Europeans face investor-state challenges with CETA

The Guardian has reported, "For years, European and North American governments saw no need for treaties to protect investment flows between developed nations. ...This dynamic was perhaps accidentally disturbed by the conclusion of chapter 11 of the North American Free Trade Agreement (NAFTA), which saw the creation of a tripartite investment treaty between Canada, Mexico and the US in 1994. The idea was to provide north American businesses with the investor-state arbitration mechanism to challenge Mexico, the developing country in the party."

The article highlights, Europe's experience with investor-state claims began with "the conclusion of the energy charter treaty (between the European Union and fifty-one other countries as signatories, Canada having only observer status) to promote and protect investments in the new democracies of eastern Europe and central Asia... Like NAFTA, (the energy charter permits) western European investors...to bring claims against other European governments such as the German, French and British."

The most notable examples of this may be challenges launched by the Swedish energy company Vattenfall against Germany. Trade campaigner Stuart Trew writes, "A recent multi-billion dollar investor-case against Germany by the Swedish energy firm Vattenfall resulted in the City of Hamburg diluting its environmental rules on a coal-fired power plant, putting the health of the adjacent Elbe River at greater risk. That firm was emboldened by the decision to launch a second case under the Energy Charter Treaty demanding nearly Cdn$4.75 billion from the German government for its decision to let existing nuclear power stations go offline at the end of their life spans."

Europe is very likely see more investor-state claims under Canada-European Union Comprehensive Economic and Trade Agreement (CETA), should it be ratified. Timothé Feodoroff of the Transnational Institute says, "CETA will empower big oil and gas companies to challenge fracking bans and regulations through the back door. They would just need to have a subsidiary or an office in Canada." Pia Eberhardt, from Corporate Europe Observatory adds, "Members of the European Parliament should put the public interest ahead of investors’ and oppose an investor-state dispute settlement mechanism in CETA. It would pave the way for millions of Euros in compensation paid to big business by European taxpayers – for legislation in the public interest."

Possible scenarios:

1- What if England opted to stop paying higher water rates and bring its privatized water services back into the public realm? Canadian investors could challenge that. The Ontario Teachers' Pension Plan owns 27 per cent of Northumbrian Water Group Plc (which sells its water services to about 4.4 million 'customers' in England), and the Canada Pension Plan owns one-third of Anglian Water Services (which sells water services to approximately six million people in England). Both are highly profitable enterprises for these Canadian pension funds.

2- What if Romania were to pass a strict law in the coming years that prohibited the environmentally-destructive Rosia Montana mine from proceeding? Whitehorse-based, Toronto Stock Exchange-listed Gabriel Resources Ltd. has already threatened the Romanian government with 'litigation for multiple breaches of international investment treaties' for up to $4-billion if it doesn't approve the controversial gold mine.

3- What if European jurisdictions - beyond France, Bulgaria and Cantabria in northern Spain - decided to ban fracking? This past June, the Guardian reported, "A leading UK shale gas explorer (iGas) has said estimates of its resources in north-west England (in Cheshire) are considerably higher than previously thought and could meet gas consumption in Britain for decades." The Globe and Mail has noted, "IGas, which is 20 per cent owned by Calgary-based Nexen Inc., has been drilling in the Bowland basin, a large rock formation that stretches across much of England."

4- A spokesperson from the Greek opposition party SYRIZA has stated they "would cancel the gold mine contract if it comes to power.” This is in reference to the highly controversial and environmentally-destructive Skouries mine in northern Greece being pursued by Vancouver-based Eldorado Gold. What if SYRIZA were to come to power, were in a position to take action on their promise, and Eldorado Gold with CETA in their back pocket threatened to sue for lost profits?

5- Corporate Europe Observatory has pointed out that, "In May 2013, Slovak and Cypriot investors sued Greece for the 2012 debt swap which Athens had to negotiate with its creditors to get bailout money from the EU and the International Monetary Fund." This adds misery to misery, but Canadian investors in Greece might see an opportunity for themselves with this example.

CETA must be ratified by both the European Parliament and the legislatures of its 28-member countries.

European Parliament: In October 2011, it was reported that, "Over 100 MEPs have signed a statement (that calls) on Canada to withdraw its challenge of the European Union’s ban on Canadian seal products at the World Trade Organization, prior to any movement forward on the Canada-European Union Comprehensive Economic and Trade Agreement." In November 2012, 262 Members of the European Parliament - more than one-third of MEPs - voted in support of a moratorium on fracking in Europe. These are MEPs that we need to speak with about the threats posed by the investor-state provision in CETA.

Member countries: CEO has also pointed out that, "15 EU member states are known to have faced one or more investor-state challenges." They specify, "Czech Republic (20 claims), Poland (14), Slovak Republic (11), Hungary (10), Romania (9), Lithuania (5), Estonia, Germany, Latvia (all 3 claims), Slovenia and Spain (2 claims), Belgium, France, Italy and Portugal (all one claim)." These are countries that may be particularly attentive to our argument that the investor-state provision should be scrapped in CETA.

We have about two years to defeat the ratification of CETA - and Europe is an important political terrain for all of us to do so.

Further reading:

http://canadians.org/node/7879

http://canadians.org/node/4542

http://canadians.org/blog/ceta-would-hinder-water-remunicipalization-england

http://canadians.org/blog/vote-mine-romania-take-place-under-threat-investor-state-challenge

http://canadians.org/node/9609

http://canadians.org/node/8983