Latest TPP Leaks Reveal That US Is Isolated In Its Desire To Push Through Corporate Exceptionalism

from the good-to-see dept

With the latest round of TPP negotiations ongoing, the folks over at Huffington Post got a hold of two leaked documents including a very useful spreadsheet highlighting all of the positions and areas of disagreement concerning every chapter of the TPP. What's quite revealing (and very good to see, though we'll see how it holds up) is that on many of the worst proposals, it appears that the US is very isolated, with either no one agreeing or maybe just one or two other countries agreeing. Of course, the US is obviously the most powerful force in these negotiations, so never underestimate the ability of the USTR to pressure countries to agree to these harmful policies -- but so far, it appears that other governments have been willing to push back on the US's extreme view of corporate sovereignty ("investor dispute resolution settlements") which would allow companies to ignore the laws of countries and sue those countries for "lost profits" when they disagree with the legal regime (say, for example, if a patent they wanted isn't granted). These programs have been a disaster in current agreements, and hopefully it appears that other countries now recognize this.

It also appears that the US is somewhat isolated in its intellectual property proposals. Only Australia and Peru agree with the US's "patentability criteria." And no one at all agrees with the US's plans for extra protection for patents or to extend protections to new uses (such as plants, animals and surgical procedures). The US is also the only one supporting programs favorable to pharmaceutical companies around data protection. On the copyright side, it appears that everyone disagrees with the US's view of parallel importation (which, if still the same as it was from the last leaked version, disagrees with the US Supreme Court's own ruling on parallel importation). Only the US wants "establishment of criminal offenses for unintentional infringements of copyright, related rights and trademarks."

This is good to see -- but, again, the US is the most powerful voice in the room, and you won't believe the tricks that the USTR will pull to try to bend other countries to agree to these proposals. Hopefully, though, the other countries stand firm. Hell, the fact that so many other countries agree on so many other proposals suggests that perhaps they should just kick the US out and make their own agreement.

Oh, and the US isn't only isolated in pushing for bad proposals. It's also isolated in rejecting some proposals as well. For example, there's a proposal in the e-commerce chapter on "privacy obligations" which everyone has agreed to... except the US. Gee, the US not interested in privacy protections? I wonder why...

Filed Under: copyright, investor state dispute settlement, isds, isolated, patents, tpp, ustr

European Commission Desperately Tries To Justify Inclusion Of Corporate Sovereignty In TAFTA/TTIP; Fails Dismally

from the is-that-really-the-best-you've-got? dept

Techdirt has been writing about corporate sovereignty (also known as investor-state dispute settlement -- ISDS) for a year now. Back in April, we noted that it was likely to be part of the TAFTA/TTIP negotiations, which were just about to start. Since then, more and more people have woken up to its dangers, and called for corporate sovereignty to be dropped from the negotiations.

The European Commission is evidently feeling the heat, because it has put together a couple of documents with the evident aim of justifying the inclusion of ISDS in TAFTA/TTIP, and sent them to the committee that will be writing the final report on whether or not the European Parliament should accept the TAFTA/TTIP agreement once finalised. The first document is entitled "EU--Canada CETA: main achievements" (pdf and embedded below). It provides us with a rare official glimpse of what is in the still-secret trade agreement between Canada and the EU.

Many of the "clarifications" to corporate sovereignty concepts listed there are welcome: for example, in defining what loose concepts like "fair and equitable treatment", and "indirect expropriation" really mean. But the credibility of the document is undermined by the very first point:

The CETA reaffirms the right of the EU and Canada to regulate to pursue legitimate public policy objectives such as the protection of health, safety, or the environment.

The fact that the European Commission even feels a need to affirm this means that it recognizes that corporate sovereignty does, indeed, threaten the fundamental rights of nations to legislate freely, and without fear of being hauled up before ISDS tribunals. And however much the European Commission may try to "clarify" the corporate sovereignty provisions, clever lawyers will always find ways for their clients to sue countries for daring to bring in laws protecting health, safety or the environment that cause profits to dip.

