US multinationals could sue EU governments through CETA

20-11-2014 (updated: 21-11-2014 )

Anti-CETA and TTIP protestors. Berlin, 11 October. [Jakob Huber/ECI Stop TTIP!/Flickr]

Languages: Deutsch

American multinationals could use investor-state dispute settlement (ISDS) provisions in the European Union-Canada trade deal to sue EU governments in costly legal battles that could stymie policymaking, campaigners have warned.

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.

http://cf.datawrapper.de/az1p3/2/

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.

Chilling effect

CETA would unleash a wave of corporate lawsuits against Canada, the EU, and its member states, particularly in the mining and financial sectors, campaigners said.

Analysis by 15 environmental NGOs, citizens’ groups and workers unions from both sides of the Atlantic found that that CETA grants even greater rights to foreign investors than NAFTA.

As well as the cost, the threat of litigation had a “chilling effect” on government regulation, which was needed to fight everything from climate change to preventing the next financial crisis, they said.

“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,” Toubeau said.

The report said that for Canada, the risks of being sued by EU banks, insurers and holding companies over financial regulations will increase significantly with CETA.

The EU and its member states are at particular risk of being sued by Canadian mining, oil and gas companies, which are already engaged in several natural resource projects across Europe.

Opposition

The CETA text has been finalised, and after up to two years of “legal scrubbing” will pass to European and national parliaments for ratification.

On 10 November, new EU Trade Commissioner Cecilia Malmström said only minor adjustments to ISDS in CETA could be made.

“It will not be possible to take the dispute settlement procedure out of CETA. We are acting in a European context and must listen to the views of other countries,” Germany’s Economic Affairs Minister Sigmar Gabriel said after meeting with Malmström in Berlin.

In September, Gabriel had said Berlin would not sign unless this clause were scrapped, refusing to accept investment protection agreements in CETA and TTIP.

Read>>Malmström: Only minor adjustments to ISDS in trade deal with Canada

TTIP, the trade pact between the EU and US, is currently under negotiation.

Matthias Fekl, France’s Secretary of State for Foreign Trade, said this week his country will not support ISDS in TTIP.

Read>>French government will not sign TTIP agreement in 2015

Opposition to ISDS in TTIP was so strong the European Commission took it off the negotiating table and held a public consultation. It attracted 150,000 replies.

Read>>Commission swamped by 150,000 replies to TTIP consultation

In his speech to the European Parliament on 22 October, Commission President Jean-Claude Juncker said he would not accept any external limitations being placed on the member states’ ability to settle their own industrial disputes.

But the US is still pushing for its inclusion.

During a visit to the European Parliament’s October plenary session in Strasbourg, Anthony Luzzatto Gardner, from the United States’ mission to the EU, insisted that the ISDS was an important clause.

“Our message to the people of Europe is not to remove it from the table, but to conclude the discussion process and to improve it,” he said.

EU trade ministers will meet tomorrow in Brussels to discuss trade priorities.

Positions

Ambassador David Plunkett, Canada's Ambassador to the EU, said, "There are significant misconceptions in this and other recent articles by the non-governmental community regarding the nature and scope of investment protection provisions in the CETA, particularly with respect to Investor-State Dispute Settlement (ISDS).

"ISDS is an essential component of free trade agreements; it provides foreign investors with access to an independent and impartial mechanism to resolve disputes while leaving the decision on whether to launch a dispute with investors who are best positioned to assess the impact of a government measure. Canada has included ISDS in all our major trade agreements since the Canada-US Free Trade Agreement.

"EU Member States have hundreds of treaties that provide for ISDS. Strong investment protection provisions in CETA will provide Canadian and EU investors with greater certainty, stability, transparency, and protection for their investments while preserving the full right of each government to legislate and regulate in the public interest. Canadian and EU investors alike will be subject to all of Canada’s and the EU’s laws and regulations, including those pertaining to environmental, labour, health care, building, and safety standards.

