A
"bypass" alternative for multinationals when publicity is
focused on TTIP
Key
findings by the Corporate Europe Observatory
“On
September 26, 2014, Canada and the European Union (EU) announced the
conclusion of a far-reaching economic integration agreement, the
Comprehensive Economic and Trade Agreement (CETA). The agreement
includes an investor-state dispute settlement (ISDS) mechanism, which
could unleash a corporate litigation boom against Canada, the EU and
individual EU member states, and could dangerously thwart government
efforts to protect citizens and the environment.”
“The
ISDS mechanism gives foreign corporations the ability to directly sue
countries at private international tribunals for compensation over
health, environmental, financial and other domestic safeguards that
they believe undermine their rights. These investor-state lawsuits
are decided by private commercial arbitrators who are paid for each
case they hear, with a clear tendency to interpret the law in favour
of investors.”
“ISDS
can prevent governments from acting in the public interest both
directly when a corporation sues a state, and indirectly by
discouraging legislation for fear of triggering a suit. Globally,
investors have challenged laws that protect public health such as
anti-smoking laws, bans on toxics and mining, requirements for
environmental impact assessments, and regulations relating to
hazardous waste, tax measures and fiscal policies.”
“Canada’s
experience with the North American Free Trade Agreement (NAFTA)
illustrates the dangers of investment arbitration. Under NAFTA,
Canada has been sued 35 times, has lost or settled six claims,
and has paid damages to foreign investors totalling over C$171.5
million. Ongoing investor claims challenge a wide range of government
measures that allegedly diminish the value of foreign investments –
from a moratorium on fracking and a related revocation of drilling
permits to a decision by Canadian courts to invalidate pharmaceutical
patents which were not sufficiently innovative or useful. Foreign
investors are currently seeking several billions of dollars in
damages from the Canadian government.”
“By
protecting investors’ 'legitimate expectations' under the so-called
'fair and equitable treatment' clause, CETA risks codifying a very
expansive interpretation of the clause that would create the 'right'
to a stable regulatory environment. This would give investors
a powerful weapon to fight regulatory changes, even if implemented in
light of new knowledge or democratic choice. CETA would give foreign
investors more rights to challenge financial regulations than NAFTA,
where they were mostly limited to a bank’s (still wide-ranging)
rights to transfer funds freely and to be protected from
expropriation. CETA expands their rights to include highly
elastic concepts such as fair and equitable treatment, which
threatens to hamstring regulators charged with protecting consumers
and the stability of the financial system in an emergency.”
“The
risks to Canada of being sued by banks, insurers and holding
companies will increase significantly with CETA. These risks are
evident as speculative investors, backed by investment lawyers,
are increasingly using investment arbitration to scavenge for profits
by suing governments experiencing financial crises. EU investment
stocks in Canada are significant in the financial sector, which would
gain far-reaching litigation rights under CETA.”
“CETA
would increase the risk to the EU and its member states of challenges
by Canadian investors in the mining and oil and gas extraction
sectors. Canadian investment stocks in the EU are significant in
these sectors, and Canadian mining companies are already engaged
in a number of controversial natural resource projects across the EU.
Mining specialists are celebrating CETA as a 'landmark' agreement,
which could have 'major implications for miners.' Oil, mining and
gas corporations around the world are increasingly turning to
investment arbitration.”
“Canadian
subsidiaries of US-headquartered multinationals will also be able to
use CETA to sue European governments, even if the EU eventually
excludes or limits investor-state dispute settlement within the
Transatlantic Trade and Investment Partnership (TTIP) currently under
negotiation with the US. This is particularly worrying for Europeans
as US corporations dominate the Canadian economy. EU-based
subsidiaries of foreign companies would also have the same power to
challenge measures in Canada.”
“EU,
Canadian and US companies are already among the most frequent users
of investment arbitration, so there is every reason to expect that
they will use CETA to rein in government measures in Canada and
Europe. Fifty-three percent (or 299) of all known investor-state
disputes globally were brought by investors from the EU. U.S.
investors have filed 22 percent (or 127) of all known investor-state
cases. Canadian investors are the fifth most frequent users of
investment arbitration.”
“Opposition
to investor-state provisions in CETA is growing on both sides of the
Atlantic amongst civil society organisations, trade unions, and even
EU member states. In response, the European Commission and the
Canadian government have begun a misleading propaganda effort aimed
at downplaying the risks of investment arbitration and diverting
attention from the fundamental problems of the system by focusing on
cosmetic reforms.”
“The
'reforms' that the European Commission and the Canadian government
have promised to dispel concerns about ISDS will not prevent abuse by
investors and arbitrators. On the contrary, CETA will significantly
expand the scope of investment arbitration, exposing the EU, its
member states and Canada to unpredictable and unprecedented liability
risks.”
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