This means that there is only one sure way to preserve the sovereignty of nations, and prevent them becoming the object of multi-billion dollar lawsuits, as is happening currently under other trade agreements like NAFTA, and that is to remove ISDS completely. Evidently worried by this argument, the European Commission has put together another document, a "factsheet" called "Investment Protection and Investor-to-State Dispute Settlement in EU agreements" (pdf and embedded below) that tries to head it off.

The opening paragraph once again makes a false equivalence between the right of states to regulate and the need to protect investors:

Investment protection provisions, including investor-state dispute settlement are important for investment flows. They have generally worked well. However, the system needs improvements. These relate to finding a better balance between the right of states to regulate and the need to protect investors, as well as to making sure the arbitration system itself is above reproach e.g. transparency, arbitrator appointments and costs of the proceedings.

The basic argument of the fact sheet can be found in the following paragraphs (bolded phrases in original):

Investment is a critical factor for growth and jobs. This is particularly the case in the EU, where our economy is very much based on being open to trade and investment. Investment is key in creating and maintaining businesses and jobs. Through investment, companies build the global value chains that play an increasing role in the modern international economy. They not only create new opportunities for trade but also value-added, jobs and income. That is the reason why trade agreements should promote investment and create new opportunities for companies to invest around the world.

Companies investing abroad do encounter problems which -- for a variety of reasons -- cannot always be solved through the domestic legal system. These problems range from the rare, but dramatic, occurrences of expropriations by the host country by force, discrimination, expropriation without proper compensation, revocation of business licences and abuses by the host state such as lack of due process to not being able to make international transfers of capital.

Precisely because of these risks, provisions to protect investments have been part and parcel of all the 1400 bilateral agreements entered into by EU Member States since the late 1960s. The EU itself is party to the Energy Charter Treaty, which also contains provisions to protect investments and investor to state dispute settlement. Worldwide, there are over 3400 such bilateral or multiparty agreements in force containing provisions to protect investments. They provide guarantees to companies that their investments will be treated fairly and on an equal footing to national companies. By creating legal certainty and predictability for companies, investment protection is also a tool for states around the world to attract and maintain FDI [foreign direct investment] to underpin their economy.

In essence, it's a kind of syllogism: investment is critically important for the EU economy; investors needs corporate sovereignty guarantees to protect their investment; so TAFTA/TTIP must contain ISDS to "attract and maintain" foreign investment -- in this case, from the US. The clear implication is that without corporate sovereignty, US investors will be reluctant to put their money in Europe, and vice versa.

The European Commission has another page on its Web site that provides some context. Here's what it says about the current levels of investment between the two trade blocs:

Total US investment in the EU is three times higher than in all of Asia.

EU investment in the US is around eight times the amount of EU investment in India and China together.

EU and US investments are the real driver of the transatlantic relationship, contributing to growth and jobs on both sidesof the Atlantic. It is estimated that a third of the trade across the Atlantic actually consists of intra-company transfers.

In other words, even though corporate sovereignty is not enshrined in any treaties between the US and EU, the scale of investment (in both directions) is unmatched anywhere else on the planet. It would seem that the European Commission's argument for the necessity of ISDS falls down at some point. It's not hard to see where.

The second paragraph quoted above from the fact sheet lists some of the "rare" problems that arise when investing in foreign countries: "expropriations by the host country by force, discrimination, expropriation without proper compensation, revocation of business licences and abuses by the host state such as lack of due process to not being able to make international transfers of capital." Does the European Commission seriously think either the EU or US is going to engage in any of those activities, or that, if they ever did, investors in those areas would be unable to use local courts to seek redress?

The European Commission's argument in favor of corporate sovereignty is invalid because it mixes two quite distinct situations. It tries to use the problems of investment in just a few emerging economies -- that is, ones without stable governments or honest judiciaries -- which gave rise to ISDS chapters in the first place, and then pretend that similar problems are an issue in the US and EU, and so require the same solution: corporate sovereignty.

