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Critics Warn TransCanada's $15 Billion Claim Offers Preview of TPP

The company behind the Keystone XL pipeline is tapping rules under NAFTA to try to win more than $15 billion from the U.S. in damages. (PDTillman/Wikimedia Commons)
The company behind the Keystone XL pipeline is tapping rules under NAFTA to try to win more than $15 billion from the U.S. in damages. (PDTillman/Wikimedia Commons)
January 12, 2016

DENVER – The Canadian corporation behind the Keystone X-L pipeline is using provisions in the North American Free Trade Agreement (NAFTA) to try to recover more than $15 billion in damages from the United States.

Stephen Kretzmann, who heads the fossil-fuel industry watchdog group Oil Change International said the move underlines the threats that trade agreements – such as the Trans-Pacific Partnership (TPP) – pose to the nation's ability to curb climate change.

According to Kretzmann, since at least 75 percent of remaining fossil fuels need to stay in the ground to meet goals set in Paris, deals that favor corporate bottom lines make it harder for governments to stand up to powerful companies.

"We are giving those entities rights and the ability to trump those government decisions - or at least, extract ridiculous amounts of money in return for decisions they don't like," he said.

Kretzmann noted that TransCanada's claim will be decided by a tribunal of three lawyers who are allowed to rotate between acting as judges and advocates for the investors launching cases.

He said under the so-called "investor-state dispute settlement" rules, the tribunal has the power to order the U.S. to pay for preparation costs and projected profits.

According to the Sierra Club, TransCanada's action is part of a rising trend. The group cites a U.S. company's request for compensation from Canadian taxpayers after a moratorium on fracking in Quebec, and Chevron's petition to keep from paying for damaging Ecuador's Amazon rainforest.

Kretzmann said so far, trade deals have fallen short of their promises.

"But the reality is, as we've seen from NAFTA, jobs leave the United States and there are not adequate environmental and consumer protections," he said. "The only winners are the corporate backers of these trade deals, at the end of the day."

Kretzmann added since NAFTA only covers trade with Canada and Mexico, the TPP deal with 11 Pacific Rim countries could expose the U.S. to claims from more than 9,000 additional foreign-owned firms.

Eric Galatas, Public News Service - CO