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Latin American countries pushing back against investor 'rights' in trade deals

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Photo: Cancillería Ecuador

While the Conservatives continue to sign bilateral investment treaties (BITs, or FIPAs in Canada's case) that give corporations the "right" to challenge or block policies they don't like, Latin American countries are working together to change the system entirely.

On April 22, at the invitation of the Ecuadorean government, representatives from Bolivia, Cuba, Ecuador, Nicaragua, Dominican Republic, St. Vincent and Grenadine, Venezuela, Argentina, Guatemala, Honduras and Mexico met in Guayaquil to discuss the impacts of foreign investment and bilateral investment treaties on the region.

Summarizing the meeting for the Network for Justice in Global Investment, Cecilia Olivet of Transnational Institute writes:

"Even when this issue has been on their agenda for some time, the renewed interest responds to the increasing number of lawsuits by transnational corporation at international tribunals against Latin American governments, as well as the recent multimillion dollar awards (i.e. Ecuador ordered to pay Oxy US$2.3 billion). It also responds to the decision of some Latin American governments to terminate their BITs."

Canadian transnational mining companies have played no small role in this assault on Latin American countries. Calgary-based Infinito Gold recently threatened (again) to sue Cost Rica for $1 billion under a 1999 FIPA with Canada because of a ban on open-pit mining in the country. In March, Rusuro Mining, a Russian outfit with headquarters in Vancouver, filed a $3.03-billion claim against the Venezuelan government under a 1998 FIPA with Canada.

And there is the high-profile case from Pacific Rim against El Salvador, which an international delegation, co-ordinated in Canada by the Council of Canadians, will learn about this week on its trip to the Central American country. El Salvador has already spent $5 million on legal fees -- money that could go towards health care or access to clean water. Pacific Rim wants $315 million more to compensate for community opposition to one of the most useless mega-projects you can think of: another gold mine.

The Ecuadorian proposal

All this might end thanks to the Ecuadorian proposal to reform the investor-state dispute process. The result of the first-of-its-kind meeting last month was a joint declaration signed by Bolivia, Ecuador, Cuba, Nicaragua, Dominican Republic, St. Vincent and Grenadine, and Venezuela that proposes some serious challenges to the prevailing investment treaty model. The reforms should inspire and embolden campaigns in Canada against the government's corporate rights agreements with China, the European Union and through the Trans-Pacific Partnership negotiations.

First, the Latin American nations want to shift investment arbitration from places like the International Centre for Settlement of Investment Disputes, with its elite club of arbitrators and pro-investor bias, to UNASUR (the Union of South American Nations), a work-in-progress EU-of-sorts for the region, which is already negotiating a new way of settling investor disputes with government policy.

Then, these countries want to establish a state-funded observatory that will review investor-state cases, monitor the performance of investment tribunals, propose mechanisms that could replace the process with a more fair and balanced resolution system, bring international experts together and connect them with Latin American countries, promote information sharing between judicial systems across the region, improve state-to-state cooperation on legislation related to trade and investment agreements, and established a dialogue with social movements.

A similar type of co-operation is to be encouraged at the ministerial level through the creation of an executive committee of the Ministerial Conference of Latin American States Affected by Transnational Interests. This committee has agreed to meet again in Caracas, Venezuela, in July.

"No more should small countries face lawsuits from big companies by themselves," said Ecuador's Foreign Minister Ricardo Patino during a press conference, as quoted by Martin Khor in a recent column. "We have now decided to deal with the challenges posed by these transnational companies in a co-ordinated way."

Olivet adds in her report of the meeting, "It was clear from the discussions that the objective is to try to reach out to southern countries from other regions, like South Africa and India."

Canada's FIPAs

Canada had 19 FIPAs in place when the Harper government was elected in 2006, plus the investor-rights chapter in NAFTA, under which Canada has paid about $160 million in damages to U.S. corporations. The Conservatives have ratified six more since then (with Czech Republic, Jordan, Latvia, Peru, Romania, and Slovak Republic), and have concluded another 11 (with Bahrain, Benin, Cameroon, China, Kuwait, Madagascar, Mali, Nigeria, Senegal, Tanzania and Zambia). Finally, Canada continues to negotiate FIPAs with Albania, Burkino Faso, Côte d'Ivoire, Ghana, Guinea, India, Indonesia, Kazakhstan, Moldova, Mongolia, Pakistan, Serbia, Tunisia and Vietnam.

In all cases except the FIPA with China, Canada is the net exporter of investment and it's obvious from the list of countries above which sector Harper is trying to "protect" and from what: mining, to be protected from public resistance to mining or environmental measures affecting mining profits.

Where Canada takes in more or as much investment as it exports (e.g. China, India, the United States and the European Union), these treaties bite back with costly challenges to public policies, laws and other decisions at home.

Yesterday, the Council of Canadians, Corporate Europe Observatory and Transnational Institute released a report on the Lone Pine Resources investor lawsuit against Quebec's moratorium on hydraulic fracturing for natural gas. The three organizations are urging the EU and Canada not to put these excessive investor protections in to the Canada-EU Comprehensive Economic and Trade Agreement or risk taking away communities' right to say no to environmentally damaging resource projects.

The Hupacasath First Nation's injunction against the Canada-China FIPA will also be in court soon, in what will surely turn into a high-profile trial against the FIPA model. The Hupacasath are demanding the right of Indigenous communities to be consulted on international treaties that clearly pose a threat to Treaty and Indigenous rights. The Council of Canadians and Leadnow continue to raise funds to support that legal challenge.

The Latin American reform movement should embolden all of these efforts to get rid of excessive investor rights in trade and investment deals. The Canada-China investment treaty has re-engaged people on the need to protect public policy from investment protection agreements. The growing list of NAFTA claims, which currently total about $5 billion, give us the proof of how dangerous these treaties can be. Canada's involvement in CETA, TPP and other trade deals (with India, Japan, etc) create opportunities to push back against all Harper's unfair corporate rights deals.

We'll be following the Ecuadorian-led process and reporting back on the meeting in July. If you want to take immediate action, you can use this Registered Nurses' Union of Ontario letter-writing campaign urging the Canadian government not to include an investor-rights pact in the Canada-EU free trade deal.

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