But that's simply not true. TAFTA/TTIP is a completely different kind of agreement, quite unlike any of the "1400 bilateral agreements entered into by EU Member States since the late 1960s." Placing arbitration tribunals above the well-developed legal systems of both the EU and US in order to encourage investment that is already taking place on a massive scale, is simply nonsensical. It underlines the European Commission's obvious inability to come up with any real justification for the inclusion of a corporate sovereignty chapter in TAFTA/TTIP.

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Filed Under: corporate sovereignty, eu commission, investor state dispute settlement, isds, tafta, ttip

Resistance Grows To Inclusion Of Corporate Sovereignty In Canada-EU Trade Agreement (CETA)

from the just-get-rid-of-it dept

Remember CETA, the Canada-EU trade agreement, officially known as "Comprehensive Economic and Trade Agreement"? You could be forgiven for losing track of where things were with the negotiations, which have been dragging on since 2009, but a kind of milestone was passed recently:

Commission President José Manuel Barroso and Canadian Prime Minister Stephen Harper have today reached a political agreement on the key elements of a Comprehensive Economic and Trade Agreement (CETA) after months of intense negotiations between EU Trade Commissioner De Gucht and Canadian trade Minister Ed Fast. It will be the first free trade agreement between the European Union and a G8 country.

Despite that "political agreement", there still remains plenty to be done, as this CBC article explains:

Some areas of the agreement still need drafting, while others need fine-tuning, reporters learned through a briefing. But the most contentious points have been settled. The agreement text then has to be drafted, run past lawyers and translated into 24 languages for the 28 EU countries to examine. The document Harper and Barroso signed Friday is an agreement in principle and full ratification is likely two years away.

Although the CBC post claims "the most contentious points have been settled", that's not true for one of the most controversial areas: corporate sovereignty, officially known as investor-state dispute settlement -- and resistance is building. For example, the European Trade Union Confederation, which claims to represent more than 60 million workers in Europe, "strongly opposes the inclusion of ISDS in CETA." And as negotiations on the ISDS chapter begin, over 80 organizations have put together a "transatlantic statement" calling for the corporate sovereignty chapter to be withdrawn from CETA completely:

As European and Canadian trade officials meet again in Brussels today to continue negotiating an investment protection chapter in the Comprehensive Economic and Trade Agreement (CETA), transatlantic civil society groups are demanding that this chapter be removed entirely as an affront to democracy, an attack on the independent judiciary, and a threat to climate change and our shared environment.

The CETA "will include a controversial and unnecessary investment protection chapter and investor-to-state dispute settlement process (ISDS) that a growing number of countries are rejecting for good reasons," says the transatlantic statement, which is endorsed by more than 80 organizations in the European Union, Canada and Quebec. "These excessive corporate protections, built into thousands of investment treaties and free trade agreements, serve no social or economic purpose other than to undermine our democratic rights to decide public policy and public interest regulation."

The accompanying statement (pdf) provides a useful summary of why the inclusion of corporate sovereignty in so-called trade agreements is so worrying. Here are some of the main points:

CETA will permanently freeze existing rules governing investment and then strictly limit government regulation of services, investment, natural resources, environmental protection and public safety measures in the interests of corporations. All existing government policies in all these areas that have not been excluded from the agreement up front will be covered, making it difficult for countries to introduce new services or regulations in the future that affect however modestly the investment opportunities of foreign companies and investors.

In fact, changes to regulations are still possible, but the ISDS chapter means in practice that they will always be in favor of corporations, not the public. That's because the intentional asymmetry of corporate sovereignty allows companies to sue a government for unlimited sums when they don't like changes in regulations, but the public has no equivalent rights. This naturally encourages governments to listen to corporations and ignore its citizens.

