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.

The post Bill C79 – ISDS does not belong in trade agreements appeared first on Elizabeth May.

October 30, 2017

Re: Consultations on Canada’s discussions with the remaining members of what was previously the Trans-Pacific Partnership
This brief is prepared as a contribution to Global Affairs Canada’s public consultation on Canada’s discussions with the remaining members of what was previously the Trans-Pacific Partnership agreement (TPP). I prepared a similar submission for the Standing Committee on International Trade during their study of the trade agreement earlier this year. 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 changed dramatically with the withdrawal of the US from TPP by President Trump’s 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.

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, or one similar to it under a different name.

With access to public hearings, I believe that the majority of Canadians would come to the same conclusion.

Investment

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.

Intellectual Property

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 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 other nations 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.

Agriculture

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.

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.

Environment

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.

Financial Services

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.

Labour Standards

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.

Human Rights

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.

Conclusion

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, nor is it worthy of a resurrection.

Thank you for the opportunity to provide these points.  I am very happy to meet with the department and staff to provide more detailed background to any of these points.

Sincerely,

Elizabeth May, O.C.

Member of Parliament

Saanich – Gulf Islands

Leader of the Green Party of Canada

PDF version of submission available here.

The post Consultations on Trans-Pacific Partnership appeared first on Elizabeth May.

Briefs exceeding 10 pages must be accompanied by a summary of no more than 1,500 words. The Committee may decide to translate, distribute and/or publish only the summary.

More information on the process for providing a brief can be found in the Guide for Submitting Briefs to House of Commons Committees. Briefs should be emailed to: ciit-tpp-ptp@parl.gc.ca.

The post Share your views on the Trans-Pacific Partnership (TPP) with the standing committee on International Trade (Deadline: Jan 27, 2017) appeared first on Elizabeth May.

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.

Investment

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.

Intellectual Property

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.

Agriculture

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.

Environment

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.

Financial Services

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.

Labour Standards

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.

Human Rights

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.

Conclusion

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.

The post Elizabeth’s Submission for the Trans-Pacific Partnership (TPP) Agreement Consultation appeared first on Elizabeth May.

The first group of flaws has a lot to do with Canada joining the talks when they were already quite far advanced.  We started from a very weak negotiating position on a wide range of trade issues – from the auto sector to the patent protection of prescription drugs to intellectual property protection – and from that weak position, we caved.  The US auto sector gets protected far longer from Japanese competition than their Canadian counterparts.  The cost of Canadian pharmaceutical drugs will soar.  And the potential for Canada to excel in the ideas economy is kyboshed while those new economic winners in the virtual economy are enshrined in their existing power position.  Canada will be frozen out.  As Jim Balsillie, founder of Research in Motion, told the trade committee, Canada will be a “colossal loser” under the TPP.  The game will be fixed and we will not have a seat at the table.  His advice to Canadian innovators if the TPP goes through?  Move to the US and start your business there.

Which is quite the observation when one considers what US economists are saying about the TPP.  Nobel Prize winning economist and professor at Columbia University, Joseph Stiglitz describes the TPP as “the worst trade deal ever.”  Not the worst deal for Canada – the worst deal ever for the United States too.  And the US negotiators struck a much better deal.

Stiglitz observes that the TPP is not really a trade deal at all.  It is about managing trade in a way that benefits a new global regime of corporate rule and not the actual promotion of the trade in goods and services.  In that sense it is not a traditional trade deal at all.

The alarm felt about the TPP in the US has much to do with the dawning recognition of how investor-state agreements work.  The TPP is not the first one the US has entered into. The US has executed dozens of ISDS treaties.  But unlike the first one, Chapter 11 of NAFTA and unlike ones between the US and Ecuador or the US and the Philippines, this is an ISDS in which the US might actually lose. The reality of these provisions, that allow a foreign corporation to bring arbitration suits against governments that enact changes that have the incidental, even if unintentional, effect of reducing a foreign corporation’s profits, is that the arbitration is neither fair nor neutral.  Almost every single case is resolved in favour of the larger economic power.  So if it is a case between a US corporation and the Canadian government, or between a Canadian corporation and the US government, the US is about 95% likely to win – whether state or investor.  But the TPP opens up the chance of other serious economic players being able to bring arbitration cases against the US.

