor: Submission and Review Process

Submission filed with NAO (Groups I, II, III)

If accepted:

Consultations with other NAOs Public hearing Issue report (Groups I, II,
III)

Evaluation Ministerial Council

Dispute Resolution Fines and

Committee of Minister- to- minister

-Consultations sanctions

Minister- to- minister Experts

consultations -Arbitral panel

(Group III only) consultations

(Groups II, III) -Special council

-Initial report (Groups I, II, III)

(Groups II, III) -Action plan

-Final report (Group III only)

Slide 10: Submission Any person or group in a NAFTA country may file a
submission with a and Review Process National Administrative Office alleging
that one of the other governments has failed to effectively enforce its
labor laws. If the National

Administrative Office decides to accept the submission, it may hold public
hearings to gather information; and it may consult with the other National
Administrative Offices. The Secretary of the National Administrative Office
receiving the submission may then recommend that the Ministers consult on
the submission. Depending on the nature of the allegation, ministerial

consultations may be followed by formation of an evaluation committee of
experts to further consider the submission. The labor agreement also
provides a government- to- government dispute settlement mechanism to be
used where cooperative efforts to resolve the problems fail and where the
submission alleges a persistent pattern of

failure to effectively enforce prevention of occupational safety and health
hazards, child labor protections, or minimum wage technical labor standards.
While some submissions have been eligible to proceed to the government- to-
government dispute settlement level, none has advanced this far. If a
submission were to reach this stage, an arbitral panel would be formed to
review the allegations and make recommendations for corrective action.
Failure to fully implement the panel's recommendations could lead to
monetary sanctions. Collected fines would be placed in a fund used to
improve enforcement of labor law in the country found in violation.

Failure to pay the fines could result in suspension of NAFTA benefits. See
appendix I for more information regarding how fines and trade sanctions
would be applied.

Briefing Section II Labor: Citizen Submissions Filed and Status of Cases
Against the United States

*23 Total submissions Labor Labor principles principles addressed

addressed in in all all submissions submissions a a 7 against the United
States

14 against Mexico

15

2 against Canada Group I

15 Submissions closed

Group II

and 8 under review

Group III

9

7 Submissions against the 20

United States

2 declined 5 ministerial consultations

a Numbers exceed 23 because a submission can address multiple labor
principles

Slide 11: Citizen The three National Administrative Offices have received a
total of 23

Submissions Filed and submissions since 1994, with 7 submissions being filed
between 1994 and

1996; 13 between 1997 and 1998; 2 in 1999; and 1 in 2000. At the time of
this Status of Cases Against report, no submissions had been filed in 2001.
Of the 23 total submissions

the United States filed, 7 were against the United States, 14 were against
Mexico, and 2 were

against Canada. Of these submissions, 15 have been closed and 8 are still
under review. Of the seven submissions filed against the United States,
three were the subject of ministerial consultations, two were declined, and
two are pending ministerial consultations. A more detailed description of
the 23 submissions can be found in appendix III.

The graph depicts the labor principles, by group, cited collectively in all
23 submissions. The number of labor principles cited exceeds 23 because more
than 1 labor violation can be included in a submission. The majority of
submissions have alleged group I violations, commonly citing freedom of
association concerns.

Briefing Section II Labor: Submissions Filed Against the United States and
Labor Principles Involved

Group I cases

4 cases cited freedom of association Group II cases

3 cases cited employment discrimination

3 cases cited compensation for occupational injuries and illnesses

3 cases cited protection of migrant workers Group III cases

5 cases cited minimum employment standards, such as minimum wages

3 cases cited prevention of occupational injuries

Slide 12: Submissions Of the seven submissions filed against the United
States, five were Filed Against the accepted for review. These submissions
together claimed violations of 6 of the 11 labor principles, encompassing
group I, II, and III labor principles.

United States and One of the five submissions alleged that the United States
violated six labor

Labor Principles principles. Involved

Briefing Section II Labor: Outcomes

No submission has progressed past the minister- tominister consultation
stage of the process

Submissions that have reached this phase have taken at least 2 years to do
so

Labor commission held jointly sponsored public seminars and forums and
issued public reports

Review of labor side agreement, including the submission process, scheduled
for 2002

Slide 13: Outcomes To date no submission has advanced past the ministerial
consultation phase, and those that have reached this stage have taken at
least 2 years to do so.

The labor submission process has resulted in conferences, seminars, and
public reports. For example, in an effort to address concerns about
genderbased discrimination that were raised in a submission to the U. S.
National Administrative Office, the three NAFTA governments held a
conference to discuss the laws and programs that protect employment rights
of women in all three NAFTA countries. In another instance, a submission
raising

issues regarding the status of international treaties and constitutional
provisions protecting freedom of association led the three Parties to hold a
seminar on international treaties and constitutional provisions in each
Party's labor laws. Furthermore, the Labor Commission initiated a variety of
public outreach forums and conferences regarding workers' rights, as a
result of issues raised in several submissions and published reports on the
topics covered. A review of all the components of the labor side agreement
is scheduled to

be completed in 2002, but may not be finalized as scheduled, according to U.
S. officials. The reason for the delay is primarily because of the recent
change in the U. S. administration and as- yet unfilled staff positions.

Briefing Section III: Investor- State Dispute Settlement

Briefing Section III NAFTA Investor- State: Background

Previous international agreements on investment

Friendship Commerce and Navigation Treaties (post- WWII)

Bilateral Investment Treaties (since the early 1980s)

Slide 14: Background The provisions on investor rights and the dispute
settlement mechanism found in NAFTA's chapter 11 are modeled on other U. S.
international treaties, with the underlying investment policy based largely
on U. S. domestic practice. For example, during the post- World War II era,
the United States negotiated treaties of friendship, commerce, and
navigation to protect U. S. investors abroad. These treaties included a
state- to- state dispute settlement mechanism designed to resolve investment
disputes

through diplomatic channels or arbitration. By the early 1980s, the effort
to protect investors overseas shifted to the negotiation of bilateral
investment treaties (BITS). These BITS provided investors more specific
investment protections (similar to those found in U. S. domestic practice)
and also introduced investor- state arbitration rules- rules similar to
those found in NAFTA's chapter 11.

Briefing Section III NAFTA Investor- State: Key Principles and Structure

Key principles

Provides investor protections that cover a broad range of issues, including
national treatment (art. 1102), minimum standard of treatment (art. 1105),
performance requirements (art. 1106), and expropriation (art. 1110)

Provides an investor- state dispute settlement mechanism, which includes
authority to award monetary damages

Uses existing international arbitration rules and structure

Cases against the United States generally overseen by the Department of
State

Slide 15: Key NAFTA's chapter 11 on investment provides several basic
protections for NAFTA investors and their investments including
nondiscriminatory Principles and treatment, 1 minimum standard of treatment,
2 freedom from Structure

performance requirements, 3 free transfer of funds related to an investment,
and expropriation only in conformity with international law. In addition,
NAFTA's investment chapter allows investors and governments to use an
investor- state dispute settlement mechanism when investors claim violations
of the agreement's protections.

This mechanism relies on the use of three existing international commercial
arbitration rules: the United Nations Commission on International Trade Law
(UNCITRAL), the International Centre for Settlement of Investment Disputes
(ICSID), and the ICSID Additional Facility. The Department of State is
generally responsible for overseeing cases brought against the United
States, but other agencies, such as the

Department of Justice and the U. S. Trade Representative, as part of an
interagency process, also play a significant role in supporting the U. S.
position in chapter 11 cases.

