The St. John’s Telegram reports today that, “More than a month after two oil companies claimed victory in a challenge against the province under a provision of the North American Free Trade Agreement (NAFTA), both the provincial and federal governments are still absorbing the ruling.” The article says, “the Council of Canadians called the ruling an example of multi-national corporations circumventing public policy in the interest of their bottom line,” adding that St. John’s chapter activist Bill Kavanagh is “looking to raise awareness locally on the decision and the implications of international trade agreements in general.”
Exxon Mobil and Murphy Oil have successfully convinced a NAFTA investor-state dispute panel (well, two out of three panelists) that a requirement to contribute a regular percentage of offshore oil profits to research and development in Newfoundland and Labrador is a prohibited “performance requirement” under the rules of the 1994 trade deal.
The decision has not been made public because the NAFTA panel “is seeking further information before issuing a separate decision on the exact penalty amount,” reports the Telegram. The companies were jointly asking for $65 million in damages for being unfairly asked to contribute a bit more to the provincial economy. Exxon Mobil was the world’s biggest public company in this year’s Forbes listing, with sales of $433.5 billion and profits of $41.1 billion.
A BAD PROCESS – RISKS IN CANADA-EU DEAL
“This case really, in the bigger picture, has to do with free trade and, in particular, some of these up-and-coming deals like (the proposed agreement with the European Union), so it was more of an opportunity for us to point out the failures and the shortcomings of some of these trade agreements,” says Kavanagh.
“Sustainable development, environmental rules and public health measures are all fair game for attack by corporations that feel their profits are being undermined,” adds Atlantic regional organizer Angela Giles, referring to the investor-state dispute process, which shows up in most Canadian free trade deals as well as standalone Foreign Investment Protection and Promotion Agreements (FIPAs). There are an estimated 3,000 global treaties containing NAFTA like investment protections that are increasingly used to challenge reasonable and legal public health, environmental and resource management policies.
Last week, the Council sent a letter to Newfoundland and Labrador Premier Kathy Dunderdale asking the provincial government to press the feds to seek a judicial review of the NAFTA decision. The letter also asks the Premier to take a stand against the right of corporations to sue governments in trade deals after the Exxon-Murphy loss and the previous AbitibiBowater settlement, which cost Canada $130 million in 2010.
In particular, the letter says there should be no investor-state dispute settlement process in either the Canada-EU Comprehensive Economic and Trade Agreement (CETA) or the Trans-Pacific Partnership, a nine-country economic integration pact which Canada and Mexico were invited to join during the G20 summit last month.
“There has been no response yet, but we don’t see any reason why we wouldn’t hear back from her (the Premier),” Kavanagh tells the Telegram. The article mentions that Ryan Cleary, an NDP MP from the island, has also called for a judicial review.
“The worst part of the NAFTA ruling is that it isn’t an aberration but precisely how the investment protections in the agreement are supposed to work,” says Cleary. “What hope does Newfoundland and Labrador, or any other province for that matter, have to promote sustainable development and local jobs when completely legal benefits plans can be knocked down as unfair investment restrictions on companies?”
Provincial Natural Resources Minister Jerome Kennedy tells the Telegram that, “We will take the appropriate time to review the decision of the tribunal… The ruling is technical in nature and requires time to examine. As NAFTA is the federal government’s agreement, we will consult with the federal government on next steps.”
On the R&D requirements, Kennedy says, “It is important that the oil and gas industry contribute to research and development, education, and training in Newfoundland and Labrador, and government will continue to advocate of the benefits of such investments present for both industry and the province.”
Finally, a federal government spokesperson says, “Our Government is disappointed by the Tribunal’s ruling,” which “is extremely technical and requires careful review.”
“Meanwhile,” concludes the Telegram, “the Canada-Newfoundland and Labrador Offshore Petroleum Board has declared no changes will be made to its guidelines, requiring the research and development spending, without a directive from both the provincial and federal governments.”
For more information on the NAFTA case against Canada brought by Exxon and Murphy Oil, see my June 4 blog. We’ll let you know when we hear back from Premier Dunderdale.