BRIEF ON THE TRANS-PACIFIC PARTNERSHIP
To: The Standing Committee on International Trade
From: Elizabeth May, O.C.
Member of Parliament Saanich-Gulf Islands
Leader, Green Party of Canada
Date: January 27, 2017
This brief is prepared as a contribution to the Committee’s public consultation of the Trans-Pacific Partnership agreement (TPP). I appreciate that this approach is an improvement from the Harper Conservative government approach, but there needs to be much more than a consultation. I have urged the government to hold public hearings accessible to all Canadians, which include expert analysis from neutral parties who can shed light on the implications of this agreement. These hearings should be broadcast in order to reach a wide audience.
The situation has changed dramatically with the withdrawal of the US from TPP by President Trump’s recent executive order. The essence of the TPP for Canada is that we joined the negotiations late and the previous government’s zeal to be “in” the deal led to a series of very uneven and poor results for Canada. This is particularly clear when one reads the years of protection for US car manufacturers against imports from Japan, versus what Canada negotiated.
The TPP has very important and serious implications for all Canadians. The TPP consists of 30 chapters, 6000 pages of text and appendices using legal language that obfuscates their meaning and makes it difficult, if not impossible, for the average citizen to dissect and comprehend. It is important for the public to understand the implications of this far-reaching agreement, and the best way to do that would be through public hearings where experts can parse the language and make it more understandable for citizens.
There are a number of concerns about the TPP. Canada is not in a position to make changes to the agreement. While it is not a comprehensive list of the shortcomings of the TPP, I have listed my concerns below. Based on these concerns and the Canadian government’s inability to address these through changes to the agreement, I believe that the TPP should be rejected and that Canada should not sign or ratify the agreement.
With access to public hearings, I believe that the majority of Canadians would come to the same conclusion.
The Investment chapter contains language and clauses that are very similar to previous trade agreements, including the investment chapter of NAFTA, Chapter 11. The Investor State Dispute Settlement (ISDS) provisions of this agreement will be used in the same way the ISDS provisions in NAFTA are being used. Terms such as “Minimum Standard of Treatment”, “National Treatment” and “Indirect Expropriation” have been interpreted to give foreign corporations massive leverage to challenge Canadian regulations that are created in the public interest. These ISDS provisions allow foreign corporations to bypass our judicial system and seek financial compensation in secretive arbitration tribunals that are made up of corporate lawyers who have a vested interest in perpetuating this arbitration system. Canadian taxpayers have paid out hundreds of millions of dollars in arbitration settlements under NAFTA, and there are billions of dollars in disputes currently before these arbitration panels. ISDS allows foreign corporations to seek financial compensation for the loss of potential profits when Canadian regulations get in the way of corporate interests. A great many of the arbitration cases brought forward under NAFTA relate to environmental legislation and protections, but there are also many examples around the world of ISDS being used to challenge health, safety, and labour standards as well. These ISDS provisions are anti-democratic in their very nature and undermine the sovereignty of nation states. Investor State provisions have no place in trade agreements.
The Intellectual property chapter extends both patent and copyright periods. It is expected that the cost of pharmaceuticals will increase as patents are extended and generic drugs take longer to come on the market. This is bad for our health care system and for Canadian consumers. It is also disastrous for health care in developing countries where the cost of pharmaceuticals will be out of reach. Many people will die as a result.
As a recent Doctors Without Borders/Médecins Sans Frontières release stated, “The TPP, which is currently being negotiated between the U.S., Canada and ten other Pacific Rim nations, is on track to become the most harmful trade pact ever for access to medicines in developing countries…”
There are concerns from Canada’s tech industries that the rules on intellectual property favour the United States and threaten to make Canada a “permanent underclass” in the economy of selling ideas. There are also concerns about new criminal penalties for minor non-commercial copyright infringement.
The TPP rules will also tilt the playing field in innovation to the large players. As James Balsillie made it clear in his testimony, had the TPP been in place when he started Research in Motion, the global success of Blackberry would simply never have been possible.