There is no comfort in claims by the Commission or Canadian government that "frivolous" claims, or challenges to environmental policy, will be filtered out. Despite efforts in the North American Free Trade Agreement (NAFTA) to limit what kinds of government decisions might violate an investor's minimum standards of treatment or other investment chapter protections, Canada continues to face investor-state disputes attacking environmental measures that affect national and foreign investors in exactly the same way (e.g. a partial moratorium on shale gas extraction in Quebec).

The declaration has a good explanation why this happens:

Likewise, we are not satisfied by efforts to limit the meaning of "indirect expropriation" so that legitimate public welfare objectives should be immune from investor challenges. The final determination is always made by the private investment tribunals themselves, and these unaccountable tribunals have a built-in bias toward the interests of multinational corporations.

Techdirt readers may recall that it was precisely this concept of indirect "expropriation" that Eli Lilly invoked when suing Canada under NAFTA's ISDS section. As the declaration rightly notes, the lawyers who make up ISDS tribunals are inherently biased in favor of corporations because they can represent the same companies in other corporate sovereignty cases -- an extraordinary conflict of interest. Finally, the declaration points out why it is really important to remove the ISDS chapter from CETA before the final ratification:

Whatever the EU gets away with in CETA, including on investment protection, will just create a new ground floor on which multinational corporations will build even more.

The way all these agreements work is that they seek to take the results of previous treaties as a baseline, and then go beyond them -- but always in favor of big business, never to the benefit of the public. That means one of the best ways of fighting corporate sovereignty in TAFTA/TTIP is to make sure it's taken out of CETA.

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Filed Under: canada, ceta, corporate sovereignty, eu, investor state dispute settlement, isds, trade agreements

US TPP Negotiators Accused Of Bullying; Refusing To Budge On Ridiculous IP And Corporate Sovereignty Demands

from the i'm-sorry-for-my-country's-insane-negotiators dept

This is hardly a surprise, but more reports are coming out revealing that the US's ongoing strategy in negotiating the TPP (Trans Pacific Partnership) agreement is to not take into account the many, many concerns about the US's hardline, maximalist position on both intellectual property issues and efforts to give corporations sovereignty over national laws under the misleadingly named (and purposely boring) "investor state dispute settlements" (ISDS). You would think that with widespread dissection and concerns expressed about the leaked intellectual property chapter, that the USTR might possibly ease up on its crazy maximalist demands. Not so -- but that's to be expected when you have Stan McCoy as the lead negotiator on intellectual property issues. McCoy is a famed extreme maximalist on IP issues who has more or less admitted to having no interest at all in hearing from public interest groups, while lapping up any opportunity to parrot bogus claims from the industry. McCoy was the same guy behind the embarassing disaster known as ACTA, which flopped so miserably. You'd think he'd take a hint, but instead it appears he's decided to dig in his heels and make sure the US continues to live up to its reputation as an obnoxious bully.

Multiple reports have called out the US (and McCoy in particular) for its aggression and "bullying" in the negotiations. Others have accused the US of engaging in a "negotiation by exhaustion," in which US negotiators seem to figure if they just stand their ground forever, everyone will eventually be bullied into agreeing to the US's positions.

‘The US has adopted a strategy of exhaustion in its bullying of negotiators on the crucial intellectual property chapter to force countries to trade away health in the Trans-Pacific Partnership Agreement negotiations in Salt Lake City’, according to Professor Jane Kelsey from the University of Auckland, New Zealand, who is monitoring the negotiations.

‘The US has stepped up its aggression as they move towards their "end point" of the TPPA ministerial meeting in Singapore from 7 to 10 December’, said Professor Kelsey.

[....] ‘This is a loaded game’, Professor Kelsey said. ‘McCoy sets the agenda and timetable. Negotiators are working from morning until late at night and preparing to work all night, if necessary.’

The second link above, from a publication in Australia, notes something similar and complains about the Australian government's seeming willingness to side with the US on these issues:

The United States has been accused of negotiation by exhaustion in last-minute talks in Salt Lake City ahead of the final ministers' meeting that will decide the makeup of the Trans Pacific trade deal between Australia and eleven other nations.

