During the debate surrounding the U.S.-Peru Free Trade Agreement (FTA) in 2007, many observers warned of the dangers associated with its extreme foreign investor rights and private “investor-state” enforcement that mirrored provisions in the North American Free Trade Agreement (NAFTA). These extreme investor provisions in the U.S.-Peru FTA empowered foreign firms to obtain compensation over any government action – health, environmental, zoning, labor, or other policies – that they claim undermined their “expected future profits”.

Unfortunately, the first “investor-state” claim brought against Peru under the U.S.-Peru FTA illustrates that the dangers of this system for Peru are not hypothetical. Renco Group Inc., a company owned by one of the richest men in the United States, is simultaneously using the investor-state system to demand $800 million from Peru’s taxpayers 1 and to derail a U.S. court case seeking compensation for children in La Oroya injured by toxic contamination. 2 The dispute relates to a metal smelter in La Oroya, Peru owned by Renco subsidiary Doe Run. La Oroya has been designated as one of the top 10 most polluted sites in the world. 3 Particularly the community’s children are suffering from the effects of pollution levels far above international standards.....

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