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Trudeau seeks ‘middle ground’ with Trump on Chapter 11 during 6th round of NAFTA talks

On the first day of the 4th round of NAFTA talks in October 2017, petitions from The Council of Canadians and numerous allies calling for an end to Chapter 11 were presented on Capitol Hill in Washington, DC.


What “middle ground” is the Trudeau government seeking to be able to maintain the Chapter 11 investor-state dispute settlement provision in NAFTA?


The Globe and Mail reports that the Trudeau government “is hoping to hammer out a compromise with the United States and Mexico on a key provision that allows corporations to sue governments in front of special tribunals” during the 6th round of NAFTA talks taking place in Montreal this week.


The article notes, “The Trump administration wants the right for countries to opt out of the Chapter 11 process, arguing it infringes on national sovereignty. Ottawa, meanwhile, has proposed that the tribunals be made more efficient along the lines of the dispute-settlement mechanisms in Canada’s free-trade deal with the European Union. That process includes a dedicated roster of judges and an appeals process. Now, Canada is hoping to revisit the matter to see whether it can find some middle ground with the United States, said sources briefed on Canada’s game plan for the talks.”


The text of the Trudeau government’s counter-proposal on ‘investment protection’ has not been made public and therefore not available for scrutiny and debate.


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


Global Affairs has stated, “NAFTA Chapter 11 establishes a framework that provides investors with a predictable, rules-based investment climate. While disputes are a normal part of every trade relationship, they represent a very small portion of the billions of dollars in investment that Canada attracts and the billions that Canadian companies invest abroad.”


And in July 2017, Prime Minister Justin Trudeau commented, “A fair dispute resolution system is essential for any trade deal that Canada signs on to and we expect that that will continue to be the case in any renegotiated NAFTA.”


On August 15, 2017, just before the first round of NAFTA talks took place, the CBC reported that Foreign Affairs minister Chrystia Freeland wanted to reform “the investor-state dispute settlement process to ensure governments can pass regulations in the public interest without facing corporate legal action.”


That text was not made public either, but The Globe and Mail did report on September 13, 2017 that, “The goal of Freeland and her negotiating team is to revamp Chapter 11 so it more closely mirrors the investor-state dispute-resolution mechanism that forms part of the 2016 Canada-European Union trade deal…”


The Trudeau government made this proposal even though this report found that the investment court system in the Canada-EU deal would still allow the most controversial Chapter 11 challenges to proceed including Lone Pine’s $250 million challenge over Quebec’s moratorium on fracking for oil and gas under the St. Lawrence River and Bilcon’s US$300 million challenge against an environmental impact assessment that stopped the construction of a quarry and marine terminal in a sensitive coastal area in Nova Scotia.


Almost 23,000 people have supported the demand in this Council of Canadians online action alert that calls on Trudeau to “eliminate Chapter 11 investment provisions that allow corporations to sue governments over public interest laws or policies that hurt future corporate profits”.


This week may tell us if the Trudeau government is forced to concede on this – for the wrong reasons – by the Trump administration.

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