Opponents of so-called free trade deals have always struggled with the question of why these international treaties don’t generate more alarm and vocal opposition from Canadians. These treaties, after all, trump all other Canadian authority to make laws — provincial legislatures, Parliament, the courts and even the Constitution. If, instead of being bored by news of another ho-hum “trade deal,” Canadians were told that a panel of three international trade lawyers would be reviewing all new laws and determining, in secret, which ones passed muster by meeting with the approval of their giant corporate clients, would they react differently?
That is effectively what all of these corporate rights treaties establish: extra-judicial rulings whose objective is to protect the profits against laws passed in the public interest. The clauses that allow such suits are referred to as investor-state dispute settlement (ISDS). This is not hyperbole — that is the actual, stated objective of ISDS: if a new law affects the expected future profits of a foreign owned company, it can sue the federal government for damages. And the decision is made by a panel of trade lawyers whose bias is, naturally, in favour of facilitating corporate interests — because that is who they normally work for. They aren’t environmental lawyers or labour lawyers or human rights lawyers. They’re trade lawyers. Foxes judging the right of other foxes to kill chickens.
Twenty years after NAFTA — the first free trade agreement to include ISDS — came into effect there are many examples of laws duly passed by legislatures in the public interest that have been ruled in violation of NAFTA. Some are more egregious than others — but they all challenge and assign financial penalties against laws that one government or another thought were important enough to implement.
According to Scott Sinclair with the Canadian Centre for Policy Alternatives, “Canada has been the target of over 70 per cent of all NAFTA claims since 2005. Currently, Canada faces eight active claims… Foreign investors are seeking several billions in damages from the Canadian government. These include challenges to a ban on fracking by the Quebec provincial government…” Canada has never won a case against the U.S.
The rate of challenges is increasing and the rulings are actually getting worse. In 2007, the Nova Scotia and federal governments rejected a proposal to create a huge quarry in an environmentally sensitive area important to local communities. The company won before a NAFTA tribunal and is seeking damages of over $300 million. But the reasoning was even more outrageous than usual. The company successfully argued that an environmental review panel relied on “community core values,” which company lawyers argued was unacceptable. Adding insult to injury, the panel ruled on the basis that there was a “possibility” the review panel’s decision might have been overturned in federal court. Effectively, the company just did an end run around Canadian environmental laws and the Canadian judicial system by going straight to NAFTA.