Bill C79 – ISDS does not belong in trade agreements

On Thursday, September 20th, 2018 in Speeches, TPP

Elizabeth May, Member of Parliament for Saanich-Gulf Islands: Mr. Speaker, it is an honour to rise today in the House. I start by acknowledging we are on the traditional territory of the Algonquin peoples.

The trans-Pacific partnership agreement has had a convoluted and somewhat rocky road. I think we would all admit that. I would like to take a bit of time to go through its history and then take as much time as possible, given that it is abbreviated now that we are down to only 10-minute speaking segments and time allocation has already been applied, on why it is completely anti-democratic to have investor-state provisions included in agreements, particularly the one currently before us.

I would like to adopt and support the submissions of the hon. member for Essex. The trade critic for the New Democratic Party has put forward clear arguments. So has the MP for Vancouver Kingsway. I agree with all I have heard from them. This allows me to concentrate on investor-state provisions rather than delve into the different sector-by-sector problems with the TPP.

Going back to where it started, the TPP was well under way in negotiation under the previous Conservative government of Stephen Harper. It knew the TPP was under way and Canada did not have a seat at the table. Therefore, there are a number of reasons the agreement is lopsided against certain Canadian sectors. It has to do with the fact we joined late. We were aggressive with trying to be in. Some will remember that even during the 2015 election, when a government is supposed to have no more than a caretaker role, the former minister of trade was working hard to try to get this deal done. That was inappropriate, given that the writ had already dropped, but he certainly did work hard to achieve the TPP.

We know that the incoming U.S. president pulled out. That had a very substantial impact on the economic reach of the agreement. With the U.S. out, it looked like the TPP was dead. However, bad trade deals never die, they rise again, and this one came back without the United States and now with 11 countries in the trade pact.

It is important for Canadians to know that we already have trade agreements, within NAFTA, with Mexico. Therefore, that means we are agreeing to new agreements with nine new nations. When we talk about the Pacific region, I think a lot of Canadians would assume this includes the big economic players. When we hear TPP, the trans-Pacific partnership, or now as it is styled, the comprehensive and progressive TPP, or CPTPP, one would assume it would include China and Indonesia. However, large economic players in Asia are out of the agreement, other than the big one, which are Japan, as well as Malaysia, and of course Australia and New Zealand. There are smaller economic countries, such as Peru and Vietnam, as well as Singapore, which is significant but relatively small in terms of trade.

We have a cobbled together agreement that we now are rushing to pass. We were promised that we would not rush through trade deals in this place, that we would have full debate. I gather the committee has been told that it has to rush as well. Therefore, this trade agreement will not be adequately debated. That is now a foregone conclusion because of time allocation.

In the six and a half minutes remaining to me, let me explain why I submit to the House that investor-state dispute resolution sections do not belong in any agreement. They do not belong in trade agreements. They in fact have nothing to do with trade. They are often conflated and confused with trade dispute resolution agreements. Therefore, in the case of NAFTA, which, by the way, was the source of these investor dispute resolution systems, chapter 11 in NAFTA had never been requested before. They were not understood. They were not even understood by the people who negotiated NAFTA.

What we have under NAFTA is chapter 19, which deals with how one sorts out disputes over tariffs and unfair trade decision. We are used to those. That is appropriately a trade dispute resolution provision. One needs those if one has a trade deal. What we do not need is this bogus, anti-democratic investor-state provision, which arose in chapter 11 of NAFTA. What does it mean? On paper, when people first read NAFTA, including in all the fights over adopting NAFTA, none of the anti-NAFTA groups ever noticed chapter 11. No one talked about it; it was a sleeper.

What chapter 11 seemed to say was common sense. If someone had invested in a country and the asset that was built was expropriated, such as when Fidel Castro took over Cuba, the expropriation of assets would require compensation, which is the international norm already. It looked like chapter 11 was about that. We found out that was not what the chapter was capable of doing in the Ethyl Corporation case, when Ethyl Corporation of Richmond, Virginia brought the first chapter 11 case again Canada.