The political debate over TPP has separated Hilary Clinton from Obama’s legacy.  She has come out against the TPP, and so has Trump.  It will make no sense at all to ratify a treaty that the US may not ratify.

Meanwhile, the debate gives us a chance to re-examine all of the investor-state agreements.  They are offensive and anti-democratic by their very nature.  They have nothing to do with trade promotion or protection of the assets of foreign investors.  They are all about the erosion of the ability of sovereign states to act in the public interest.  The ability to act in the public interest remains, but is forever constrained.  Profits of foreign corporations will trump acting in the public interest.  That such an unholy and outrageous scheme could be elevated to “routine” is shocking.  The CETA agreement with the EU now boasts a new approach – setting up an Investment Court.  Don’t be fooled.  It is no different than its predecessors.  It has some window dressing, but fails to remedy the central objectionable feature of ISDS agreements.  Whether under the CETA approach, NAFTA or the Canada-China Investment Treaty, foreign corporations are given extraordinary rights to demand compensation when a government – municipal, provincial or federal – acts in a way that reduces a foreign corporation’s expectation of profits.

We need to engage a global process of re-negotiation of all ISDS.  Canada should open the dialogue about the creation of a rebalancing of nation state rights versus corporate rule.  We should propose within the WTO the creation of a model agreement to protect the legitimate interests of the investor and the protection of domestic sovereignty.  With the litany of perverse decisions accumulating under these agreements, we should find many countries willing to demand a new approach leading to the replacement of all current ISDS agreements.

Meanwhile, we start by saying “no” to the TPP.

Originally published in the Hill Times.

The post How bad can the TPP be? appeared first on Elizabeth May.

“I congratulate Mr. Balsillie for voicing his strong opposition against the TPP,” said Ms. May. “I am in total agreement with his position that trade negotiators have profoundly failed Canadians and our future innovators. For example, the TPP would impose intellectual property standards, set by the U.S., which would be extremely damaging to Canadian entrepreneurs.”

In addition, Paul Manly, Green Party International Trade Critic, expressed concern about the TPP as an investor-state agreement that allows foreign corporations to launch suits against Canada in private arbitrations.

“It’s clear that the TPP could cost Canada hundreds of billions of dollars and is a threat to Canada’s sovereignty,” said Mr. Manly. “We will work to ensure there is an open and transparent debate in Parliament before any vote to reject or ratify the TPP agreement is taken.”

The post Elizabeth May congratulates Jim Balsillie for his strong stance against the Trans-Pacific Partnership appeared first on Elizabeth May.

“In 1999, Health Canada banned bovine growth hormones (rBST), because of animal welfare concerns, including an increased risk of mastitis, a painful bacteria inflection that affects the udders, a 50 percent increase risk of clinical lameness, and shorter lifespans for cows. I played a key role in keeping the bovine growth hormone out of Canada as the Executive Director of the Sierra Club of Canada.

“In Canada it is still illegal to use bovine growth hormone to increase milk production, yet the TPP would allow milk with this hormone into Canada. We really do not know the affects of this hormone on humans, which is one of the reasons why Europe has already banned rBST. The International Agency for Research in Cancer has concerns that rBST increases cancer in humans. Milk that includes hormones needs to be kept out of Canada.”

“The Green Party has serious concerns with the fundamentally undemocratic and non-transparent nature of the negotiations surrounding the TPP. At this point, the TPP is an agreement only in principle. The Green Party will work in Parliament to ensure that an open and transparent debate takes place before any vote to reject or ratify the agreement,” said Paul Manly, Green Party International Trade Critic.

The post Elizabeth May says TPP deal is dangerous: “Milk that includes hormones needs to be kept out of Canada” appeared first on Elizabeth May.

While investor-state agreements are sometimes associated – or even confused – with free trade agreements, they are not the same. A trade agreement opens up areas, or sectors, of national economies to allow other countries access. An investor-state agreement is different. For example, the Canada-China Investment Treaty does not open any new sectors to trade. China still refuses foreign investment in its energy sector – while at the same time it makes major purchases of Canadian energy companies.

