EU-Canada trade deal would unleash wave of investor lawsuits, analysis finds

A first in-depth analysis of CETA’s investor rights by 15 environmental NGOs, citizens’ groups and workers unions from both sides of the Atlantic [1] finds that CETA grants even greater rights to foreign investors than the North American Free Trade Agreement (NAFTA) – increasing the risk that corporations will use CETA to constrain future government policy.

 

Under NAFTA’s so-called investor-state dispute settlement provisions, Canada has been sued 35 times and has paid €121 million (CAD$171.5 million) in damages to foreign investors, including for laws to protect the public, according to the report Trading Away Democracy.

 

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. If we continue to give them this powerful weapon to fight public regulation, our societies will not to be able to confront the big challenges of our time – from combating climate change to preventing another financial crisis.”

 

Trading Away Democracy shows that for Canada, the risks of being sued by banks, insurers and holding companies over financial regulations will increase significantly with CETA. Meanwhile, the EU and its member states particularly risk being sued by Canadian mining, oil and gas companies, which are already engaged in a number of controversial natural resource projects across Europe.

 

The report also shows how US-headquartered companies through their Canadian subsidiaries will be able to use CETA to sue European governments, even if the EU eventually excludes or limits the investor rights within the proposed Transatlantic Trade and Investment Partnership (TTIP) currently under negotiation with the United States.

 

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. If the European Commission, member states and the European Parliament are serious about protecting public policy, they have to scrap investor-state dispute settlement not only from TTIP, but also from CETA.”

 

Pia Eberhardt, researcher and campaigner with Corporate Europe Observatory, added: “The alleged reforms that the European Commission and the Canadian government have promised to dispel concerns about investor-state dispute settlement will not stop corporations and private lawyers from abusing the system. 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.”