In September 2013, the oil and gas company Lone Pine Resources announced it was suing Canada for $250 million in damages under investment rules in the North American Free Trade Agreement (NAFTA). The target of the lawsuit was a partial moratorium on shale gas development (fracking) in the province of Quebec.
In its notice of arbitration, Lone Pine complained of the provincial government's "arbitrary, capricious, and illegal revocation of the Enterprise's valuable right to mine for oil and gas under the St. Lawrence River in violation of Chapter Eleven of the NAFTA."
It may seem incredible that a trade deal would give companies a right to profit from anything, let alone an industrial process as controversial as fracking. It is incredible but true.
And the Harper government is about to give these same "rights" to European companies in a nearly completed Comprehensive Economic and Trade Agreement (CETA). A new poll commissioned by the Council of Canadians suggests most people in Canada are opposed to the idea.
The Environics telephone survey, conducted between Nov. 14 and 20 among a national sample of 1,003 adults, found broad support (73 per cent) for the idea of free trade with Europe. This is consistent with previous surveys from many other polling companies showing high support for more transatlantic trade.
But according to our poll, 54 per cent of Canadians said they oppose giving special protections to EU firms, "similar to the protections American investors in Canada have as part of free trade with the U.S. [that] let them sue Canadian governments if they feel a government policy, including an environmental policy, unfairly affects their investment or profits in Canada."
If investor lawsuits were a rare occurrence, this wouldn't be so interesting. But they're not. In fact, investor-to-state dispute settlement has grown exponentially over the past decade along with the number of bilateral and regional investment treaties in play globally, estimated at around 3,300 and growing.
Canada's first investment protection treaty was in NAFTA. It guarantees that U.S. and Mexican companies will receive treatment that is no worse than that offered Canadian firms, and also treatment as good as Canada offers to the companies of any other country. Fair enough.
But NAFTA, and all Canadian investment treaties since, also guarantee fuzzy but very strong protections with names like "minimum standards of treatment" or "fair and equitable treatment." Exactly what they mean is left up to investment arbitration panels with no obligation to work within the limits of national laws.
As a result of this ambiguity, and the power of paid private arbitrators to interpret treaties like NAFTA or CETA, the definition of "fair and equitable treatment" has expanded over the years to favour investors over government. Not surprisingly, it is the most frequently cited insult by corporations and private investors in investor-to-state disputes globally.
Under NAFTA's investor-to-state dispute process, Canada has been sued at least 30 times for breaches of these investor "rights" in NAFTA. The government has lost or settled half a dozen claims totalling about $160-million in payouts to U.S.-based corporations. Several corporate lawsuits involved environmental policies. In one case, the government repealed a ban on trade in gasoline containing a suspected neurotoxin after Canada has taken to NAFTA investment arbitration.
Canada has also settled several cases before investment tribunals could reach their final decisions. This happened in 2010 in a NAFTA lawsuit from pulp and papermaker AbitibiBowater (now Resolute Forest Products), which claimed its "rights" to timber and water were unfairly expropriated by the Newfoundland and Labrador government.
There are no private ownership rights for these resources under Canadian law but NAFTA gave extra-legal rights to AbitibiBowater. The federal government paid the firm $130-million compensation. AbitibiBowater left the province forever without remediating the site or paying severance to its workers, which Newfoundland and Labrador government covered.
There are eight ongoing NAFTA investment lawsuits, including the Lone Pinie case, a $500-million challenge to two court decisions overturning pharmaceutical patents for lack of evidence of their usefulness, a temporary moratorium on off-shore wind farms in Ontario, and the federal government's plans to build a second international crossing between Windsor and Detroit to improve trade flows.
Despite this embarrassing record, Canada continues to pursue investment protection treaties with dozens of countries, including a controversial Foreign Investment Protection Agreement (FIPA) with China that cannot be cancelled for 15 years and would live on for 15 more if it ever was. (The FIPA has not been ratified yet because of a B.C. First Nation is challenging it in court.)
The CETA investment chapter, which Howard Mann of the International Institute for Sustainable Development recently called "the most investor-friendly set of corporate rights" Canada has ever negotiated, would live on for 20 years in the unlikely event it was cancelled. European corporations pursue more investor-to-state lawsuits than corporations from any other country in the world.
Combined, these two treaties alone (China and CETA) will mean that dozens of future environmental, resource conservation and other public interest regulations and laws will end up in front of private arbitration panels, deciding if the policies are "fair" or not for foreign investors. Considering the environmental and social record of this Conservative government, that might be point of signing these deals.
But they sign them without a public mandate. In November, more than 100 Canadian, Quebec and European organizations published a statement opposing the investment protections and investor-to-state dispute process in CETA. The Council of Canadians poll shows the public is also uncomfortable with the idea.
It's time to reverse course on corporate rights treaties -- to balance the desires of investors to profit against our democratic right to govern in the broader public interest.
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