1 Nondiscriminatory treatment requires each government to treat investors
from another NAFTA country and their investments no less favorably than its
own investors and their investments (national treatment), and no less
favorably than investors of other countries and their investments (most-
favored- nation (MFN) treatment). In addition, investors and

their investments must be accorded the better of national treatment or MFN
treatment (standard of treatment).

2 Minimum standard of treatment requires each government to accord investors
from another NAFTA country treatment in accordance with international law,
including fair and equitable treatment and full protection and security. 3
?Performance requirements? refers to a set of requirements that governments
impose or enforce on investors or their investment either as a condition of
establishment or operation, or as a condition for receipt of an advantage.
Examples include requiring an investor to buy or use components from a local
supplier or to export a specified level of goods or services.

Briefing Section III Investor- State: Dispute Settlement Process

Investor may seek consultation and negotiation If not satisfied with
consultations, investor

files notice of intent to submit claim 6 months since events

90 days since giving rise to claim

notice of intent Investor files notice and submits claim under

specific international arbitration rules Tribunal is constituted (three
arbitrators) Tribunal convenes to hear arguments

Parties can seek to set aside, annul, or revise

Tribunal makes award award on

limited grounds

Slide 16: Investor- State Chapter 11 encourages consultations and
negotiations as the first steps in Dispute Settlement

the dispute settlement process under the investor- state dispute settlement
mechanism. Failing successful consultations, an investor may proceed to
Process

the formal steps under the dispute settlement process and seek monetary
damages against the host government, including interest and costs, for
actions taken by that government at all levels, e. g., local, state, and
federal. Article 1123 of NAFTA provides for the establishment of an arbitral
tribunal consisting of three arbitrators, one appointed by each of the
disputing parties, and the third, to be the presiding arbitrator, appointed
by agreement of those parties. 4 The investor selects the international
arbitration rules that will govern the

arbitration from the available alternatives provided under the NAFTA. 5
Generally, the tribunal receives formal written submissions from the
disputing parties on the issues raised by the case and convenes to hear the
parties' arguments. The extent of public access to proceedings, documents,
or decisions is guided by the text of the NAFTA, the selected arbitration
rules, and by the parties to the dispute. In addition, a panel can
unilaterally issue a confidentiality order. These practices have limited the
accessibility of information about investor- state cases.

4 NAFTA chapter 11 also includes specific provisions regarding the parties'
failure to appoint arbitrators or agree on a presiding arbitrator. 5
Currently, only the ICSID Additional Facility and the UNCITRAL Arbitration
Rules are available.

The tribunal may make interim orders and final awards, which are binding on
the parties. Under article 1136, which sets out rules governing enforcement
of final awards, each NAFTA Party is obligated to abide by

and comply with a final award and provide for enforcement of that award in
its own country. In addition, this article allows a disputing party to seek
enforcement of an award only where certain time requirements related to the
applicable arbitration rules have elapsed and neither party has

requested revision, set- aside, or annulment of the award; or where a
revision, annulment, or set- aside application proceeding has been dismissed
or completed by a court and there is no further appeal. 6 A government's
failure to pay the award could result in the imposition of trade sanctions
if the government of the investor seeks further resolution of the matter
under NAFTA chapter 20's dispute settlement procedures.

6 Article 1136 allows a disputing party, under the law governing the
arbitration, to commence proceedings to revise, set aside, or annul an award
of the arbitral tribunal. Mexico and Canada have both initiated such
proceedings in Canadian courts. Both countries sought to have awards in
favor of the investor set aside under Canadian enactments of the UNCITRAL
Model Law on International Commercial Arbitration, which allow decisions of
arbitral tribunals, such as NAFTA chapter 11 tribunals, to be subject to
action to set aside the award on limited grounds, including a tribunal
exceeding its jurisdiction. Such a proceeding is not a judicial review of
the merits of an underlying arbitration.

Briefing Section III Investor- State: Claims Filed and Status of Claims
Against the United States

13 Total claims filed

4 by U. S. investors against Canada

5 by U. S. investors against Mexico

4 by Canadian investors against the United States

4 Claims against the United States

All pending and in various stages of the dispute settlement process

Slide 17: Claims Filed To date, 13 investor- state claims have been made
under NAFTA's chapter 11. 7 Of these claims, nine have been filed by U. S.
investors against Canada and Status of Claims or Mexico. Canadian investors
have filed four claims against the United Against the United

States. All four cases filed against the United States are pending and in
States various stages of the dispute settlement process. For example, in one
case, Loewen, a hearing was held in 2000 on jurisdictional issues. The next

hearing, which involves the Methanex case, is scheduled for mid- summer
2001. 7 Thirteen refers to the number of formal claims submitted to
arbitration. In some cases, a notice of intent to claim may have been
submitted by an investor but was never followed up with a formal notice of
claim or notice of arbitration. A case only becomes an official claim when
it is submitted to arbitration under the applicable rules.

Briefing Section III Investor- State: Cases Filed Against the United States
Loewen: $725 million

Methanex: $1 billion Claim:

Claim:

Mississippi jury awarded $500 million in compensatory California regulations
ban use of MTBE, a gasoline and punitive damages against Canadian- owned

additive that can contaminate drinking water, by end funeral home chain in
civil proceeding for fraudulent

of 2002. Canadian firm Methanex, which produces and malicious business
practices. To stay

methanol, a feedstock for MTBE, claims regulations execution of the judgment
pending appeal, company

illegally expropriate firm?s U. S. investment and was required to post $625
million appeal bond, a

discriminate against it in favor of the U. S. ethanol state statutory
requirement upheld by the

industry. Mississippi Supreme Court. Company claims jury award and court
action, among other things, amount to a denial of justice.

NAFTA provisions: Arts. 1102, 1105,

NAFTA provisions: Arts. 1102, 1105, and 1110

and 1110

Briefing Section III Investor- State: Cases Filed Against the United States
Mondev: $50 million

ADF: $90 million Claim:

Claim:

Canadian- owned real estate company that contracted Canadian company?s U. S.
subsidiary subcontracted with city of Boston and local agency to construct

with U. S. firm to supply steel for a federally- aided buildings won $16
million award (reduced to $9.6

highway construction project in Virginia. Canadian million) for breach of
contract and tort. Award was

company?s U. S. subsidiary wanted to fabricate U. S. manufactured reversed
by Supreme Judicial Court of Massachusetts,

steel in Canada for use in the project. which ruled that Boston did not
breach contract and

Buy America requirements prohibit use of Canadianfabricated agency was
immune from suit under state law from

steel in the construction project. ADF claims tort liability. Firm claims
that the city of Boston?s

Buy America requirements discriminate against and alleged breach of contract
and the court?s ruling

prohibited performance requirements on ADF. involve expropriation of
Mondev?s interest and a denial of justice.

NAFTA provisions: Arts. 1102, 1103,

NAFTA provisions: Arts. 1102, 1105, 1105, and 1110

and 1106

Slides 18 and 19: Two claims, one filed by the Loewen Group and one by
Methanex, together Claims Filed Against seek total monetary damages against
the United States of approximately

$1. 7 billion. While each case presents arguments unique on the facts, they
the United States

both essentially assert that actions taken in the United States violated the
national treatment and minimum standard of treatment provisions of chapter
11. In addition, they both claim that the U. S. actions (through
Mississippi's justice system and California's regulations, respectively)
amounted to an expropriation of their property, in violation of another key
provision of NAFTA's investment chapter. The Department of Justice is the
lead agency in the Loewen case, while the Department of State is leading the
defense in the Methanex case.

