The Council of Canadians called on President Obama many time to reject Keystone XL, including at this Nov. 2011 protest outside the White House.
Calgary-based TransCanada Corp. is launching a US$15 billion North American Free Trade Agreement (NAFTA) Chapter 11 investor-state dispute settlement (ISDS) challenge against the United States over US President Barack Obama’s rejection of its proposed 830,000 barrel per day Keystone XL tar sands pipeline.
The Canadian Press reports, “TransCanada has filed a lawsuit against the Obama administration and plans to file a claim under the North American Free Trade Agreement over the U.S. government’s rejection of the company’s proposed Keystone XL pipeline. The company said Wednesday [Jan. 6] it has filed a notice of intent to initiate the NAFTA claim on the basis that the denial was arbitrary and unjustified. The firm says it will be looking to recover $15 billion US in costs and damages as a result of what it says is a breach of obligations under Chapter 11 of NAFTA.”
While TransCanada has spent $2.4 billion on the pipeline, which was slated to ultimately cost $8 billion to build, the company says, “The preliminary damages figure [of $15 billion] for the NAFTA claim takes into account the lost value of these investments, as well as the lost economic return.”
In terms of the Trudeau government’s response to this, the Toronto Star reports, “Adam Barratt, a spokesman for Foreign Affairs Minister Stephane Dion, had little to say on the matter Wednesday, although he noted the lawsuit is ‘not entirely unexpected’ and falls within TransCanada’s purview. ‘We’re aware of recent developments with this file and TransCanada’, he said. ‘As this is a matter which is expected to go before arbitration, or before a court, we don’t have a comment at this time.'”
As Barratt suggests, although Obama rejected Keystone XL in November 2015, there was speculation in November 2014 that a NAFTA challenge could happen.
At that time, Globe and Mail columnist Barrie McKenna wrote, “If Mr. Obama rejects Keystone, Ottawa should dust off NAFTA, file a formal trade challenge and demand the free trade in energy that the deal was supposed to deliver.” Financial Post columnist Terence Corcoran, trade lawyer Lawrence Herman, Carleton University professor Fen Osler Hampson, and former NAFTA negotiator Derek Burney have all made similar arguments.
Burney, who is now a director at TransCanada, says, “The whole point of open trade on the border for energy was, ‘you can’t restrict our imports and we can’t discriminate against your exports’. That’s the equation. You can’t put a tax at the border, you can’t have a separate price for domestic consumers – all that stuff that would be contrary to an open border.”
The Council of Canadians has called for both the abrogation of NAFTA and for the removal of the energy chapter from the deal. Council of Canadians chairperson Maude Barlow has stated, “We are demanding a Canadian Energy Strategy which features meaningful regulatory limits on greenhouse gas emissions, a just transition to conservation, energy efficiency and the rapid expansion of public and community-owned renewable energy. Intimately linked to these efforts is our trade campaign, which challenges agreements, especially NAFTA [and the Canada-EU CETA], which stand in the way of progressive change.”
We have also highlighted that US-owned fossil fuel corporations operating in the tar sands could sue Canada under NAFTA Chapter 11 for hundreds of millions of dollars in compensation in lost profits should restrictions be placed on water takings from the Athabasca River. It has been projected that water takings from the river for tar sands projection could climb to 505 million cubic metres within the next decade.
Ironically, in February 2008, when Obama was first seeking to be president, he commented, “I will make sure that we renegotiate [NAFTA]… I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced.”
The Council of Canadians also recently argued for a provision in the COP21 climate agreement that would shield governments from ISDS challenges when taking action to limit climate change. It has been estimated that the Keystone XL pipeline would have generated 22 million tonnes of greenhouse gas emissions a year.
Further reading
Columnists claim Keystone XL veto would be a NAFTA violation (Nov. 20, 2014)
The price of free trade is unchecked climate change (Sept. 12, 2014 article by Naomi Klein)
