July 18, 2017

Written submission in response to the Canada Gazette Notice

RE: Consultations on the Renegotiation of the North American free trade agreement (NAFTA)

What should be the goals of free trade? 

NAFTA, despite being a deeply flawed agreement, has become a template for free trade and bilateral agreements around the world. As the number of agreements have multiplied, so too have the problems arising from the form and structure of NAFTA. It is time we rethink how we structure free trade. Trade isn’t just about the export and import of goods and services. Trade agreements also impact human rights, labour standards, cultural diversity, environmental laws, and even constitutional rights. Hewers of wood, drawers of water – Canada’s longtime international reputation – was to be reformed under NAFTA. Now, many Canadians and public policy think-tanks admit that the trilateral integration has not lived up to its promises of widely-shared income benefits and increased productivity.

As our Prime Minister acknowledges: “What we’re facing right now – in terms of the rise of populism and divisive and fearful narratives around the world – it’s based around the fact that globalisation doesn’t seem to be working for the middle class, for ordinary people.”

Where I think we disagree, and has been apparent from the Prime Minister’s recent decisions to sign and implement the Canada-European Union Comprehensive and Economic Trade Agreement (CETA) and push for the Trans-Pacific Partnership (TPP), is that the Prime Minister believes the problem is in style, not substance. He believes the positive impacts of globalization are not being effectively communicated to the middle class. The Green Party, on the other hand, believes that there are simply not as many positive outcomes of free trade, as currently structured, as there are drawbacks. Free trade can’t simply be seen to work better for Canadians – it has to actually work better.

Current Problems with NAFTA 

Chapter 11: Investor-State Dispute Settlements 

Chapter 11 of the agreement has been interpreted so broadly as to be nearly unrecognizable in its enforcement in comparison to its original intent. Let’s not forget that foreign investment protection agreements (FIPAs), as they are now commonly referred, were devised as a mechanism to protect Canadian and American investors from the Mexican justice system, which at the time was seen as susceptible to corruption and political interference. The Mexican justice system has since undergone substantial reforms. We now deal routinely with large agreements, as in the case of CETA and the TPP, that involve industrialized countries bound by the rule of law, with no reasonable prospect of expropriation of property. Canada need no longer act as prime protector of Canadian investment abroad.

The reality of the arbitration system as currently structured is that the Canadian government is the most sued under Chapter 11 provisions, the majority of which are not for violations of article 1110 (direct or indirect expropriation) but rather the use of other articles to challenge environmental protection, resource management and health care. As of 2015, nine active Investor-State Dispute Settlement (ISDS) claims places Canada liable for over $6 billion in alleged damages. And Canadians should be concerned about losing these cases – Canada is notoriously unsuccessful in tribunals, with claimants being successful in 46% of claims against Canada.

Yet proponents of ISDS continue to make erroneous assurances that, as the Parliamentary Secretary of Trade, David Lametti, recently said of CETA, “Nothing .. prevents governments from regulating in the public interest to protect or promote public health, social services, public education or the environment. This principle, which is well recognized in international law, is clearly set out in the CETA text.”

The reality is that ISDS mechanisms lead to regulatory chill. As Professor Gus Van Harten explains succinctly : “Corporate giants and the super-rich, alongside the ISDS legal industry, have been the main beneficiaries of ISDS by far, at significant expense and opportunity cost to countries and to those who would have benefited from laws and regulations that were deterred by ISDS.”

Removal / Clarification of Chapter 11 

There are those who claim that recent jurisprudence suggests a limiting of the interpretation and scope of the NAFTA tribunals. In fact, the opposite is true. While the recent decision in the long-awaited Eli Lilly Case went in Canada’s favour, the implication was that had Lily’s claims not been as baseless as they were, the tribunal could have ruled in their favour. As the tribunal pointed out in its conclusion, it could not find allegations of arbitrariness or discrimination because there was no “fundamental or dramatic change in Canadian patent law.” As Michael Geist, professor of Law at the University of Ottawa, puts it: “While Eli Lilly failed in its efforts to use the dispute settlement system to extract hundreds of millions from Canadian taxpayers, the dangers of the system remain a reality … as new trade deals are negotiated or renegotiated, should rethink the need for investor-state dispute settlement provisions in agreements with countries with respected court systems that offer investors sufficient protections and reliable legal recourse.”

The ISDS provisions in NAFTA are deeply flawed. Any renegotiation of the agreement must have at its fundamental core the goal of limiting the potential of ISDS tribunals to intercede on Canadian sovereignty by deterring or chilling the exercise of lawmaking power. The Green Party advocates for wholesale removal of Chapter 11 from the agreement, or at the very minimum, a limiting of investor protections. Investors should be protected from threats of expropriation, but it is unreasonable and over broad to protect their profit-loss at the expense of taxpayers.

