The Negotiation, Diffusion, and Legacy of NAFTA Chapter 11: An Empirical Eulogy

Abstract

AbstractFollowing a three-year post-termination transition period to bring investor-state arbitration disputes, the investment protections afforded by Chapter 11 of the North American Free Trade Agreement (NAFTA) finally expired in June 2023. Chapter 11 was one of the most litigated, cited, commented, and copied investment treaties. An important, but largely ignored, part of its legacy is how the making of NAFTA Chapter 11 shaped its subsequent successful diffusion. Combining traditional legal assessment with computational text-as-data analysis, this article shows how the give and take during the negotiations generated buy-in on the part of Mexico and Canada and emulation by Latin American countries who helped to spread NAFTA Chapter 11 language globally. The link between the making and diffusion of NAFTA Chapter 11 highlights the power of negotiated compromise: sharing the pen with others may sometimes be the most effective way to write the rules that come to shape the world.