Canada's Strict New Anti-Corruption Rules Might Lead To Yet More Corporate Sovereignty Lawsuits Against It

from the no-good-deed-goes-unpunished dept

Wed, Dec 10th 2014 1:07am — Glyn Moody

Recently, we wrote about the extraordinary free trade agreement between Canada and China that places itself above the Canadian constitution. Here's another development where Canada can serve as a warning to the rest of the world about the dangers of giving too much power to corporations in free trade agreements, as reported by the The Globe and Mail:

Canada risks being hit with a World Trade Organization challenge and NAFTA investor lawsuits over its threat to bar some companies from selling to the government for up to 10 years, warns a report commissioned by the Canadian Council of Chief Executives (CCCE) and delivered to federal officials.

And a number of foreign multinationals are already exploring possible trade action, according to an industry source, who declined to be named.

The problem is that Canada has introduced new anti-corruption rules: Under the newly revised federal regime, companies seeking to bid on federal contracts must certify that neither they nor their affiliates have been charged with a long list of criminal offences anywhere in the world, including bribery and fraud, dating back 10 years.
Apparently, the inclusion of affiliates is much stricter than anti-corruption laws elsewhere, and that might open up Canada to claims that it is unreasonable for Canadian subsidiaries of foreign companies to be held responsible for the actions of other affiliates over which they have no control. No lawsuits have yet been filed, so it's too early to say how serious this threat is. But it certainly emphasizes how signing up to corporate sovereignty chapters in free trade agreements -- in this case, the 1994 North American Free Trade Agreement -- increases the risk that companies will use them in unexpected ways to attack governments when they introduce new policies, however praiseworthy those may be.

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Filed Under: anti-corruption, canada, china, corporate sovereignty, free trade, isds, trade agreements

8 Comments

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That One Guy (profile), 9 Dec 2014 @ 11:49pm

Unexpected to who?
increases the risk that companies will use them in unexpected ways to attack governments when they introduce new policies, however praiseworthy those may be

The ability to order a country or government to pursue, or not pursue, a course of action based upon how it would affect potential profits is the entire point of corporate sovereignty clauses. That's why they are put in there, to place companies on higher footing than the governments of countries, and allow private companies to dictate to governments what to include, remove, or change with regards to their laws, with the threat of massive fines for non-compliance.

As such, to claim such actions are 'unexpected' seems to be rather naive. Only those foolish enough to buy the arguments that such clauses are meant to help countries, rather than corporations, would be surprised when those same clauses are used to bludgeon and threaten governments into being good little obedient employees.
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- Anonymous Howard (profile), 10 Dec 2014 @ 3:32am
  
  Re: Unexpected to who?
  Funny how agreements to counter physical asset expropriation mutated into future profit guards and lawmaking coercion tools.
  
  High time to do away with this crap, once and for all.
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Anonymous Coward, 10 Dec 2014 @ 1:48am

Of course that's just simply a continuation of the path we (as a society) have been on for decades (and perhaps even longer). After succesfully institutionalising corruption (or lobbying, to use the friendlier term), we just need a way to cut out those officials that can't be bought. The only unintended consequence I foresee is that officials that *can* be bought will find there won't be much of an incentive to do so in the future.
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Anonymous Coward, 10 Dec 2014 @ 5:07am

Pinky: What are we going to do today Brain?
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Anonymous Coward, 10 Dec 2014 @ 5:40am

Well this will certainly bring the corrupt serial offenders out , way to smack the hornets nest Canada now you'll be able to see your enemies and proceed as needed.
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No Name for this Use, 10 Dec 2014 @ 11:20am

I see not many bites but...
It is worth considering that Harper intended this legislation to provoke, just the sort of reaction that is being talked about, he is a traitor and the entire conservative party with him they have been working to cripple Canada for decades so it is not even close to beyond belief.
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- Anonymous Coward, 11 Dec 2014 @ 7:10am
  
  Re: I see not many bites but...
  Harper is an idiot. Always has been and this just proves it.
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tqk (profile), 11 Dec 2014 @ 10:43am

Apparently, the inclusion of affiliates is much stricter than anti-corruption laws elsewhere, and that might open up Canada to claims that it is unreasonable for Canadian subsidiaries of foreign companies to be held responsible for the actions of other affiliates over which they have no control.

That's easily countered. Anti-corruption laws elsewhere are insufficient and need to be corrected to align with Canada's more robust implementation, so any claims are patently false and denied. World, you're most welcome.

Any corporations claiming insufficient control over foreign subsidiaries are hereby put on notice that they are expected to forthwith gain and exert said control.

Have a nice day.
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