The Mondev and ADF claims together call for $140 million in monetary damages
against the U. S. government. Both claims cite violations of NAFTA's
national treatment and minimum standard of treatment provisions. The Mondev
claim also cites violations of NAFTA's mostfavored- nation provision, and
further alleges that U. S. actions amount to an expropriation of its
investment in Massachusetts. The ADF claim asserts that U. S. Buy America
requirements impose performance requirements on ADF in violation of NAFTA's
chapter 11. The Department of State is the

lead agency defending the U. S. government position in both of these cases.
There have been interagency discussions among the U. S. Trade
Representative, the Department of State, the Department of Justice, the
Department of Commerce, and the Department of the Treasury on how the

damages would be paid if awarded. However, no agreement has been reached,
and no awards have had to be paid. One possible source for payment
considered in interagency discussions is the permanent, indefinite
appropriation in 31 U. S. C. 1304, known as the Judgment Fund, which is
legally available to pay final judgments and comprise settlements against
the United States. The Fund is administered by the Department of the
Treasury, which certifies and disburses actual payments from the Fund.
Before payments can be made, however, the Department of Justice must first
certify that a judgment is final and payment is in the interest of the
United States. In addition, the judgment must be for an actual sum of

money, and there must be no other source of funds legally available to pay
the judgment.

Briefing Section III Investor- State: Outcomes

5 Cases brought by U. S. investors have resulted in settlement or award

Ethyl Corporation vs. Canada-- settled for $13 million

S. D. Myers vs. Canada-- partial award for investor; case under review in
Canadian courts

Pope & Talbot vs. Canada-- partial award in favor of investor on one aspect
of case

Azinian, et al. (DESONA) vs. Mexico-- award in Mexico?s favor

Metalclad Corporation vs. Mexico--$ 16.7 million award for investor;
Canadian courts upheld award in part

Experience with investor- state disputes is limited and few cases finalized

Slide 20: Outcomes To date, U. S. investors have made nine claims under
NAFTA's investor- state dispute settlement mechanism, with results, so far,
of settlement or award

in five of those cases. Canada settled with a U. S. investor in one case in
which a Canadian court, in an unrelated case, called for the federal
government of Canada to reverse the actions that gave rise to the claim. 8
In two other cases involving Canada, arbitral tribunals found in favor of U.
S. investors. In the S. D. Myers case, Canada is seeking to have the partial
award against it set aside in its domestic courts. Outcomes for U. S.
investors in two cases involving Mexico have been split- with one arbitral
tribunal's decision in favor of Mexico and another

in favor of the U. S. investor. In the Metalclad case, Mexico sought to have
the award against it set aside in Canadian courts. A Canadian court ruling
denied Mexico's application to set aside the award in its entirety, but did
set aside part of the award. More investor- state dispute settlement cases
are currently progressing

through chapter 11's arbitral system. According to a schedule of deadlines
for investor- state arbitration, a hearing will be held in four cases
involving the United States or a U. S. investor before the end of 2001.

8 The provincial government of Alberta sued the Canadian federal government
on the same measure raised in the Ethyl case and won.

Appendi xes Monetary Enforcement Assessments and Trade Sanctions in the
North American Free

Appendi x I

Trade Agreement?s Labor and Environment The structure for monetary
enforcement assessments (fines) and trade sanctions in the North American
Free Trade Agreement's (NAFTA) labor and environmental side accords follows
distinct processes. For labor, there is a single, continuous process that
begins with a citizen submission

on a labor law enforcement matter and could lead, in some cases, to fines or
suspension of NAFTA tariff benefits. For environment, there are two
processes. One specifically addresses citizen submissions on

environmental law enforcement matters and can, at most, result in the
publication of a ?factual record? by the Secretariat of the Commission for
Environmental Cooperation. The other, a Party- to- Party dispute settlement
process, could lead to fines or suspension of NAFTA tariff benefits.

Aside from these distinct processes, the way monetary fines are assessed and
what happens if a Party fails to pay a fine are handled the same under both
side accords. How the United States pays fines assessed against it, while
not addressed in either side accord, has been the subject of interagency
discussion.

Environmental Process Fines are called for in the Party- to- Party
Consultation and Resolution of Disputes Section (part V) of the North
American Agreement on Environmental Cooperation. Fines may be assessed if an
arbitral panel determines that one Party has exhibited a persistent pattern
of failure to effectively enforce its environmental law, Parties have not
been able to agree on an action plan, or an action plan designed to correct
a failure to effectively enforce a Party's environmental law has not been
fully implemented. Even if a fine is assessed, the original plan for
corrective action required by the arbitrage panel must still be fully
implemented.

Labor Process A citizen submission can evolve into a Party- to- Party
Ministerial Consultation, which in turn can lead to the utilization of the
dispute resolution mechanism for 3 of the 11 labor principles listed in the
North

American Agreement on Labor Cooperation: child labor, minimum wage technical
labor standards, and occupational safety and health. An arbitral panel
determines whether the Party complained against showed a persistent pattern
of nonenforcement of one of the three labor principles and prepares a final
report on the complaint. If the disputing parties have not agreed on a final
report or cannot agree on full implementation of an action plan, then the
panel can impose a monetary enforcement

assessment. Even if a fine is assessed, the original plan for corrective
action required by the arbitral panel must still be fully implemented

Amount of Monetary A fine cannot exceed $20 million or its equivalent in the
currency of the Fines Under the Side Party paying the fine in the first year
of NAFTA implementation or be no

more than .007 percent of total trade in goods between the parties during
Accords the most recent year for which data are available. The fine must be
paid into a fund directed by the Council of the Commission established under
each side accord. The monies must be used as the Council directs to either

improve the environment or labor conditions or the enforcement of
environmental or labor laws in the territory of the Party complained
against, consistent with the law of that Party.

How the United States There have been interagency discussions among the
Department of Labor,

Would Pay the U. S. Trade Representative, the Department of State, the
Department of Justice, and the Environmental Protection Agency on exactly
how the fines

would be paid. However, no agreement has been reached, and no fines have
been assessed.

One possible source for payments considered in interagency discussions is
the permanent, indefinite appropriation in 31 U. S. C. 1304, known as the
Judgment Fund, which is legally available to pay final judgments and
comprise settlements against the United States. The Fund is administered by
the Treasury Department, which certifies and disburses actual payments from
the Fund. Before payments can be made, however, the Department of

Justice must first certify that a judgment is final and payment is in the
interest of the United States. In addition, the judgment must be for an
actual sum of money, and there must be no other source of funds legally
available to pay the judgment.

If Fines Fail If Mexico or the United States fails to pay a fine within 180
days, the complaining Party (or Parties) may suspend NAFTA tariff benefits,
in an amount no greater than that sufficient to collect the fine. The rates
of duty

on goods originating in the Party complained against shall not exceed the
lessor of (a) the rate that was applicable to those goods just prior to
NAFTA's entry into force, or (b) the most- favored nation rate applicable to
those goods on the date the Party suspends tariff benefits. To the extent
practicable or effective, the sector that is impacted (i. e., that sector
against

which NAFTA benefits are suspended) shall be the same sector or sectors as
those involved in a complaint.

In the case of Canada, 1 the respective Commissions may file the arbitral
panel's determination (that a fine be paid or that an action plan be fully
implemented) in a court of competent jurisdiction in Canada and may take
legal measures for enforcement of the panel's determination. Neither the
panel's determination nor a court order to enforce a panel determination is
subject to review or appeal.

