New trade agreements will TTIP us into powerlessness

Anti-TTIP and CETA protesters use a Trojan horse to get their message across in Berlin. Mehr Demokratie under a Creative Commons Licence

The British government has issued many soothing words in recent months to the effect that we must not worry about being sued by US transnationals if TTIP (the US-European Union trade deal) ever passes into law. After all, they say, Britain has never been successfully sued in one of the special tribunals known as investor-state dispute mechanisms (ISDS).

A report released last week – ‘Trading Away Democracy’ by Corporate Europe Observatory and others – looks at the experience of Canada. This is particularly relevant because, unlike Britain, Canada has actually shared such a system with the US for the last 20 years, under NAFTA (the North America Free Trade Agreement).

The report finds that, far from having nothing to worry about, Canada has faced 35 claims worth billions of dollars as a result of cases being brought by US transnationals. It’s already lost over $175million, but this could be the tip of the iceberg, as companies are suing Canada for such crimes as revoking drilling permits, subsidising renewable energy, placing a moratorium on fracking, questioning pharmaceutical patents, banning toxic additives in petrol and placing a temporary ban on the export of toxic waste. These cases cost Canada a small fortune just to fight, are held in secret, and give no right to appeal.

Now British ministers seem to think they can design trade agreements so cleverly that no such cases will be possible. But a case brought by Mobil Investments, subsidiary of ExxonMobil, is instructive. When a Canadian province tried to insist that oil companies invest in local research and development, rather than doing a grab and run on their oil, they were sued. And the companies won. This is despite the fact that Canada had negotiated a ‘reservation’ in NAFTA for research. Apparently, it didn’t mean this sort of research.

So even if Britain does make a reservation for the National Health Service (NHS), of which we see no sign of them doing at present, such reservations don’t seem worth the paper they’re printed on.

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Also interesting is a case in which Canada was sued for trying to ban a dangerous chemical from its petrol. It was successfully sued – but it also withdrew the ban. This shows up the British government’s claims that these treaties don’t inhibit legal changes in the public interest.

We have all this to look forward to under TTIP. US investors have brought 22 per cent of all known investor-state cases. But even without TTIP, we need to worry about another trade deal – called CETA (the Comprehensive Economic & Trade Agreement) – which is being agreed between Canada and the EU. This deal has already been finalized, and will go to the European Parliament for ratification next year. CETA does contain an ISDS system. So this would allow US transnationals with Canadian subsidiaries to sue the British government from Canada.

But of course, Canada’s transnationals are no angels – in fact, Canada hosts some of the dirtiest mining companies in the world, with a whole host of controversial projects planned across Europe. CETA will provide just the protection these companies need to make sure pesky governments don’t get in the way with environmental or social protection laws.

One Canadian company, Gabriel Resources, has already sued Romania, under a current trade agreement, for turning down its goldmine in the face of local resistance. But at the moment 21 of 28 EU states don’t have such agreement with Canada. So it’s no wonder that mining companies celebrated the final text of CETA, with one group claiming that the investor-state provision is ‘Probably the most significant development’ for mining corporations.

So to the final lie of the British government – that the ‘new wave’ of trade deals like TTIP and CETA won’t allow such frivolous cases. As a matter of fact, CETA could well be worse than NAFTA in one important respect – that it gives investors more power to challenge financial regulations. Who could be responsible? Perhaps the very British government which has been reassuring us of the harmless nature of ‘investor protection’ but which regularly acts on behalf of the big banks who are desperate to use TTIP and CETA to do away with costly financial regulation in North America.

So while European governments undermine their ability to protect our environment from Canadian mining companies, Canada risks being sued by European financiers for trying to protect its financial stability. And while European companies account for 53 per cent of all investor-states cases we know about, it’s no idle threat.

Next time your MP tells you ‘we have nothing to fear’ from TTIP, show them this. And insist, we need to defeat CETA and TTIP.

Nick Dearden is Director of the World Development Movement.

Read ‘Ten reasons to be worried about the Trojan treaties’ – a New Internationalist primer on TTIP and TPP.