Submission
To
The House of Commons Standing
Committee on International Trade
by
Marilyn Reid
For
Citizens
against CETA
St. John’s NL
July, 2016
First
let me thank the Committee for the opportunity to submit this brief.
There
are four concerns we would like to express. They relate to the impact of trade
agreements like the TPP on our parliamentary democracy, our judicial
sovereignty and the Canadian economy. Finally, we would like to address the inherent
imbalance of the lobbying process.
1.
The impact of the TPP and other trade
agreements on democratic governance.
It
seems to us that there is an invisible elephant on the table in discussions
about the merits of trade agreements that the Prime Minister, elected MPs and
civil servants, particularly in the Department of International Trade, rarely
acknowledge. That elephant is democratic
governance.
Trade agreements like the TPP and CETA are a clever back door way of
getting around one of our most important democratic principles. It’s called the No-Fettering Rule.
|
“In Canadian law (based on the English common law) there is a
democratic principle called the no-fettering rule that bars one elected
government from making commitments to bind another.
However, the principle does
not exist in international law and an international agreement cannot be
trumped by the laws of Canada.”
from Sold Down the Yangtze by Gus Van Harten, Osgood Hall Law
School 1
|
Thus, a government, driven by ideology or corporate interests, can surreptitiously
use a trade agreement (which falls under international law) to fetter future
governments for decades. That can happen through targeting highly specific
policies for elimination (such as Minimum Processing Requirements in our
province of Newfoundland or Labrador). But the fettering language can be more
general, and therefore open to interpretations that government never intended. We’ve chosen to focus on just three of the
many ways in which this type of fettering can take place.
Regulatory Fettering: Under
trade agreements like NAFTA, the TPP and CETA, corporations are able to legally
challenge the right of future governments to create and amend regulations. They
can do this by claiming their “legitimate expectations
under the Fair and Equitable Treatment”2 clauses
have been violated.
The
most frequent targets of these legal challenges have been, and probably will
continue to be, government attempts to protect the environment and manage our
resources. However, the TPP is notable in that it goes beyond NAFTA in also making
it harder to regulate the
financial sector.3 The reasons for the 2008
financial collapse have apparently been forgotten.
The
most troubling aspect of regulatory fettering is invisible. For example, there
is evidence that the mere corporate threat of an ISDS NAFTA lawsuit has caused
government to modify or reconsider planned and needed new regulations.4
Fettering Public Services: Both the TPP (at the federal level) and CETA (in sub-federal
jurisdictions as well) use a “negative list”5 approach to protect public
services. That means that any attempt by future governments to introduce a public service that has not been already protected on the “negative lists” can be legally challenged
by TPP or CETA investors. Furthermore, under the Ratchet6 mechanism, if government decides to privatize a
public service, that privatization becomes locked in. The service cannot be
brought back into the public sector
What about Pharmacare? Under both CETA7 and the TPP8 it will be very difficult for future
governments to introduce a national “Pharmacare” program that will not have
costly restrictions placed on it by the big pharmaceutical corporations.
Fettering Government
Procurement: 50 municipalities9, including the largest in the country,
petitioned their provincial governments asking that public spending at the
municipal level be excluded from CETA. Their argument was that the right of
governments to use “Buy Local policies” to stimulate local economies should not
be tampered with.
Government’s response was, in essence, to side step the core issue of the
fettering of government authority by simply raising the threshold beyond which
CETA’s procurement restrictions would kick in. We find it significant that, by
contrast, TPP countries, chose to protect ``Buy Local``10 policies in sub-federal
jurisdictions.
Are we exaggerating our claim that the TPP and CETA are a long-lasting
assault on the traditional power of government? Not according to Nobel Prize
winning economist, Joseph Stiglitz. He asserts that the intent of many TPP provisions is “to make it hard
for governments to conduct their basic functions - protecting their
citizens’ health and safety,
ensuring economic stability, and safeguarding the environment.” 11 We would say Ditto for
CETA.
2.
The impact of the TPP and other trade
agreements on Canada’s judicial sovereignty
What happens if a future government rebels and chooses not to be fettered
by the TPP or CETA? Under the Investor State Dispute Settlement (ISDS) regime
they can be sued by investing corporations in offshore tribunals. These
tribunals can demand that governments
pay huge (multi-billion dollar) compensation to corporations.