1 Both the environment and labor side agreements contain special rules that
apply to Canada, which establish that trade sanctions are not applicable to
Canada where Canada fails to pay an assessed fine or fully comply with an
action plan.

Citizen Submissions Under the North American Agreement on Environmental

Appendi x II

Cooperation Case no. and name Submitted by Issue Status Against country

95- 001 Biodiversity Legal Alleged failure to effectively enforce

Process terminated

United States Spotted Owl Foundation, et al. selected provisions of the
Endangered

Secretariat determined Species Act government response not merited 95- 002

Sierra Club, et al. Alleged failure to effectively enforce all

Process terminated

United States Logging Rider (1995) applicable federal environmental laws
Secretariat determined by eliminating private remedies for

submission criteria not met salvage timber sales

96- 01 Comitï¿½ para Comitï¿½ para la Alleged failure to conduct an Factual
record prepared and Mexico

Cozumel Protecciï¿½n de los Recursos environmental impact assessment made
public Naturales, A. C., et al,

before building a public harbor (1996) terminal for tourist cruises on the
island of Cozumel 96- 002

Mr. Aage Tottrup, P. Eng Alleged failure to effectively enforce

Process terminated Canada Aage Tottrup (1996) Canadian and Alberta
environmental

Secretariat determined laws resulting in the pollution of government
response not wetlands impacting fish and migratory merited bird habitats 96-
003

Friends of the Old Man River Alleged failure to effectively enforce

Process terminated Canada Old Man (1996) habitat protection sections of
Secretariat determined factual River I

Canada's Fisheries Act and the record not warranted

Canadian Environmental Assessment Act; charge of a de facto abdication of
legal responsibility by the Canadian

and provincial governments 96- 004

The Southwest Center for Alleged failure of the U. S. Army to Process
terminated Submitter United States

Fort Biological Diversity, et al. uphold the National Environmental withdrew
after U. S. Huachuca

(1996) Policy Act and produce an government response

environmental impact assessment of Fort Huachuca base expansion 97- 001

British Columbia Aboriginal Alleged failure to effectively enforce Factual
record prepared and

Canada BC Hydro Fisheries Commission, et al. the Canadian Fisheries Act and
failure

made public (1997) to protect fish and fish habitat in British Columbia from
hydroelectric dam

97- 002 Comite Pro Limpieza del Rio

Alleged failure to effectively enforce Secretariat reviewing in light of
Mexico

Rio Magdalena (1997) environmental legislation governing Mexican response to
Magdalena the disposal of wastewater into the determine if factual record
Magdalena River in the state of

warranted; Mexico has not Sonora

responded to the Secretariat's September 1999 request for additional
information

Case no. and name Submitted by Issue Status Against country

97- 003 Centre Quebecois du Droit

Alleged failure to effectively enforce Council, by two- thirds majority,

Canada Quebec Hog de L'environnement, et al.

environmental standards related to decided not to direct the Farms

(1997) agricultural pollution originating from Secretariat to prepare a
factual

animal production facilities, mainly record; process was from hog farms
terminated 97- 004

Canadian Environmental Alleged failure to conduct an Process terminated-

Canada Canadian Defense Fund (1997) environmental assessment of ?The
Secretariat determined Environmental Atlantic Groundfish Strategy? that
submission criteria not met

could jeopardize the future of Defense Fund

Canada's East Coast fisheries 97- 005

Animal Alliance of Canada, Alleged failure to effectively enforce

Process terminated

Canada Biodiversity Council of Canadians,

regulations ratifying the Convention on Secretariat determined Greenpeace
Canada (1997) Biological Diversity signed at the Rio submission criteria not
met Earth Summit; claim that such ratification, under Canadian Law, is a

legally binding ?regulation? 97- 006 The Friends of the Oldman

Alleged failure to effectively enforce Council decided to defer

Canada Old Man River

habitat protection sections of the consideration of the River II

(1997) Fisheries Act and the Canadian Secretariat's notification
Environmental Assessment Act;

recommending preparation of charge of a de facto abdication of a factual
record legal responsibility by the Canadian and provincial governments

97- 007 Instituto de Derecho Alleged failure to effectively enforce

Process terminated

Mexico Lake Chapala Ambiental

environmental legislation regarding Secretariat is prevented, for

(1997) the hydrological basin of Lake

procedural reasons, from Chapala considering the submission

98- 001 Instituto de Derecho Alleged failure to effectively enforce

Process terminated

Mexico Guadalajara

Ambiental, A. C., et al. the General Law on Ecological

Secretariat determined (1998) Balance and Environmental submission criteria
not met Protection in relation to explosions occurring in the Reforma area
of the

city of Guadalajara 98- 002

Hector Gregorio Ortiz Alleged failure to effectively enforce

Process terminated

Mexico Ortiz Martï¿½nez (1997) environmental legislation in relation to
Secretariat determined Martinez lumbering operations at the "El Taray"
submission criteria not met

site in the state of Jalisco 98- 003

Department of the Planet Alleged violation of and failure to Secretariat
reviewing

United States Great Lakes Earth, et al. (1998)

effectively enforce both U. S. domestic submission in light of U. S. laws
and ratified U. S.- Canada treaties response and additional designed to
protect the Great Lakes information to determine if factual record warranted
98- 004

Sierra Club of British Alleged failure to enforce section

Secretariat reviewing Canada

BC Mining Columbia, et al. 36( 3) of the Fisheries Act to protect submission
in light of (1998)

fish and fish habitat from the Canadian response to

environmental impacts of the mining determine if factual record industry in
British Columbia warranted

Case no. and name Submitted by Issue Status Against country

98- 005 Academia Sonorense de Alleged failure to effectively enforce

Process terminated Mexico Cytrar Derechos Humanos, A. C.,

environmental legislation by having Secretariat determined factual Lic.
Domingo Gutiï¿½rrez authorized the operation of a

record not warranted Mendï¿½vil

hazardous waste landfill (Cytrar) less (1998) than 6 kilometers away from
Hermosillo, Sonora, in violation of official standards

98- 006 Grupo Ecolï¿½gico Manglar, Alleged failure to effectively enforce

Secretariat recommended Mexico

Aquanova A. C. environmental laws with respect to the

preparation of a factual record; (1998)

establishment and operation of a Council considering whether to shrimp farm
located in Isla del Conde, approve preparation of factual Nayarit

record 98- 007

Environmental Health Alleged failure to effectively enforce

Council unanimously decided Mexico

Metales y Coalition, Comitï¿½ environmental law in connection with

to instruct the Secretariat to Derivados Ciudadano Pro

an abandoned lead smelter in Tijuana, prepare a factual record

Restauraciï¿½n del Caï¿½ï¿½n del Baja California, that poses serious Padre y
Servicios threats to the health of the Comunitarios, A. C.

neighboring community and to the (1998)

environment 99- 001

Methanex Corporation Alleged failure to effectively enforce

Secretariat determined not to United States

Methanex (1999) California's environmental laws and proceed further because
the regulations related to water resource matter raised by the protection
and to the regulation of

submission is the subject of a underground storage tanks

pending arbitration proceeding initiated by Methanex under chapter 11 of
NAFTA 99- 002

Center for International Alleged failure to effectively enforce

Secretariat recommended United States

Migratory Environmental Law, et al.

