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Canada-Europe trade deal threatens public water in Canada

I have just completed a week in Brussels with colleagues Stuart Trew, the Council of Canadians trade campaigner, Brent Patterson, CoC director of campaigns and communications, Larry Brown from the National Union of Public and General Employees and Scott Sinclair from the Canadian Centre for Policy Alternatives. We are here as part of a campaign against the Canada-EU Comprehensive Economic Trade Agreement (CETA). Round four of the negotiations, expected to conclude next spring, are underway. We have been meeting with members of the European Parliament and European civil society organizations to voice our concerns about a trade deal that isn’t really about trade, but about granting greater rights to corporations in both Europe and Canada. Both Stuart and Brent have blogged extensively about CETA.

I am here as the national water campaigner to examine impacts on public water and sanitation systems in Canada — one of the greatest threats CETA poses to the well-being and health of communities in Canada. We had two meetings with the chief negotiator for Canada who confirmed information we had obtained through leaked CETA text earlier this year that Europeans wanted access to Canadian water and sanitation services.

This is consistent with Europe’s international trade objectives elsewhere in the world. A recent report from Corporate Europe Observatory notes, “In February 2003, the EU’s requests to third countries were leaked and [it] became public that the EU was asking 72 countries to ‘liberalize’ their water services [in free trade agreements], providing unlimited market access and ‘national treatment’ for foreign firms. Many of the countries targeted had public-managed water sectors. The EU’s demands were clearly aimed at advancing privatisation to benefit the EU corporations that dominate the world’s private water markets.”

As Scott Sinclair pointed out in his report on CETA, “Negotiating from Weakness,” the European Commission has only recently retreated from its aggressive pursuit of markets for water and sanitation services in trade treaties with the Global South due to much public opposition in Europe. However, it appears Canada will not benefit from such sensitivities.

To be clear, European corporations already have access to Canadian muncipal services. Winnipeg city council just voted in favour of a 30-year contract with French water corporation Veolia. But under CETA, the legal rights of these corporations would be entrenched in an international agreement. While chief negotiator Steve Verheuil failed to acknowledge the links, this would make it far more difficult for municipalities to resist privatization of Canada’s public drinking water systems or remunicipalize once a contract is signed with the private sector.

Investment protection for European water corporations.

As Scott Sinclair has pointed there are currently very few barriers to trade between Canada and Europe. CETA goes beyond simply increasing trade. It grants greater rights to foreign investors. Among other protections, the investor-state clause of NAFTA, chapter 11, is likely to be reproduced in the agreement with Europe. This means, like American corporations, European corporations will soon be able to challenge governments in Canada when policies contradict investment rules — this would be new for Europe.

Among other rights, European corporations will be guaranteed “national treatment,” which means they will have the same rights as Canadian corporations. Europe is home to the largest water corporations in the world including Veolia, Suez and RWE Thames. Unlike NAFTA, the CETA includes access to municipal and provincial procurement, which means European corporations will be granted the same “national treatment” as public utilities. They will have the same access to municipal contracts and government subsidies as public utilities.

Canadian utilities are ripe for privatization

Despite a few notable shortcomings including First Nations reserves, Canada has one of the best public drinking water systems in the world, built with public funds and operated by highly trained public sector professionals. This system, however, has been starved of funds and is currently in need of $35 billion in funding for infrastructure upgrades an maintenance — that is if the system stays in public hands. The private sector estimates an infrastructure deficit for water and wastewater services of $90 billion.

Under the new funding requirements of the federal government’s Building Canada Fund, municipalities seeking more than $50 million in federal subsidies are required to explore P3 options. Unless privatization is on the table, muncipals are not eligible for funding. This means muncipalities have to now go through an elaborate process involving expensive legal fees before opting to keep services public. In 2006, Whistler had to spend over a million dollars in legal fees before giving into public pressure to maintain public services.

Things would become even more difficult under CETA for municipalities wanting to keep services public. European companies are seeking legal guarantees and a dispute settlement process that would grant them compensation if a panel rules they should have won a bid for a municipal service. Even if a panel rules in favour of a municipal government choosing against a private contract, it will make the entire process of procurement and tendering far more expensive for local governments.

Remunicipalization and CETA

There is a growing movement of municipalities reclaiming public services as a result of failed private water and sanitation projects. Communities like Hamilton Ontario, Grenoble France, and Maldonado Uruguay have taken services back from the private sector after disastrous experiences including rate hikes, corruption and the failure to meet environmental standards. Remunicipalization or de-privatization would become much more complicated once the rights of European water corporations are entrenched in an international trade agreement with a dispute settlement mechanism that is unaccountable to the local public and above domestic law.

Water conservation and local green job strategies threatened

As Steven Shrybman points out, muncipalities or provincial governments seeking to implement conservation strategies allowing municipalities to promote local green jobs may be threatened under CETA. As Shrybman points out, plans like those of the Capital Regional District of British Columbia’s to establish sewage treatment facillities that promote environmental innovation by providing a market for Canadian environmental services would be challenged under CETA provisions that prohibit “procurement terms that would require any bidder to source environmental engineering services or technologies from Canadian providers.”

In addition, the concept of “regulatory expropriation,” inherent in NAFTA’s investor-state provisions allows corporations to challenge new policies that threaten profit. Such policies are deemed a form of expropriation through policy change. Strategies like Ontario’s proposed Water Opportunities and Conservation Act which also claims to have a dual purpose of promoting water conservation strategies at the municipal level while creating markets for Canadian green technology may be challenged once the rights of European water corporations are under CETA. Provisions of the act that require public agencies to include water conservation and innovation in their procurement practices would be an impediment to the profits of multinational water corporations.

In fact, as documented by Corporate Europe Observatory, corporations like Veolia have lobbied hard to prevent local governments from adopting strategies that promote reduction in water consumption within Europe, favouring the promotion of water reuse technologies instead. Through CETA these corporations would have new powers to challenge local measures aimed at reducing water consumption.

Indigenous communities at risk

The federal government has failed miserably in its obligation to ensure access to water and sanitation services on First Nations reserves. A disproportionate number have lacked adequate infrastructure for generations, creating Third World conditions within a country known for its high standards of living. The Council of Canadians and Indigenous rights organizations are concerned that the deplorable conditions on First Nations reserves have been identified as a business opportunity for water corporations seeking new markets.

The public in Canada should pay closer attention to this sweeping trade deal given its ability to undermine the strong public drinking water and sanitation systems built over several decades to protect the health and well-being of our communities. Europeans who have campaigned against the neoliberalization of water and sanitation services in the Global South must turn their attention to CETA. Canadian communities, particularly Indigenous communities will be very poorly equipped to handle the threat of privatization from European water corporations once their rights are cast into a powerful international trade agreement.

Blog post written by Meera Karunananthan, National Water Campaigner, Council of Canadians