Free Fences and Windows by Naomi Klein

Agreement—including its controversial “Chapter 11” clause, which allows investors to sue governments—was in full effect. So Metalclad launched a Chapter 11 challenge, claiming Mexico was “expropriating” its investment. The complaint was heard last August in Washington, D.C., by a three-person arbitration panel. Metalclad asked for US$90 million, and was awarded $16.7 million. Using a rare third-party appeal mechanism, Mexico chose to challenge the ruling before the British Columbia Supreme Court.
    The Metalclad case is a vivid illustration of what critics mean when they charge that free trade deals amount to a “bill of rights for multinational corporations.” Metalclad has successfully played the victim, oppressed by what NAFTA calls “intervention” and what used to be called “democracy.”
    As the Metalclad case shows, sometimes democracy breaks out when you least expect it. Maybe it’s in a sleepy town or a complacent city, where residents suddenly decide that their politicians haven’t done their jobs and it’s time for citizens to step in. Community groups form, council meetings are stormed. And sometimes there is a victory: a hazardous mine never gets built, a plan to privatize the local water system is scuttled, a garbage dump is blocked.
    Frequently, this community action happens late in the game and earlier decisions are reversed. These outbreaks of grassroots intervention are messy, inconvenient and difficult to predict—but democracy, despite the best-laid plans, sometimes bursts out of council meetings and closed-door committees.
    It is precisely this kind of democracy that the Metalcladpanel deemed “arbitrary,” and it is why we should all pay attention. Under so-called free trade, governments are losing their ability to be responsive to constituents, to learn from mistakes and to correct them before it’s too late. Metalclad’s position is that the Mexican government should simply have ignored the local objections. And there’s no doubt that from an investor perspective, it’s always easier to negotiate with one level of government than with three.
    The catch is that our democracies don’t work that way: issues such as waste disposal cut across levels of government, affecting not just trade but drinking water, health, ecology and tourism. Furthermore, it is in local communities that the real impacts of free trade policies are felt most acutely.
    Cities are asked to absorb the people pushed off their land by industrial agriculture, or forced to leave their provinces due to cuts in federal employment programs. Cities and towns have to find shelter for those made homeless by deregulated rental markets, and municipalities have to deal with the mess of failed privatization experiments—all with an eroded tax base. The trade deals may be negotiated internationally, but it’s the locals who have to drink the water.
    There is a move among many municipal politicians to demand increased powers in response to this off-loading. For instance, citing the Washington Metalclad ruling, Vancouver City Council passed a resolution last month petitioning “the federal government to refuse to sign any new trade and investment agreements, such as & the Free Trade Area of the Americas, that include investor-state provisions similar to the ones included in NAFTA.” And on Monday, themayors of Canada’s largest cities launched a campaign for greater constitutional powers. “[Cities] are listed in the constitution of the late 1800s between saloons and asylums and that’s where we get our power, so we can be offloaded [and] downloaded,” explained Joanne Monaghan, president of the Federation of Canadian Municipalities.
    Cities and towns need decision-making powers commensurate with their increased responsibilities, or they will simply be turned into passive dumping grounds for the toxic fallout of free trade. Sometimes, as in Guadalcazar, the dumping is plain to see.
    Most of the time it is better