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Canada-EU deal could unleash “corporate litigation boom”

OTTAWA – A new report warns that controversial investor protection rules in the proposed Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union could expose Canada to a new wave of corporate lawsuits that restrict the powers of all levels of governments.

Canadian, Quebec and European groups are simultaneously launching the study about the dangers of CETA’s investor-state dispute settlement mechanism (ISDS). Concern about the deal’s investor protection rules continues to grow in the European Parliament and among the EU’s 28 member states.

Trading Away Democracy outlines how CETA grants corporations sweeping new powers to challenge domestic laws and regulations that could limit profits. The rules entrench a private system of tribunals that’s available only to foreign investors, sidestepping domestic courts and silencing the voices of citizens.

“Investor-state dispute settlement has one very dangerous goal: transfer power away from governments and to corporations. These rules have nothing to do with fair trade between nations. Our public court system is the fair and accountable way to handle any disputes about government policy,” says report co-author and Canadian Centre for Policy Alternatives research associate Blair Redlin.

CETA’s rules go beyond NAFTA’s Chapter 11, which U.S. and Mexican corporations have used to launch 35 suits against Canada – many still unresolved. Canada has lost or settled six cases, paying more than C$170 million in damages, as well as millions of dollars in legal fees. CETA opens the door to suits from European corporations – which have launched more than half of all investor-state challenges globally – as well as back-door challenges from American or Canadian companies hiding behind European subsidiaries.

“By exposing more areas of public policy to challenge by foreign investors, CETA's investment rules threaten to undermine our federal, provincial and municipal sovereignty," says Pierre-Yves Serinet, coordinator of the Quebec Network on Continental Integration (RQIC). “Lone Pine Resources’ $250-million NAFTA challenge of Quebec’s fracking moratorium illustrates how investor-state suits divert much-needed public funds at a time when austerity measures are threatening good jobs and public services.”

The report warns that CETA’s expansive new provisions in the financial services sector put Canada’s sector at risk of challenges, especially in light of extensive European investment in Canada’s finance and insurance industries. This threatens the systems that protect consumers and sheltered Canada’s banking system during the recent global financial crisis.

“Corporations must not be given a veto over government policies that protect public health, the environment and local economies,” says Paul Moist, national president of the Canadian Union of Public Employees. “European parliamentarians see CETA’s flaws and are putting the interests of their citizens before those of corporations. Canadian governments should do the same.

While European, Canadian and provincial governments pretend that CETA is a done deal, opposition to investor-state provisions is growing. Ratification is at least 18 months away.

“CETA’s investor-state rules are a symptom of a much bigger problem: the entire deal favours corporations over citizens” says Maude Barlow, national chairperson of the Council of Canadians. “Whether it’s through extended patent protection for prescription drugs that could increase drug costs by up to $1 billion, or prying open the lucrative municipal procurement market for European multinationals, this deal is about boosting corporate profits, with no public benefits.”

Trading Away Democracy calls for legislators on both sides of the Atlantic to reject any CETA text that includes private investor-state arbitration.

Trading Away Democracy is co-authored by Blair Redlin of the Canadian Centre for Policy Alternatives, Pia Eberhardt of the Corporate Europe Observatory, and Cécile Toubeau of the European NGO Transport & Environment. The report is co-published by nearly 20 labour and civil society groups, including CUPE, the Council of Canadians, the Canadian Centre for Policy Alternatives, the Trade Justice Network, and RQIC (the Quebec Network on Continental Integration).

The report can be downloaded at canadians.org/trading-away

For more information:

Sujata Dey, Council of Canadians media relations officer, 613-796-7724

– or –

Greg Taylor, CUPE media relations, 613-818-0067

Trading Away Democracy