Water 

Of the threats to Canadian sovereignty posed by NAFTA, the agreement’s stipulations with regards to water are of chief concern. NAFTA threatens Canada’s control over our water – classifying Canadian freshwater as a good or service capable of being exported for a price.

This characterization was summed up by then Assistant Deputy Attorney General Mr. Konrad Von Finkenstein, who testified to the House of Commons Legislative Committee on the NAFTA implementation bill in 1993: “… if you trade water in its natural state you put in tanks, or bottles, or something and sell me freshwater that you’ve taken out of a well or something like that, then you are indeed trading in water and it’s then a good and is covered by the GATT, by the FTA, or by the NAFTA … Water is no different from any other resource.” We disagree. As stewards of 9% of the world’s renewable water, we cannot simply treat it like any other resource.

The issue of freshwater will only become more vital as we face the effects of climate change and the accompanying scarcity of water resources. We must act to enshrine, enforce and strategically implement the 1987 Federal Water Policy to meet the requirements of sustainable water management – equity, efficiency and ecological integrity. We must remove all mentions of water as a good from NAFTA, in addition to passing federal legislation to prohibit bulk water exports, building on the current law banning exports from trans boundary basins. Canada can also work to ensure the removal of similar language from CETA, and other trade deals based on the NAFTA template.

Resources 

Raw Logs

Donald Trump may be the loudest sabre rattler on NAFTA, but it was under Barack Obama that Canada failed to reach an amicable settlement to the long lingering softwood lumber dispute. Thousands of jobs and dozens of mills are under threat without an agreement. Canada’s forest heritage – 300 million hectares or 10% of all the world’s forests – is on the line.

Canada has the power to defend our forestry industry. We must cease the practice of exporting raw logs, and focus on keeping value-added jobs in Canada by implementing a substantial whole log export tax. And throughout the process of renegotiation, Canada must work toward a management strategy for our forests with long-term, environmental sustainability as a priority.

Energy

While energy lobbyists and others have advocated that the NAFTA provisions touching the energy sector shouldn’t be altered, the Green Party believes it must be a part of the renegotiations. Canada’s need for an energy reserve and its own long-term energy security must be recognized. Export controls must be allowed in the context of domestic environmental frameworks, especially in light of the recently agreed to Pan-Canadian Framework on Clean Growth and Climate Change.

Commission for Environmental Cooperation 

NAFTA’s Commission for Environmental Cooperation (CEC) has been effective, though slow, in holding all three NAFTA countries to account on issues of environmental stewardship. Some have suggested the future of the council is in jeopardy due to recent Trump cuts to the Environmental Protection Agency. Despite this more recent development, it’s been Canada, not the US, that has been threatening the credibility and effectiveness of the Commission.  During a period of one year under the former Harper administration, the Canadian government successfully stopped three separate CEC investigations into Canadian misconduct, including BC salmon farms, polar bear protection and Alberta’s tailings ponds. Renegotiation serves as an opportunity to not only redouble our commitment to the principles of the CEC, but also to protect and strengthen the Commission by putting into place mechanisms to ensure the Commission operates free from political interference.

Health Care 

The threat of a NAFTA challenge from the American for-profit health care industry cannot be over-estimated. Allowing further for-profit health care schemes to operate in Canada will be the ‘thin end of the wedge’ that could jeopardize our entire health system. Based on the rules for ‘national treatment,’ if Canada allows increasing numbers of for-profit facilities, we run the risk of losing our entire universal single-payer system in a single NAFTA challenge. We cannot take that risk. As Dr. Danielle Martin, vice-president at Women’s College Hospital Toronto, recently framed the issue: “If strong provisions that exclude health care from free trade are not maintained and in fact strengthened, in any renegotiated trade agreement, American insurance companies and health care delivery organizations could claim the right to a Canadian private health care market.”

Canada’s Dairy Industry

Canada needs to ensure that supply management is defended and protected. One key reason has to do with human health and the health of dairy cow, namely that Canada rejected regulation of the Monsanto product, Bovine Growth Hormone (BGH). Competition between US dairy products and Canadian dairy products will inevitably lead to the approval of BGH in Canada, unless we reject changes. We must be very clear – any US dairy products allowed into Canada must be free of BGH. Canadian regulators found that the health risks were too high.  This aspect of Canadian dairy supply management must be advocated forcefully by Canada’s negotiators.

