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Whale watching off Digby's Neck, Nova Scotia, where Bilcon wants to site a massive basalt quarry. Now Canada must pay Bilcon as much as $300 million following a NAFTA judgment that the company's right to profit comes before cetacean survival. Photo: Reigh
Whale watching off Digby's Neck, Nova Scotia, where Bilcon wants to site a massive basalt quarry. Now Canada must pay Bilcon as much as $300 million following a NAFTA judgment that the company's right to profit comes before cetacean survival. Photo: Reigh LeBlanc via Flickr (CC BY-NC 2.0).
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Profits before whales! To know why TTIP would be a nightmare, look to Canada

Nick Dearden

26th March 2014

A series of judgments against Canada in secret corporate tribunals costing taxpayers $100s of millions show that 'free trade' agreements really do restrict governments' right to protect health, environment and endangered species, writes Nick Dearden.

The corporate court system fundamentally challenges our ability to protect the environment. However you reform it, it has no role in a democratic society.

If anyone tries to convince you that TTIP is no threat to a government's ability to protect its people, just point them to Canada.

Last week, Canada's government was successfully sued for daring to turn down a large mining quarry which threatened to cause environmental damage in Nova Scotia.

It is the latest in a long line of cases which have been brought against Canada for attempting to introduce environmental protection, under NAFTA - the North America Free Trade Agreement. These cases have been brought about under exactly the same mechanism - known as ISDS (Investor State Dispute Settlement) - which is at the centre of the TTIP deal.

ISDS is essentially a corporate court system - allowing foreign corporations to sue governments in secret tribunals, overseen by corporate lawyers, with no right of appeal. Even winning can cost a country a small fortune in legal costs.


Canada has to pay $100s of millions in 'compensation'

The most recent ruling focuses on Canada's decision, following an environmental review, to block the White's Point 152-hectare basalt quarry on Digby Neck in Nova Scotia - which happens to be a key breeding area for cetaceans, increasingly popular among whale-watchers.

Among the species regularly frequenting nearby waters are Finback Whales, Minke Whales, Harbor Porpoises, Humpback Whales, Whitesided Dolphins, the endangered North Atlantic Right Whale, and there have been sightings of Pilot, Beluga, Sei, Sperm Whales and Orcas.

US corporation Bilcon wanted to open the quarry and argued that it had put time and money into the development. The province's environmental review, however, found that the project clashed with "community core values", and the quarry blasting and shipping movements would be detrimental to the area's cetaceans.

The company argued that the government shouldn't even have resorted to an environmental review. It has now won its case before the NAFTA arbitration panel, which ruled in its 260-page judgment that Bilcon was "denied a fair environmental hearing". It is now demanding $300 million in compensation.

Two aspects of this case prove what critics have always said about these corporate courts. First, the case didn't relate to a breach of contract or to discrimination in favour of a domestic company. It simply related to a regulation which a foreign corporation didn't like.

Second, the case is a challenge to Canada's ability to make decisions based on environmental protection, as pointed out by the one dissenting voice in this tribunal, that of Ottawa law professor Donald McRae who warned:

"A chill will be imposed on environmental review panels which will be concerned not to give too much weight to socio-economic considerations or other considerations of the human environment in case the result is a claim for damages under NAFTA."

The ruling, he continued "will be seen as a remarkable step backwards in environmental protection" and a "significant intrusion into domestic jurisdiction."

Environmental protection subordinate to corporate profit

Canada has been sued for environmental protection regulations again and again. Previous cases include Canada being taken to task for attempting to ban the import of toxic waste and for trying to prohibit dangerous chemical MMT from petrol. In the latter case, Canada reversed its ban.

And only days before the Bilcon ruling, Canada had a $17.3-million award made against it for a regulation which required oil giant Exxon Mobil and Murphy Oil (along with other offshore oil producers) to invest some of their profits from offshore drilling in the local economy.

It has been suggested that unless the requirement is withdrawn, this will be the tip of the iceberg in terms of 'compensation' - another example of a completely moderate and sensible government regulation being threatened by unelected, unaccountable corporate lawyers. 

It is often claimed that these corporate courts 'only' effect developing countries with dubious standards of law. That would be bad enough, but Canada is not a developing country, yet has lost millions of dollars to these corporate courts after signing an investment deal like TTIP with the US. These cases should be instructive to European governments.

The European Commission is keen to tell us that they are reforming the corporate court procedure for TTIP, so there's no need to worry. But from what we've seen of such reforms to date, they may actually make matters worse. Veteran investment arbitrator Todd Weiler said of the reformed system:

"I love it, the new Canadian-EU treaty ... we used to have to argue about all of those [foreign investor rights] ... And now we have this great list. I just love it when they try to explain things."

In the UK, the political divide is laid bare

In a ground-breaking report, the House of Commons Business Select Committee came out yesterday saying it wasn't convinced of the need for the corporate court system, and demanding that Soverign Nation's "right to regulate" be enshrined in the controversial deal.

But most Conservatives and Liberal Democrats - and the coalition government they have formed - support TTIP and its ISDS provisions, often with great enthusiasm.

Lobbying of MPs and MEPs has shown that Labour representatives are looking for significant reform of ISDS before they will be persuaded to vote for CETA or TTIP, while Green Party, SNP and UKIP MEPs are voting against the deal.

It has recently been flagged by a number of US Senate Democrats as a reason to oppose TTIP. 

Negotiations on TTIP between the EU and the US are continuing, amid reports of "problems" over the inclusion of ISDS in the agreement. In an earlier public consultation on ISDS in TTIP, over 150,000 respondents participated - 97% of them opposing ISDS. The next round of negotiations will take place in Washington DC in the week starting 20th April.

Canada's experience shows why it's important for progressive politicians to stick to their guns - and for those now supporting ISDS to rethink their position. The corporate court system fundamentally challenges our ability to protect the environment. However you reform it, it has no role in a democratic society.



Action: an International Day of Action against all 'free trade' deals is planned for Saturday 18 April in association with Stop TTIP.

Sign an EU-wide petition against TTIP - it already has 1.6 million signatures and has a target of 2 million by October 2015.

Nick Dearden is director of the Global Justice Now (formerly World Development Movement), and former director of the Jubilee Debt Campaign.

This article is an updated version of one first published by Global Justice Now.



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