The Applicability of NAFTA to the Subsidization of U.S.-Based NHL Teams: Legal and Economic Perspectives

INTRODUCTIONN recent years, there has been a proliferation of regional free trade agreements worldwide.The major regional trading blocs are the European Union (EU), North American Free Trade Agreement (NAFTA), the Southern Cone Customs Union (MERCOSUR), and the Andean Pact.'When the framers of international trade agreements draft various clauses in an agreement, they presumably have some pre-conceived notions as to the types of situations to which each clause is intended to apply.Sometimes, however, the legal drafting of the agreement is such that it allows certain clauses to be used for purposes not originally considered or intended by the framers.Chapter 11 of NAFTA is one such example of this unintended application.Chapter 11 requires the U.S., Canadian, and Mexican governments to provide "fair and equitable treatment and full protection and security ' 2 to investments of foreign companies.Specifically, Chapter 11 allows companies in a NAFTA country to sue governments of other NAFTA member countries for compensation, if their investments have been hurt by the host countries' laws or regulations. 3Thus, a private business could initiate legal action against a foreign government under NAFTA, even though NAFTA is an international trade agreement between sovereign states.