Global News reports that while the new United States Mexico Canada Agreement (USMCA) is similar to its NAFTA predecessor in many ways, the removal of Chapter 11 – the investor-state dispute settlement (ISDS) provisions that allowed foreign corporations to sue the governments over policies and regulations that restrict their profits, even if they are done in the interest of the environment or people’s health – is a major victory according to some experts.
Chapter 11 corporate lawsuits have cost Canadian taxpayers almost one-third of a billion dollars.
Global News states that “since NAFTA’s inception, Canada has spent more than $95 million in legal costs defending itself against investor-state claims and has paid out over $219 million in damages and settlements, according to a report by the Canadian Centre for Policy Alternatives in January 2018.”
“There were a lot of U.S. companies coming after the Canadian government for a lot of environmental challenges, as well as other challenges in Canada. So it was costing the Canadian government a lot of money to defend against those claims,” explained Walid Hejazi, an economics and policy professor at the University of Toronto’s Rotman School of Management.
Canada was the most sued country under NAFTA’s Chapter 11.
Gus Van Harten, a professor at Osgoode Law School and an expert in ISDS, said, “the new NAFTA is way better than the old NAFTA.” He added that the fear of an ISDS claim would often create “a chill” for decision-makers, preventing them from enacting decisions in the public interest for fear of Chapter 11 corporate lawsuits.
He said all of this changes with ISDS provisions removed from USMCA.
“Behind the scenes, we’ll be able to pass our own laws and regulations without being afraid of a big U.S. company bringing a multi-billion-dollar claim against us. The Canadian public isn’t aware of it, but behind the scenes, decision makers are often intimidated because of these legal risks and the financial risks of these claims,” Van Harten explained.
In terms of Canadian sovereignty, Van Harten said Canadian legislators are breathing a sigh of relief.
“In terms of Canada as a whole and our sovereignty, it’s just transformational. It was the number one obstacle to actually calling ourselves an independent country in our entire legal framework, ever since we repatriated the Constitution. It’s as simple as that,” he told Global News.
Gus Van Harten was a panellist at the Council of Canadians’ 2015 annual conference and is a renowned expert on ISDS and its impacts.
Council of Canadians supporters led a strong campaign to have Chapter 11 dropped from a new NAFTA agreement to stop corporations from using them to challenge laws that protect people’s health and the environment.