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Corporations with Canadian subsidiaries and holdings could use the Comprehensive Economic and Trade Agreement (CETA) to take countries to international arbitration tribunals, even if the ISDS clause is dropped from the EU-US Transatlantic Trade and Investment Partnership (TTIP).
US companies with “substantial business interests” in Canada would be able to use the CETA ISDS mechanism, if it is ultimately cleared by European and national parliaments.
They include ExxonMobil Investments, which used ISDS in the North American Free Trade Agreement (NAFTA) between Canada, the US and Mexico, to successfully sue Canada in 2007. The energy giant’s investment arm with Murphy Oil claimed about €49 million, but their final award was never made public.
US food processing company Cargill would also qualify. In 2004, Cargill sued Mexico through NAFTA ISDS, winning €71.8 million. Mexico had tried to introduce a tax on drinks containing high fructose corn syrup. The syrup is linked to obesity.
Sustainable trade policy officer at Transport & Environment, Cecile Toubeau, said: “CETA will be a Trojan horse for US-based multinationals to sue the EU and its member states.”
Under NAFTA rules, Canada was sued 34 times, at least once a year since 1996, according to a report Trading Away Democracy, published yesterday (18 November).
Canada has paid €121 million to American investors. Not all the cases were successfu,l but that still exposed the Canadian government to exorbitant legal costs of about €223.4 million, Transport and Environment, an NGO, said. The figure is based on UN research that put the legal fees, (typically 82% of total costs) and tribunal expenses at more than €6.4 million on average.
The US has had 22 cases brought against it under NAFTA. The cases have either been dismissed or arbitration never began, and three cases are pending.
Blair Redlin, researcher with Canada’s Trade Justice Network, said: “Canadians have learned painfully from NAFTA that investor-state dispute settlement is a dangerous system which transfers power away from elected governments, towards corporations and private lawyers.”
Supporters of trade deals would argue that the figures were relatively small in comparison to the economic benefits of free trade. The European Commission, for example, claims that TTIP will be €119 billion a year to the EU economy – or an extra €545 for a family of four.
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