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Climate leaders don’t build pipelines, nor do they back NAFTA

Council of Canadians chairperson Maude Barlow protests the Canada-US FTA on the day of its signing, January 1988.

Responding to US president-elect Donald Trump’s condemnation of the North American Free Trade Agreement (NAFTA), the Trudeau government has very quickly signalled its willingness to renegotiate NAFTA.

That said, the Liberal government has been unwilling to disclose to the public what provisions it would renegotiate, has not committed to any kind of transparent and accountable public process in advance of opening these talks with the Trump administration in January-February 2017, and maintains that NAFTA has been a beneficial agreement for Canada.

Council of Canadians chairperson Maude Barlow has written, “One of the most egregious aspects of the Canada-US Free Trade Agreement was that it wiped out the long-standing Canadian policy that sufficient supplies to serve Canadian needs had to be guaranteed before exports were granted. Most important, the FTA, and NAFTA after it, placed strict limits on the ability of our government to curtail energy exports in times of Canadian need or for environmental purposes.”

She explains, “The deals say that Canada must maintain at least the same level of oil and gas exports to the United States as it had supplied for the past thirty-six months. Only if Canadian consumption is cut proportionately, and then only in times of crisis, could the Canadian government claim jurisdiction over its own energy resources.”

Author-activist Gordon Laxer has commented, “The clause was crafted to allow petro-corporations, most of them foreign, to export as much Canadian oil and natural gas to the U.S. as possible. It was written before the end of the age of cheap oil and before we recognized the looming catastrophe of climate change.”

He adds, “Proportionality, the de facto, mandatory-exporting clause applies only to Canada, since Mexico refused it.”

Laxer highlights, “Alberta’s oilsands can’t be greened – they must be phased out. So must oil and natural gas exports. It’s the production of oil and natural gas, not in their use in transportation in Canada (cars and trucks), that is this country’s biggest source of greenhouse gases” He further explains, “The first step is to cap and then phase out the Sands over fifteen years. Canada can meet its target of reducing carbon emissions by 80 per cent if it phases out Sands oil and relies instead on our slowly falling output of conventional oil and natural gas as transition carbon fuels to get Canadians to a low-carbon future run on renewables.”

According to the US Energy Information Administration, the US imported 3.76 million barrels a day of oil from Canada. That same year Canada consumed 2.32 million barrels a day. As a result of the proportionality clause, Canada could not end oil exports to the US, phase out the tar sands by 2040 and then rely on conventional oil until 2050 when it would then fully transition to a 100 per cent clean energy economy.

It is more widely known that NAFTA also includes the Chapter 11 investor-state dispute settlement (ISDS) provision. That’s the provision that allows transnational corporations to sue democratically-elected governments over public interest measures, most commonly to protect the environment, in private tribunals for decisions and legislation that impact future profits.

In January of this year, Calgary-based TransCanada Corp. used that provision to launch a US$15 billion 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. 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.”

If the Keystone XL pipeline moves forward, as both Trudeau and Trump want, it would generate about 22 million tonnes of greenhouse gas emissions a year.

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.

Barlow has stated, “We have demanded an energy strategy with 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, which stand in the way of progressive change.” The Council of Canadians has also signed the Leap Manifesto which states, “We call for an end to all trade deals that interfere with our attempts to rebuild local economies, regulate corporations and stop damaging extractive projects.”

And related to this we also have argued for a provision in United Nations climate agreements that would shield governments from ISDS challenges when taking action to limit climate change.

To meaningfully tackle the climate crisis, the corporate rights that NAFTA gives to Big Oil must be rejected.