An investor-state agreement gives a foreign company (an “investor”) the right to seek damages from a country (a “state”) in private arbitrations. These are not court actions, although the word “sue” is often used. These are claims for damages arbitrated by a panel of three arbitration lawyers – usually in a posh hotel room somewhere. The first investor-state agreement in the world was Chapter 11 of NAFTA. In the late 1990s, an attempt was made through the Organisation for Economic Co-operation and Development (OECD) to extend Chapter 11 principles to all industrialized countries. The OECD proposal was called the Multilateral Agreement on Investment (the MAI). In what is viewed as the first global citizens’ campaign using the internet effectively, the MAI was defeated. The pro-MAI community then turned to advancing bi-lateral investment treaties. The Canada-China Investment Treaty is one such effort.

Why should Canadians care about investor-state treaties?

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.

Are these cases taken to court?

No. They go to an arbitration. Three international lawyers hear the case, usually in a hotel room. There are no appeals. There is no access to a Canadian court before being thrust into arbitration.

While “international arbitration” may sound fair and neutral, the reality is different. A recent report, “Profiting from Injustice: How law firms, arbitrators and financiers are fuelling an investment arbitration boom,” (Corporate Europe Observatory, Transnational Institute, Brussels, Amsterdam, November 2012), provides some disturbing details of the world of global arbitration.

The report concluded that:

“Rather than acting as fair and neutral intermediaries, it has become clear that the arbitration industry has a vested interest in perpetuating an investment regime that prioritises the rights of investors at the expense of democratically elected national governments…”

Here are some of the report’s key findings:

• There is a huge increase in the number of such cases — from 38 cases in 1996, to 450 in 2011;
• The cost to a country of fighting an investor challenge is on average $8 million (US$), and rise to over $30 million (US$) in some cases;
• Elite arbitration lawyers charge as much as $1,000/hour;
• Poor countries have to spend scarce resources on lawyers to battle global multi-nationals. For example, the Philippines spent $58 million defending a claim by German airport operator Fraport. That amount of money could have paid the salaries of 12,500 school teachers for the year;
• A small group of elite international lawyers handle a large proportion of the cases. 15 lawyers alone decided 55% of all known investor-state disputes; and
• They are often associated with firms that advise governments to enter into such treaties.

After I read this report, I raised the issue on the floor of the House, suggesting international investment treaties put us in the hands of “global ambulance chasers.” I think most MPs simply do not understand what we are granting the People’s Republic of China in this investment treaty. But the decision to ratify will not be made by Parliament. The Prime Minister and his Cabinet can decide through an Order in Council.

“When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all […] Three private individuals are entrusted with the power to review, without any restriction or appeal procedure, all actions of the government, all decisions of the courts, and all laws and regulations emanating from parliament.” – Juan Fernandez-Armesto, arbitrator from Spain

Why is the Canada-China Investment Treaty worse than NAFTA Chapter 11?

1. NAFTA can be exited with six months written notice; the investment treaty with China is in force for 15 years, then Canada or China could give a one year written notice to exit, but all existing investments would be grandfathered for a further 15 years (31 year “lock-in”);
2. Even though it is egregious that US (or theoretically Mexican) corporations can bring multi-million dollar claims against Canada for laws passed with no intent to discriminate in trade terms, the “investors” from China are not individual corporations. State Owned Enterprises (SEOs) of the People’s Republic of China are all branches of the government, with boards and CEOs appointed by the politburo of the Communist Party of China;
3. Under the Canada-China FIPA all claims begin with six months of diplomatic efforts to resolve the dispute. Under such a provision, the larger economic party, China, would be able to link all its investments in Canada into a serious threat for economic retaliation. This is not something a US-based firm would be capable of doing under NAFTA, and, in any event, a diplomatic process is not part of NAFTA.

Is an Investor-State Agreement necessary to pursue trade?

No. Even though Australia does not have an investor-state treaty with China, they lead the globe in Chinese investment.

In 2012, investment from China to Australia stood at $51 billion (US), eclipsing the United States ($50.7 billion) and far surpassing Canada ($36.7 billion).