The TPP undermines food sovereignty and the production of food through ecologically sound and sustainable methods. Increased trade in food commodities undermines small-scale local farming and shifts production to large factory farms and agribusiness corporations, increasing the environmental footprint of the food chain.
The TPP will undermine the efficient and equitable supply management system in Canada, which provides a stable price and market for Canadian dairy, egg and poultry producers.
Dairy products from the United States, which can include bovine growth hormone, will be allowed into the Canadian market and will not be labeled for consumers to avoid. These dairy products will compete with locally produced, hormone-free dairy products and undermine local farmers.
Standards set for genetically modified food (GMOs) including GMO approval processes, GMO import monitoring and GMO labelling requirements could all be cited as trade barriers. Local municipal, regional or provincial rules governing the cultivation of GMOs, the use of GMO associated herbicides, or increased food chain transparency could be challenged.
The TPP text fails to mention the words “climate change” even though this is the most pressing issue of our time. The Investor State rules could be used to undermine efforts to tackle climate change and force governments to compensate corporations for mitigation initiatives. ISDS has already been used to undermine efforts to create energy alternative policies of national and state governments. Fossil fuel corporations will be able to challenge the limits placed on them by governments trying to mitigate climate change. As an example, Trans-Canada pipelines has launched a $15 billion NAFTA arbitration suit against the United States government for the loss of potential profit after the Obama administration blocked the Keystone XL pipeline project for environmental reasons.
The environmental rules in the TPP are weak and the provisions do not include specific obligations or enforcement. Rather than using stronger terms such as “obligated”, “banned” or “prohibited” the terminology is aspirational and uses terms such as “endeavour” and “promote” and non-binding lists of suggested measures that countries “should” take.
The TPP will constrain government’s abilities to regulate their financial institutions and allow financial firms to challenge financial stability measures. Governments will not be able to impose regulations on risky financial products such as derivatives or hedge funds or ban risky new financial products and services if other TPP countries permit them.
Large financial institutions from other TPP nations could challenge Canadian financial regulations using the investor state provisions of the TPP and seek compensation from taxpayers in secretive tribunals for the loss of potential profit that those regulations might entail.
Rules of Origin and the Loss of Canadian Manufacturing Jobs
The Rules of Origin chapter in the TPP will encourage the continued trend of off-shoring manufacturing jobs from North America to countries with lower labour and environmental standards and enforcement. The 62.5% content rules under NAFTA are being lowered to 45% under the TPP. Under the NAFTA rules there was a major shift in manufacturing from Canada and the USA to Mexico. Under the new rules a vehicle with 55% Chinese content could still qualify as Made in Canada or Made within the TPP signatory countries. These new rules will further undermine Canada’s auto manufacturing sector and will result in the loss of Canadian jobs.
The TPP countries have agreed to adhere to the International Labour Organization (ILO) declarations and maintain statutes and regulations governing acceptable working conditions, but the agreement fails to set minimum standards for those regulations. The ILO agreements call for minimum wages but countries such as Vietnam and Brunei could establish minimum wages that are pennies per hour and still be in compliance with the ILO.
Brunei, Vietnam and Malaysia are countries with very poor human rights records; in Brunei, for example, the punishment for homosexuality is death by stoning. Brunei and Vietnam are not democratic countries. We should not be liberalizing trade with these countries without guarantees that they will reform their laws and respect human rights.
This is not an agreement that will benefit Canadians or the citizens of the other TPP countries. The main beneficiaries of the TPP are large multi-national corporations and wealthy investors. The Investment chapter of the TPP will increase the number of foreign corporations that can challenge Canadian laws and regulations though private secretive tribunals. The Financial chapter opens up sovereign countries to more deregulation of their financial systems and increased risk from financial crashes. Rather than raising the standards of developing countries within the TPP with mandatory targets for better labour, environmental, health and safety regulations, the agreement uses aspirational language that allows countries and corporations to utilize loopholes and exploit lax regulations.
The TPP is not an agreement that is worthy of support.
Thank you for the opportunity to provide these points. I am very happy to meet with the committee and staff to provide more detailed background to any of these points.