Washington, D.C. – Legislation to renew the President’s authority to negotiate new trade agreements could set the stage for unprecedented legal protections for foreign investors against local, state and federal laws. If not fixed, the legislation could cost taxpayers $32 billion in monetary damages and threaten many of our public health and safety laws, according to a new study released today by Taxpayers for Common Sense, a national budget watchdog organization.

“The current legislation provides foreign corporations more legal rights than provided to Americans,” said Joe Theissen, Executive Director at Taxpayers for Common Sense. “The prospect of imposing this new fiscal burden on U.S. taxpayers should be cause for grave concern during this period of national emergency and serious budget shortfalls.

According to The Fiscal Impacts of Investment Provisions in United States Trade Agreements, a study released today by Taxpayers for Common Sense, and written by two professors from Tufts University , the “investor protecti.png” provision could expose U.S. taxpayers to claims totaling up to $32 billion annually. “If not fixed, future trade agreements could subject the United States to massive financial liabilities,” continued Theissen.

Under current trade law, foreign investors operating in the United States are allowed to bring lawsuits to overturn federal and state laws that they deem to be unfair and costly to their business. Since the North American Free Trade Agreement (NAFTA), foreign interests have brought a number of suits seeking billions of dollars in damages from the federal government. The provisions in the trade agreement only apply to foreign investors, and grant no new legal rights to U.S. citizens.

A number of public officials, policy-makers, and members of the public have raised strong concerns about the investor protection provisions in future trade agreements. The National Conference of State Legislators, the National Association of Attorneys General, the National League of Cities, and the National Association of Counties have all urged the Senate to put measures in the fast-track bill that will require the investment provisions of all future trade deals to be consistent with U.S. law. Senator John Kerry (D-MA) is expected is offer an amendment later this week on the investor-related provision.

Many point to the pending lawsuit for $1 billion filed by the Canadian Methanex Corporation as a clear-cut case of why the investor-protection provisions needs to be fixed. Methanex is suing under NAFTA on grounds that a California public health law that bans the use of MTBE, a gasoline additive found to contaminate drinking water, will cut into Methanex’s future profits. There has already been more than $3 billion in lawsuits filed under the NAFTA investor-protection provisions. Other examples of cases include:

• A company called Group ADF filed a $90 million lawsuit under “Buy America” rules;
• Kenex, Ltd. filed a $20 million lawsuit against the U.S. government on its discriminatory policies against industrial hemp products;
• A funeral home company, called the Loewen Group filed a $725 million lawsuit saying that the state of Mississippi discriminated against them.

“Subjecting the United States to liability claims brought by investors from any nation will have a chilling effect on the enforcing our nation’s laws,” concluded Theissen.