Why TransCanada's $15 Billion Lawsuit Against U.S. Is a Bad Omen for Trans-Pacific Partnership

The latest expression of our corporate-controlled economic structure revealed itself last week when TransCanada, the Canadian-based energy giant that hoped to build the Keystone XL pipeline, filed a $15 billion lawsuit against the United States government for rejecting the pipeline's construction, under guidelines set forth in NAFTA. The lawsuit presents the most recent evidence of the prioritization of corporate profits and interests over the rights of citizens in a sovereign, domestic nation. Yet instances like this will only increase with the passage of the Trans-Pacific Partnership.

In a statement accompanying the news, TransCanada announced that it had "undertaken a careful evaluation of the Administration’s action and believe there has been a clear violation of NAFTA and the U.S. Constitution in these circumstances.” The company also called the government's decision to reject the pipeline “arbitrary and unjustified.”

Arbitrary and unjustified indeed. The pipeline, about 1,200 miles long, would have carried over 830,000 daily barrels of crude oil, or tar sands, from Alberta, Canada, to refineries on the Gulf Coast. It would have been built over precious aquifers throughout the midwestern U.S., namely the Ogallala Aquifer. It would also violate tribal sovereignty and potentially pose problems with eminent domain – where landowners would be forced to give up their land to a foreign corporation under the argument that it was somehow serving the "public interest."

How dare we, as a free nation, come to the conclusion that this pipeline is bad for our country?

But here’s the real kicker: not only can TransCanada sue the U.S. government over the costs of the project, but the company is also allowed to seek an array of damages taking the form of "expected future profits." What we have here is a foreign corporation suing the American taxpayers because their government made a democratic, sovereign, autonomous decision to reject a commercial project, on both ecological and economic grounds. The process is occurring in an extrajudicial forum completely outside the realm of U.S. domestic law, cites the non-profit Public Citizen, “in which three private attorneys are authorized to order unlimited sums of taxpayer compensation."

"The amount is based on the ‘expected future profits’ the tribunal surmises that the corporation would have earned in the absence of the public policy it is attacking," the group writes. "There is no outside appeal. Many of these attorneys rotate between acting as tribunal ‘judges’ and as the lawyers launching cases against the government on behalf of the corporations.” The private attorneys aren't bound by conflict of interest or impartiality rules, and "if a government doesn't pay, [the plaintiff] has the right to seize government assets in order to extract our tax dollars.”

In fact, the American taxpayers have already shelled out over $440 million as a result of these extreme investor-state systems included in many U.S. trade deals. Most of the lawsuits were filed under the domestic state tribunal guidelines outlined in NAFTA, which we can thank former President Bill Clinton for signing into law.

Prelude to the TPP?

The TransCanada lawsuit, in short, is a forerunner of what we can to happen should the TPP come into effect. When speaking in front of Nike, in Beaverton, Ore., Obama mocked individuals that claimed that the TPP and similar trade agreements were circumventing national governmental decisions.

“Critics warn that parts of this deal would undermine American regulation, food safety, worker safety, even financial regulation. This is…(chuckles)…they’re making this stuff up. This is just not true. No trade agreement is going to force us to change our laws," said the president. He went on, “[The TPP] reflects our values in ways that frankly, some previous trade agreements did not. It’s the highest standard, most progressive trade deal in history. It’s got strong enforceable provisions on…child labor [and] on the environment…NAFTA was passed 20 years ago. That was a different agreement.”

One can argue about the meaning of the word “progressive,” but in the traditional American rhetoric, it’s probably not supposed to be used to describe a policy granting supranational judicial powers to corporate entities. To use it with a superlative is particularly unsettling. And "our values?" Please speak for yourself, Mr. President.

Obama’s statements contradict Public Citizen’s findings. Lori Wallach, head of the group's Global Trade Watch, has indicated that “the actual language that TransCanada is using in this case…is the same language that, word-for-word, is replicated in TPP.” But more important to discuss are the implications of the corporate tribunal system that allows foreign multinational corporations to sue sovereign nations for making decisions that could, potentially, impact their profits. Businesses that didn't get what they wanted with the passage of NAFTA have contributed to the secret crafting of the Trans-Pacific Partnership and its Atlantic twin, the Transatlantic Free Trade Agreement, or TAFTA.

It is the right of any free nation to dictate its own laws and guidelines – especially if those laws and guidelines help strengthen food and water safety, financial regulation, and environmental regulation. Supranational lawsuits like TransCanada's directly contradict and infringe upon that right. As corporate leaders secretly tighten their grip on the economy, governments, and particularly the citizens of those governments, fear they will slowly become subservient to those corporate entities. More frighteningly, with the airtight, secretive trade agreements being crafted behind closed doors, there will be no legal or political recourse to reverse the decisions.