Source: KPMG – Demystifying Chinese Investment, August 2012

In the House of Commons – Hearings on the Canada-China Investment Treaty

April 22, 2013

Elizabeth May: Mr. Speaker, I would like to wish all members of this House a happy Earth Day. Today is the 43rd anniversary of that celebration, but please excuse me if I do not feel like celebrating. The only motion before us today that has any environmental content is the NDP motion from its last opposition day to block ratification of the Canada–China Investment Treaty.

We should all be voting to block ratification, but I can predict as of now that the motion will be defeated, and that is going to be a terrible shame because it will mean that this House has not had a single proper day of hearings, not one day of expert witnesses coming here to tell us what we need to know about this extraordinary treaty that will give the People’s Republic of China and its Communist Party government the right to sue us and lock us in for 31 years.

NAFTA locks us in for six months. The new treaty that was tabled after the Chinese treaty locks us in for 16 years. However, there was not one day of hearings on this. I urge members, before it is too late, to let us find a way to have hearings.

(Video available online at www.elizabethmaymp.ca/parliament/statements/2013/04/22/statement-international-trade)

The post Backgrounder – Investor-State Treaties appeared first on Elizabeth May.

Leaked documents obtained by the New York Times reveal that Canada has been pressuring the US to abandon logging regulations, a ban on the harvesting of sharks’ fins, and other environmental provisions included in a draft version of the trade agreement between Pacific Rim nations.

“Our party has long expressed concern that this secretive trade agreement threatened Canada’s ability to legislate for the good of public health and the environment,” said Elizabeth May, Leader of the Green Party of Canada and Member of Parliament for Saanich–Gulf Islands. “While we can no longer be shocked by Stephen Harper’s aversion to all things green, to learn that the Conservatives are actually fighting US efforts to include minimal environmental controls in the agreement is beyond disheartening.”

The TPP is a proposed free trade and investment agreement between Canada, the US, and ten other Pacific Rim nations that would include drastic changes to copyright law and would grant sweeping new powers to foreign corporations operating in Canada.

Negotiations between member states have been carried out in secret, and public information about the agreement is extremely limited. The TPP is opposed by the Green Parties of Canada, New Zealand, Australia, Japan, Taiwan, the Philippines and the United States.

The post Leaked documents reveal Canada fighting environmental regulations proposed by US in Trans-Pacific Partnership appeared first on Elizabeth May.

January 29, 2013

To whom it may concern,

The following comments are submitted as part of the Environmental Assessment of the Trans-Pacific Partnership (TPP) Free Trade Agreement Negotiations that Canada has officially joined and which Ministers Moore and Fast announced on October 9th, 2012.

While the secrecy surrounding these ongoing negotiations renders it difficult to know precisely what the full extent of the environmental impacts could be, given the demonstrable negative environmental effects that similar kinds of agreements have had and continue to have in Canada and internationally, there are a number of things we can conclude.

Despite Australia’s urging against the inclusion of such measures in the TPP, and despite the Gillard Government’s published Trade Policy Statement stating that it will no longer agree to such measures, we can be very certain that the final iteration of the Trans-Pacific Partnership Free Trade Agreement will include investor-state provisions.

While not directly related to trade, there exists ample evidence that the inclusion of investor-state provisions in treaties, such as the TPP or Chapter 11 of the North American Free Trade Agreement (NAFTA), fundamentally erode a government’s ability to enact laws, regulations and policies that protect its environment or the health of its citizens. In particular, insufficient attention has been paid to an analysis of the arbitrations under Chapter 11 of NAFTA.

The first of these suits was in 1997, when Ethyl Corporation of Richmond, Virginia, challenged a Canadian statute that had been democratically enacted to protect Canadians from MMT. MMT (Methylcyclopentadienyl manganese tricarbonyl) is a neuro-toxic gasoline additive that posed both health and environmental problems. It was compromising the catalytic converters on Canadian cars, alarming car makers about the potential for voiding their warranties, while also increasing air pollution. As well, its impact in the atmosphere raised concerns it could have neuro-toxic effects on particularly vulnerable populations – children, pregnant women and the elderly. The same company had manufactured, and I believe still does for sale in the developing world, leaded gasoline. The public health experience with leaded gas demonstrated conclusively that if one wanted to increase absorption to the brain of a toxic heavy metal, adding it to gasoline was an effective delivery method. Ethyl Corporation’s creative use of the “tantamount to expropriation” language of Chapter 11 was a surprise to the trade and investment community. What they now so sanguinely defend as a “typical FIPA provision,” was not the intent of the NAFTA negotiators. I have spoken to a number of them who believed that the Chapter 11 language was only to codify what was clear in international law: that is a nation-state nationalized and expropriated the assets of a foreign corporation, compensation was owed.

