The Free Trade Area of the Americas (FTAA) agreement on services - like the WTO's General Agreement on Trade in Services (GATS) - will make it increasingly difficult for governments to limit multinational investment in these activities or regulate them to protect the environment. These services rules will require that governments open their markets to foreign service operators and will impose restrictions on the laws and regulations that governments can use to ensure environmental protection.

Because the services provisions of the FTAA could include operations that actually take place within a foreign country, these rules will give broad rights to multinational service operators very much like those in an international investment agreement. Yet - just as in the GATS - FTAA services rules lack any provision giving countries an exception from the rules in order to conserve exhaustible natural resources, and the exception for animal and plant life is extremely narrow.

Moreover, the FTAA will be even more problematic than the WTO services agreement. Instead of a system in which countries have some options about which service sectors they will liberalize, the FTAA could require that all countries open their markets in all service sectors.

The result is likely to be a substantial increase in environmental damage as harmful service operations expand. For example, fossil fuel extraction and mining are already among the leading causes of forest destruction. The hotel construction and tourism activities that already create great pressure on many ecologically sensitive areas, including beach areas and coral reefs, will also likely be expanded. Meanwhile, water extraction and supply services will be increasingly privatized, even in areas where private operators may deplete scarce water supplies.

The key provisions of the FTAA services agreement will result in the following:

Governments - including local or state governments - could be prohibited from setting limits on the size or quantity of service operations, including environmentally-harmful operations such as oil rigs and pipelines, water extraction, waste incineration, and cruise liners.

Governments could be required to prove to international tribunals that their environmental laws and regulations are the ones least burdensome to multinational service corporations - whether or not the laws and regulations are the most enforceable, the least expensive, or the most favored by the public. Restrictions on domestic regulation could also force governments - including local and state governments - to let foreign governments and multinational corporations participate in the process of setting new environmental standards.

Governments could be required to give more leeway to foreign corporations than to domestic ones if a foreign service corporation stands at a competitive disadvantage because of an environmental law or regulation. This is true even if the environmental standard was intended to treat all service operations similarly and is the most effective way to protect the environment.

Some possible scenarios under the FTAA services agreement include the following:

A country could be forced to override its own environmental regulations and let a multinational energy corporation build an unlimited number of oil rigs in an ecologically sensitive area.

A hotel chain could insist on buying land and building hotels in environmentally sensitive beach areas or forests.

A local government could have to publicize to foreign governments and corporations any environmental improvements in its waste disposal regulations and justify its decision not to allow the construction of incinerators or its decision to require certain levels of recycling.

A multinational water supply company could force a local government to give it unlimited access to valuable acquifers.