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Canada-Ecuador trade deal could put corporate profits over people, say groups

A proposed Canada-Ecuador free trade agreement could put corporate interests above citizens’ rights, say several concerned organizations.

In a parliamentary committee meeting, the organizations urged the federal government to consult Ecuadorian civil society groups on the trade agreement and heed their calls to exclude investor-state dispute settlement (ISDS) mechanisms, which allow foreign investors, like Canadian mining companies, to sue countries for environmental policies or other actions that affect their profitability.

A 2022 report by the Canadian Centre for Policy Alternatives found multinational corporations, the majority of which are mining companies, used the dispute settlement process to extract payment from poor countries or strong-arm them into abandoning environmental policies.

The federal Standing Committee on International Trade is studying the Canada-Ecuador free trade agreement at the request of NDP MP Richard Cannings.

Canada's big interests in Ecuador, and presumably in this free trade agreement, revolve around major investments in mining, said Cannings.

On Feb. 13, witnesses from MiningWatch Canada, Amnesty International and the Canadian Centre for Policy Alternatives told committee members it was high time to discard ISDS mechanisms.

“Canada is the 12th biggest economy in the world, but we're the fourth most litigious country when it comes to companies using ISDS to challenge environmental decisions in other countries, challenges with respect to mining permits and whatnot,” said Stuart Trew, a senior researcher at the Canadian Centre for Policy Alternatives and director of its trade and investment research project.

Trew pointed to a UN report from July that concluded the ISDS regime “with its roots in colonialism and extractivism, is not fit for purpose in the [21st] century because it prioritizes the interests of foreign investors over the rights of [states], human rights and the environment.” It found the “crippling costs” of ISDS claims “have already had enormous impacts by deterring, delaying and watering down [states’] climate and environmental policy decisions” and put a chill on climate and environmental action. The Intergovernmental Panel on Climate Change has noted fossil fuel companies can use ISDS to block national legislation aimed at phasing out their assets.

These witnesses also urged the federal government to hold off negotiating the trade agreement because Ecuador is currently under a state of emergency declared on Jan. 8 after a prominent gang leader escaped from jail.

“I do not think these negotiations should proceed at all under the current civil emergency in Ecuador. It would be opportunistic for Canada to exploit the current crisis,” said Trew.

It is concerning that no human rights, environmental and Indigenous Peoples' organizations in Ecuador have been consulted on the agreement, said Kathy Price, Latin America campaigns co-ordinator for Amnesty International Canada.

“Those who will be impacted must be consulted,” said Price, noting the impacts of resource extraction projects include “elevated levels of gender violence against women and girls, which have coincided with the arrival of mining and oil companies and militarization.”

She quoted environmental defender Pablo Fajardo: “We are not against extractive activity. What we are against is the way things are being done now. The economic rights of corporations cannot be allowed to prevail over our rights to water, clean air, land, community harmony.”

Ecuador’s constitution — changed after a 2008 referendum — prohibits adopting international treaties that “yield sovereign jurisdiction” in contractual or commercial disputes with private parties. In July, the country’s top court ruled the Ecuador-Costa Rica free trade agreement was unconstitutional because it included an ISDS mechanism.

However, Ecuador’s last three presidents have pushed to allow ISDS mechanisms since 2017 and this holds true for the current president, Daniel Naboa.

“The government of Ecuador wants ISDS as part of this agreement,” Stephen Potter, Canada’s ambassador to Ecuador, told the committee on Feb. 29. “They feel that they are not competitive as a destination for investment with other countries in the region,” he added.

Cannings and Trew point out that in 2018, then-minister of foreign affairs Chrystia Freeland celebrated the removal of ISDS mechanisms from the United States-Mexico-Canada Agreement. The investor-state dispute resolution system allowed companies to sue the Canadian government and has cost Canadian taxpayers more than $300 million in penalties and legal fees, Freeland said in 2018.

“ISDS elevates the rights of corporations over those of sovereign governments. In removing it, we have strengthened our government’s right to regulate in the public interest, to protect public health and the environment, for example,” she said.

Given Freeland’s comments, Cannings wants to know “why we don't do that every time.”

“The rest of the world, especially Europe, seems to be moving away from investor-state dispute settlement clauses,” said Cannings in a phone interview with Canada’s National Observer.

“Let's get rid of these investor-state dispute mechanisms and try to be good actors on the world stage,” added Cannings.

ISDS “is a key interest for Canadian industry stakeholders,” Doug Forsyth, director general for Global Affairs Canada, told the committee on Feb. 15.

“As of 2022, Canada had the largest stock of foreign direct investment in Ecuador of any country at $2.6 billion, led by investments in the mining sector,” said Forsyth. He said Canada’s newest investment agreement model clarifies that parties still have the right to regulate and make policy on the environment, health, safety, Indigenous rights and more.

“It's still a one-sided process. Only companies can bring cases against governments; you can't have counterclaims against the companies … it's still the standard ISDS model,” Trew said, referring to this newest investment agreement. The new language didn’t stop Ruby River Capital from filing a US$20-billion NAFTA lawsuit — the largest in history — against Canada after the federal government and Quebec denied the company a permit to build a liquefied natural gas plant in Quebec.

A statement signed by many Ecuadorian social and environmental organizations says: “The territories are treated as sacrificial — a mentality which will be even more difficult to reverse if an FTA further cements legal protections for these investments,” said Viviana Herrera, Latin America program co-ordinator at MiningWatch Canada.

In May, an executive decree was signed that allows mining companies to commence activities without Indigenous Peoples’ free, prior and informed consent.

In the following months, “vast police repression and intimidation” was unleashed against Indigenous and campesino communities opposing the activities of Canadian mining companies Adventus Mining and Atico Mining, said Herrera. The UN high commissioner for human rights commented on the situation and the need to consult Indigenous people over the use of their lands: “People directly affected by mining projects or activities must be heard, not repressed," said Volker Türk.

Bloc Québécois MP Simon-Pierre Savard-Tremblay pointed out that Potter, ambassador to Ecuador, refused to speak out about the violence at the time.

Potter responded that “the opinion of the high commissioner for human rights was not well-founded.”

Canada’s primary interest in trade negotiations with Ecuador “seems to be shielding Canadian mining and construction interests from accountability for human rights and environmental abuses,” said Trew in a press release.

“It seems kind of insidious what Canada is doing here,” said Cannings. “There's a way you can look at it that looks like we are trying to work against the will of the Ecuadorian people, certainly, people [who] are affected by these projects that are impacting their water supply, for instance.”

Natasha Bulowski, Local Journalism Initiative Reporter, Canada's National Observer