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Globe and Mail columnist says Council of Canadians wrong on TransCanada NAFTA challenge


Globe and Mail columnist Barrie McKenna says the Council of Canadians is wrong about the TransCanada NAFTA challenge against the United States.

The $15 billion NAFTA Chapter 11 challenge from Calgary-based TransCanada asserts that US President Barack Obama’s decision in Nov. 2015 to deny a presidential permit for the Keystone XL pipeline was arbitrary and unjustified. While the company had reportedly spent $2.4 billion on the pipeline, the investor-state dispute settlement provision allows the company to sue for lost future profits as well.

McKenna writes, “It took barely a nanosecond for anti-trade activists to decry what they say is the real meaning of TransCanada Corp.’s multibillion-dollar Keystone XL pipeline lawsuit. …The Council of Canadians quickly [complained] that trade agreements enable companies such as TransCanada to thwart the democratic will of Americans to manage their environment and economy. Wrong. If there is a lesson in the Keystone saga, it is that Canadians should be thankful that NAFTA, the Canada-EU free-trade deal and the TPP give companies a tool to fight mistreatment at the hands of other governments.”

McKenna further argues, “Critics like to cast ISDS as a nefarious device that allows big companies to skirt legitimate environmental or health regulation. That’s a stretch. What these clauses do is give foreign investors access to an independent arbitration process when they believe they’ve been treated worse than domestic investors, or when their investments have been expropriated without fair compensation.”

But it’s not “a stretch” as McKenna claims. As of Jan. 1, 2015, Canada has been subject to 35 NAFTA claims, with 63 per cent of those claims challenges to environmental protection or resource management measures. And while McKenna praises the “independent arbitration process”, he does not explain why transnational corporations need a special system outside established court systems, nor does he acknowledge that investor-state tribunals are not judicially independent, that the judges are paid per case, and in that only investors can bring forward cases there is a strong incentive for judges to side with them to generate more case and more income for themselves.

There can be no doubt that the Keystone XL pipeline would have made the problem of carbon pollution worse, a key test for the pipeline that President Obama noted in 2013. A 2014 study published in Nature Climate Change suggests the carbon dioxide emissions from the pipeline would have been about 110 million tons per year. And US Secretary of State John Kerry was clear when he stated, “The critical factor in my determination [to reject Keystone XL] was this: moving forward with this project would significantly undermine our ability to continue leading the world in combatting climate change.”

The United States may be a long way from “leading the world in combatting climate change”, but it should have the right to reject a carbon-intensive pipeline.

The Council of Canadians believes that the decision of a democratically-elected government should not be subject to punitive damages in a secretive tribunal process by a transnational corporation that seeks to profit from the transport of a dirty fossil fuel that science says must remain in the ground to avert climate chaos. We agree with environmental lawyer Robert F. Kennedy who says, “[TransCanada is] asking to be paid not to do bad things”, and 350.org founder Bill McKibben who comments, “The idea that some trade agreement should force us to overheat the planet’s atmosphere is, quite simply, insane”.

The Council of Canadians campaigned against NAFTA in the early 1990s and called for the deal’s abrogation after it came into effect in 1994. We have also argued that there should be a provision in UN climate agreements – such as the COP21 climate accord reached in Dec. 2015 – that would shield governments from ISDS challenges when taking action, such as rejecting a pipeline, to limit climate change.

Further reading
TransCanada launches US$15 billion challenge over rejection of Keystone XL pipeline (Jan. 6, 2016)
Keystone XL: TransCanada’s embarrassing NAFTA lawsuit just the beginning (Jan. 7, 2016)