Corporate power bleeds Canada dry

Barely noticed by most media outlets, top corporations are finding ways to assert their control over policies nominally designed to serve public interests. Unglamorous trade talks between the European Union and Canada offer a prime example of the headway they are making. Since their launch in Prague last year, these negotiations have largely followed an agenda drawn up by the European Services Forum (ESF). Bringing together Goldman Sachs, IBM, Vodafone and Deutsche Bank, the ESF is determined to usher in a trans-Atlantic investment regime where elected institutions play second fiddle to unaccountable chief executives.

The forum’s principal recommendation is that an EU-Canada trade deal should be modelled on the North Atlantic Free Trade Agreement (NAFTA). More specifically, it wants chapter 11 of NAFTA to be copied and pasted into an EU-Canada accord. That chapter facilitates private firms to sue any of the three governments that signed NAFTA – the US, Canada or Mexico – if obstacles to making profits are encountered. The courts of arbitration provided for by the chapter can issue legally binding verdicts after hearings held in camera. If the ESF has its way, firms would also be able to put the European Union in the dock.

The likely implications of the ESF’s demands can be foreseen by examining the case law for NAFTA. When an American waste management company called Metalclad was ordered to cease building a toxic dump in Mexico during the 1990s, it initiated proceedings against the Mexican government. Even though there were sound reasons – for protecting human health and preventing soil and water pollution - why Metalclad had been told to stop work on a site that was already contaminated, a NAFTA tribunal found that Mexico had failed to ensure there was a “clear, transparent and predictable framework for foreign investors.” And so Metalclad was awarded almost $17million.

The EU-Canada talks cannot be viewed in isolation from a discussion taking place among Brussels officials about how imports of tar sands from the Canadian province of Alberta should be regulated. Last year a European Commission paper proposing revisions to an EU fuel quality law stated that petrol derived from tar sands would have a 20% greater effect on the climate than conventional petrol. But this warning was removed from later versions of the paper after Ross Hornby, Canada’s ambassador to the EU, objected. Hornby signalled that Canada would retaliate if a “barrier” to trade in tar sands was erected.

Should the EU-Canada trade deal be tailored to satisfy big business, Shell and other energy companies could litigate against measures that impede them from selling tar sands. And so the EU would be giving its tacit blessing to the large-scale vandalism being planned in Alberta, where an expansive boreal forest – one quarter of the world’s remaining undisturbed forest – is under threat. Operations that encroach into this ecosystem will not only harm bears, caribou and lynx but the First Nations communities, who are already suffering heightened incidences of cancer because of exposure to naphthenic acid, a constituent of petroleum that becomes concentrated in the hot water required to process tar sands.

Similarly, it is conceivable that Europe’s restrictions on genetically modified (GM) foods could be one of the first targets of aggrieved corporations once the EU-Canada deal comes into effect. Whereas the planting of GM crops can only be authorised in the EU after their probable ecological consequences have been assessed, the safeguards in Canada are considerably less robust. Last year SmartStax, a new corn designed by Monsanto and Dow Chemicals to resist a variety of different pesticides, was authorised in Canada without having to go through the health and environment checks required in Europe.

As its contribution to the trade talks, Monsanto’s Canadian subsidiary has advocated that the EU and Canada would recognise each other’s standards, rather than having to introduce anything more rigorous than those currently in place. This position has been endorsed by the Canada Europe Roundtable for Business, an influential lobby group in both Brussels and Ottawa.

The strategy being pursued by the captains of industry is all the more troubling, when one considers that they are sneakily trying to attain objectives that have been rejected by separate international fora. In a triumph for the so-called anti-globalisation movement, the Multilateral Agreement on Investment (MAI) was shelved in the late 1990s. Discussed at the level of the World Trade Organisation, that treaty was also designed to give corporations the power to counter green or social rules they regarded as pesky.

Recently, however, a letter signed by prominent writers and activists such as Naomi Klein, Susan George and José Bové (now a French MEP) dubbed the draft EU-Canada agreement a “carbon copy” of the MAI. Both contain the same “judicial monstrosity”, the letter noted.

Often the EU’s representatives seek to portray themselves as slightly more progressive than their north American peers by bragging of how they have set deeper targets for greenhouse gas reductions or of how they are committed to maintaining a “social market” economy. Yet in reality, they are just as ideologically blinkered as Stephen Harper and his right-wing government in Canada. It was the European side, for example, which insisted that public procurement markets at both federal and provincial levels in Canada should be opened up to European competitors. Although Canada’s 10 provincial governments were not party to the NAFTA talks, they are participating in the trade discussions with the EU.

In the past few weeks, the EU has complained about entirely reasonable efforts by the Montreal authorities to ensure that new trains for its subway were made in Quebec. If the EU’s arm-twisting pays off, it will be illegal for such tenders to contain “buy local” caveats in the future, while a range of other vital services – including healthcare and water – will be opened to competition. Michael Moore’s film “Sicko” indicated that politicians across the political spectrum in Canada regarded access to affordable healthcare as a basic right. That right would be harder to protect once the business of keeping people alive is handed over to the private insurance industry.

The EU-Canada talks should be viewed against the backdrop of the wider external trade policy being pursued by the European Commission. In 2006, Peter Mandelson, then the EU’s trade chief, published a strategy known as Global Europe. It committed the Union to attack relentlessly any obstacles encountered by corporations doing business abroad. Brussels officials have had no qualms about seeking counsel from some of the least ethical players in the marketplace. When the Commission held a conference in 2008 to evaluate the first two years of Global Europe, the vehicle-maker Caterpillar was invited to thunder against air pollution standards it felt should not apply to its products. None of the conference speakers saw fit to query if Caterpillar, provider of the specially designed bulldozers that Israel uses to demolish Palestinian homes, was a suitable source of advice.

During November, a follow-up paper to Global Europe will be published by the current EU trade commissioner Karel de Gucht. It is expected that this will recommend sticking to the objectives set by Mandelson, though to enlarge the geographical focus of trade policy. With a free trade agreement with South Korea in the bag though encountering difficulties winning approval from the European Parliament) and one with India likely to be clinched next year, the European Commission is eyeing potential deals with China and Japan.

Heedless to regional variations within its negotiating “partners”, the EU has been striving to ram through a series of largely identical trade deals. At the behest of the pharmaceutical industry, it has been pressurising India into imposing patents on medicines in a way that would jeopardise its status as a leading manufacturer of generic drugs for the world’s poor. Some African governments, meanwhile, have accused the EU of trying to bully them into accepting liberalisation plans they regard as inimical to their economic development. And the Union has gone ahead and finalised a free trade agreement with Colombia, despite receiving voluminous evidence from human rights watchdogs documenting how the Bogota authorities have connived in numerous violent attacks on trade unionists.

Back in 1999, protesters fighting the ‘Battle of Seattle’ raised many awkward questions about how the rules of world commerce had been rigged to benefit the super-rich. Global trade talks have been at a standstill for most of the subsequent decade, yet that doesn’t mean the rigging has stopped. Rather, it is taking place in a greater number of venues, making resistance to it increasingly difficult, yet no less urgent.

·First published by openDemocracy (www.opendemocracy.net), 29 October 2010