Section 703 of the Migratory Bird preparation of a factual record; Birds

(1999) Treaty Act, which prohibits the killing

Council considering whether to of migratory birds without a permit

approve preparation of factual record

00- 001 Rosa Marï¿½a Escalante de Alleged failure to effectively enforce

Process terminated

Mexico Molymex I Fernï¿½ndez

environmental law regarding air Secretariat determined (2000)

quality and to limit pollution from the submission criteria not met

Molymex plant 00- 002

Neste Canada Inc. Alleged failure to effectively enforce

Secretariat determined not to United States

Neste (2000) environmental laws, as defined in the proceed further because
the

Canada environmental side agreement,

matter raised by the relating to underground storage tanks

submission is the subject of pending arbitration proceeding initiated by
Methanex under chapter 11 of NAFTA

Case no. and name Submitted by Issue Status Against country

00- 003 Hudson River Audubon Alleged failure to effectively enforce

Process terminated

United States Jamaica Bay Society of Westchester, Inc., Section 703 of the
Migratory Bird Secretariat determined Save Our Sanctuary Treaty Act and
sections of the

submission criteria not met Committee

Endangered Species Act with the (2000) proposal of a bicycle path through
the Jamaica Bay Wildlife Refuge, in Queens, New York

00- 004 David Suzuki Foundation, et

Alleged failure to effectively enforce Secretariat reviewing

Canada BC Logging al.

sections of Canada's Fisheries Act submission in light of (2000) against
logging on private land in Canadian response to

British Columbia determine if factual record warranted

00- 005 Academia Sonorense de Alleged failure to effectively enforce

Secretariat reviewing Mexico

Molymex II Derechos Humanos, environmental law in relation to the submission
in light of Mexican Domingo Gutiï¿½rrez Mendï¿½vil

operation of the Company Molymex, response to determine if (2000) including
operation without

factual record warranted environmental impact authorization

00- 006 Comisiï¿½n de Solidaridad y Alleged failure to effectively enforce

Secretariat reviewing Mexico

Tarahumara Defensa de los Derechos environmental laws by denying submission
Humanos, AC environmental justice to indigenous (COSYDDAC) (2000)
communities in the Sierra Tarahumara in the state of Chihuahua 01- 001
Academia Sonorense de Alleged failure to effectively enforce

Secretariat requested and is Mexico Cytrar II Derechos Humanos, A. C.,

environmental laws in relation to the awaiting Mexican response Lic. Domingo
Gutiï¿½rrez establishment and operation of the

Mendï¿½vil Cytrar hazardous waste landfill

(2001) 01- 002

Names withheld pursuant to Alleged failure to effectively enforce

Process terminated

Canada AAA

Article 11( 8)( a) (2001) obligations in the environmental side Secretariat
determined criteria Packaging

agreement to prohibit export to the not met

territories of the other Parties of a pesticide or toxic substance

01- 003 Mercerizados y Tenidos de Alleged failure to effectively enforce
Secretariat reviewing

Mexico Dermet Guadalajara

part of Mexico's environmental laws submission (2001) and failure to
effectively enforce obligations in the environmental side agreement to
provide procedural

guarantees and private access to remedies

Submissions Under the North American

Appendi x II I Agreement on Labor Cooperation Case no. and NAO Against
identifier Submitted by country Issue Status Time frame U. S. NAO

International Mexico Alleged violations of workers' Submission accepted --
U. S. 2/ 14/ 1994- 940001 and Brotherhood of rights to freely organize into
the National Administrative Office 10/ 12/ 1994 940002

Teamsters, United unions of their choice concluded that the information was

Honeywell Electrical, Radio and insufficient to establish that Mexico

and Machine Workers of

failed to enforce its labor laws. General

America However, acknowledging the strong Electric

concerns raised by the submission, the United States proposed that all three
NAFTA parties develop a comprehensive cooperative program to address these
issues

U. S. NAO International Labor Mexico Alleged intimidation and Ministerial
consultations 8/ 16/ 1994-

940003 Rights Education and pressure then dismissal by the recommended -- a
series of

12/ 4/ 1996 Sony

Research Fund, company when workers seminars and other activities National
Association of

attempted to organize a union addressed issues of union

Democratic Lawyers of registration. Follow- up review Mexico, Coalition for

included issues stemming from a Justice in the

related Mexican Supreme Court Maquiladoras, et al.

decision U. S. NAO United Electrical,

Mexico Alleged violations of freedom of Process terminated the union 1/ 25/
1995

940004 Radio, and Machine association and the right to

withdrew the submission prior to General Workers of America

organize at a subsidiary in completion of the review process Electric

Mexico U. S. NAO Human Rights

Mexico Alleged violations of freedom of Ministerial consultations 6/ 13/
1996- 9601

Watch/ Americas, association and the right to recommended -- on relations
among

12/ 4/ 1997 SUTSP

International Labor organize when employees of the international treaties,
constitutional

Rights Fund, and the Mexican government's Single

provisions, and domestic law National Association of Trade Union Workers of
the

protecting freedom of association. A Democratic Lawyers of

Fishing Ministry attempted to related seminar was held in

Mexico receive recognition for their Baltimore, MD

union U. S. NAO Communications

Mexico Alleged threats and intimidation Process terminated submitters 10/
11/ 1996-

9602 Workers of America, by company management withdrew submission after
resolving

4/ 16/ 1997 Maxi Union of Telephone

against workers trying to the dispute to their satisfaction Switch

Workers of Mexico, organize a union and the Federation of Unions of Goods
and

Services Companies of Mexico U. S. NAO Human Rights Watch/

Mexico Alleged mistreatment or Ministerial agreement reached -- one 5/ 16/
1997-

9701 American,

discharging of pregnant conference and two outreach 5/ 30/ 2000

Gender International Labor

employees at a maquiladora sessions held to discuss and Discrimi Rights Fund
and the

plant to avoid paying maternity educate workers on their rights nation

National Association of benefits

Democratic Lawyers of Mexico

Case no. and NAO Against identifier Submitted by country Issue Status Time
frame U. S. NAO Support Committee for

Mexico Alleged violations of health and Ministerial agreement reached,

10/ 30/ 1997- 9702

Maquiladora Workers, safety, freedom of association, which resulted in:
Mexico's pending

Han Young the International Labor

and the right to bargain agreement to promote the use of

Rights Fund, and the collectively

secret ballots in union representation National Association of elections and
that workers be Democratic Lawyers of provided information pertaining to
Mexico, et al. collective bargaining agreements; seminars on freedom of
association issues and the structure and role of labor boards; and
governmental exchange of information on techniques and policies to promote
compliance with safety and health

laws. (The ministerial consultations with submissions 9702 and 9703
regarding freedom of association and safety and health issues were held
congruent to one another)

U. S. NAO Echlin Workers Mexico Alleged violations of freedom of Ministerial
agreement reached which 12/ 15/ 1997- 9703

Alliance, the association and occupational resulted in: Mexico's agreement
to pending

ITAPSA Teamsters, and 26

health and safety. Alleged promote the use of secret ballots in additional

worker exposure to asbestos union representation elections and
organizationsincluding and other toxic substances.

that workers be provided information nongovernmental pertaining to
collective bargaining organizations, human agreements; seminars on freedom
of rights groups and association issues and the structure unions

and role of labor boards; and governmental exchange of information on
techniques and

policies to promote compliance with safety and health laws. The ministerial
consultations with submissions 9702 and 9703 regarding freedom of
association and safety and health issues were held congruent to one another)

U. S. NAO Association of Flight Mexico Alleged violation of freedom of

Submission declined -- the U. S. 8/ 17/ 1998-

9801 Attendants, and the

association for flight attendants National Administrative Office 10/ 19/
1998

Flight AFL- CIO

employed by Aerovias de agreed to undertake a research Attendants Mexico, S.
A. de C. V. project with the three Parties on (Aeromexico). When workers
freedom of association

tried to strike, the government of Mexico took over the company's
operations.