Information leaking from the closed official-level talks suggests the United States is giving no ground on questions of intellectual property and medicines and is insisting each nation sign up to so-called Investor State Dispute Settlement provisions that would allow global corporations to sue sovereign governments.

[....] “What is happening is not a negotiation,” said Patricia Ranald, Convenor of the Australian Fair Trade Network. “The United States is dictating the terms and it seems the Australian Government is not prepared to join other governments which are resisting these demands

While Stan McCoy plays out his own last stand game, pushing for policies that may help a few of his friends in the industry at the expense of the public, hopefully that last point -- about other governments resisting McCoy's attempt to bully them into a really bad deal -- stays true. An analysis of the positions on the IP Chapter, done by Gabriel Michael, highlighted how the US's position is a lot more isolated than it might like. That may explain the bullying behavior. It looks like the USTR is getting desperate, realizing its usual tricks and games aren't fooling most of the other negotiators. As Michael's analysis showed, the US and Japan (two of the strongest supporters of maximalism) appear to be fairly isolated -- issuing a lot more proposals that no one else supports.

Of course, the USTR is somewhat famous for its ability to start horse trading, promising bogus sweetheart deals if people just agree to awful language that will do massive harm to the public, so it's still something to be quite nervous about until any final text is revealed. Of course, just the fact that the USTR has still refused to reveal the text itself should be reason enough to recognize that this deal is a joke designed to screw over the public. Those acting in the interest of the public don't hide their efforts from the public.

Filed Under: bullies, copyright, corporate sovereignty, intellectual property, isds, negotiations, public interest, stan mccoy, tpp, ustr

South Africa Plans To Terminate And Renegotiate Treaties That Include Corporate Sovereignty

from the fair's-fair dept

Despite the growing evidence that corporate sovereignty clauses in international treaties pose considerable risks to nations that sign them, such "investor-state dispute settlement" (ISDS) mechanisms are present in both TPP and TAFTA/TTIP -- at least as far as we know: it's hard to be sure given the obsessive secrecy surrounding them.

South Africa has experienced first hand the reality of those bland-sounding systems and the behind-closed-doors tribunals that implement them. Here's what happened when it set about transforming the country after apartheid, as this column on the South African Independent Online site explains:

One would assume that no nation state would have the audacity to file such a [ISDS] claim against a post-apartheid country that has been widely held up as a model for the world. That, however, didn't stop European firms from filing claims under their bilateral investment treaties. Worse, they went right at the core of South Africa's post-apartheid transformation plan.

The reason the country was taken to these private tribunals was an attempt to shoot down South Africa's policy to seek greater equality in its lucrative mining sector. South Africa had required that these companies be partly owned by "historically disadvantaged persons".

Allowing external investors to dictate its social policies was unacceptable, and South Africa decided to review its other investment agreements to see if there were dangers there too. The problem turned out to be systemic:

Bilateral investment treaties, the review found, "pose risks and limitations on the ability of the government to pursue its constitutional-based transformation agenda".

Since this review South Africa has further concluded that "bilateral investment treaties were now outdated and posed growing risks to policymaking in the public interest". On that basis, the government has recently moved to terminate many of its bilateral investment treaties.

The dogma is that without such bilateral treaties and their guarantees of corporate sovereignty, external investors would be reluctant to invest in a country. But that turns out not to be true:

South Africa actually receives far more capital inflows from nations with which it does not have bilateral investment treaties than from nations with which it has a treaty. Therefore, renegotiating them should not cause capital flight.

Freed from the necessity to accept whatever terms other countries might seek to impose on it, South Africa is now able to renegotiate bilateral agreements that are fair and that preserve its right to pass laws as it sees fit, unconstrained by legal threats from foreign investors. The Independent Online article points out:

South Africa's efforts should not be seen in isolation. India is also undergoing a national review of its bilateral investment treaties. A group of 12 Latin American nations has recently convened to rethink the benefits of bilateral investment treaties, and the subject is under discussion at the [African Union].

