Why CETA has implications for Scottish Water

The CETA trade agreement could lock in water privatisation in England and have implications for Scottish Water.

The Council of Canadians has warned that if the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) were ratified, it would pose a serious obstacle to the remunicipalisation of privatised water services in England. That's because the Ontario Teachers' Pension Plan owns 27 per cent of Northumbrian Water Group Plc, which sells its water services to about 4.4 million 'customers' in England, and the Canada Pension Plan owns one-third of Anglian Water Services, which sells water services to approximately six million people in England.

The pension funds could use the investor-state dispute settlement (ISDS) provision in CETA to sue for future profits should the water utilities be brought back into public hands by a future government.

There is a certain irony here as Scottish Water International has recently won a second contract to advise the Canadian city of Calgary on its water supply. We export public service water expertise to Canada, they export privatisation back!

The Scottish Parliament's European and External Relations Committee is currently holding an inquiry into CETA and the EU Commission will be giving evidence to the committee on 4 February. While Scottish Water is a public service, many of its services are delivered by the private sector. As Utilities Scotland previously highlighted, almost all the capital programme is delivered by contractors and a number of wastewater plants are run by contractors under PFI schemes.

In addition, the Scottish Government recently handed a contract for public sector water and wastewater services to Anglian Water - who are part owned by Canadian pension funds. This opens the possibility of a future Scottish Government being sued under the ISDS process if they sought to bring all of Scottish Water back into public ownership.

This isn't a theoretical risk. In 1999, Azurix, a subsidiary of Enron Corporation, sued the Argentinian government after water supply failures led to a consumer boycott . A 2007 ICSID [International Centre for Settlement of Investment Disputes] tribunal found in favour of the company and ordered the government of Argentina to pay $165 million in compensation. In 2010 the ICSID again ruled in favour of a water company, in a dispute involving the French transnational Suez. This time it was the Argentine government that rescinded the contract, because of concerns over water quality, lack of wastewater treatment, and mounting tariffs.

If TTIP was agreed we would have a whole new batch of problems with US firms getting in on the act. The Flint River crisis highlights the risks of privatised water supply. The decision to switch the Michigan city’s drinking water source to the Flint River was aimed at saving $5m, but almost two years later the cost to treat the water supply carries a tag of $45m together with concerns over lead poisoning and contamination. President Obama cited Flint’s water crisis as an example of why the government’s role in public safety is so crucial, He said; “It is a reminder of why you can’t shortchange basic services that we provide to our people and that we, together, provide as a government to assure the health and safety of the American public is preserved".

As Food & Water Europe has highlighted; "TTIP, CETA and TISA all pose major threats to many of the victories that civil society has achieved over the decades to make the human right to water a reality and to promote and recover public control over water management. ...[Trade agreements] can make privatisation processes iron-clad. Investment protection mechanisms would allow corporations to challenge processes of water remunicipalisation, the powerful wave of local governments taking back public control over water, like in Paris and Berlin."

Much of the focus in campaigns against TTIP and CETA have been on the NHS. Let's not forget that our public water supply is equally at risk.