House of Commons Hansard #52 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was chapter.

Topics

Point Of Order
Oral Question Period

3 p.m.

Some hon. members

Agreed.

Point Of Order
Oral Question Period

3 p.m.

Some hon. members

No.

Point Of Order
Oral Question Period

3 p.m.

Progressive Conservative

Bill Casey Cumberland—Colchester, NS

Mr. Speaker, I ask for unanimous consent to present a petition on behalf of the Canadian Grandparents Rights Association of Nova Scotia.

Point Of Order
Oral Question Period

3 p.m.

The Speaker

Does the hon. member have unanimous consent to revert to presentation of petitions?

Point Of Order
Oral Question Period

3 p.m.

Some hon. members

Agreed.

Petitions
Routine Proceedings

May 1st, 2001 / 3:05 p.m.

Progressive Conservative

Bill Casey Cumberland—Colchester, NS

Mr. Speaker, it is my pleasure today to present a petition that consists of 4,000 signatures from the Canadian Grandparents Rights Association of Nova Scotia.

These people support the rights of grandparents having access to their grandchildren unless there is concrete evidence to do otherwise. These individuals request that the federal government revise the 30 year old Divorce Act now to give grandparents access to their grandchildren. I want this group and the grandparents here today to know that I support them.

The House resumed consideration of the motion and of the amendment.

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Government Orders

3:05 p.m.

Parkdale—High Park
Ontario

Liberal

Sarmite Bulte Parliamentary Secretary to Minister of Canadian Heritage

Mr. Speaker, I forgot when I was speaking before question period to say that I would be splitting my time. As I said earlier, I am here to speak to the NDP motion and its concerns regarding chapter 11. I started to talk about how important investments were for Canada and for individual Canadians and corporations that do business abroad.

One of the most significant features of Canada's recent economic history has been the rapid growth of Canadian investment abroad. Since 1996 Canada has become a net exporter of capital. With the free trade of the Americas agreement so prominently in the minds of Canadians, it is important to remember that Canada continues to be a major investor in South America, particularly in the telecommunications and natural resource sectors.

Investments abroad create opportunities for Canadians by giving our firms new markets to expand their businesses through exports and through local sales. Often securing new customers and making sales in new markets requires investments in local services, customer support, assembly and distribution channels.

The most important thing we must remember is that when Canadians invest abroad they bring our values together with increased exports of goods and services. It adds up to jobs and opportunities for all Canadians.

As I said earlier, chapter 11 of NAFTA deals with foreign investment. Section A of chapter 11 deals with the definition and the treatment to be accorded within the North American free trade zone, and section B of chapter 11 deals with the settlement of disputes concerning investments.

The main forms of treatment of foreign investment dealt with in chapter 11 are national treatment and most favoured nations treatment. This is what is applicable to foreign investment. Under national treatment NAFTA countries are generally obligated to accord to investors and investments from another NAFTA country treatment no less favourable than the treatment accorded to domestic investors and investment.

With respect to most favoured nations treatment, NAFTA countries are generally obligated to accord to investors and investments from another NAFTA country treatment no less favourable than the treatment accorded to investors and investments from any other country, be it NAFTA or non-NAFTA countries.

Chapter 11 restricts the ability of NAFTA countries to impose certain performance requirements on the investors and investments from other NAFTA countries such as a requirement to export a certain level or percentage of goods or services.

Generally these so-called performance requirements do not restrict the ability of a NAFTA country to condition what is called an advantage to be conferred upon a foreign investor or investment upon compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand facilities, or carry out research and development in its territory.

At a minimum, NAFTA countries are required to treat foreign investors and investments from other NAFTA countries in a manner consistent with international law. This point is very important and I hope that my NDP colleagues are listening. There are a number of exceptions and reservations to the general non-discrimination obligations I have outlined. Aside from the general exceptions which are contained in NAFTA, reservations are set out in the country schedules to annexes I, II, and III of NAFTA.

These reservations are generally either bound or unbound reservations. A bound reservation means that a NAFTA country may maintain a non-conforming measure identified in the appropriate schedule and may amend that non-conforming measure, provided that the amendment does not make the measure more trade distorting. An unbound reservation allows a NAFTA country to maintain an existing non-conforming use to make the measure even more trade distorting or to create new non-conforming measures in relation to certain broad areas or sectors.

For example, in the case of Canada certain unbound reservations exist in relation to aboriginal affairs, communications, transportation and social services. The latter reservation includes income security, social security, social welfare, public education, public training, health and child care.

Historically under bilateral conventions to promote and protect investment possible disputes about the application of these conventions were settled between the governments concerned. Chapter 11 of NAFTA improves bilateral conventions to promote and protect foreign investment mainly by making it possible for a private party to challenge a disputed measure directly with a foreign government.

Expropriation is the main subject of disputes concerning foreign investment. An expropriated private party claiming that a government may not expropriate or has not respected the applicable rules in expropriating may challenge the measure under the dispute settlement mechanisms contained in part B of chapter 11 of NAFTA.

It is also important to note that the dispute settlement mechanism also proceeds at stages. An investor claiming that a foreign government has breached its obligations may submit its claim to arbitration if it incurs a loss or damage as a result of the breach of obligation.

The parties to the dispute must consult with each other in an effort to settle the dispute. If the dispute cannot be settled an investor wishing to pursue a claim must send a written notice of claim and of intent to submit the claim for arbitration. However the investor may not submit the claim to arbitration until 90 days after the notice of submission of the claim to arbitration has been sent. Nor may a claim be submitted to arbitration until at least six months have elapsed since the events giving rise to the claim.

A limitation period may apply to the submission of a claim if more than three years have elapsed between the date the investor knew or should have known of the breach by the foreign government and the date the claim is being submitted to arbitration.

