An ominously ironic juxtaposition of news stories, for those who are paying attention. First, the apparent good news. President Obama announced Nov. 6 that he's rejected the Keystone XL [12] oil pipeline, after seven years of deliberation on the question. Obama invoked the prospect of leaving the 800,000 barrels a day of Canadian shale oil [13] the pipeline would carry in the ground. "America is now a global leader when it comes to taking serious action to fight climate change," the president said. "And, frankly, approving this project would have undercut that global leadership." (NYT [14], Nov. 6) But one day earlier, Obama notified Congress of his intent to sign the Trans-Pacific Partnership (TPP [15]), and finally released the text of the heretofore secretive trade deal. The notification starts a 90-day countdown to the next step in the approval process—seeking Congressional authorization. (The Hill [16], Reuters [17], Nov. 5)
What is the connection here? That cancellation of the KXL pipeline could be challenged under the Investor-State Dispute Settlement (ISDS) mechanisms in trade deals like the TPP. Pipeline developer TransCanada [18] has already broached a challenge under the ISDS mechanism in NAFTA, as Politico [19] noted back on Feb. 25:
"If the pipeline is actually vetoed on so-called environmental grounds, I think there is a very strong case for a NAFTA challenge," former Canadian ambassador to the U.S. Derek Burney, a senior negotiator on the landmark North American trade deal and its U.S.-Canada predecessor, said in an interview...
Burney and former Canadian Prime Minister Brian Mulroney, whom he served as a top aide, have long described the six-year-long delay in the administration's Keystone decision as stepping on NAFTA's goal of unrestricted energy trade between the U.S. and its northern neighbor.
"That provision in the NAFTA agreement was really something that had been required by the U.S., not by Canada, that trade in energy should be unfettered across the border," recalled Burney, who is on the TransCanada board but said he speaks as an individual on the trade issue.
Pro-Keystone Sen. John Hoeven has said as much too. When asked last month about the possibility of a Keystone-inspired NAFTA complaint, the North Dakota Republican told Canada's CTV that "I think certainly Canada is entitled to move forward with any other type of challenge" if the GOP Congress can’t win the project's approval.
And Global Trade Watch [20], having reviewed the newly released text of the TPP, tweets [21] that it "doubles US exposure to #ISDS..." The ISDSCorporateAttacks [22] website notes similar cases currently pending. For instance, Swedish energy firm Vattenfall [23] is now suing Germany for $5 billion before the World Bank's International Center for the Settlement of Investment Disputes (ICSID [24]) for supposedly violating terms of Energy Charter Treaty [25] by cancelling planned nuclear reactors in its post-Fukushima decision to phase out atomic power [26].
But we are also not to dismiss the economic context for Obama's KXL decision, and the possibility that both his nixing the project and the petro-boosters' outrage at this are part of a choreographed spectacle. A successful challenge under an ISDS mechanism could buy enough time for currently depressed oil prices [27] to rise again—"banking" the shale oil in the ground until it is more propitious to exploit, and in a way where everybody saves face. The enviros and the petro-oligarchs alike.
