Pope Francis’ visit to the U.S. has galvanized discussion about climate change and raised hopes for the upcoming December COP21 Paris climate change talks. Those talks are intended to lead to a multilateral agreement to reduce greenhouse gas emissions, with serious pledges from the many participating countries.
But now, a Canadian legal scholar and professor, Gus Van Harten has released a report warning that trade deals like NAFTA, the pending TransPacific Partnership (TPP), and other trade and investment deals could threaten implementation of a Paris climate agreement through their investor-state dispute settlement (ISDS) mechanisms.
The ISDS clause in many bilateral and regional trade deals allows foreign corporations the right to sue governments for financial compensation if they change regulations that affect profits. Canada, for example, has already been sued under NAFTA for billions of dollars because of changes to regulations, especially to protect the environment. [1]
Van Harten, an internationally-recognized authority on investment law and trade deals, has offered a legal “carve-out” (several paragraphs in length) that climate negotiators could include in a Paris agreement in order to protect signatory countries. [2]
In a forward to Van Harten’s report, Council of Canadians Chair Maude Barlow explains that “many of the same countries pledging to take serious action on climate change are also party to, or are aggressively negotiating, trade and investment deals…So the stage is set for a conflict. If the parties come to a meaningful agreement on climate change in Paris, for it to be successful each country will have to take the promises home to their own legislatures and change laws and practices accordingly. Yet the ISDS ‘rights’ of foreign corporations to challenge any changes that might negatively impact their profits are strongly entrenched in international trade law. In other words, the power of corporations to use ISDS could strongly undermine any agreement made in Paris if corporations decide to fight the necessary resulting regulatory changes.” [3]
This situation puts countries in “a Catch-22,” says Barlow, as they could be sued for billions if they try to regulate against greenhouse gases in order to fulfill their Paris pledges Around the world, corporations have used ISDS to challenge governments “over 600 times.” [4]
Van Harten’s recommended legal language for a “carve-out” to be included in any Paris multilateral agreement could protect governments against the risk of ISDS lawsuits targeting climate change action by governments.
Barlow notes in her forward: “It is our hope that [Van Harten’s] report will get widely published and impact the negotiations in Paris. We also hope that the climate and trade justice communities will adopt the demand that the threat of ISDS must be part of any meaningful discussions in Paris.” Van Harten’s “small report has the potential to have a very big impact,” she says.
Notes
[1] Joyce Nelson, “Those Crappy Trade Deals,” Counterpunch.org, February 13, 2015.
[2] Gus Van Harten, “An ISDS Carve-out to Support Action on Climate Change,” Osgood Hall Law School Legal Studies Research Paper Series, Volume. 11, Issue 8, 2015.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2663504
[3] Council of Canadians, “Paris climate summit: New report protects climate legislation from trade deals,” September 21, 2015.
http://canadians.org/media/paris-climate-summit-new-report-protects-climate-legislation–trade-deals
[4] Ibid.