As the Ethyl Corporation challenge became known, there was an effort through the Organization for Economic Cooperation and Development to being in an international version of Chapter 11 under the name “Multilateral Agreement on Investment.” The OECD chose to consult with global civil society and, as Executive Director of Sierra Club of Canada, I attended a session with OECD negotiators in the Paris headquarters of the OECD. The session was under “Chatham House Rules,” meaning I can relate what happened, but not attribute quotes. It was clear from that session that the negotiators within the OECD working on the MAI were shocked that a US-based corporation could use Chapter 11 “tantamount to expropriation” language to claim damages from Canada for the decision to remove a toxic product from trade. The collapse of the MAI negotiations was proximately related to concern of the French government

for protection of its culture, as well as a massive international citizen mobilization, but the Ethyl MMT complaint was a warning of the way the language had morphed into something with the potential to undermine democratic decision-making. Barry Appleton, Canadian lawyer for Ethyl Corp, said at the time, “It wouldn’t matter if you were adding liquid plutonium to children’s breakfast cereal. If you ban it and a US corporation loses its expectation of profit, you will owe money under Chapter 11.” (This quote is a paraphrase of his comment.)

Following the decision of former Prime Minister Jean Chretien to push the MMT matter to a settlement prior to the arbitrators’ ruling, a second Chapter 11 case was brought by S.D. Myers of Ohio, complaining of the impact of the ban on export of PCB contaminated waste from Canada. S.D. Myers had hazardous waste incinerators in the US. It had none in Canada, so the term “investor” was a stretch. This matter went to arbitration and Canada lost.

The S.D. Myers ruling is notable for several reasons:

1. It was a law of general application, i.e. PCB exports were banned. There was no way in which the move was discriminatory towards the United States in general, nor to S.D.Myers in particular.
2. It was a move taken consistent with Canada’s obligations under the Basel Convention on Hazardous and Toxic Materials. Further, the Basel Convention is specifically referenced in NAFTA as a pre-existing multi-lateral obligation of Canada, exempt from NAFTA requirements.
3. At all material times when Canada banned the export of PCB contaminated waste, it would have violated US law to import the PCB waste to the United States.

The S.D. Myers case should be a clear warning to anyone looking at the Canada-China Investment Treaty that international arbitration can come to bizarre conclusions. Chapter 11 of NAFTA has had a higher proportion of environmental law challenges than in other areas of public policy. Mexico lost to Metalclad, a US-based hazardous waste disposal company that wished to locate a large toxic facility in San Luis Potosi. The state level government rejected the application and the federal government of Mexico was successfully sued.

It must be stressed that the nature of the full environmental impacts of Chapter 11 of NAFTA has never been assessed. I submit that the chilling effect of the Ethyl Corporations and S.D. Myers was profound. I am aware of a letter warning Alan Rock when he was Health Minister that removing the registration of pesticides for use in lawns for cosmetic purposes could give rise to Chapter 11 suits, so the move was not made. We have no way of assessing the “chilling effect” of the Chapter 11 cases that Canada has lost. In my opinion, there is a compelling case that the Ethyl and S.D. Myers case have resulted in failures of the Canadian government to regulate and/or ban toxic substances that they would have in the pre-Chapter 11 era. A thorough review of the regulatory process by the Commissioner for Environment and Sustainable Development, within the office of the Auditor General, assessing why certain pesticides and toxic substances have not been banned could provide empirical evidence of the chilling effect. In my view that is the single greatest environmental threat in this treaty. I believe municipal, provincial, territorial and the federal government will find themselves second-guessing policy and law-making related to environmental quality, health and safety based on how they imagine the investors awarded these powers by the TPP might respond.

