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ICS ‘reform’ in CETA would still allow worst NAFTA Chapter 11 challenges

Council of Canadians trade campaigner Sujata Dey speaking against NAFTA at the “CETA: TTIP in a Canadian disguise” conference at the European Parliament in Brussels earlier today.

The so-called Investment Court System (ICS) ‘reform’ now in the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) would still allow the most controversial Investor-State Dispute Settlement (ISDS) challenges launched under the North American Free Trade Agreement (NAFTA) to proceed.

This is the finding of the new report Investment Court System put to the test published by five of our allies: the Canadian Centre for Policy Alternatives, Corporate Europe Observatory, Friends of the Earth Europe, Forum Umwelt und Entwicklung, and the Transnational Institute.

Their media release notes, “The [European] Commission promised that its new approach to investment protection … would ‘protect the governments’ right to regulate and ensure that investment disputes will be adjudicated in full accordance with the rule of law’. Members of the Commission promised that some of the most egregious cases, which have come to symbolize the injustices and wrongs of ISDS, would no longer be possible under the ‘reformed’ system.”

It is notable too that after the Trudeau government approved ICS within CETA, trade minister Chrystia Freeland stated, “There have been some modifications to the investment chapter to reflect the shared intent of Canada and the EU to strengthen our provisions on the right to regulate.” Environment and climate change minister Catherine McKenna went so far as to say, “[CETA is] a green trade deal”. And even with its ISDS provision still intact, Prime Minister Justin Trudeau had instructed Freeland to “develop strategies to implement” the deal.

This report puts the claims of the “right to regulate” to the test by examining five ISDS challenges including: TransCanada’s US$15 billion NAFTA challenge against the United States over US president Barack Obama’s rejection of the Keystone XL 830,000 barrel per day tar sands pipeline, Lone Pine’s $250 million NAFTA challenge over Quebec’s moratorium on fracking for oil and gas under the St. Lawrence River, and Bilcon’s US$300 million NAFTA challenge against an environmental impact assessment that stopped the construction of a quarry and marine terminal in a sensitive coastal area.

The report finds that, “Close analysis of each case shows that every one of these controversial disputes could still be launched and likely prosper under ICS. There is nothing in the proposed rules that prevents companies from challenging government decisions to protect health and the environment. And there is nothing to prevent arbitrators from deciding in their favour, ordering states to pay billions in taxpayer compensation for legitimate public policy measures. In other words, put to the test, the Investment Court System would fail to prevent any of these controversial cases from happening.”

The report also finds that “the right to compensate investors for loss of (future) profit remains, making cases such as TransCanada’s exorbitant claim for $15 billion in damages for an unbuilt pipeline more likely” and that “the interpretation of the expansive rights afforded to corporations and the ill-defined restrictions will still depend on for-profit adjudicators, and not on public, independent judges”.

The Council of Canadians and its allies have consistently rejected the so-called ICS reform since it was first proposed in the US-European Union Transatlantic Trade and Investment Partnership (TTIP) negotiations and later when it was proposed that the ISDS provision in CETA be switched out with the ICS clause.

We call on the Canadian government not to sign CETA. Currently, Prime Minister Trudeau is scheduled to sign the deal at a Canada-EU summit on October 27 in Brussels. We also call on the 190 Members of the European Parliament who are part of the Group of the Progressive Alliance of the Socialists and Democrats in the European Parliament (the S&Ds) – who were critical of ISDS but who have been more accepting of ICS – to vote against the ratification of CETA. This ‘free trade’ deal is expected to be voted on in the European Parliament in November-December of this year or early in 2017.

For more on our campaign to stop CETA, please click here.