Solidarity with Mexico

Canada may not be in the cross-hairs of the US Administration, but Mexico surely is.  Mexico’s economy underwent a far more radical transformation than Canada’s due to NAFTA. The Maquiladora areas set up under NAFTA have created pollution havens. The diesel truck exhaust has negatively affected the health of Mexican children along heavily trafficked routes. The dumping of US corn in Mexico undermined local agriculture and led to a movement of displaced growers to urban areas.

Mexico must not be abandoned by Canada. We should use our economic influence and clout to help protect the economy and people of Mexico.

The Possibilities and Perils of Renegotiation 

As Canada enters a renegotiation of NAFTA, we have an important opportunity to address the negative impacts of the agreement. As President Trump rejected the TPP, perhaps he is open to removing the ISDS provisions from NAFTA. Protecting legitimate economic activity while removing perverse elements of NAFTA is a winning formula that may give the US President what he craves in populist approval domestically, while protecting the significant and symbiotic trade linkages between Canada, the US and Mexico. Canada’s success in these renegotiation talks depends on standing up for Canada – acknowledging that not all of NAFTA was ever to our benefit.

Elizabeth May, O.C.
Member of Parliament
Saanich – Gulf-Islands
Leader of the Green Party of Canada

A PDF copy of the original submission is available, here.

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One of the issues that was frequently raised in the last round of town hall meetings I held with constituents in January 2013 was the threat of the Canada-China Investment Treaty.  As I write this, the treaty has still not been ratified.  While this is very good news, the treaty could be ratified at any time by a decision of the Prime Minister and his Cabinet. If ratified, the treaty would be binding on Canada and on future Canadian governments for a minimum of 31 years.

Meanwhile, there have been a number of interesting developments in countries around the world related to this type of treaty, often called a Foreign Investment Protection and Promotion Agreement (FIPPA or FIPA). Australia recently undertook a cost-benefit study of investment treaties, which showed that these treaties create far greater costs than benefits. Since this study, Australia has taken a new and strong position: they have decided not to enter into any new FIPAs. Similarly, India also recently decided that it would not only reject any new investor-state treaties, it would also attempt to re-negotiate any existing treaties that contained investor state clauses. India’s new stance may come as a surprise to the PM as it was just last fall that Stephen Harper returned from India claiming a Canada-India Investor-State agreement was just around the corner. Meanwhile, South Africa is also reconsidering its investor-state agreements, and a recent international report which makes clear the social and monetary costs of these agreements is likely to influence other nations to also reconsider entering into investor-state agreements.

I am writing this newsletter in response to the large number of my constituents who have asked for more information on these types of treaties, and I hope you find this information helpful and will share it with others.

In This Issue…

• What is an Investor-State Agreement?
• Is an Investor-State Agreement necessary to pursue trade?
• Why is the Canada-China Investment Treaty worse than NAFTA Chapter 11?
• What happened under Chapter 11 of NAFTA??
• Are these cases taken to court?
• In the House of Commons – Hearings on the Canada-China Investment Treaty
• In the House of Commons – How did Benin get better terms than Canada?
• Your opinion matters!

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On March 18^th, the committee heard witness testimony from the Ambassador of Chile.  On March 20^th, the committee heard from the Colombian and Peruvian Ambassadors. The questions targeted highlighting the difference between the trade agreements outlined in the Pacific Alliance and other FTAs. Each of the Ambassadors spoke in favor of the Alliance citing that the Alliance goes beyond the scope of the FTAs as it includes the harmonization of trade regulation in capital and personnel, rather than just goods, services, and investment.

On March 18^th, a motion was carried in camera to ensure that the Minister of International Trade prior to May 29^th 2013, to discuss the Main Estimates 2013-2014.

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We believe that the process should be transparent. This agreement has been negotiated behind closed doors with a level of secrecy that is completely unacceptable in a democratic society.

The Right to Set Our Own Laws

The governments of Australia, Canada and New Zealand traditionally have the right to set down their own laws for the good of public health, consumers, workers and the environment.

Leaked details of the TPPA reveal that, foreign investors and firms could sue Canada or New Zealand in a private international tribunal if their parliaments or local councils pass laws that reduce their profits or adversely affect their businesses. This could include laws such as:

• a requirement for large graphic warnings or plain packaging of cigarettes and other tobacco products (such as in Canada and Australia, and forthcoming in NZ);
• laws requiring labelling of genetically-modified food and drink (NZ); and
• retention of agricultural regulations such as Canada’s supply management system for dairy, which aims to preserve farmers’ livelihoods.