These ISDS tribunals can also override Canadian courts and profoundly fetter
future government actions.
A salient example is the Exxon Mobil Murphy
Oil lawsuit.12 Three levels
of Canadian courts rejected arguments made by US oil companies that a tribunal
in Newfoundland and Labrador could not lawfully tighten requirements related to
oil company research and development in the province. When the oil companies
took the lawsuit to the NAFTA ISDS tribunal the tribunal chose to ignore the interpretation of the Canadian courts. Not
only did the government have to pay generous compensation to the corporations. The
tribunal ruled that Canada would continue to be liable as long as the
restrictive regulations stayed in place.
Also, of notable significance is the
current Eli Lilly NAFTA
lawsuit13 against Canada. Eli Lilly is
challenging decisions by Canada’s federal courts to invalidate the company’s
patents for two drugs. Canadian courts had decided that Eli Lilly had presented
insufficient evidence to show the drugs would deliver the promised long-term
benefits. According to Ottawa University
law professor,
Michael
Geist, “If
the pharmaceutical giant succeeds, it will have effectively found a mechanism
to override the Supreme Court of Canada.”14
Canada has been sued 39 times under NAFTA. That’s more than any
other developed country in the world. Expect an acceleration of ISDS lawsuits
if the TPP is ratified. It may even be dramatic. That’s because, at present, disputes over procurement contracts or public-private
partnerships are typically resolved in Canadian courts. The TPP would allow multinational
corporations who enter into contracts with the federal government (either to
supply goods and services or to deliver or operate privatized services and
infrastructure) to pursue ISDS lawsuits15. This is a very significant extension of the definition of
what kind of investor is entitled to use the ISDS mechanism.
.
The silence of our judiciary on the impact of the TPP and CETA stands in
contrast to what’s been happening elsewhere in the world. Even before this
latest development was revealed, internationally there has been substantial and
growing judicial and legal opposition to the ISDS regime. That includes:
We applaud their stance. Our position is that Canada should be
working to reform the ISDS obligations ceded under NAFTA, rather than signing
trade agreements that will further fetter our court system through enlarged
concessions to huge international corporations.
3. The impact
of the TPP and CETA on the Canadian economy
Did you know that between 2001 and 2015:
·
Exports to countries with which Canada does
not presently have a free trade agreement (FTA) grew six
times as fast as to those with whom we do have an FTA? 21
·
Our imports from our trade agreement partners
grew twice as fast as our exports to them.
·
Canada’s export performance since the turn of
century has been the 2nd worst of any OECD country?22
In spite of these sobering statistics, economists and lobbyists
from the powerful corporate think tanks continue to enthusiastically push for
the ratification of the TPP and CETA. Canada has to participate, we’re told, because
so many other countries do. Our poor performance to date is rationalized by the
claim that there is always a lag period while countries adjust to a different
economic reality. If we are just patient, we are told, the benefits will
eventually flow to Canadian businesses and Canadian workers.
In response to the argument that we have no choice but to
participate, we would point out that there is substantial and growing opposition to NAFTA
style trade agreements23 in both the
United States and the EU.
As for the claim that the benefits of free trade will come if we
are patient, some well-respected research, as well as dissent from Canadian
entrepreneurs, suggest exactly the opposite.
Jobs: According
to a study out of Tufts
University 24 which used the UN Global
Policy Model, the TPP is going to increase
inequality and cause job
losses in all 12 participating
countries. The model predicts highest per capita job losses in Canada.25 CETA will
also provoke job losses, particularly in manufacturing and processing sectors, according
to a 2010 CCPA report.26
Canadian Businesses: A United Nations UNCTAD study27 (Table 2, pg. 24) predicts
a 26% drop in Canada’s value-added exports as a consequence of the TPP.
Particularly hard hit will be innovative industries.
Canadian business leaders who have spoken out against different
aspects of the TPP include:
The National Farmers Union which represents family farms33
As for the CETA agreement, the obligatory opening up of provincial
and municipal procurement to corporations based in Europe is a one way
concession. Canadian companies will find it very hard to penetrate the European
market given both the linguistic and diverse regulatory challenges in place
there.
Foreign Direct Investment (FDI): It seems to us that the big question with
respect to FDI in Canada is not how much money will come into the country, but
rather what it will be used for.