Brazil, a country that did its homework ahead of time and does not negotiate bilateral investment treaties, is putting forth an alternative model for negotiating treaties that may serve as a template for others.

Over the next several years, we will thus see an increasing number of nation states withdrawing from their investment treaties and offering more balanced alternatives.

If that proves to be the case, it could be that those countries signing up for one-sided and inequitable ISDS clauses in TPP and TAFTA/TTIP will come to regret not choosing to preserve their sovereignty as South Africa has done.

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Filed Under: corporate sovereignty, investor state dispute settlement, isds, south africa, tafta, tpp, treaties, ttip

How Much Does Gold-Plated Corporate Sovereignty Cost? $1 Billion Or About 2% Of A Developing Country's GDP

from the taking-from-the-poor,-giving-to-the-rich dept

Last week we wrote about the rising threat of corporate sovereignty, known more obscurely as "investor-state dispute settlement", that allows companies to sue countries for alleged loss of future profits. Just how grave that threat is for developing nations can be gauged by the following, reported by Tico Times:

Canadian gold-mining company Infinito Gold Ltd. announced its intentions to go forward with a $1 billion lawsuit against Costa Rica over the retracted Las Crucitas open-pit gold mining concession in northern Costa Rica, in a statement released on Friday.

The contract was withdrawn for largely environmental reasons:

Costa Rica and the Canadian mining company have been ensnarled in a protracted legal battle over the canceled Las Crucitas project in Cutris de San Carlos, Alajuela, since environmentalists and locals decried the loss of virgin forest and health concerns over leeching chemicals contaminating drinking water.

Initially, the company fought the decision using local courts, but when it lost there, it made use of corporate sovereignty to take its complaint to a supra-national tribunal, the World Bank's International Centre for Settlement of Investment Disputes (ICSID):

Infinito has been rattling its saber over a potential ICSID arbitration after the company lost its appeal in Costa Rica's Constitutional Chamber of the Supreme Court, known as the Sala IV, in November 2010.

Now, $1 billion is a lot of money by anyone's reckoning. But for a country like Costa Rica, whose Gross Domestic Product (GDP) is estimated to be around $46 billion for 2012, an award of $1 billion against it would represent about 2% of the country's entire annual economic activity, in a land where 25% of the population live below the poverty line.

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Filed Under: corporate sovereignty, costa rica, investor state dispute settlement, isds, trade agreements
Companies: infinito gold

Trade Agreements Are Designed To Give Companies Corporate Sovereignty

from the above-the-law dept

One of the difficulties of making people aware of the huge impact that investor-state dispute settlement (ISDS) clauses in TPP and TAFTA/TTIP are likely to have on their lives, is that the name is so boring, and so they tend to assume that what it describes is also boring and not worth worrying about. And yet what began as an entirely reasonable system for protecting investments in emerging economies with weak judiciaries, through the use of independent tribunals, has turned into a monster that now allows companies to place themselves above national laws, as Techdirt has reported before.

The acronym "ISDS" just doesn't capture any of that, so during a conversation on Twitter with Maira Sutton, Jamie Love and a couple of Techdirters (Mike and me), Joe Karaganis came up with a great alternative: "corporate sovereignty". That, in a couple of words, is what ISDS is really all about. It represents the rise of the corporation as an equal of the nation state, endowed with a financial sovereignty that allows it to claim compensation if its expectation of future profits is somehow diminished by a country's courts or legislative changes.

A link-rich page on Public Citizen's "Eyes on Trade" blog provides a timely introduction to the field. It's based on another interesting, but slightly more academic post by Todd N. Tucker, found on the Investment Policy Hub of United Nations Conference on Trade and Development (UNCTAD). That organization produces an extremely valuable annual review of the whole area of ISDS/corporate sovereignty, which is recommended if you want to get all the facts and figures.