The Australian government has indicated it will not agree to these clauses intended to protect multinational businesses from the impact of policy decisions, but New Zealand and Canada’s leaders refuse to do the same (even after Canada was on the receiving end of costly lawsuits under NAFTA).

The End of a Free Internet

We believe the TPPA is being used to sneak in measures to bind its member countries to extensive and harsh laws on Internet use that wouldn’t be acceptable at the domestic level – including harsher criminal penalties for minor, non-commercial copyright infringements, a ‘take-down and ask questions later’ approach to pages and content alleged to breach copyright, and the possibility of Internet providers having to disclose personal information to authorities without safeguards for privacy. The European Parliament voted 478-39 against the international ACTA treaty, which was trying to create similar standards. Now, the same type of regulation is being attempted under the TPPA.

More IP Rights for the Big Players

The Intellectual Property Rights chapter of the TPPA was leaked in draft form in February 2011. We anticipate that unless a more moderate and balanced version is adopted, NZ, Canada and Australia’s shoppers, schools and libraries would end up paying more for their books and DVD’s  because it would let copyright holders veto parallel importing. Small and medium-sized software and IT businesses would have their innovative visions stifled by constraining patent laws. Finally, large pharmaceutical companies could use the legislation to deny state drug-buying agencies like those in Australia and NZ access to reliable, low cost medicines.

Behind Closed Doors

Almost everything we have learnt about the TPPA’s contents comes from leaked documents that the negotiators didn’t want the public to see. No agreement this important should be finalised without the informed input of the ordinary people it will affect.

Yet while representatives of AT&T, Verizon, Cisco, major pharmaceutical companies and the Motion Picture Association of America have access to the text, democratically elected members of parliament, advocacy organisations for healthcare and the environment and ordinary citizens are being left out in the cold.

Governments, including the US, have opened up to the public in the past by releasing the draft text of agreements. In 2001, all nine chapters of the Free Trade Area of the Americas Agreement were released. At the time, this was called an ‘important step’ that would make the trade negotiation process ‘more transparent and accessible’. If this was the standard for public accountability in 2001, it is disconcerting that similar standards are not in play in 2012.

Together, we Green Parties are declaring that we will only support a fair, genuinely progressive trade agreement that promotes sustainable development and the creation of new jobs alongside the protection of the environment and human rights (including freedom of association and the right to collective bargaining). We call on our current governments to remove the veil of secrecy surrounding this agreement and to open these negotiations to public input and comment.

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“The failure of some Canadian mining companies to respect the environment and human rights throughout the Americas – from Canada to Argentina – has forced the many communities affected to stand up and protest,” said Green Party Leader Elizabeth May, MP Saanich-Gulf Islands.  “As a Canadian, I am ashamed that the irresponsible behaviour of some Canadian corporations has reached this level that brings our global reputation into disrespect.”

60% of the world’s publicly traded mining companies are listed on the Toronto Stock Exchange, accounting for more than 3,200 exploitation projects in over 100 countries.   Canada is the largest stakeholder in the resource extraction industry in the Americas with 37% of total investment.

Too many Canadian-based mining operations have forced people from their homes, destroying communities and livelihoods; they have threatened water and food safety and caused long- term health problems.  As well, they have disregarded indigenous and human rights and led to small-scale miners, union, environmental, and community activists being threatened and often jailed. 

Large-scale mining explorations and exploitations have also led to an irreversible loss in biodiversity.  Despite the fact that resource extraction is presented by the Harper Conservatives and CIDA as good for jobs and economic growth, too often the reality for local people is the opposite.

“Until Canadian mining operations abroad can prove that their impact is truly beneficial – and not just for profits, the Conservatives should divest public funds, including our pensions, from these extraction industries,” said May.  “They should support a Corporate Responsibility Act, such as Bill C-323, that establishes corporate accountability standards, penalizes companies linked to human rights violations, and allows foreign nationals to pursue legal action for damages in Canadian courts.

Mr. Harper should also stop signing free-trade agreements that pave the way for nearly unrestricted extraction.”

The Green Party leader also noted that public institutions, including the Museum of Natural History in Ottawa, Simon Fraser University, University of Toronto, York University, and CIDA, should avoid getting involved with high-profile public relations campaigns conducted by resource extraction companies.

The Continental Day of Action Against Mega Resource Extraction is being organized by the Latin American and Caribbean Solidarity Network (LACSN).  Coordinated actions will range from rallies, demonstrations, and letter writing campaigns to protests in front of mining corporate offices and Canadian embassies.

