House of Commons Hansard #84 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was united.

Topics

Supply
Government Orders

5:15 p.m.

Canadian Alliance

Darrel Stinson Okanagan—Shuswap, BC

Mr. Speaker, I listened to the member's speech with great interest. I could not agree more with the hon. member when he said that it is time we ended this nonsense and showed our friends to the south exactly where we stand on many issues.

I say this because throughout our history, outside the brief time in 1812 when we had a conflict with the Americans, we have been their allies and they have been our allies. They have come to our aid many times as we have to theirs, sometimes maybe not as fast as we would have liked, such as in regard to the second world war, but they came. Not only that but a lot of people tend to forget that the Americans supplied munitions and food during the time when they were not involved directly in the conflict.

I find it terribly frustrating that this friendship is at stake not because of what the Canadian people have done but because of what the government has done. I was wondering if the member could tell us in his own words what has to be done in regard to extending our hand to the Americans.

Whether we like it or not, we need that neighbour to the south. We only stand here today in great part due to having that neighbour to the south.

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Government Orders

5:15 p.m.

Canadian Alliance

John Duncan Vancouver Island North, BC

Mr. Speaker, a lot of Canadians who are embarrassed by the Canadian position on this issue are asking themselves, what can we do to turn this thing around? That is why we saw some very spontaneous rallies in Canada this past weekend and why there are more planned. This is an important question also for members of Parliament.

I went to the U.S. this past weekend for an engagement I had committed to long ago. For the first time ever I was actually embarrassed to display my Canadian identity publicly. It was the first time I had crossed the border into the U.S. and felt anything but proud. That is a great difficulty.

We are family, as the U.S. ambassador described. The Americans would be the first ones to come to our aid. There needs to be a very strong signal, a way at least to engage Canadians in recognizing our relationship. I go back to what I was promoting some time ago, and that is to recognize that on September 11, 2001, a lot more than the U.S. was attacked. Canada and all western nations were attacked.

I have asked for and received very short responses from the government. I have asked for a Canadian memorial to be built for the 26 Canadian victims. There is only one government memorial in this country. It was done by the province of Manitoba. Last September 11 I went to that memorial because it is the only one we have. Canadians who are not from Manitoba should not have to travel that far. We should have one national monument.

That is the start of the process from my perspective. There are obviously dozens of other things including a top-down revamp of the foreign policy posture of the government.

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Government Orders

5:15 p.m.

Canadian Alliance

Chuck Strahl Fraser Valley, BC

Mr. Speaker, it is a pleasure to rise to speak to the motion today. It has already been read into the record so I will not repeat it.

It is enough to say that this is not our first effort to try to get the government to do the right thing in the House regarding our relationship with our American friends and our position on the Iraqi war. I hope the Liberals will support the motion in the long run and I hope that the logic of it will be forced upon them by next Tuesday when the vote will be taken.

I would like to deal with the first part of the motion last.

First, reaffirming our position as the closest friend and ally of the United States is surely the simplest part of the motion. What person here does not understand the idea that we share not only the longest undefended border with our American friends, but we also share common ideals, principles and values that make their nation great and ours as well. We have a commitment to democracy, the rule of law, property rights, their's may be stronger than ours. We have a commitment to due process and to do what is right even when it costs us sometimes.

Those kind of values are something that we share with our American friends and is something that we like to export around the world, even in our trading with other people in our business relationships. That is why we put free trade agreements in place and why we adhere to WTO rules and so on. We want other nations to understand that this is the way Canadians do business. We respect their ability to run their country and to do things differently but there are rules that we all play by. The Americans respect them.

They are our best friends, our best allies and our best partners economically, militarily and friendship wise and we have more ties in every way with the Americans. This part of the motion is easy to support and I cannot imagine anyone who will not support that wholeheartedly.

Second, the hope that the U.S.-led coalition in Iraq is successful in removing Saddam Hussein's regime from power, I think again is easy to support.

It is difficult to understand what the Liberal position is on this. On the one hand the Liberals say they are not in favour of regime change. On the other hand the Prime Minister says that of course he would like Saddam Hussein removed from power but he does not want it done by force. He would just as soon they had a general election to remove Saddam Hussein. It is just incredible.