Case no. and NAO Against identifier Submitted by country Issue Status Time
frame U. S. NAO

Florida Tomato Mexico Alleged child labor violations in Submission closed --
U. S. National 9/ 28/ 1998-

9802 Exchange the production of fruit and

Administrative Office requested 10/ 4/ 1999 Tomato/

vegetables in Mexico additional information but received Child Labor

nothing in a year U. S. NAO International Canada Alleged violations relating
to

Submission accepted and later 10/ 19/ 1998- 9803

Brotherhood of freedom of association, and withdrawn Canadian government 4/
21/ 1999

McDonald's Teamsters, Teamsters delays in union certification

and corporation held consultations, of Canada, the and the two sides reached
an International Labor

agreement Rights Fund, et al.

U. S. NAO Organization of Rural Canada Alleged denial of workers' right

Submission declined 12/ 2/ 1998 9804

Mail Couriers, to bargain collectively. Alleged 2/ 1/ 1999

Rural Mail Canadian Union of violation of occupational health Couriers

Postal Workers, and safety issues, and National Association of protection
against discrimination Letter Carriers, et al.

U. S. NAO Association of Flight

Mexico Alleged violations of freedom of Submission accepted -- public report
11/ 10/ 1999- 9901

Attendants, and the association, minimum

issued recommending ministerial pending

TAESA Association of Flight

employment standards, and level consultations

Attendants of Mexico occupational health standards U. S. NAO Coalition for
Justice in Mexico Alleged violations concerning Submission accepted -- site
visit 7/ 3/ 2000 2000- 01

the Maquiladoras, occupational health and safety conducted, and ministerial-
level

pending Auto- Trim/ current and former

and compensation in cases of consultation recommended Custom workers, and 22
other

occupational injuries Trim

unions and nongovernmental organizations

Case no. and NAO Against identifier Submitted by country Issue Status Time
frame Mexico Telephone Workers United Alleged violation of freedom of

Ministerial consultations requested 2/ 9/ 199511/ NAO 9501

Union of the Republic States association when a corporation Commission for
Labor Cooperation 25/ 1997

Sprint of Mexico

subsidiary closed prior to a issued report on the effects of scheduled
election on union

sudden plant closings on freedom of representation association in each NAFTA
country

Mexico Local 1- 675 of the Oil, United Alleged violations of freedom of
Submission accepted -- public report 4/ 13/ 1998- NAO 9801

Chemical and Atomic States association and minimum issued and ministerial
agreement pending per SOLEC

Workers International employment standards. Also, signed in May 2000 on
freedom of implementatio Union (? October 6?), et

allegations of employment association and health and safety n of the al.

discrimination and health and issues agreement

safety violations (The ministerial agreement signed in May 2000 covered
issues raised in NAO 9801, 9802 and 9803.)

Mexico National Union of United Alleged violations of freedom of Submission
accepted -- a ministerial

5/ 27/ 1998- NAO 9802

Workers, the Authentic States association, right to organize, agreement was
signed on May

Apple Workers' Front, the and minimum conditions of 2000, which included
plans for

pending per Growers

Metal, Steel, Iron and work. Also, allegations of public outreach seminars
for migrant implementatio

Allied Industrial employment discrimination, workers, and government- to n
of the

Worker's Union, and failure to prevent occupational government meetings to
discuss

agreement the Democratic Farm injuries and illnesses, and

migrant workers' rights Workers Front

protection of migrant workers (The ministerial agreement signed in May 2000
covered issues raised in NAO 9801, 9802 and 9803.)

Mexico Mexican

United Alleged violations of freedom of Submission accepted -- a ministerial
8/ 4/ 1998

NAO 9803 Confederation of Labor States association, protection for agreement
was signed on May

Pending per Decoster migrant workers, safety and 2000, which included plans
for implementatio Egg

health, and workers' public outreach seminars for migrant n of the
compensation. Also, allegations

workers, and government- to agreement

of employment discrimination government meetings to discuss

migrant workers' rights (The ministerial agreement signed in May 2000
covered issues raised in NAO 9801, 9802 and 9803.)

Mexico Yale Law School United Alleged failure to effectively Submission
accepted -- U. S. 9/ 22/ 1998-

NAO 9804 Worker's Rights

States enforce the U. S. existing Department of Labor issued a new pending
Yale/ INS

Project minimum wage and overtime Memorandum of Understanding and
protections

Mexico issued report on U. S. labor violations. Ministerial consultation was
recommended

Case no. and NAO Against identifier Submitted by country Issue Status Time
frame Canada

Canadian Office of the Mexico Alleged failure to effectively

Submission accepted two reports 4/ 6/ 1998pending

NAO 98- 1 United Steelworkers of

enforce labor legislation issued the first addressed freedom

ITAPSA America, in concert covering occupational health

of association; the second covered with 31 concerned and safety and freedom
of occupation health and safety issues. organizations from the association
of workers at a

Ministerial consultations pending three NAFTA countries

processing plant Canada

Yale Law School United Alleged failure to effectively Submission closed --
Canadian 9/ 28/ 1998-

NAO 98- 2 Worker's Rights

States enforce the U. S. existing National Administrative Office 4/ 27/ 1999
Yale/ INS

Project minimum wage and overtime considered the review inappropriate

protections and closed the file in light of new Memorandum of Understanding

U. S. NAO Organization of Rural Canada Alleged denial of workers' right

Submission declined 12/ 2/ 1998 9804

Mail Couriers, to bargain collectively. Alleged 2/ 1/ 1999

Rural Mail Canadian Union of violation of occupational health Couriers

Postal Workers, and safety issues, and National Association of protection
against discrimination Letter Carriers, et al.

Canada Labor Policy United Alleged failure to effectively

Submission declined -- submitters 4/ 14/ 1999- 99- 1

Association and EFCO States enforce section 8( a)( 2) of the filed an appeal
on June 15, 1999 6/ 15/ 1999

LPA Corporation

U. S. National Labor Relations appeal Act

pending

Cases Filed Under NAFTA's Chapter 11 Investor- State Dispute Settlement

Appendi x I V

Mechanisms Through May 2001 Arbitration Petitioner rules Respondent Action
and Claim Status

Ethyl Corp. UNCITRAL Canada Action: Canadian passage of MMT Act in April

Canadian court decision called for (U. S. company) 1997 prohibits the
importation or interprovincial Canada to reverse its actions trade of MMT
without ministerial authorization.

giving rise to the claim. Canada Claim: Claim filed by Ethyl in April, 1997
states settled with Ethyl for $13 million in that Canadian actions through
implementation of August 1998. the MMT Act discriminated against it in
violation of national treatment, imposed prohibited performance
requirements, and unfairly expropriated its property. Ethyl sought $250

million in damages. S. D. Myers

UNCITRAL Canada Action: A ban on the export of polychlorinated A partial
award was issued in (U. S. company) biphenyl (PCB) waste from Canada to the
United November 2000 in favor of S. D. States was passed in late 1995.

