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Trudeau Liberals may choose to ‘opt in’ on controversial NAFTA Chapter 11 investor-state provision

The Trudeau Liberals may choose to ‘opt in’ to NAFTA’s Chapter 11, the controversial investor-state dispute settlement provision.

The Toronto Star reports, “When it comes to the mechanism in chapter 11—which allows investors to sue when they feel they’ve been unfairly treated by a foreign government regulation or policy action – Ottawa says it is open to improving the chapter, to establishing standalone, professionally trained panels of trade judges to assess claims. However the Canadian sources said while Canada wants to strengthen the system, the U.S. demand that it be an ‘opt-in’ system, which would give domestic courts the power to rule if a country did not opt in, would weaken it.”

The article highlights, “‘They’d expect the U.S. would opt out but Canada and Mexico would opt in’, said one official.”

The Council of Canadians has opposed the Chapter 11 provision for 24+ years, but both Liberal and Conservative governments have defended it.

Most recently, a Canadian Centre for Policy Alternatives (CCPA) study found that Chapter 11 had cost taxpayers $95 million in unrecoverable legal fees, $219 million in awards and settlements, and that Canada faces eight active investor-state claims that combined seek more than $475 million in damages.

In January 2015, the CCPA highlighted, “Sixty three per cent of claims against Canada involve challenges to environmental protection or resource management measures.”

Toronto Star national affairs columnist Thomas Walkom recently commented, “But the raw figures don’t capture the full absurdity of Chapter 11. In the cases it lost, Canada was pursuing public policy goals that in most instances were reasonable and in all lawful.”

Walkom adds, “[Chapter 11] has hurt Canada and benefitted the U.S. Yet Trump wants to scrap it and Prime Minister Justin Trudeau wants to keep some version of it. …Let us hope that Ottawa quickly agrees to negotiate it out of any deal that might emerge — before Trump wises up and changes his mind.”

At this moment, it does not appear that the Trudeau government will do that.

It’s important – though clearly obvious – to highlight that this move by the Trump administration (which is made up of billionaires who are rapidly gutting basic protections for workers and the environment) isn’t because it is concerned by provisions that enshrine corporate rights and undermines the public interest. Rather, U.S. Trade Representative Robert Lighthizer has commented, “I’m always troubled by the fact that non-elected non-Americans can make the final decision that the United States law is invalid. This is a matter of principle I find offensive.”

But why is the Trudeau government so adamant about Chapter 11? Maybe it’s because the Business Council of Canada (which represents more than 150 of the biggest corporations in Canada, including 29 subsidiaries of US corporations) says, “This was a deal breaker for Canada in the original NAFTA and it will be for Canadian companies in the new NAFTA framework.” And Politico has reported that the US oil and gas sector (which is heavily active in Canada) wants Chapter 11 to stay in NAFTA.

Meanwhile, a poll conducted for the Council of Canadians by EKOS Research in September 2017, found that 63 per cent of respondents said Chapter 11 should be eliminated from NAFTA.

So far, the Trudeau government appears to be opting to side with transnational corporations rather than the public interest.