When my daughter was a toddler I used to read her Dr. Seuss books at bedtime. I don’t know which of us enjoyed this ritual more, her or me, but one of my favourites was Seuss’ famous anti-war satire, the Butter Battle Book.
Although ostensibly an arms race parable, it also probes nationalism and the tendency to fear and demonize other cultures. Seuss’ classic Yook versus Zook butter war mocks a deeply human tendency to get nervous when you hear rumours your opponent has a fancy new weapon.
The Butter Battle Book was published during the Cold War when people were grappling with the possibility that all life on Earth could be destroyed in a nuclear war. People used to fear that intercontinental ballistic missiles (ICBMs) tipped with multiple nuclear warheads could destroy their city and country in seconds. But in today’s globalized world, you no longer need nuclear weapons to destroy or take over another nation; corporations can just sue countries to death under free trade agreements.
After decades of fighting deregulation, and trade at-any-cost federal policies, many people are now fearful their corporate opponents are poised to get a fancy new weapon. It’s not one of Seuss’ famed “Triple-Sling Jiggers” or even a “Kick-A-Poo Kid,” it’s the Trans Pacific Partnership (TPP) agreement former Prime Minister Stephen Harper inked during the last election in a last ditch, but ultimately failed, effort to salvage his government.
The scariest images of my youth were ICBM missiles. For activists now it’s planeloads of lawyers representing big corporations using trade deals to tear down our environmental, health, food safety or labour laws – or any laws that might potentially reduce their profits.
Our Chief Yookeroo, Prime Minister Trudeau, is currently evaluating the draft TPP text to decide whether to ratify under the terms negotiated by Harper. He is being lobbied intensely by both sides. Pro-TPP advocates, including many prominent federal Liberal insiders, argue concerns are just grievances about which side to butter our bread. TPP opponents like Leadnow claim the TPP agreement contains hidden “Bitsy Big-Boy Boomeroos” provisions (again, quoting Seuss) that could imperil our national sovereignty.
What’s clear is that many British Columbians committed to the globally significant effort to stop the expansion of oil tankers off our beautiful coast fear the controversial investor rights provisions in the TPP will help push an unwanted pipeline through our unwilling province.
The TPP has a supercharged Investor-State Dispute Settlement (ISDS) mechanism, which grants sweeping powers to foreign investors. These mechanisms allow foreign corporations, feeling disadvantaged by laws that address climate change or protect the coast from oil spills, to sue Canada over federal or provincial laws, policies, court decisions or other actions they claim harm their investments.
The lawsuits filed under these agreements by foreign companies are decided not in Canadian courts, but in secret international trade arbitration tribunals. Cases are decided not by independent judges, but by three-person panels of private lawyers who also act on behalf of foreign corporations, are not bound by Canadian law or precedents, and whose track record shows a bias towards corporate interests.
As David Boyd, one of Canada’s leading environmental lawyers and authors, has written:
“The most glaring example of arbitrators’ bias toward investors is their sweeping interpretation of what is called “indirect expropriation.” Under Canadian law, only direct expropriation – such as government taking your land for a highway – creates a right of compensation. However if a government enacts an environmental law that prevents you from developing a portion of your property (indirect expropriation), you are generally not entitled to compensation. In contrast, ISDS tribunals have repeatedly held that indirect expropriation, caused by environmental rules, gives foreign investors the right to compensation.”
Other so-called trade agreements like Canada’s Foreign Investor Protection Agreement with China (FIPA), NAFTA and the new Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada have similar Investor State Dispute Settlement (ISDS) provisions.
Environmentalists and pro-democracy supporters should be concerned about these ISDS mechanisms in trade agreements. To date, U.S. corporations using NAFTA’s ISDS mechanism to challenge Canadian laws have filed 38 lawsuits against our country. Of these, 12 cases have been decided (requiring Canada to pay hundreds of millions of dollars in compensation and in some cases leading to the repeal of environmental regulations enshrined in Canadian law), and ten are ongoing (with American companies seeking billions in damages).
In politics as in physics, every action has a reaction. Recently, ISDS tribunals have become a global flash point. Opposition is becoming formidable.
Germany provides a good case study. Germany has historically been evangelical about trade agreements. Like most other G8 countries, Germany signed a bunch of these agreements, which included investor rights ISDS mechanisms. But things began to unravel when Germany got serious about climate change and began to transition its economy away from carbon and towards renewables.
Germany cracked down on coal-fired power, imposing aggressive new environmental regulations, and then, after Fukushima, decided to mothball its nuclear industry. Unfortunately, Vattenfall, a Swedish corporation active in both industries, wasn’t as enthusiastic about these reforms as the German public and sued Germany for compensation. While the nuclear phase-out case is unresolved, Germany settled the coal case by agreeing to water down its environmental standards.
