CAFTA Allows Foreign Firms to Circumvent Environmental Laws

The Central American Free Trade Agreement (Cafta) allows firms such as the Vancouver-based Pacific Rim company to challenge attempts by leaders of Central American nations to protect their environment from exploitation. Numerous government leaders in El Salvador have refused to allow Pacific Rim to extract gold in their country due to the negative impact that the extraction process has on the environment. Pacific Rim has proceeded to file a claim under a provision of Cafta, allowing it to bypass the domestic legal system of El Salvador and access an ‘investor-state’ international dispute system instead, where it can sue El Salvador for damages. While El Salvador is stepping up to defend itself, many are worried that a loss for this small, developing country could signal opportunities for other mining companies to take advantage of the Cafta provision and file similar claims.

To read more about this issue, please see Kevin Gallagher’s article – Stop Private Firms From Exploiting Poor States – in the Guardian.

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