It should be noted that as of now, Canada is the most sued industrialized country under these investor-state agreements and we have lost repeatedly. We have lost, but it was not as if we did something that was a subversion of our trade, not as if we treated some country that we promised we would give it friendly treatment and it was a duplicitous action in pursuit of a trade benefit. No, we have lost when we were trying to protect public health and the environment.

Let us look at Ethyl Corporation. In that instance, the former minister of environment, Sheila Copps, heard of the efforts of groups like the one I was executive director of, Sierra Club Canada. We worked hard to get rid of a toxic gasoline additive called MMT, which is manganese based. We were joined in that effort, believe it or not, by the car makers. The car makers said that MMT gunked up the engines and compromised the catalytic converters. In other words, it increased pollution in a way that could void their warranties.

Therefore, the auto manufacturers, the environmental groups and a number of health groups, with evidence from neurotoxicologist Dr. Donna Mergler of the University of Quebec in Montreal, said that this stuff increased manganism in the human population, in other words tremors that looked a lot like Parkinson’s, and at the same time threatened to void the warranties of cars. The minister of the environment brought forward a law which was passed in Parliament. The law said that we would get rid of MMT in gasoline.

It is important to know that at this point the United States Environmental Protection Agency had refused to register MMT, because its advice was that this stuff was bad for the environment, bad for human health and we should not use it. Therefore, Canada banned it.

Ethyl Corporation said that it was going to chapter 11 of NAFTA. However, before that chapter 11 case was through, the government of the day decided to settle, and we cannot say “out of court” because there are no courts involved here. These are private arbitration matters generally heard in hotel rooms. Therefore, if we are going to call a chapter 11 arbitration “out of court”, we have to insert the word “kangaroo” before the word “court” so the whole thing makes sense.

However, Ethyl Corporation got out of Canada an award of $13 million U.S., which was taken out of the A-base budget of Environment Canada. If members do not think that had a chilling affect on Environment Canada’s willingness to ban dangerous chemicals that were made in the United States, then they are not looking at the facts of what has happened since then. That was the first one. By the way, what was Ethyl Corporation’s investment in Canada? Did it have a plant here? No. Did it create jobs here? No. It was selling the toxic gasoline additive here, and that was enough to make it an investor. The same thing happened with S.D. Myers, which was the next case.

S.D. Myers is an Ohio-based company that runs incinerators for PCB contaminated waste. Sheila Copps, former minister of environment, banned the export of PCB contaminated waste from Canada consistent with the Basel Convention to which Canada was a signatory, but S.D. Myers sued. Guess what. It was suddenly an investor. It had expected profit from taking Canadian PCB waste and burning it in Ohio.

However, when we banned the export of PCB contaminated waste from Canada, the import of PCB contaminated waste into the U.S. was illegal under U.S. law. On that set of facts, we could not imagine that we would lose, but we lost. Canada appealed to the Federal Court of Appeal, which said that it was not significant enough of an egregious error under the rules of arbitration for us to win, and so we had to pay S.D. Myers money.

We are now awaiting Bilcon, which has asked for $580 million in damages. Canada has lost in Federal Court in our efforts to defend the good decision of a very ethical, thorough, independent, thoroughly evidence-based finding of the environmental assessment panel on Bilcon’s efforts to do an open-pit quarry in Digby, Nova Scotia.

Ethyl Corporation did not go to the courts in Canada, which it could have done. By the way, that decision led to the Progressive Conservative government of Nova Scotia turning down the permit and the previous Conservative Government of Canada environment minister John Baird turning down the permit. However, Bilcon, in New Jersey, went to a secret hearing under chapter 11 of NAFTA and it won.

TPP does not have such egregious secrecy; that is the one area in which this is different. However, we pass this and we will regret it. We will have chapter 9 suits under TPP, again from Malaysia and from Japan, and we will lose because Canada generally loses. This is corrosive to democracy, and I urge us to take investor state out of the bill in front of us.

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