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Insane Keystone XL lawsuit illustrates ticking time bomb trade deals

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Oil pipeline pumping station in rural Nebraska. Shannon Ramos under a Creative Commons Licence

Trade and investment policy can no longer continue to undermine a sustainable future, argues Sam Cossar-Gilbert.

Last November, the duly elected government of the United States of America rejected the Keystone XL oil pipeline – in response to an outcry by citizens across the country and protests by the communities along the pipeline’s route. Now, TransCanada, the company behind the pipeline, is suing for $15 billion in sunk costs and lost future profits.

As crazy as this sounds, it's because corporations can use trade agreements like the North American Free Trade Agreement (NAFTA) to sue governments for introducing rules that protect citizens' health, rights or the environment.

The controversial Keystone XL pipeline, which would have carried climate-killing tar sands oil from Canada, was rejected by US President Barack Obama in November 2015. The pipeline would have opened up global markets to exports of tar sands oil – one of the world’s dirtiest fuels. Blocking the pipeline was a major victory for the climate movement, putting the interests of people ahead of profits.

TransCanada's Keystone XL permit was rejected on the basis that construction of the pipeline was not in the national interest of the United States and contributed to climate change. Instead of honouring President Obama's reasoned decision, TransCanada is turning to secretive trade tribunals in an attempt to force American citizens to pay compensation.

Trade rules undermining environmental protection

Trade and investments agreements are no longer just about import tariffs, but about a range of issues that determine the food we eat, the energy we use and the ability of our governments to regulate in the public interest.

Current trade rules empower corporations like TransCanada to challenge legitimate environmental protections in secret tribunals. A mechanism called Investor-State Dispute Settlement (ISDS) that is included in most trade deals enables companies to sue governments when they feel their profits are threatened by new regulation. TransCanada says that Obama's decision to reject the pipeline was 'arbitrary and unjustified’, and has initiated one of the largest trade appeals against the US on this basis.

Unfortunately, this is not an isolated case. There are over 600 such ISDS cases worldwide, with the majority in the global south. For example, a simple bilateral trade agreement was the basis of a cigarette company's attempt to sue the government of Uruguay for an anti-smoking campaign. And the Ethyl Corporation gained the reversal of Canada’s ban on the toxic chemical MMT.

The fact that a private international tribunal, composed of unelected corporate lawyers can force governments to pay billions of dollars for protecting the environment is an example of the dangerous powers assumed by big business through trade deals.

And we could see even more of these lawsuits in the future. New trade deals like the Trans-Atlantic Trade and Investment Partnership (TTIP) or the Trans-Pacific Partnership (TPP), will greatly expand this system. These deals have been called 'NAFTA on Steroids'.

Growing movement for change

The silver lining may be that the Keystone XL pipeline becomes a rallying point for a growing global movement of grassroots communities, activists and politicians who are gravely concerned about the implications of these unjust trade deals.

A Europe wide anti-TTIP protest on October 15 saw tens of thousands on the streets of Brussels, London and Amsterdam and a stunning 250,000 people at a demonstration in Berlin.

In Uruguay, after months of intense public pressure against a similar Trade in Services Agreement (TiSA) – including a general strike on the issue – the president listened to public opinion and left the US-led trade agreement last September.

TransCanada has made a big mistake by going after an oil pipeline that’s already synonymous with corporate greed, and disregard for the environment and communities. They’re putting these toxic trade agreements out into the spotlight. And when people get a good look at them, the more they oppose these corporate power grabs.

Bad trade deals are a ticking time bomb for climate action and must be stopped. Trade and investment policy can no longer continue to undermine a sustainable future.

People power defeated the dirty tar sands oil pipeline, and will also defeat these unfair trade deals.

Sam Cossar-Gilbert is economic justice and resisting neoliberalism program coordinator at Friends of the Earth International. He tweets from: @samcossar

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