Measurement of FDI in Canada in the 16 years after the CUFTA and NAFTA
were signed (1985-2001) showed that 96.6% of investments34 were used for the acquisition of existing
businesses. Less than 3% was used for the introduction of new industries.
Does government really believe that FDI under the TPP and CETA is going
to be used to start up new industries that will benefit our economy? Isn’t it
much more likely that the objective of international corporations is greater
access (either through P3s or increased privatization) to that enormous cash
cow, the delivery of public services? How does guaranteeing them that access through
trade agreements benefit the Canadian economy?
4.
Lobbying: Which voices most influence
government?
According to Statistics Canada, international
trade was the top lobbying topic35 for
Canada in 2015. While we were unable to find out just how much money is spent
on lobbying governments in Canada, we are pretty sure that a minuscule fraction
of the total amount spent comes from civil society groups.
Government will, no doubt, argue that civil
society is already represented by the MPs we elect. However, it`s a very
selective representation. MPs do an excellent job at responding to constituency
issues but trade is not considered a constituency issue. How many MPs outside
of the trade committee have been briefed in a comprehensive and unbiased manner
on both the pros and cons of these trade agreements? How many have been
encouraged to bring trade issues back to their constituents for discussion?
As for the promised public consultations on
the TPP, they were, in our opinion, initially structured to avoid having to
talk with the public. For a long time there was no schedule posted on the
government website as to where and when public consultations would take place
with the result that interested civil society groups either missed the
“presentations” or were given less than 24 hours’ notice.36
That’s since been corrected but only after civil society groups went public
with their disappointment.
With respect to CETA, we would like to remind the Committee that civil
society groups had minimal access to government during the excessively
secretive CETA negotiations. This stood in stark contrast to the access corporate lobbyists37
were granted to negotiators. Thus,
while presentations were accepted by the International Trade Committee early on
in the negotiation process, civil society groups, unlike the corporate sector, were
at the considerable disadvantage of having to rely on leaked and outdated
material to make their case.
Civil society groups hoped and expected that that bias would be corrected
with the election of a new government committed to more openness and reform.
The decision not to hold public consultations or revisit CETA through the
Parliamentary Committee profoundly surprised us. It`s hard not to conclude that government
wants the general public to know as little about this trade agreement as
possible.
Our conclusions
“The Liberal Party of Canada strongly supports free trade as this is how we open markets to Canadian goods and services, grow
Canadian businesses, create good-paying jobs, and provide choice and lower prices to
Canadian consumers.”38
Could it be that the political enthusiasm of our mainstream
parties for free trade is based more on ideology than evidence? Studies analyzing or estimating past and
future performance suggest that the TPP will not open markets for our value
added industries. Nor will it grow
genuine Canadian businesses. And it will not create good paying jobs.
As for the CETA agreement, restrictions on the procurement of
goods and services at the sub-federal level represent an enormous concession to
the giant corporations that have lobbied so heavily for this agreement. CETA also includes a “zombie clause” that will
allow these corporations to continue suing government for up to 20 years even
if a future government chooses to withdraw from the agreement.
We would
like to end with three questions for the committee.
1. What possible justification could the
Canadian government have for ratifying two trade agreements that will so
significantly fetter the legislative and adjudicate power and authority of
future governments?
2. Where is the positive economic evidence
justifying the ratification of either the TPP or CETA?
3. Is it not time to reassess Canada’s free
trade policy?
Our
group is aware of all the time and effort Committee members must put into
reading briefs like our own. This is a huge responsibility.
We
hope that, in diligently examining all the evidence, you will come to the
conclusion, as we have, that the ratification of these trade agreements is not
in Canada’s best interest.
Marilyn
Reid
for
Citizens against CETA
Bibliography
1.
Van Harten, Gus. Sold down the Yangtze. 2015: p 27
2.
Alvarez, José E. Is the
Trans-Pacific Partnership’s Investment Chapter the New “Gold Standard”?
Institute for International Law and Justice. 2016. https://wp.nyu.edu/megareg/wp-content/uploads/sites/3134/2016/03/Alvarez_IILJ-MegaReg_2016-3.pdf
3.
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Gus and Scott, Dayna Nadine . Investment
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maintained.
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14.
Ibid
15.
Van Harten, Gus. Foreign
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Nick. How TTIP and CETA got a little
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. Trans-Pacific
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