More recent instances of such investor-state provisions being used to challenge sustainability or environmental protection measures here in Canada, and by Canadian firms abroad, are equally troubling. This past November, US energy company Lone Pine Resources launched a Chapter 11 challenge against the Quebec government, demanding $250 million in compensation. The damages that Lone Pine is alleging emerge from Quebec’s adoption of a province wide moratorium on hydraulic fracturing (or fracking), and related suspension of exploration rights in the Gulf of St. Lawrence, pending the results of a comprehensive review into the negative environmental impacts of the practice. Such cases represent clear barrier to environmental protection and regulation in Canada. As stated by company spokesman Shane Abel, “We think that the expropriation is arbitrary and without merit,” he said. “… We think that’s a clear violation of the NAFTA agreement.”

In practice, findings that such a regulatory decision is “arbitrary” are themselves arbitrary, since a many government decisions, such as those resulting from a democratic change in government, can be viewed as “arbitrary” from the perspective of investors. This creates a basis for arbitration claims in any area of Canadian policy. And while guarantees against arbitrary and uncompensated expropriation are important to ensure a stable investment climate, in reality, the domestic courts in any of the countries participating in the ongoing Trans-Pacific Partnership negotiations would provide sufficient protection for investors against such risks.

At minimum, I would insist that any inclusion of investor-state arbitration clauses into the Trans-Pacific Partnership Free Trade Agreement include clearly stated exceptions against claims of expropriation for any laws or regulations pertaining to environmental, social, or labour policies that a future government may want to pursue. Yet while better than nothing, even here such exceptions present unacceptable risks to Canadian’s sovereign, democratic rights to govern ourselves, including in environmental protection.

As explained by investment law expert Gus Van Harten, “The catch is that these exceptions are always uncertain and, ultimately, in the arbitrators’ hands. Arbitrators have often decided that a measure was not “necessary”, for example, where a less restrictive option was available to a government.” The potential environmental impact of this degree of power being vested in an unelected and unaccountable body is both direct, wherein an arbitral panel may award damages in response to environmental laws or regulations that, in its sole opinion, are not strictly “necessary”, creating pressure for them to be rescinded, and indirect, wherein the implicit threat of such legal action is sufficient to pre-empt a government from enacting an environmental law or regulation that could even potentially be challenged using the dispute resolution mechanism likely to be included in the TPP.

As described above, and for the reasons listed here, the Government of Australia has commissioned a major national review of the impacts of investor-state dispute resolution on the Australian economy and environment. Published in November, 2010, the 400 page “Bilateral and Regional Trade Agreements Productivity Research Report” formed the backbone of the “Gillard Government Trade Policy Statement”, from April, 2011. The Policy Statement arrives at some conclusions that are particularly relevant in considering the environmental impact of the Trans-Pacific Partnership.

Describing the negative impact of investor-state mechanisms on the ability of an elected government to pursue laws and regulations in the public interest, the Policy Statement states:

Some countries have sought to insert investor-state dispute resolution clauses into trade agreements. Typically these clauses empower businesses from one country to take international legal action against the government of another country for alleged breaches of the agreement, such as for policies that allegedly discriminate against those businesses and in favour of the country’s domestic businesses.

The Gillard Government supports the principle of national treatment – that foreign and domestic businesses are treated equally under the law. However, the Government does not support provisions that would confer greater legal rights on foreign businesses than those available to domestic businesses. Nor will the Government support provisions that would constrain the ability of Australian governments to make laws on social, environmental and economic matters in circumstances where those laws do not discriminate between domestic and foreign businesses. The Government has not and will not accept provisions that limit its capacity to put health warnings or plain packaging requirements on tobacco products or its ability to continue the Pharmaceutical Benefits Scheme.

Australia has, in no uncertain terms, identified the linkage between investor-state provisions and the erosion of democratic control over the laws governing its social, environmental, and economic spheres. As a direct result, as a matter of policy the Government of Australia “will not support [investor-state] provisions in trade agreements that constrain our ability to regulate legitimately on social, environmental or other similar important public policy matters.”iv When it comes to our domestic ability to enact environmental laws or regulations, Canada would do well to heed Australia’s example during these negotiations.

I urge the Trade Agreement Secretariat to make public the terms of this Agreement currently being negotiated in our name.

Sincerely,

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

The post Submission: Environmental Assessment of Trans-Pacific Partnership Free Trade Agreement Negotiations appeared first on Elizabeth May.