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Canada Is Signing Up to Get Sued by More Foreign Corporations

Wikileaks reveals Canada is on deck to face lawsuits from more foreign corporations thanks to the Trans-Pacific Partnership.

by Christopher Malmo
Mar 27 2015, 8:08pm

Photo via Flickr user GlobalTradeWatch

Whatever you think about Julian Assange, Wikileaks is quietly continuing to do yeoman's work providing public access to secret documents. Most recently, on March 25, Wikileaks dropped the investment chapter of the Trans-Pacific Partnership (TPP).

This chapter does much to confirm critics' fears that the TPP will allow foreign corporations to sue Canada over laws and regulations that don't go their way, and demand compensation equal to their "expected future profits," which can range into the dozens or hundreds of millions.

The provision enabling this kind of action is called "investor-state dispute settlement," (ISDS) and its purpose is to discourage countries from passing laws and regulations that privilege domestic firms or expropriating property outright. It sounds reasonable enough in theory. In reality, critics contend, the rules inside these agreements often too heavily favour corporate over public interests and undermine protections for workers, the environment, or economic security.

The result: foreign corporations are thus empowered to abuse the secret tribunal process to fight not only unfair treatment, but any pesky laws that might dent their profits.

Canada has been subject to ISDS under our NAFTA agreement with the US and Mexico for some time now, and it hasn't been cheap. Just this month, a US mining company won a ruling against Canada because they weren't allowed to expand their quarry in Nova Scotia for environmental reasons. The company is asking for $300 million in compensation.

The TPP is everyone's favourite secret trade agreement. It's been called "NAFTA on steroids" by labour unions, public-interest groups, and environmentalists in most of the Pacific Rim countries involved in its negotiation. Based on a long line of barely informative diplomatic announcements, the TPP would seem to rival cold fusion as the next big thing that will deliver us from hardship but is "just around the corner."

Canada joined TPP negotiations in 2012 so as not to miss out on the promised economic party. As VICE has reported before, it is hoped that by joining up, Canadian firms will get increased access to Asian markets for important exports like pork and beef, as well as access to the US government procurement game.

In any trade deal, to get a little, you have to give a little—or in this case, a lot. Previous leaked drafts of the TPP have shown it menaces the internet, the environment, and Canada's copyright terms. Most of this pressure is coming from the United States, who are looking to "facilitate trade" by exporting their economic and legal system abroad.

As Alan Beattie from the suspender-snapping Financial Times puts it,

"The participation of countries in the TPP has less to do with enthusiasm for importing the US economic model than a grudging acceptance that yet more tribute has to be paid in order to retain access to the US market. Negotiating a trade deal with the US is not a particularly pleasant business, and nor is it becoming happier over time. You are essentially presented with a US model agreement that contains a decreasing proportion of actual free trade and an increasing proportion of intellectual property protection, and invited to sign."

ISDS is the enforcement mechanism for countries that sign the deal and then break the rules. The problem is that nobody really likes what's in the deal, so Canadian negotiators have been working to carve out exceptions for our country's cultural products, sensible copyright regime, and coddled dairy farmers, among other things.

Public-interest group Public Citizen's analysis of the ISDS chapter reveals a flawed process wherein corporate lawyers rotate between representing corporations and being judges in extrajudicial tribunals with no appeal mechanism. "The text includes no requirements for tribunal members to be impartial, reveal conflicts of interest or recuse themselves in instances of direct conflict. There is no internal or external mechanism to appeal the tribunal members' decisions on the merits, and claims of procedural errors would be decided by another tribunal of corporate lawyers."

It's this kind of process that led to the aforementioned $300-million dollar compensation demand for the Nova Scotia quarry expansion. It's not hard to imagine that Canada would be subject to many more cases like this under the TPP, given our recent history of promising lucrative resource deals to massive Asian multinationals like Petronas.

It goes both ways, however. For example, the TPP's investor-state dispute settlement system would equally empower ne'er-do-well Canadian mining companies to attack laws in Peru and Chile when there are already serious environmental concerns about their activities.

Perhaps most concerning is that most Canadian parliamentarians don't have access to the negotiating text of the agreement the government hopes to sign. It's not a stretch to say that Wikileaks has again struck a blow for transparency with this latest publication. MPs would do well to read the chapter, if only to have some advance notice of what will likely be rushed through parliament if and when negotiations conclude.

Chris Malmo is a donor relations coordinator at OpenMedia.

Follow Chris Malmo on Twitter.