"The argument that CETA would automatically allow companies based in countries other than Canada to benefit from the agreement’s investment protection provisions is completely false. The CETA text is clear that only investments made by Canadian investors into the EU would be covered by the investment protection provisions of the agreement. Furthermore, companies in Canada owned or controlled by investors from a third state and lacking substantial business activities in Canada (e.g. letter-box companies), would not be recognised as an investor for the purposes of the investment chapter of CETA."

A Transport and Environment spokesman answered, "The CETA text says that investors with "substantial business activities" in Canada are covered. All the US-based multinationals that we show in our study have registered subsidiaries with substantial business activities in Canada (offices, many employees, massive turnover every year etc.) So, clearly they will be able to sue the EU and its member states through CETA."

Background

Ottawa and Brussels started trade negotiations in 2009 and a deal was initially supposed to be concluded by the end of 2011.

That deadline was pushed back to the end of 2012 as the two sides tried to resolve differences over how much beef Canada can export and how much freedom EU companies will have to bid for Canadian government contracts.

The talks stalled again in 2013 over demands for protecting Europe's distinctive geographically defined products such as feta and Gorgonzola cheeses.

Backed strongly by Canadian and European industry, the deal was originally presented as a straightforward way to reinvigorate economic growth for both sides and generate around $28 billion in new trade and business a year.

Negotiations between the US and the EU on the Transatlantic Trade and Investment Partnership (TTIP) began in July 2013.

If the treaty is signed, it will affect almost 40% of world GDP. The transatlantic market is already the most important in the world. It is estimated that TTIP could save the average European household €545 each year, and could cause the European Union's GDP to grow by 0.5%.

Investor-state dispute settlement clauses, increasingly part of free trade agreements, allow companies to take governments to international arbitration tribunals.

Timeline

21 Nov: EU trade ministers meet in Brussels

Press articles

EURACTIV Germany: CETA-Abkommen mit Kanada: US-Multis könnten EU-Regierungen verklagen
EURACTIV Slovakia: Americké firmy môžu žalova? európske vlády cez dohodu
EURACTIV Greece: ?? ???????????? ??????????? ??????? ?? ???????? ??? ?? ???? ??? ????????? ????????? ?? ??? ??????

Languages: Deutsch

Comments

0 responses to “US multinationals could sue EU governments through CETA”

David E.H. Smith says:

21/11/2014 at 07:41

HOW to DISCOURAGE CORPORATE USA, et al, “Need” to FLEECE NON-Shareholders & GLOBALLY EXPAND $17 Trillion DEBT; SECRET TPP, CETA, et al, GLOBALIZES WALL ST.’s UNREGULATED TRANSGRESSIONS? TOO Big, BigGER, BIGGEST to be “ALLOWED” to FAIL?

WILL CHINA, INDIA, The MUSLIM WORLD, et al, SUPPORT PUTIN (B.R.I.C.S., et al); The WHITE KNIGHT”?

TPP, CETA, C-CIT SHAREHOLDERS & NON Shareholders AWAIT SUPREME COURT of CANADA’S, et al, FINDINGS, et al, to PROCEED. FINDINGS OF HIGHEST COURTS of the TPP, EU NATIONS, et al, DIFFER FROM CANADA’S, et al?

As the establishment of branch corporations in other countries, etc. enables corporations to sue the NON shareholders of their “home” nation by claiming that the suits were initiated by the foreign signatories to the trade treaties/”arrangements”,
it will be good for, not only the NON shareholders of the enterprises that will be generated by the on-going global “cooperation” of corporate treaties, agreements, partnerships, et al, including the China – Canada Investment Treaty, The Trans Pacific Partnership, the EU – Canada CETA,
but,
for the potential shareholders, as well,
who are quite interested to know if President Xi Jinping (China) will support Russia as a co-member of B.R.I.C.S. when President Putin uses his potential role as “The White Knight”.

