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TransCanada Lawsuit Holding America's Sovereignty Hostage

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President Obama decided to reject TransCanada Corp.'s Keystone XL pipeline, ending seven years of debate over an infrastructure project that swelled into one of the most contentious environmental issues of his presidency. (Photo: Andrew Harrer/Bloomberg via Getty Images)

While President Barack Obama, Prime Minister Justin Trudeau and President Peña Nieto, the three "amigos" of North America, are meeting in Canada, TransCanada Pipelines has filed a $15-billion lawsuit against the government of the United States. Citing chapter 11 of NAFTA (North America Free Trade Agreement), TransCanada alleges that the refusal to allow the construction of its Keystone XL pipeline is mere political posturing in favour of climate change; TransCanada claims that the Obama administration failed to protect the investments of a Canadian company.

Of course, TransCanada is referring to ISDS (Investor State Dispute Settlement) clauses in the free trade agreement signed in 1992 by the three countries. Trade agreements between countries are a good thing when they help the economy, but one must be wary of the fine print of such clauses that give precedence to foreign investors over the rights of citizens to nurture their democratic values.

The public affair program Backlight of VPRO TV (Netherlands) aired an excellent analysis of the stakes of ISDS last October -- the title "Might is Right" gives a good idea of the overwhelming weight of these fine-print clauses which can effectively negate the right of duly elected officials to act in the best interest of their citizens.

Lone Pine turned the system of justice into a system of "legal and financial terrorism" wherein a foreign investor can blackmail a duly elected government.

The starting point of this 50-minute analysis is the $250-million lawsuit filed by Lone Pine Resources. This company had a gas claim under the bed of the St. Lawrence River between Montreal and Quebec City. In June 2011, the government of the province of Quebec forbade drilling and fracturing under the waters of this vital waterway. In retaliation, Lone Pine sued not only for the loss of potential revenue (in case it should have found a substantial deposit of gas), but also to effectively punish the government because it acted to protect the drinking water of its citizens and the fisheries of the Gulf of St. Lawrence.

In effect, Lone Pine turned the system of justice into a system of "legal and financial terrorism" wherein a foreign investor can blackmail a duly elected government which wants to protect the health, safety and economic welfare of its citizens. When Canada, Mexico and the United States signed these ISDS clauses, they signed away a good part of their sovereignty.

President Obama rejected Keystone XL because he was convinced it was not "in the best interest" of his country. With many options possible, his administration chose one course of action for the good of the nation. Future historians will decide if he made the right decision. As in any public policy made for the common good, some people are happy with this decision, others are not. Such are the political realities of a free and democratic country.

Unhappy with this decision, TransCanada Pipelines chose to directly challenge the sovereignty of the government of the United States with this $15-billion lawsuit. Presently, as an alternate to Keystone XL to the south, TransCanada would bring Alberta tar sands oil to the Atlantic seaboard with the 4,600-kilometre Energy East pipeline which is expected to cost $16 billion. If successful, this lawsuit would mean that the taxpayers in the USA would pay 94 per cent of the cost of the Energy East pipeline!

This is basically "taxation without representation," something that George Washington, Benjamin Franklin, Thomas Jefferson and the founders of the United States of America would find totally unacceptable.

These ISDS clauses, the fine print found in trade deals such as NAFTA, the TransPacific partnership and the trade agreement project with the European Union, seriously undermine the basic principle that democracy is "government of the people, by the people and for the people." In democracies such as Canada or the USA, foreign investors such as TransCanada Pipelines or Lone Pine Resources should not hold the duly elected governments as hostage to their greed!

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