Here's Public Citizen's summary of perhaps the most blatant attempt to assert corporate sovereignty so far:

In one of the Chevron v. Ecuador cases, a three-person tribunal last year ordered Ecuador's government to interfere in the operations of its independent court system on behalf of Chevron by suspending enforcement of a historic $18 billion judgment against the oil corporation for mass contamination of the Amazonian rain forest. The ruling against Chevron, rendered by Ecuador's courts, was the result of 18 years of litigation in both the U.S. and Ecuadorian legal systems. Ecuador had explained to the panel that compliance with any order to suspend enforcement of the ruling would violate the separation of powers enshrined in the country’s Constitution -- as in the United States, Ecuador's executive branch is constitutionally prohibited from interfering with the independent judiciary. Undeterred, the tribunal proceeded to order Ecuador "to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment [against Chevron]."

As that notes, the tribunal was essentially telling the Ecuadorean government to place Chevron above the country's constitution -- an extraordinary state of affairs: imagine if the US government were ordered to do the same. Unfortunately, Ecuador's situation is one that is likely to become more common if the corporate sovereignty sections of TPP and TAFTA/TTIP make it into the final versions of those treaties.

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Filed Under: corporate sovereignty, investor state dispute, investor state dispute resolution, investor state dispute settlement, isds, tafta, tpp, trade agreements, ttip

Canadian-Based Company Sues Canada Under NAFTA, Saying That Fracking Ban Takes Away Its Expected Profits

from the it's-not-meant-to-work-like-that dept

We've written several posts about a growing awareness of the dangers of investor-state dispute settlement (ISDS), which lets foreign companies sue entire countries for the alleged loss of future profits. One of the most egregious examples of ISDS concerns Canada, which is being sued by Eli Lilly & Co for $500 million after refusing to grant it a couple of pharma patents. Now The Huffington Post has details about another ISDS case involving Canada:

Free trade critics say a $250-million damage suit being pursued as a result of Quebec's moratorium on fracking is proof Canada needs to be careful in negotiating trade pacts around the world.

That's because TPP and TAFTA/TTIP, as well as Canada's bilateral treaty with Europe, CETA, all have ISDS clauses in them -- at least as far we know, given the obsessive secrecy that surrounds their negotiation. Here's the key issue in this latest case involving Canada:

Quebec has yet to decide whether fracking -- a process to inject fluid into the ground at a high pressure in order to fracture shale rocks to release natural gas inside -- can be conducted safely under the St. Lawrence.

"If a government is not even allowed to take a time out to study the impact without having to compensate a corporation, it puts a tremendous chill on a governments' ability to regulate in the public interest," said Ilana Solomon, director of the Sierra Club's trade program in Washington, D.C.

That is, the company concerned is trying to pressure Quebec to lift its moratorium before the latter has had a chance to evaluate all the scientific evidence on fracking, and come to a reasoned decision. That seems to be a typical effect where ISDS clauses are in operation: with the threat of huge claims hanging over them, governments often choose to capitulate and give companies what they want, rather than risk losing before the secretive tribunals that are used to adjudicate such ISDS cases.

The fear is that both TPP and TAFTA/TTIP will cast a chill over policy making around the Pacific and across the Atlantic, as businesses take advantage of the punitive damages available to bully governments into scrapping existing or proposed regulations in key consumer areas like food, health, safety and the environment.

The present case is noteworthy for the following fact:

Lone Pine is a Calgary-based firm and would not have standing as a foreign entity to sue Canada under NAFTA [North American Free Trade Agreement], but [Lone Pine company president] Granger said it can do so because it is registered in Delaware.

The justification for ISDS is that it is designed to protect companies when they make investments in a country that is not their own, and which therefore may not offer all the protections they enjoy at home -- although that's plainly absurd when trade agreements are between nations like Canada, the US and the EU. But here we see ISDS being turned into yet another way for a local company to overturn decisions it doesn't like -- a clear perversion of the original intent of such measures.

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Filed Under: canada, fracking, investor-state dispute resolution, investor-state dispute settlement, investor-state disputes, isds, nafta, tafta, tpp, ttip
Companies: lone pine