Backroom deals on NAFTA and Kinder Morgan endanger the climate

NAFTA and Climate

Op-ed: By Maude Barlow and Sujata Dey, published in Ricochet, April 20, 2018

Pipeline giant’s putting the squeeze to the feds with Chapter 11 threat looming

On the one hand, the federal government is negotiating with Kinder Morgan, trying to find ways to bail out the company’s Trans Mountain crude oil pipeline expansion to the B.C. coast. On the other front, Foreign Affairs Minister Chrystia Freeland is off to Washington to renegotiate NAFTA; some say a deal is imminent.

While the two issues may seem separate, they are in fact hyper-connected. The link: NAFTA’s Chapter 11.

In the Trans Mountain negotiations, Kinder Morgan has used this as a stick, suggesting that, if the B.C. government or any government restricts its project, it could retaliate with a Chapter 11 suit. Their bluff seems to have paid off; the government is considering investing up to $2 billion in the project. This illustrates the power of Chapter 11 threats in changing public policy in a transnational oil corporation’s interest.

The Council of Canadians and many labour and environmental groups have long been exposing the ravages of Chapter 11, a rule used by corporations to sue governments when public policy decisions affect their investments. Canada is the developed-world country most often sued by corporations.

Recently, together with leading economists in the U.S., Mexico, and Canada, we went further in our analysis. A joint report with the Sierra Club in the U.S. and Greenpeace Mexico, NAFTA 2.0: For People or Polluters?, reveals how NAFTA has been a climate opponent, guiding policy decisions away from renewables, towards fracking, tar sands oil and overall fossil fuel extraction in all three countries, making it impossible for any NAFTA member to meet Paris commitments.

It is not just Chapter 11, but a whole slew of policies. Renegotiation has not addressed these problems. Instead, it entrenches and expands the ability of corporations to evade and challenge environmental protections.

For example, Canadian report author Dr. Gordon Laxer, a former Council of Canadians board member and Professor Emeritus at the University of Alberta, shows that energy proportionality, a rule guaranteeing energy export levels to the U.S., prevents Canada from eliminating 1,488 megatonnes of greenhouse gas emissions. To put this figure in perspective, that is double Canada’s current emission level and 12 times greater than its 2050 climate pollution target.

Instead of questioning proportionality and Chapter 11 investor state dispute settlement mechanisms, Canada is arguing for non-binding and decorative language on protecting the environment. In current negotiations, there is talk of extending the proportionality clause to Mexico, which rejected it during the initial negotiations.

There is also talk of locking in Mexico’s privatization of national energy company Pemex. This would also remove a possible mechanism that Mexico could use to transition to renewables.

And while the U.S., ironically, even with Trump’s climate denial, has asked for Chapter 11 to be taken out of the agreement, Canada has been digging in its heels to protect it, despite the fact that many Canadians would probably support its elimination.

If NAFTA 2.0 is to live up to its hype as a modern 21st century agreement, Minister Freeland and company must come up with true solutions to the very modern global climate crisis, in actions and solid policy, not just in green-tinted preambles and fuzzy soft-lens sound bites.

Sujata Dey is the Trade Campaigner and Maude Barlow is the Honorary Chairperson of the Council of Canadians.