But what’s most interesting, and I hope a harbinger for Canada, is that the German people didn’t like having to pay a foreign corporation millions of dollars for implementing broadly popular environmental programs. Nor did they like the fact that laws to crack down on coal were rolled back. Germans from across the political spectrum began to organize and push back. Just before the Canadian federal election hundreds of thousands of Germans took to the streets, marching against the anti-democratic investor superpowers entrenched in trade agreements.
Although this resistance hasn’t been widely reported in Canada, it’s working! Germany is now having second thoughts about the investor rights provisions in the new Comprehensive Economic and Trade Agreement between the EU and Canada. In fact Germany is now trying to re-open the text of the agreement to weaken these provisions. After initially resisting, in recent weeks Canadian trade negotiators have admitted that ISDS mechanism could “become a poison pill that derails the [CETA] deal altogether.” With enough pressure the same could be true for the TPP. Strangely, the U.S., which usually is the strongest ISDS hard liner, might have introduced a compromise that could create a precedent for future trade agreements. The United States has proposed a “carve-out provision” that would keep tobacco companies from threatening governments with lawsuits for passing anti-tobacco regulations.
The proposal would let TPP signatory countries exclude tobacco products from ISDS protections. In the past, tobacco companies have sued countries — Uruguay, Togo, Autralia and Namibia — for legislation aimed at cracking down on smoking and tobacco. Philip Morris International and British American Tobacco, for example, sued the British government for laws requiring plain packaging for cigarettes in lieu of branded packaging. Now that the precedent has been established to carve out industries and sectors and prevent them from using ISDS mechanisms, why n
ot carve out climate unfriendly industries as well?
As David Boyd says, “Tackling the hydra-headed challenge of climate change is already difficult and costly for a fossil-fuel exporting nation like Canada. Why ratify trade deals that will make it even harder and more expensive?” Clearly, Canada shouldn’t!
As a major producer of oil, natural gas, and coal, Canada is particularly vulnerable to ISDS claims from American, Chinese, and European corporations that have big stakes in our LNG, oil sands or Newfoundland energy projects. Without a carve-out, any of these corporations could sue if they claim harm from stricter rules on extracting their prized fossil fuels or a new price on the carbon they produce.
Prime Minister Trudeau is uniquely positioned to work with the E.U., Brazil and other countries disillusioned with ISDS mechanisms to protect the broader public interest in rigorous climate laws by carving out fossil fuel corporations from secret arbitration mechanisms.
In the meantime, No Tankers supporters need to remember that nothing in the TPP, FIPA or CETA prohibits Canada from enacting laws to protect its national environmental or economic interests. Canada can enact whatever laws it chooses. There is nothing in these agreements that would prevent Prime Minister Trudeau from fulfilling his promise to legislate a ban on oil tankers off B.C.’s North Coast. Nothing in these agreements prevents Prime Minister Trudeau from rejecting Kinder Morgan outright when his cabinet reaches its decision in December. And nothing in these agreements prevents Premier Christy Clark from refusing to approve the 60 or so provincial permits both Enbridge and Kinder Morgan need to get built.
At worst, if the federal government chose to flex its sovereign Yook muscle arbitrarily in ways that disadvantage a corporation from Zook, Canada might be found liable by a secret trade tribunal and have to pay compensation to a Zookian investor in a pipeline or other proposed project.
Such a judgment would be terrible, unjust, and a significant attack on Canadian sovereignty, but it might not be the worst thing in the world. Lawsuits are not ICBMs. Unlike in a nuclear Armageddon, win or lose, protests can begin the day after a lawsuit.
I suggest that if a Chinese state-owned oil giant, or a Koch Brothers-type investor tried to launch a compensation claim over the coming rejection of Enbridge’s proposal to Kitimat, a British Columbia version of the German uproar would develop very quickly. In the short term Canada might be on the hook for unwarranted compensation, but in the long run, like Germany, it may take a couple of high profile arbitration losses to get Canadian governments’ attention and embolden them to refuse future agreements — or renegotiate existing ones to weaken corporate power.
So while investor-protection treaties complicate the situation, as long as British Columbians remain steadfast against the expansion of oil tankers on the B.C. coast it is unlikely the provincial or federal government will cave to the threat of foreign corporations. And if a foreign corporation is stupid enough to pull the trigger, the lawsuit won’t be a game-ending “Eight-Nozzled Elephant-Toted Boom Blitz” or “Bitsy Big-Boy Boomeroo”, but rather an opportunity for British Columbia to take the lead in yet another internationally significant grassroots fight.
Trade Minister Chrystia Freeland has said Canada will sign the TPP, but “signing does not equal ratifying.” Will Prime Minister Trudeau be a hero and step out of the never-ending Butter war — or will our Chief Yookeroo let us be sued by the Zookian corporations?
All I can do is quote Seuss:
“Grandpa! I shouted. “Be careful! Oh, gee!
Who’s going to drop it?
Will you . . . ? Or will he . . . ?
“Be patient,” said Grandpa. “We’ll see.
We will see . . . “