North American Free Trade Agreement:

U.S. Experience With Environment, Labor, and Investment Dispute Settlement Cases

GAO-01-933: Published: Jul 20, 2001. Publicly Released: Aug 21, 2001.

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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.

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