Myers with respect to claims Claim: S. D. Myers' October 1998 claim states
involving national treatment and that Canadian actions through PCB export
ban

minimum standard of treatment discriminated against it in violation of
national violations. However, the arbitral treatment and did not afford it a
minimum

panel found in Canada's favor in standard of treatment. Furthermore, the ban
all other respects. Canada has imposed prohibited performance requirements
applied to a Canadian federal and had the effect of expropriating S. D.
Myers

court to have the partial award property. S. D. Myers sought $20 million in

against it set aside; that damages. proceeding is ongoing.

Pope and Talbot UNCITRAL Canada Action: The Softwood Lumber Agreement

The tribunal rejected jurisdictional (U. S. company) between the United
States and Canada allows a challenges by Canada on January

portion of Canadian timber sales to enter duty 26, 2000. The tribunal issued
a free into the United States.

partial award on June 26, 2000,

Claim: Pope and Talbot filed a notice of dismissing the investor's claims
arbitration on March 25, 1999, claiming that regarding performance Canada's
implementation of the U. S.- Canada requirements and expropriation. Softwood
Lumber Agreement breached

On April 10, 2001, the tribunal Canada's obligations under chapter 11,
including found that Canada did not violate national treatment, minimum
standard of the national treatment treatment, performance requirements, and

requirements. However, it found expropriation. Pope and Talbot sought
damages that Canada partially violated the of $507 million.

minimum standard of treatment provision in connection with the verification
review process it imposed on the investor.

Arbitration Petitioner rules Respondent Action and Claim Status

United Parcel UNCITRAL Canada Action: Canada Post, a state enterprise and
The tribunal has been formed and

Service (UPS) government monopoly, operates Canada's postal

some procedural decisions have (U. S. company) system.

been made.

Claim: In April 1999, UPS claimed that Canada Post abused its authority to
run a postal monopoly by engaging in anticompetitive practices involving its
nonmonopoly courier and

parcel services in violation of Canada's national treatment and minimum
standard of treatment obligations and the requirement that it supervise

a ?government monopoly' and ?state entity. ' UPS seeks $160 million in
damages.

Azinian, et al. ICSID

Mexico Action: A Mexican municipality dissolved its The tribunal issued an
award on (U. S. company) Additional

contract with Azinian after a Mexican federal November 1, 1999, in favor of

Facility court found that the waste disposal company was

Mexico on all counts, finding that not complying with the terms of the
contract. the U. S. company misrepresented Claim: Azinian (a. k. a. DESONA)
claimed that its qualifications.

Mexico's cancellation of the contract violated the minimum standard of
treatment and expropriation provisions of chapter 11. Azinian sought damages
of $14 million in connection with this claim.

Marvin Roy ICSID

Mexico Action: The Mexican government reversed its The finance ministers
from Mexico Feldman Additional

policy of allowing Feldman (a. k. a. CEMSA) tax and the United States
rejected (U. S. investor) Facility

rebates on cigarette exports as contemplated by one of the proposed
expropriation Mexican legislation and confirmed by Mexico's claims and
allowed the others to Supreme Court proceed under chapter 11. The Claim:
Feldman filed a formal notice of tribunal issued an interim decision
arbitration in April 1999 claiming that Mexico took on preliminary
jurisdictional issues actions, including refusing to allow CEMSA to on
December 6, 2000, and will export cigarettes with rebates of excise taxes as
hold a hearing on liability and

provided by law, which resulted in expropriation damages in July 2001.

of his investment. Later, he also cited violation of chapter 11's national
treatment provisions. He seeks $40 million in damages.

Arbitration Petitioner rules Respondent Action and Claim Status

Metalclad ICSID Mexico Action: Mexican municipality of Guadalcazar in

On August 30, 2000, the tribunal Corporation Additional

the state of San Luis Potosi refused to grant upheld claims by Metalclad
that (U. S. company)

Facility Metalclad a municipal license to operate a Mexico breached its
obligations

hazardous waste treatment facility and landfill under two sections of NAFTA
site and designated the Metalclad site as part of

chapter 11- expropriation and an ecological preserve.

minimum standard of treatment-

Claims: Metalclad claimed in January 1997 that and ordered Mexico to pay the
Mexico's refusal to grant a municipal license and investor $16.7 million.
Mexico the creation of an ecological preserve that petitioned Canada's
Supreme

included its facilities violated several provisions Court of British
Columbia to set of NAFTA chapter 11: national treatment, most aside the
award. On May 2, 2001,

favored- nation treatment, minimum standard of the court partially upheld
the

treatment, performance requirements, and award but also set aside the ruling
expropriation. Metalclad sought $90 million in

that the transparency provisions in damages. the NAFTA preamble could be
read into the obligation to provide fair and equitable treatment under

chapter 11's minimum standard of treatment provision. Waste ICSID

Mexico Action: State of Guerrero and city of Acapulco The tribunal dismissed
the case Management

Additional granted a 15- year concession to Waste

against Mexico on jurisdictional (U. S. company) Facility

Management (through Acaverde) in early 1995. grounds, stating in its award
that Acapulco agreed to pay Waste Management for the U. S. investor had not
met the waste collection and disposal services and

waiver requirements of chapter guaranteed that payment through Banobras, a

11. The U. S. investor resubmitted Mexican state- owned bank and Guerrero.

the claim on September 27, 2000.

Claim: Waste Management filed a notice of The new tribunal is not yet
arbitration on September 29, 1998, asserting

constituted. Acapulco, Banobras, and Guerrero failed to meet their contract
obligations, including payment for services rendered. The claim states that
these actions violated the minimum standard of

treatment and expropriation obligations of NAFTA chapter 11. The U. S.
investor is seeking $60 million in damages.

Arbitration Petitioner rules Respondent Action and Claim Status

Adams, et al. UNCITRAL Mexico Action: Mexican federal district court
decision in No arbitral panel has been (U. S. investors) 1995 and its
enforcement beginning in 1998 constituted.

delivered possession of disputed property to individuals claiming to be the
original Mexican landowners and evicted the U. S. investors by October 2000.

Claim: Adams, et al., filed a notice of arbitration on February 16, 2001,
claiming that Mexican government actions to exclude them from participating
in legal proceedings to determine

ownership and possession of the disputed land violated the national
treatment and minimum standard of treatment provisions of chapter 11.
Furthermore, they claimed the Mexican federal court decision caused actions
that resulted in the expropriation of the investors' possessions.

Adams, et al., is seeking $75 million in damages. ADF Group Inc.

ICSID United States Action: The Virginia Department of

The parties agreed to join, or (Canadian Additional Transportation
determined that ADF's proposal

combine, the jurisdictional and company)

Facility to fabricate U. S. manufactured steel in Canada

merits claims. The hearing will would not meet the Buy America requirements
of likely be scheduled for spring its contract with the Virginia Department
of

2002. Transportation.

Claim: ADF filed a notice of arbitration in July 2000 claiming that the U.
S. requirements that federally funded state highway projects use only
domestically produced steel violate NAFTA chapter 11's prohibition against
performance requirements. In addition, ADF claims that Buy America
requirements violate both the national

treatment and minimum standard of treatment provisions of chapter 11. ADF is
seeking damages of $90 million. The Loewen

ICSID United States Action: A jury awarded $500 million in A hearing on
jurisdiction was held Group

Additional compensatory and punitive damages in a civil in 2000 and the
tribunal issued a

(Canadian Facility suit against Loewen. Mississippi law requires, decision
in favor of the claimants, Company)

and the Mississippi Supreme Court ruled, that holding that the United States
can an appeals bond equaling 125 percent of the

be held liable under NAFTA award must be posted. Loewen settled the

chapter 11 for decisions of state case for $175 million. courts, even in
litigation between

Claim: Loewen filed a claim in October 1998 purely private parties.

alleging that the jury award and the Mississippi Another hearing on
competence Supreme Court action amounted to a denial of

and merits is scheduled for justice and violated the national treatment,
October 2001. minimum standard of treatment, and expropriation provisions of
NAFTA chapter 11. Loewen is seeking more than $600 million in damages.