And, while President Putin’s potential support as “The WHITE KNIGHT” in the development of the CETAgreement, et al, litigation below can dramatically off-set the hundreds of billions of dollars due to the present & future sanctions leveled by American led, et al, corporations & financial institutions via their governments’ signing their global corporate economic treaties/”arrangements”,
and the potential for making trillions of dollars for the Russian economy over the next 30 – 40 years & beyond,
are the citizens (SHAREHOLDERS & NON shareholders) of Germany & JAPAN just being prudent in wanting to wait (not-so “fast track”) for the outcome of:
1) the submission to The SUPREME COURT of CANADA & the highest courts of the EU & Trans Pacific nations, et al, to make their findings regarding “The Submission”:
“The SHAREHOLDERS & Corporations of AMERICA, et al
v
the harmless NON shareholders of Canada, both; Native & Non Native, et al”?

and
2) “The MERKEL (Chanc. Germ.) Letter; To Sue, or, Be Sued”?
(see; davidehsmith.wordpress.com )

Have the federal representatives of the nations that are the potential signatories of CETA, TPP, et al, willingly provided the NON shareholders of China, Canada, Europe, the Trans Pacific nations, et al, with the aforementioned information? Are the federal representatives, et al, depriving the NON shareholders of Canada, et al, of the due diligence information that enables the family of the NON shareholders of Canada, et al, to make informed decisions regarding their financial planning?

And, would a reasonable person conclude by a preponderance of the evidence, &/or, beyond a reasonable doubt, that these documents, et al, demonstrate that the SHAREHOLDERS of AMERICA, CANADA , the EU & Trans Pacific nations, et al, really do not care which NON shareholders pay them the punitive penalties, etc., by way of their secret (“Death-Star Chamber”) TRIBUNALS, as long as its not the SHAREHOLDERS who pay & not their corporations regardless of which country the corporations:
1) operating from,
2) maintain their headquarters,
3) use to do their cyber banking, accounting, “taxation”, etc.
&
4) et al?

And, re; the CHINA – Canada Investment Treaty, is it understandable why the “coveted” Hong Kong investor & his associates are “concerned” with the aforementioned findings of The SUPREME COURT of CANADA, et al, & the effects of the findings, et al, on the EU, AMERICA, the Trans Pacific nations, et al, treaties with CHINA, et al?

In regard to arms sales; how about the sale of arms (non nuclear) in general in regard to the “trade” treaties that are continuing to be secretly negotiated and how will the Tribunals, both; B.R.I.C.S. & non BRICS, adjudicate, decide & penalize the NON SHAREHOLDERS for the sale of legitimate, semi- legitimate & “illegal” sales of arms within the signatories nations & the those of others, &/or, unaligned? Of particular, interest is China, which does have an treaty with Canada, which puts China “at odds” with other arms manufacturing & nuclear powers that it (China) does not have any “arrangements” with.
Are these types of questions that your politicians & the corporate lobbyists calls “forget-me-nots” (“Buyer Beware”) that will be (maybe) worked out after the fast tracked signatures are obtained?

And, what do you think is the significance of the line in The Submission to The Supreme Court of Canada “…And, lest one forgets that the revelation of the present perilous international treaties/”arrangements” began with the regard for the rights of Native Canadians as per the Treaties/”arrangements” that corporate Canada & the Government of Canada have “foisted” upon Native Canadians…”? What are the various ways that this line will cost the SHAREHOLDERS, et al?

On the other hand, it may be worth repeating,
“What the TREATY of VERSAILLES was to the 20th century (WWII) PALES in COMPARISON to the TPP, CETA, C-CIT, NAFTA, et al, in the 21st”.

And, how will YOUR submission to YOUR highest court IMPROVE upon The Submission that is presently before The Supreme Court of Canada?

David E.H. Smith
– Researcher
– “Qui tam…”
******
For more Information & Questions re; The Relationship between Human (Nature) Rights & Economics by way of the CET Agreement, the C-CI Treaty, the TPP, et al, and The WAD Accord
& List of RECENT ARTICLES, LETTERS & NOTIFICATIONS by DEHS,
see; davidehsmith.wordpress.com

Log in to Reply

US multinationals could sue EU governments through CETA

Positions

Background

Timeline

Further Reading

Press articles

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.

US multinationals could sue EU governments through CETA

Positions

Background

Timeline

Further Reading

Press articles

Topics

Subscribe to our newsletters

Want to know what's going on in the EU Capitals daily? Subscribe now to our new 9am newsletter.