The Treatment of SPS Measures Under NAFTA Chapter 11: Preliminary Answers to an Open-Ended Question

Abstract

NAFTA Chapter 11 permits eligible foreign investors to use binding international arbitration to seek compensation for the harmful economic impacts of most regulatory measures. This mechanism effectiYely provides a second avenue of redress for individuals affected by risk regulation, in addition to any remedies that may be available to their governments acting through the WTO. However, because not all risks are equal, neither are all regulations of equal importance. It follows that the international regimes, which regulate the use of these measures, must be able to differentiate between them. In this regard, there is a need to interpret the more general investment obligations of NAFTA to take into account the importance of regulating risks to human, plant, or animal life or health. This article explains the way in which principles drawn from much more detailed WTO sanitary and phyto-sanitary rules can be used to achieve this result.