Arbitration concerning investment is done before a tribunal composed under one of the three conventions listed in article 1120 of NAFTA, the existing international rules. There are also prerequisites for arbitration.

Before a dispute concerning investment may be submitted to arbitration, the investor must consent to arbitration and waive the right to any other proceeding of any party under the law. The parties to the arbitration must agree to the rules and procedures governing the arbitration.

Perhaps the greatest area of the investment chapter that is of concern to the government is the investment expropriation provisions. In that regard the chapter includes specific commitments of fair treatment in the event of expropriation of an investment by a NAFTA country.

Expropriation of an investment can only occur for a public purpose, on a non-discriminatory basis, in accord with due process of law and on the payment of compensation to the foreign investor. Perhaps the concern with the expropriation provision of most people is that the definition of expropriation act includes the words tantamount to expropriation. This broad language could possibly extend beyond what governments would normally consider to be expropriation to possibly include regulations or measures that significant impair or nullify benefits to NAFTA investors.

In conclusion, it is always possible to improve the dispute settlement process under all our trade agreements. Yes, there have been disputes and yes, there will continue to be disputes. The disputes that actually reach the arbitration process are rare. It should not be forgotten that Canada has greatly benefited from the system to date. Any future negotiations should be conducted with this record firmly in mind.

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3:15 p.m.

Canadian Alliance

Deepak Obhrai Calgary East, AB

Mr. Speaker, I saw my friend across the way point to our NDP colleagues and ask them to listen, but I can assure her that I was listening to the good points she made. My colleagues on the other side are good friends of mine but they do have selective hearing. They only want to hear what they want to hear on chapter 11.

Perhaps the member would like to comment on what the minister and the Prime Minister said about chapter 11. I know the minister very well and I know his own gut feeling is that the provision is needed and is appropriate to protect investments going out. I am sure the member agrees with that.

Does the member think that perhaps the statement was a slight misunderstanding or misstep by the minister?

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3:15 p.m.

Liberal

Sarmite Bulte Parkdale—High Park, ON

Mr. Speaker, let me begin by thanking my colleague from the Alliance across the way for listening to what I had to say.

The motion talks about completely throwing out chapter 11. Neither the minister nor the Prime Minister ever said that. Therefore, first and foremost, there is no inconsistency between the two.

What I have tried to do in my presentation is talk about chapter 11. Chapter 11 is composed of many things. It is composed of schedule A, which talks about national treatment and most favoured nations treatment. Schedule B talks about the dispute settlement system. There is a long process.

In addition, what I think is very important for all Canadians to remember, and what we have not been hearing, are the annexes and schedules that talk about restrictions, exceptions, the unbound exemptions and the bound exemptions. Under no circumstances does chapter 11 throw out the ability to ensure public education in our country. Under no circumstances does chapter 11 stop us in any way from legislating on health care.

With respect to the general exceptions under NAFTA, we can look at the exceptions in culture, but we do need to do more, which is what I said about our trade agreements.

The history of trade agreements goes back to 1947 and the GATT when the first dispute settlement process was actually put into place. We have built on that process, starting with the free trade agreement and then with NAFTA. We have Chile and Canada, Israel and Canada and, most recently, and we should be very proud, we also have a Canada and Costa Rica agreement that puts us in the centre of Central America.

We are always looking to build on agreements. If we look at the history, from the GATT to where we are today, there are some concerns. If we need to work with a few words that does not mean we throw out entire sections or chapters. The fact is that NAFTA has been good for Canadians. It brings wealth. We as a government have a role on all sides to ensure that wealth is properly distributed to all of our citizens.

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3:15 p.m.

NDP

Svend Robinson Burnaby—Douglas, BC

Mr. Speaker, the hon. member paints a glowing picture of the triumph of chapter 11 but she may not be aware of the fact that the International Institute for Sustainable Development just released a very damning report on the impact of chapter 11.

Professor Howard Mann said that the current interpretations of NAFTA's chapter 11 could have a significant and determinative negative impact on government decision making in relation to the public interest.

They already have. The study points out that chapter 11 has been used to challenge the only two major federal environmental laws that have been passed since NAFTA came into force in 1994. One of those laws subsequently was repealed and compensation was paid. That was in the case of the Ethyl Corporation and MMT. In the second case, the S.D. Myers case, the damages award was pending.

I have a question for the hon. member. If chapter 11 investor state provisions are working so well, why is it that the International Institute for Sustainable Development and others are telling us not to duplicate them in the FTAA?

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3:15 p.m.

Liberal

Sarmite Bulte Parkdale—High Park, ON

Mr. Speaker, let me begin by saying that I value the opinions of Professor Howard Mann. He is an extremely brilliant individual who has worked with our committee.

Having said that, I wish, once and for all, we would tell Canadians the truth about the Ethyl Corporation case and how it arose. It arose as a result of a challenge by the Alberta government that dealt with the interprovincial restriction on trade. It was only when that interprovincial matter was ruled upon in favour of Alberta that we chose to settle before the matter ever reached arbitration. This is not a case where the arbitration panel found against it. It was settled before it ever reached arbitration.

When we look at the number of arbitration cases we see only three cases. Last week we won another case, the Pope & Talbot case, which was the only pending case after the NAFTA five year review was disclosed.

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Government Orders

3:20 p.m.

Liberal

Maurizio Bevilacqua Vaughan—King—Aurora, ON

Mr. Speaker, I rise on a point of order. I think you would find unanimous consent to revert to routine proceedings for the purpose of presenting a report from the finance committee.

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3:20 p.m.

The Speaker

Is there unanimous consent to revert to presentation of reports by committees?

Supply
Government Orders

3:20 p.m.

Some hon. members

Agreed.