(originally published May 2017 by International Institute for Sustainable Development here)
One urgent concern is how foreign investors have successfully used NAFTA Chapter 11 to make Canadian taxpayers fund damages, including lost profits, when Canada applies its environmental laws so as to reject foreign investors’ projects.The worst example is the March 2015 arbitral ruling against Canada on jurisdiction and liability in the Clayton/Bilcon case.
Two of three arbitrators found Canada violated Chapter 11 by applying its environmental laws to reject a New Jersey company’s project to mine basalt on the Digby peninsula in rural Nova Scotia because of impacts on the Bay of Fundy and local communities. As the dissenting arbitrator noted, this is an egregious result. Now, Canadian taxpayers will have to pay (Canada is likely to lose its challenge to the ruling in federal court). The Clayton/Bilcon ruling is a terrible precedent, and it could rear its ugly head in other pending NAFTA Chapter 11 cases, such as claims by U.S. energy companies for damages due to Quebec’s moratorium on shale gas fracking under the St. Lawrence River and elsewhere in Quebec.
Clayton/Bilcon have filed their brief for damages—but, in yet another travesty, they are not even required to inform Canadians how much of our public funds they seek. How is it possible that this information can be kept from the public? Just look at the redactions they were allowed to include in the public version of their brief.
Meanwhile, the pathetic counterweight in NAFTA to the strong protections for investors is a meaningless provision: NAFTA section 1114(2) timidly implores the NAFTA countries not to weaken their environmental, health or safety laws and regulations to benefit investors. All three countries—but especially Canada and the United States—have ignored that provision many times since NAFTA took effect in 1994, from the scaling back of U.S. environmental protections to promote logging in the 1990s and repeal of environmental protections under President George W. Bush, to Canada’s overt appeal for foreign investment in Canada’s natural resource sector in light of rollbacks of environmental law in the Harper government. But, those examples pale in comparison to the drastic environmental rollbacks that have already begun in the Trump administration, with many more to come. Not surprisingly, NAFTA 1114(2) this is an entirely forgotten provision that no country has ever used to challenge another country’s environmental rollbacks—neither under NAFTA nor under post-NAFTA agreements with similar provisions.
Other glossy environmental “commitments” in NAFTA and its environmental side agreement were supposed to be about promoting upward harmonization of environmental standards in North America, but it has just not happened in any significant way. In fact, Environment Minister McKenna’s disappointing recent announcement that pending regulations on methane emissions from oil and gas operations will be delayed because of the Trump administration’s shameful environmental policies was more typical. As well, the meager rights offered to North American citizens to seek review of weak environmental enforcement have been almost completed eroded. (I led the citizen submission process at the NAFTA environmental commission from 2000 to 2007.)
Yet, the NAFTA model for trade and environment has been replicated over and over again in U.S. and Canadian post-NAFTA trade agreements, even as it has become more and more clear that international trade contributes to mounting global ecological impacts such as climate change, biodiversity loss and pollution of ecosystems with human-driven nitrogen and phosphorus loads. Post-NAFTA adjustments to environmental provisions just have not come close to being sufficient to date—including those in CETA. If NAFTA is going to be renegotiated, these shortcomings need to be addressed in a much more serious way. Unfortunately, I am not holding my breath.
Geoff Garver is an adjunct professor in interdisicplinary studies on environment and sustainability at McGill University and Concordia University. He also coordinates law and governance research for the Economics for the Anthropocene Partnership (e4a-net.org). He completed his PhD in 2016, with his thesis, Law for the Anthropocene: An adaptive eco-bounded legal system for a mutually enhancing human-Earth relationship. He has a B.S. (chemical engineering) from Cornell University (1982), a J.D. cum laude from Michigan Law School (1987), and an LL.M. from McGill University (2011). From 2000–2007, he was Director of Submissions on Enforcement Matters at the Commission for Environmental Cooperation. He has also worked for the U.S. Department of Justice, the U.S. Environmental Protection Agency and U.S. District Judge Conrad Cyr. Geoff co-authored Right Relationship: Building a Whole Earth Economy (2009), and has several published articles and book chapters. He was raised in a Quaker family in the countryside south of Buffalo, New York.