A decision by U.S. President Barack Obama to reject the Keystone XL pipeline could lead to a claim for damages under the North American Free Trade Agreement (NAFTA).
“The 21-year-old free-trade pact allows foreign companies or governments to haul the U.S. in front of an international tribunal to face accusations of putting their investments at risk through regulations or other decisions,” Politico reported yesterday. TransCanada CEO Russ Girling “has raised the prospect as a potential last resort if Obama rejects the $8 billion project, although for now the company is focused on getting him to say yes.”
A NAFTA claim is “obviously something we would have to take a look at if we end up in a situation where the pipeline is delayed indefinitely or denied,” Girling told reporters last May. “Our view is that this pipeline looks no different than other pipelines that have been approved [and] continue to be approved in the United States.”
Although a NAFTA tribunal “would not have the power to approve Keystone,” it could assess damages that would be paid by U.S. taxpayers, Politico writes.
“If the pipeline is actually vetoed on so-called environmental grounds, I think there is a very strong case for a NAFTA challenge,” Canada’s former U.S. ambassador and senior NAFTA negotiator, Derek Burney, told Schor. “That provision in the NAFTA agreement was really something that had been required by the U.S., not by Canada, that trade in energy should be unfettered across the border.”