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Corporate rights in Europe under scrutiny while Canada stays fast asleep

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On February 3, I made a presentation  in Vancouver to the House of Commons Standing Committee on International Trade on the proposed Canada/EU trade deal (CETA). I was there on behalf of CUPE B.C.

The Committee, chaired by Alberta Conservative MP Rob Merrifield, was in B.C. to review both CETA and the Trans-Pacific Partnership (TPP)

There are many problems with CETA -- like higher pharmaceutical costs, limits on local procurement and the fact Parliament is reviewing the thing based not on an actual text, but only a 26 page “technical summary”-  but the primary focus of the CUPE presentation was Investor to State Dispute Settlement (ISDS). It's proposed that the CETA  include an investor rights mechanism similar to the notorious Chapter 11 of NAFTA  which permits corporations to sue elected governments via unaccountable, secretive and unappealable commercial arbitration panels rather than in the regular court system.

Interestingly, the Government of Canada continues to push for this kind of special corporate rights system for the CETA even though the European Parliament and European Commission are taking a serious second look at whether it makes sense for them.

We press ahead, even though Canada's lived experience with investor/state has not been positive. We've paid out over $160 million in taxpayer funded damages for NAFTA complaints so far and Canada has been the target of the majority of complaints. Canada and Mexico have lost time again but the U.S. has yet to lose a single Chapter 11 case. All 3 North American governments have incurred tens of millions in legal costs.

Most significantly, investor complaints have brought consistent pressure against public policies of elected Canadian governments. Examples include: Mobil Oil's successful challenge to research and development policies in Newfoundland; Mercer International's suit against B.C. Hydro's industrial rates policy; Abitibi-Bowater's successful challenge of provincial water and timber rights in Newfoundland; Lone Pine's $250-million suit against Quebec's fracking moratorium and drug giant Eli Lilly's $500 million challenge of our generic drug rules (in a case which a NAFTA panel will review even though the company did not succeed in front of Canadian appeal courts  and even though the Supreme Court of Canada has declined to hear the case!). It's not clear what any of these cases have to do with increasing trade.

Given that Europe is home to many of the world's largest corporations (think GDF-Suez, Bayer or Royal Dutch Shell just to name a few), we really need to ask ourselves why we would expand to Europe the Chapter 11 model which has been so to our detriment within N.A.F.T.A?  And, even if one accepts we need any investor/state dispute system outside of the regular courts, why isn't Canada taking advantage of the CETA talks to insist on a system that better suits our national interests?

It's just those kinds of questions which caused the European Commission to announce on January 21st that it is suspending investor/state dispute settlement negotiations with the United States while it undertakes a comprehensive consultation with the European public. The Commission will publish proposed investor/state language in March, then receive submissions and comments from citizens and member states over a three month period after that.

What a contrast with Canada! Can you imagine the Harper government ever publishing draft trade agreement language then engaging in a serious consultation with the public about wording and purpose? Not likely. The federal government recently denied a Freedom of Information request for a copy of the working CETA text.

The European Commission made its review decision after extensive representations from civil society and after hearing from the 2nd largest caucus in the European Parliament (the social democrat S.and D.s) that they oppose inclusion of  investor/state dispute settlement in the trade deal with the U.S. .

The common critique both inside and outside the European Parliament is that NAFTA style investor/state dispute settlement with the U.S. would be bad for democracy and not in Europe's interest. For example, on January 30th Nicole Bricq the Trade Minister for the Socialist government of France said the French government does not favour investor/state in the U.S. deal and supports "state-to-state" dispute settlement instead. Reportedly, Germany takes the same view.

And it's not only in Europe that this model is being fundamentally challenged. The Governments of Australia and South Africa have both said they won't include an investor/state mechanism in any of their future trade deals. Most South American countries are also opposed to the idea, including a big economy like Brazil which has never included investor/state in any trade deal.

Meanwhile, back in Canada, the big second look at investor/state in Europe's trade deal with the U.S. has mostly been met with torpor. The European review of investor/state in their U.S. deal will obviously have big implications for CETA but it feels like Canada is pretty much fast asleep as usual. Certainly, the Conservative and Liberal politicians on the trade committee didn't seem to click in to the significance for a CETA which is still under negotiation if the Europeans take investor/state out of their deal with the U.S.

Hopefully, the NDP Official Opposition in Canada has taken note of positions and actions of their social democrat colleagues in Europe, will make the case against investor/state in CETA and -- like the social democrats in the European Parliament -- will vote against CETA if it has investor/state in it.

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