Council of Canadians co-releases paper that says ISDS must be rejected to protect the climate

Keystone XL Rally, 2012. FOE U.S.

The Council of Canadians, Friends of the Earth Europe, Food & Water Watch, the Transnational Institute and nine other groups based in the European Union and the United States have released a new 8-page briefing paper titled Oil Corporations Vs. Climate: How investors use trade agreements to undermine climate action.

The paper highlights how Calgary-based TransCanada is using the Chapter 11 investor-state dispute settlement (ISDS) provision in the North American Free Trade Agreement (NAFTA) to sue the U.S. government for $15 billion in "compensation", including for lost future profits, relating to the rejection of the Keystone XL tar sands pipeline.

It notes, "Rather than learning lessons from trade agreements like NAFTA, governments in the United States, the European Union, Canada, and many other countries are now pushing for even more trade and investment agreements that would expand the very tool that TransCanada is using to challenge the rejection of the Keystone KL pipeline: the investor-state dispute settlement system which empowers corporations to sue governments for up to billions of dollars in private trade tribunals." Those deals include the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Trans-Pacific Partnership (TPP), and the US-EU Transatlantic Trade and Investment Partnership (TTIP).

The paper explains, "While the exact form and structure of the ISDS proposals might differ slightly from one agreement to the other, they all give foreign investors extremely broad rights and empower them to ask arbitration tribunals not accountable to any domestic legal system to order host governments to pay financial compensation for regulations and laws that they think get in the way of those rights." And it notes, "NAFTA, the free trade deal between Canada, the USA and Mexico that came into effect in 1994, was the first trade deal among developed countries to include an investor-state provision. As a result of NAFTA, Canada now has faced more ISDS challenges than any other developed country in the world."

That makes it all the more curious (and wrong) that Canadian prime minister Justin Trudeau is pushing for the implementation of CETA with its ISDS provisions (his trade minister has stated, "I think CETA will be really the gold standard of trade agreements."), has not ruled out the ratification of the TPP (in its defence of that deal his government says, "Our experience under the NAFTA demonstrates that neither our investment protection rules nor the ISDS mechanism constrain any level of government from regulating in the public interest."), and supports ISDS in the Canada-India Foreign Investment Promotion and Protection Agreement (in which Canada has also rejected India's demand that investors pursue disputes in domestic courts for at least five years before moving on to international arbitration).

As for the NAFTA challenge over the Keystone XL, the Trudeau government, which supports the pipeline, has stated the investor-state claim was "not entirely unexpected" and falls within TransCanada’s purview.

And the paper says, "In order to tackle the climate crisis, the U.S., EU, Canada and other countries need to reject 'VIP' treatment for corporations and say no to any trade agreement that includes special rights for foreign investors. Doing so is critical in the fight to protect our communities, our democracy, and our climate." Friends of the Earth Europe campaigner Colin Roche, one of the paper's authors, adds, "Tar sands are a climate killer, and the Obama Administration was right to block Keystone XL. Trade policy should not be a backdoor for corporations to challenge or dissuade measures to tackle climate change. It’s time to drop investor-state dispute mechanisms in any form, stop harmful trade deals and start taking necessary action to stop climate destruction."

Other organizations that have signed on to the report include:, Bold Nebraska, Friends of the Earth U.S., Greenpeace, Powershift, Oil Change International and Sierra Club (from the United States) and Corporate Europe Observatory, and Transport and Environment (from the European Union).

To read the briefing paper, please click here.

Further reading
TransCanada launches US$15 billion NAFTA challenge over rejection of Keystone XL pipeline (Jan. 6, 2016)
Barlow calls for protection from ISDS challenges in Paris climate agreement (Oct. 2, 2015)