Arbitration Petitioner rules Respondent Action and Claim Status

Methanex Corp. UNCITRAL United States Action: California banned the use of
MTBE, a

A jurisdictional hearing is (Canadian gasoline additive, by the end of 2002.
scheduled for July 2001. company)

Claim: Methanex submitted a claim in July 1999 alleging that the ban
illegally expropriates the firm's U. S. investment, discriminates against it
in favor of the U. S. ethanol industry, and denies it fair and equitable
treatment. Methanex is seeking

nearly $1 billion in damages. Mondev ICSID

United States Action: Mondev sued the city of Boston and the The
jurisdictional and merits International,

Additional Boston Redevelopment Authority for breach of phases were joined.
A tribunal Ltd.

Faci li ty and interference with a real estate contract. The order regarding
confidentiality was (Canadian jury found for Mondev and the court entered a
filed on February 27, 2001. A

company) $9.6 million judgment. The Massachusetts hearing will likely take
place in late Supreme Judicial Court overturned the ruling. 2001 or early
2002.

Claims: Mondev filed a notice of arbitration in September 1999 claiming that
municipal authorities' actions and the court ruling amounted to an
expropriation of Mondev's interest and a denial of justice, thus violating

NAFTA obligations to provide a minimum standard of treatment to foreign
investors. Mondev is seeking no less than $50 million.

Appendi x V

Objectives, Scope, and Methodology In preparation for considering future
free trade agreements, the Chairman of the Subcommittee on Trade, House
Committee on Ways and Means requested that we review the U. S. experience to
date with cases brought under NAFTA's environment and labor side agreements
and the treaty's chapter 11 investor- state dispute settlement provisions.
In performing this work, we studied the institutional structure and
principles of the side

agreements and chapter 11 on investment. We also examined the processes that
are used to investigate and settle disputes. Finally, we reviewed the cases
that have been initiated under the side agreements and investment
provisions, as well as the outcomes and disposition of these cases.

To obtain information on the institutional structures and principles, we
relied on our previous work in this area, and interviewed officials from the
U. S. Trade Representative, the Environmental Protection Agency, and the
Departments of Commerce, Justice, Labor, State, and Treasury. In addition,
we reviewed the NAFTA agreement and the labor and environment side
agreements.

To obtain information on the submission process of the side agreements and
chapter 11's investor- state dispute settlement process, we interviewed
agency officials at EPA, the Departments of Interior, Labor, State, Justice,
Commerce, Treasury, and the USTR. To further understand the

environmental and labor submission processes, we reviewed procedural
guidelines issued by the Commission for Environmental Cooperation and the
Department of Labor's National Administrative Office. To gain greater
insight into the investor- state dispute settlement process, we also

interviewed representatives from nongovernmental entities and reviewed the
United Nation's and World Bank's commercial arbitration rules referenced in
the NAFTA.

To obtain information on the cases initiated and their outcomes, we
interviewed agency officials from the EPA, the Departments of Interior,
Labor, State, Justice, Commerce, Treasury, the USTR, and the Commission for
Environmental Cooperation. We also reviewed case information provided by the
Department of Labor's National Administrative Office, the State Department,
and the Web sites of the Commission for Environmental Cooperation, the World
Bank, and Canada's Department of Foreign Affairs and International Trade.
Finally, we interviewed representatives of nongovernmental entities with
knowledge of the environment and labor submissions, as well as those
familiar with cases brought under NAFTA's investor- state dispute settlement
mechanism.

We conducted our work from February to June 2001 in accordance with
generally accepted government auditing standards.

Appendi x VI

GAO Contacts and Staff Acknowledgments GAO Contacts Phillip Herr (202) 512-
8509 Patricia Cazares- Chao (213) 830- 1021 Acknowledgments In addition to
those listed above, Janey Cohen, Kim Frankena, Ernie

Jackson, and Julia Souder made key contributions to this report.

(320052) Lett er

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GAO United States General Accounting Office

Page 1 GAO- 01- 933 North American Free Trade Agreement

Contents

Contents Page 2 GAO- 01- 933 North American Free Trade Agreement

Page 3 GAO- 01- 933 North American Free Trade Agreement United States
General Accounting Office

Washington, D. C. 20548 Page 3 GAO- 01- 933 North American Free Trade
Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Briefing Section I: Environmental Side Agreement

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Slide 7: Outcomes Of the 31 submissions made, only 2 have resulted in the
preparation of a factual record and its public release. One factual record
involved Mexico,

and the other involved Canada. The Secretariat is currently preparing
another factual record that involves Mexico. In June 2000, the Council
passed a resolution to have the Joint Public Advisory Committee conduct a
review of the history of submissions and the submission process. A final
report covering the issues raised during this review was recently released
by the Joint Public Advisory Committee.

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Briefing Section II: Labor Side Agreement Page 22 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 23 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 24 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 25 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 26 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 27 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 28 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 29 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 30 GAO- 01- 933 North
American Free Trade Agreement

Briefing Section II: Labor Side Agreement Page 31 GAO- 01- 933 North
American Free Trade Agreement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Briefing Section III: Investor- State Dispute Settlement

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Appendix I

Appendix I Monetary Enforcement Assessments and Trade Sanctions in the North
American Free

Trade Agreement?s Labor and Environment Page 49 GAO- 01- 933 North American
Free Trade Agreement

Appendix I Monetary Enforcement Assessments and Trade Sanctions in the North
American Free

Trade Agreement?s Labor and Environment Page 50 GAO- 01- 933 North American
Free Trade Agreement

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Appendix II

Appendix II Citizen Submissions Under the North American Agreement on
Environmental Cooperation

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Appendix II Citizen Submissions Under the North American Agreement on
Environmental Cooperation

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Appendix II Citizen Submissions Under the North American Agreement on
Environmental Cooperation

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Appendix III

Appendix III Submissions Under the North American Agreement on Labor
Cooperation

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Appendix III Submissions Under the North American Agreement on Labor
Cooperation

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Appendix III Submissions Under the North American Agreement on Labor
Cooperation

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Appendix III Submissions Under the North American Agreement on Labor
Cooperation

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Appendix IV

Appendix IV Cases Filed Under NAFTA's Chapter 11 Investor- State Dispute
Settlement Mechanisms Through May 2001

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Appendix IV Cases Filed Under NAFTA's Chapter 11 Investor- State Dispute
Settlement Mechanisms Through May 2001

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Appendix IV Cases Filed Under NAFTA's Chapter 11 Investor- State Dispute
Settlement Mechanisms Through May 2001

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Appendix IV Cases Filed Under NAFTA's Chapter 11 Investor- State Dispute
Settlement Mechanisms Through May 2001

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Appendix V

Appendix V Objectives, Scope, and Methodology

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Appendix VI

United States General Accounting Office Washington, D. C. 20548- 0001

Official Business Penalty for Private Use $300

Address Correction Requested Presorted Standard

Postage & Fees Paid GAO Permit No. GI00
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