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NAFTA Creates Energy ‘Free-for-All’, Undermines Canadian Climate Action

The 38 lawsuits Canadian jurisdictions have faced under the North American Free Trade Agreement (NAFTA) are one of the most compelling reasons to build relationships between climate, social, and trade justice movements, argues Andrea Harden-Donahue, energy and climate justice campaigner at the Council of Canadians, in a recent post on Below 2C.

“We need a fundamental shift in how we approach trade—one that puts the needs of people and the planet first,” more than 30 Canadian organizations stated in a recent open letter. “Trade deals must create a fair playing field by requiring each participating country to adopt, maintain, and implement policies to ensure compliance with domestic environmental laws and important international environmental and labour agreements.”

The two main concerns in the letter—NAFTA’s dispute resolution mechanism and its energy chapter—are the focal points of Harden-Donahue’s post.

NAFTA’s Investor-State Dispute Settlement (ISDS) has allowed corporations to sue the government of another country if it introduces new laws, regulations, or practices that impact their investments,” she writes. Two-thirds of the suits filed against Canada have been in reaction to environmental protection laws—including Quebec’s moratorium on hydraulic fracturing (“fracking”), and Nova Scotia’s refusal to approve a new quarry.

“Canada currently faces suits where corporations are seeking over $6 billion in damages,” Harden-Donahue writes. “Chapter 11 has also been used to undermine labour and human rights.

She adds that the energy chapter of the original agreement “has locked Canada in as a major exporter of primarily raw, unrefined resources,” deregulating the country’s energy sector and triggering “a free-for-all corporate rush to own resources.” The chapter was “written before broad awareness on climate change,” and “limits our capacity to influence our energy production and consumption.” (Energy Mix writer Chris Wood has a different view.)

Harden-Donahue points to a “NAFTA chill”, in the form of Canadian efforts to avoid ISDS challenges by subjecting all new laws or amendments to review by trade experts. And she cites colleagues at the Council of Canadians who say it isn’t sufficient for Canadian negotiators to treat the chapter that contains the ISDS provision as non-negotiable, apart from trying to amend it to match the Comprehensive Economic and Trade Agreement (CETA) between Canada, the European Union, and its member states.

“You cannot protect climate and labour rights and still give corporations this powerful right to undermine public legislation,” said Trade Campaigner Sujata Dey. “[Prime Minister Justin] Trudeau’s negotiating position makes it clearer than ever that his government’s claim that it wants a ‘progressive’ NAFTA with ‘environment’ and ‘labour’ standards is nothing more than pretty words.”