Trade Deals vs. 'Core Community Values'

Canada lost a big chunk of its sovereignty as well as its right to protect local communities from bad developments earlier this year in a little reported NAFTA tribunal decision.

Furthermore the appalling ruling has major implications for any community or First Nation opposed to liquefied natural gas terminals, mining projects or bitumen pipelines.

The bizarre Bilcon case also represents a perfect example of why Investor-State Dispute Settlement (ISDS) provisions, now commonplace in international trade agreements such as the Trans-Pacific Partnership deal, face increasing resistance from citizens around the world.

The investor trade law expert Gus Van Harten has defined the ISDS or new pseudo-courts deftly. Their purpose "is to protect foreign investors, meaning usually the world's wealthiest companies and people, from the rest of us. Instead of public courts, you now have private lawyers sitting as 'arbitrators' with the power to decide how much Canadians must pay to compensate foreign investors for our country's decisions."

Last March, a three-man NAFTA tribunal ruled that a federal and provincial environmental review process grossly erred by rejecting a controversial quarry proposed by a Delaware construction company on Digby Point in Nova Scotia.

Tellingly, the ruling can't be contested under Canadian law.

The dismal facts are these. The Delaware-based firm Bilcon wanted to blast, crush, wash and stockpile millions of tons of rock a year and to build a 170 metre-long marine terminal that would load cargo ships with approximately 40,000 tons of aggregate, every week over a 50-year period.

Lots of Nova Scotians objected to the mining export project on the grounds that it would degrade a precious resource: the beautiful Bay of Fundy.

A joint federal review environmental panel noted that Bilcon didn't do a very good job talking to First Nations or fishermen either.

The panel, which examined all sorts of potential effects on fishing, tourism, air and water quality, eventually concluded that the social impacts of the quarry were going to be so adverse for the land, citizens and right whales alike that the project was inconsistent with "core community values."

Although the term has no real definition in Canadian law, everyone knows that it basically means caring about where you live and respecting the democratic right of local communities to determine their own futures.

NAFTA's tribunal steps in

Bilcon, needless to say, opposed the decision, arguing the government had promised that mining projects would be welcome in the province. And so Bilcon sued the government of Canada in 2008 using NAFTA's investor state dispute mechanism known as Chapter 11.

In their 220-page decision, a three-man NAFTA Tribunal, whose job it is to see that the international trade deal is enforced, ruled earlier this year that it didn't like the environmental assessment being based on the notion of "core community values."

In fact, the tribunal didn't think "core community values" were compatible with free trade or that oxymoron called "sustainable development." The NAFTA court ultimately viewed "core community values" as an unfair criterion to reject any kind of project. Bilcon now plans to seek $300 million in damages from the government.

What makes the Bilcon decision a hot environmental issue on Vancouver Island at the moment is the perplexing fact that Murray Rankin, an NDP MP and environmental lawyer, provided an independent report supporting Bilcon's case prior to becoming a politician.

In his expert testimony, Rankin argued that "community core values" did not constitute an "environmental effect" and therefore should not have been included in any environmental assessment.

Rankin didn't say core community values should never be considered, but argued that the company wasn't adequately told it was going to be a main criterion and that such criteria need to be better defined. That Rankin is regarded to be pro-environment didn't matter in this case. Trade law grinds exceedingly fine.

"I was called upon by a law firm in Ontario to do an expert report. I am an administrative lawyer who has done a lot of work on environmental assessment processes and I have an international reputation. I was asked to look at whether it was fair and I concluded it was not fair," Rankin told Focus magazine. "I didn't do so as an advocate, it just happened to be part of the process."

Movement to gain back sovereignty

Fortunately a dissenting tribunal member, University of Ottawa Professor Donald McRae, came to the defence of "community core values" in this case.

He called the Bilcon decision a profoundly bad precedent that could undermine communities and environmental law in Canada for decades. The conclusion of his brave and brilliant dissent is worth quoting in full:

"In this day and age, the idea of an environmental review panel putting more weight on the human environment and on community values than on scientific and technical feasibility, and concluding that these community values were not outweighed by what the panel regarded as modest economic benefits over 50 years, does not appear at all unusual. Neither such a result nor the process by which it was reached in this case could ever be said to 'offend judicial propriety.' Once again, a chill will be imposed on environmental review panels, which will be concerned not to give too much weight to socio-economic considerations or other considerations of the human environment in case the result is a claim for damages under NAFTA Chapter 11. In this respect, the decision of the majority will be seen as a remarkable step backwards in environmental protection."

Governments have now approved more than 2,500 investment treaties with provisions that invite corporations to sue them in quasi-secret courts and whose decisions remain above national law.

Not surprisingly corporations have taken full advantage of the invitation and the Canadian government, environment and public have often been the losers. Meanwhile an elite group of trade lawyers get to make lots of money.

As a consequence, resistance to Investor-State Dispute Settlement provisions is growing around the world. The United Nations Conference on Trade and Development recently concluded that ISDS provisions are a documented threat to governments' right to regulate or defend the best interests of its citizens.

More than 50 countries including Germany, Brazil and Norway are reviewing ISDS provisions. Many countries, including Bolivia, Ecuador, and Venezuela, are cancelling their investment treaties or proposing alternative ways for resolving disputes.

It's time for Canada to do the same before the unfettered pursuit of money hands over our law and regulations to pseudo-courts with no mandate to serve our best interests.