President Barack Obama listens to US Trade Representative Michael Froman (L) as Vice President Joe Biden, National Security Adviser Susan Rice and US Secretary of Labor Thomas Perez look on during a meeting in the Oval Office of the White House December 16, 2013. (Photo by Alex Wong/Getty Images)
The Canadian company behind the Keystone Pipeline is suing the US government. It’s a perfect example of why many environmentalists are wary of Obama’s secretive trade deals.
By John Light | January 8, 2016
On Wednesday, TransCanada, the Canadian fossil fuel company behind the Keystone XL Pipeline, announced that it is suing the Obama administration under the North American Free Trade Agreement (NAFTA). The case will be decided by an international tribunal. The corporation also filed a separate suit at the US Federal Court in Dallas.
“TransCanada has been unjustly deprived of the value of its multi-billion-dollar investment by the U.S. Administration’s action,” the company said in a press release, declaring that it hopes to recover $15 billion in US taxpayer money as compensation for lost profits. (The federal court suit, the company explained, “does not seek damages, but rather a declaration that the [administration’s] permit denial is without legal merit and that no further Presidential action is required before construction of the pipeline can proceed.”)
The NAFTA suit takes advantage of Investor State Dispute Settlement (ISDS), a way corporations can sue foreign governments for damages that’s a feature of many trade agreements — and which many environmental groups staunchly oppose.
ISDS filings increased over the last two decades. (From “Recent Trends in Investor-State Dispute Settlement,” by Rachel Wellhausen)
ISDS was an idea conjured up by European investors in the mid-20th century, when companies worried that revolutionary governments would nationalize an investment, like a coal mine. They wanted a way to hold governments accountable for their losses. But in the last two decades, as the number of trade deals containing ISDS has increased, suits have been put to a broader use, with companies alleging lost profits and suing not just when a government seizes a company’s property but also when a government changes regulations in a way that seems to target one company.
In large part because of ISDS, groups like the Sierra Club, Greenpeace and Friends of the Earth have become outspoken opponents of Obama’s current deal with Pacific Rim countries — the Trans-Pacific Partnership (TPP) — and another trade agreement with European countries that is still being negotiated, the TransAtlantic Trade and Investment Partnership (TTIP). The environmentalists argue that while the administration is pursuing agreements with countries like China and India to cut emissions, and backing action through the UN Paris climate pact, it simultaneously is pushing new trade deals that, like NAFTA, would allow foreign fossil-fuel companies to sue to protect their interests and keep pumping greenhouse gases into the atmosphere.
Global Climate Change