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“From the few details emerging, the TPP – a highly secretive pact initiated by the George W. Bush administration – grants special privileges to already powerful corporations,” commented Green Party Leader Elizabeth May, MP Saanich-Gulf Islands.  “It has been dubbed ‘NAFTA on steroids.’  Some are even calling it a ‘corporate coup.’  This is not what Canadians want or need.”

Mainly based on leaks, it appears that the talks, which have included the United States, Australia, New Zealand, Chile, Peru, Singapore, Malaysia, Vietnam, and the Sultanate of Brunei, are focussed on ensuring new enforceable corporate rights along with increased constraints on governments.  Only two of TPP’s 26 chapters actually have anything to do with trade.

What is emerging is a pact promoting extensions on price-raising drug patent monopolies, increased corporate rights to attack government drug-pricing plans, safeguards for job off-shoring, and added corporate control over natural resources.  This is particularly interesting in light of Bill C-38’s destruction of government influence over resource extraction.

There also appear to be severe limits to government regulation of financial services, zoning and land use, product and food safety, energy, and other essential services. The copyright chapter poses several threats to internet freedom along the lines of the Stop Online Piracy Act (SOPA), which was held up in the US Congress after effective public pressure.

The proposed pact will even limit the way governments can spend their tax dollars.  Buy local procurement policies would be banned and human rights or environmental conditions on government contracts could be challenged in behind-closed-door foreign tribunals.  There are proposed rules regarding the activities of publicly owned enterprises.

A recent leak of a particularly controversial TPP chapter revealed that the agreement will raise corporations and investors to the same status as sovereign nations.  The so-called “investor state” provisions would give any foreign companies incorporated in TPP countries the right to ignore our courts and laws and sue our government directly by way of foreign tribunals.  Businesses would be able to demand compensation for financial, health, environmental, land use, and other laws they think undermine their TPP privileges.

Already, in San Diego, we saw the CEO of Australian Pork Limited going after Canadian federal and provincial pork supports, even though Canada’s share of the world pork market has fallen because of the strong Canadian petro-dollar and high feed costs.

“The TPP negotiations were yet another disturbing example of the larger pattern of unaccountable, secretive, and undemocratic practices by the Harper government,” said May.  “This pattern, once again, shows a real contempt for Canadians and for our democracy.”

The Green Party is determined to bring more TPP information to light before the 14th round of secret talks in early September inLeesburg, Virginia.

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All negotiations with other countries are over before the bills get here. The Prime Minister is making announcements about a free trade agreement with China, and another one with Japan.

What does he think the role of members is when free trade agreements are signed before they can be debated here?

Hoang Mai: Mr. Speaker, I would like to thank the leader of the Green Party for her question.

I agree with her that this government is not entirely transparent and often presents us with a fait accompli. We see this in virtually every regard.

When we want to debate, it gags us, and when we want to talk about something as fundamental as a free trade agreement, it presents us with a fait accompli. And when we propose amendments, it rejects them. There has been no real public debate about this. None of the groups that work to protect the environment or to protect workers’ rights have been heard.

The real role of the government and the House is to discuss and debate all the issues from various angles. Unfortunately, this government is very much lacking in transparency.

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With respect to this bill, does my colleague have any recommendations concerning the environment?

Elizabeth May: Madam Speaker, I thank the hon. member for Brossard—La Prairie for the question.

A completely different approach is needed. The European Union has regulations that compel member countries to use the highest standards to protect the environment in their trade transactions.

If we did the same thing here, we would say that Panama must improve its environmental standards to be at least equal to Canada’s, and that Canada will provide trade assistance to make sure it is able to do that.

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One of the issues I have is that history has proven that as countries become more prosperous, average family income goes up, life expectancy goes up, as does the amount of freedom in a country. If my colleague went online to a YouTube video called “200 Countries, 200 Years”, she would find those facts recorded there.

Why would the member be against a free trade agreement with Panama that is going to increase not only those people’s place in life as far their family income is concerned, but also their life expectancy and freedoms in their country? Would the member not support the agreement just on those grounds?

Elizabeth May: Madam Speaker, I tried to be very specific in my response to this proposed treaty, specifically the investor-state provisions.

It is true that when a country is not prevented from selling its goods by tariff barriers, there is a trend toward improved incomes. I will not deny that for one minute, but the member should to ask the people of San Luis Potosi whether they feel that the NAFTA agreement advantaged them.

There are consequences to these trade deals that we should now be able to examine forensically. We should now be able to ask where our good intentions went wrong and how can we improve on the model. Trade agreements in other regions have not included investor-state provisions, and I mentioned the European Union as one example, and the trade bloc in Latin America is another. Investor-state provisions are not a necessary ingredient to improving one’s trade relationships. In fact, they are a poison pill.

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