Fracking in Canada: Trojan horse hitched to the Lone Pine
Lone Pine Resources is suing Canada for $250 million over a fracking moratorium in Quebec province. The energy company’s action under the North American Free Trade Agreement (NAFTA) demonstrates yet again why the EU should delete a corporate appeals procedure from current EU-USA free trade talks.
Public resistance to fracking under the St Lawrence River persuaded the Quebec government to impose a moratorium until an environmental impact assessment was carried out. Lone Pine has challenged this democratic decision not using Canadian courts, but procedures under NAFTA.
The Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations include a Trojan horse clause in the far-reaching deal now being negotiated. The Investor-State Dispute Settlement (ISDS) procedure is by definition only available to corporates.
According to an FoE briefing, ISDS would make it much harder for countries to ban or impose strong regulations on fracking for shale gas and other unconventional fossil fuels, for fear of having to pay millions in compensation. Irrespective of the evidence of environmental harm or, say, trade union policies, ISDS would likely frustrate governments’ efforts to address global warming and reduce dependency on fossil fuels.
Hence, a transatlantic coalition of 177 trade unions and campaigns have called on the EU and USA negotiators to exclude ISDS from the talks. Signatories include the TUC, the global ITUC and our US sister organisation the AFLCIO, as well as environment groups such as Greenpeace, FoE and the Sierra Club. Their letter says:
ISDS grants foreign corporations the right to go before private trade tribunals and directly challenge government policies and actions that corporations allege reduce the value of their investments. Even if a new policy applies equally to domestic and foreign investors, ISDS allows foreign corporations to demand compensation for the absence of a ‘predictable regulatory environment.
In recent years, the use of ISDS to challenge a diverse array of government policies has expanded dramatically. Inclusion of ISDS in free trade agreements and bilateral investment treaties has allowed corporations to file over 500 cases against 95 governments. Many of these cases directly attack public interest and environmental policies.
As Owen has previously blogged, unions on both sides of the Atlantic – represented by the AFLCIO and the ETUC – are still being broadly positive about the deal where it creates more and better jobs and leaves our rights or environment alone, but equally, some unions are opposed because of concerns that it won’t.
In the case of shale gas, TTIP could limit the government’s ability to regulate the development and expansion of fracking, and more broadly, frustrate its efforts to address climate change through an energy policy of its own choosing. ISDS could remove the ability of governments to control natural gas exports. States could be forced to pay millions in compensation to corporations for profits lost to regulation.
The TUC’s approach to shale gas is informed by a decision at TUC Congress 2012, which advised that the precautionary principle should apply and opposing further shale gas fracking. The TUC’s concerns include the unabated methane emissions that fracking may generate, the overselling of consumer and employment benefits, and its immediate and long term environmental impacts. All of these issues should be decided and based on evidence at national level.