Keystone, NAFTA, and the TPP: What you need to know

Regardless of whether you support or oppose building the controversial Keystone XL oil pipeline from the Canada-Montana border to the oil refineries of the U.S. Gulf Coast, the latest moves in the seven-year brouhaha over the project are a perfect illustration of why workers must oppose – and Congress must defeat – legislation to implement the controversial Trans-Pacific Partnership “free trade” pact.

To recap: In November, President Obama rejected a permit for Keystone construction, supposedly killing it – and the project labor agreement jobs that would have seen unionists build Keystone’s northern leg, just as they already have built its southern section.

On Jan. 6, Keystone’s sponsor, TransCanada, sued in federal court in Houston to overturn Obama’s ruling. It also filed a NAFTA claim with U.S. officials for lost future profits, totaling $15 billion, from Keystone. That claim goes to relevant U.S. government agencies.

And that’s where NAFTA, the equally controversial and jobs-destroying 22-year-old U.S.-Canada-Mexico “trade pact,” and the TPP come into the picture.

Both NAFTA and the TPP have mechanisms that firms can use to reclaim profits they say they are losing or would lose under federal, state and local laws and rules.

Investor-State Dispute System

TransCanada used NAFTA’s rules – let’s call them the Investor-State Dispute System (ISDS) – to seek its $15 billion in future Keystone profits. (TransCanada added that due to Obama’s ruling, it’s writing off $1.8 billion-$2 billion in Keystone investment losses for 2015).

Under NAFTA’s ISDS, U.S. agencies must rule on TransCanada’s claim and the company must prove its case. If it loses, it can try to overturn those decisions in U.S. courts, and again must prove its case. Keystone foes get a chance to challenge TransCanada’s math and its arguments. Everything is out in the open, relatively. But if TransCanada loses in federal forums and the federal courts here, that’s it. No money.

Suppose the TPP was in effect?

But suppose the TPP was in effect? It has an ISDS, too, after all. And Canada is one of the 11 other nations, along with the U.S., that signed the TPP. Now let’s look at what TransCanada could do under the Trans-Pacific Partnership’s ISDS. It’s very different.

First, TransCanada wouldn’t have to take its case for the $15 billion to U.S. agencies. It could take one of two routes (a) go to U.S. courts and, if it loses, go to the TPP’s dispute system or (b) bypass our courts and go straight to the TPP’s investor-state dispute system.

And the TPP’s system is very different from the NAFTA dispute system.

The TPP system is secret, for starters. Keystone foes can file challenges, but can’t question witnesses in an open court. TPP system “judges” are trade-oriented lawyers, many of whom handle similar cases for other corporations. Their mandate is strictly to decide if a law, rule or decision impedes present or future profits. And their final rulings can’t be appealed.

As Sen. Elizabeth Warren, D-Mass., said, that system is rigged. It would be rigged for TransCanada. Rigged for its $15 billion — $15 billion that U.S. taxpayers would pay.

“So what?” you may ask. “It’s just one company, and just one pipeline.” Well, no.

The TPP’s secret trade courts – its Investor-State Dispute System – cover any trade case and any and every federal, state and local law or rule that could harm present or future profits. Enact TPP and it wouldn’t just help TransCanada get Keystone money, none of which would go to construction workers who lost business because they couldn’t build Keystone.

– Enact the TPP and McDonald’s could take New York State to that secret trade court to challenge a state commission ruling saying fast food workers must be paid $15 hourly and have the right to organize. A $15 wage, you see, cuts into McDonald’s profits.

– Enact the TPP and Massey Energy – or what’s left of it – could take the Mine Safety and Health Administration to that secret trade court and challenge MSHA’s future rulings closing Massey coal mines due to dangerous conditions. Closing coal mines cuts profits, which of course was Massey’s goal: Profits before people. Get ready for another Upper Big Branch.

– Enact the TPP and companies could challenge the federal minimum wage law, state minimum wage laws, local pro-worker laws, Buy America rules, job safety standards, or you name it, all because those laws and rules could cut into present or future profits.

The TPP route wasn’t open to TransCanada on the Keystone case, even though it filed a claim for the $15 billion. It would have been if TPP was enacted. It would be open for those other examples if legislation enabling the TPP to take effect becomes law of the land.

Now do you see why workers and their allies call the TPP “NAFTA on steroids?”

There are tons of other problems with the TPP, but this system alone is enough to sink it. Now, get out there and convince your lawmakers of that.

Photo: TPP rally, Leesburg, Virginia, Global TradeWatch, Flickr, CC BY ND 2.0 


Mark Gruenberg
Mark Gruenberg

Award-winning journalist Mark Gruenberg is head of the Washington, D.C., bureau of People's World. He is also the editor of the union news service Press Associates Inc. (PAI). Known for his reporting skills, sharp wit, and voluminous knowledge of history, Mark is a compassionate interviewer but a holy terror when going after big corporations and their billionaire owners. El galardonado periodista Mark Gruenberg es el director de la oficina de People's World en Washington, D.C. TambiƩn es editor del servicio de noticias sindicales Press Associates Inc. (PAI).