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EU-US free trade could open door to fracking across Europe and undermine democracy

The Transatlantic Trade and Investment Partnership will be biggest bilateral free trade agreement in history but it risks becoming a power grab for corporations – a deal that would rein in democracy and safeguards to protect people and the planet – claims Magda Stoczkiewicz

At the beginning of this year, Catalonia became the fourth region in Spain to ban fracking – the hydraulic fracturing of rock to extract unconventional gas and oil. In January in the United Kingdom, energy company Cuadrilla scrapped plans to frack in Balcombe citing geological reasons and not community opposition – which saw weeks of protests last summer. In the last two weeks, the local authorities of Los Angeles and Denton in the heart of Texas voted to declare themselves frack-free.

These are just a handful of examples so far this year of the growing local, regional and national resistance to fracking in both Europe and the United States. Protests against fracking on the ground may seem far-removed from the abstract and opaque free trade discussions currently happening between the European Union and America. But these talks represent a major threat to local communities resistant to fracking and more broadly they could even thwart efforts to address global warming and reduce dependency on fossil fuels.

The fourth round of trade negotiations take place on a Transatlantic Trade and Investment Partnership between the EU and US on Monday in Brussels. One clause in this trade deal could wipeout people’s hopes of resisting fracking in one fell swoop; it could even undermine democratically agreed restrictions in both Europe and the US. Known as the ‘investor-state dispute settlement’ mechanism, or ISDS, this clause would give foreign companies the possibility to claim damages if they deem their investments – including future profits – are adversely affected by changes in regulation or policy.

So, this would mean energy companies could bring proceedings against governments if they regulate or ban fracking. The cases could be brought regardless of evidence of the environmental harm caused by fracking or the desire of communities now to have this risky technology on their doorstep.
The business-friendly tribunals that hear such cases are dominated by corporate lawyers, only open to companies and bypass domestic courts. If agreed, this would open the door for companies to seek millions in compensation for policies that have been made in the public interest. This is highly likely to intimidate governments and dissuade them from imposing strong regulations or bans on fracking for shale gas and other unconventional fossil fuels – for fear of having to pay defend lengthy lawsuits and potentially pay huge sums of compensation for loss of revenue.

It all sounds Orwellian but under existing trade agreements in North America, a similar set-up has already been used to challenge environmental policies and to undermine governments’ sovereignty to regulate fracking. Under an agreement between the US and Canada, the American company Lone Pine is suing Canada for $250m after Québec introduced a precautionary moratorium on fracking in the St Laurent River basin. If a similar system is introduced in between the EU and US, the private business-friendly arbitrators will be deciding who is right – elected governments or private companies.

The trade deal between the EU and US will be biggest bilateral free trade agreement in history. But, it risks becoming a power grab for corporations – a deal that would rein in democracy and safeguards to protect people and the planet. Growing controversy may have forced the European Commission to temporarily halt the negotiations on ISDS and announce a public consultation. But it has done so with the intention to reform the clause, not abandon it. Investor rights remain a serious threat to communities who do not want fracking and to democratically agreed laws to regulate polluting energy. Citizens, not corporations, should determine the future of the transatlantic economy. The contentious ‘investor-state dispute settlement’ system should play no part in trade deals now, or in the future.

Magda Stoczkiewicz is director of the Friends of the Earth Europe campaign group

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