Saddam Hussein has been terrorizing his own people for a dozen years. He invaded two other countries. He has used weapons of mass destruction against his own people and against neighbouring countries. He has cared not a wit about environmental degradation, about human rights abuses, about the opinions of world leaders or the status of his own people. He needs to be replaced. Resolutions and hand-wringing will not get it done. The coalition will go in there and remove Saddam Hussein from power. Our party thinks that we should at least wish the U.S. success.

It is interesting that this motion does not even say that the government has to get in there, muck it out with them and do the heavy lifting. It only says that we wish them success.

Interestingly this morning the Deputy Prime Minister said that he preferred another motion. He had another idea. Part of the motion states, “our hope that the U.S. led coalition accomplishes its mission as quickly as possible with the fewest casualties”. I agree with that part of the motion as well.

However what is the U.S. mission? The U.S. mission is regime change. The Deputy Prime Minister supports the mission of the U.S.-led coalition and hopes that it accomplishes as quickly as possible but the Liberals do not support regime change.

The Liberal position, again, is incomprehensible. It is embarrassing for Canadians to try to read the tea leaves on a daily basis of are we in the war or are we not and do we have troops there or not. We have naval vessels but they cannot intercept Iraqis but they can intercept terrorists. It is as if they have to examine the bombs on the boat. If the bombs say that they are made for terrorist purposes only, then I guess they can intercept it. It is just ridiculous and the position is untenable and illogical. That is why this is an effort at least to say that we wish them success.

The final part of the motion is that we urge the government to assist the coalition in the reconstruction of Iraq. The government says in its motion that it would like to commit Canada to assist in the reconstruction of Iraq. There is something appalling to the government about assisting the coalition. Members will not say those words. It is like the words cannot come out of their mouths, that it is a mental block when we say “assist the coalition”. They are poisonous words to the Liberals but they should not be and they are not to Iraqis who are looking for help and assistance.

It is interesting to me that while the Americans and the coalition are putting together their armed forces and the military force to depose the tyrant, Saddam Hussein, alongside are supply ships full of medications and medicines, food, basic supplies, water purification, everything to help the Iraqi people. They are side by side with the military force. As soon as it was safe to go into Basra, they were there. They are trying their best to deliver that aid as quickly as possible.

We are saying let us assist the coalition in the reconstruction of Iraq. I do not think there is much doubt about who will win this confrontation. I am sure the American-led coalition will win. I would say to the Liberals, can we not at least say that we will assist the coalition in the reconstruction? Can we not say that there are 40-some other countries there helping the Americans, that wish them well and will help with the reconstruction? Can we not at least say that we will help the coalition reconstruct Iraq for the benefit of the people of Iraq? For some reason, it is poison in the water on the Liberal side. They will not say it.

Finally, we have said that the House should express its regret and apologize for offensive and inappropriate statements made against the United States of America by certain members of this House. There is not much doubt about the seriousness of this part of the motion. We have not condemned the government in here. I personally hold the government more responsible than this motion does. All we say is that the House of Commons expresses regret. We do not blame the government. We are not holding any particular member responsible. We are not naming a prime minister for example. We are not saying that the foreign affairs minister is the man to blame.

All we are saying is that we express regret to our American friends. We are sorry about some of the remarks made. We could go through the list again. We are sorry for calling people names and calling the American President scandalous names, and right in the middle of the war they are fighting on behalf of freedom loving people everywhere. We just say that we should express our regrets that we are sorry it happened. Let us put it behind us and let us move on. That should be easy to support as well.

One of the principles that I have learned from this is in a crucible of a crisis the real content of our character comes out. The real content of the character of the Liberals has manifested itself in the way they have attacked our American friends, and that is a shame. In the crucible of a crisis we do not develop our character or principles, it is manifested and it manifested itself in a very negative way. This motion should be passed to try to correct that.

Second, Canadians expect leadership when important complex issues face the country. Why did Prime Minister Blair consistently make the case for intervening in Iraq? Because he wanted to lead his people. He did not just read the polls, he led the people. Why has his support for the intervention in Iraq gone from 10% to 60% in three weeks? Because Prime Minister Blair led his country. We expected something similar from this government and we have been sadly disappointed.

Third, it is not my original comment but injustice anywhere is an injustice everywhere and injustice to anyone is an injustice to everyone. The Prime Minister has said who is next if we depose Saddam Hussein and maybe we would have to depose the president of Zimbabwe or something. Maybe we should talk about that. Maybe we should start saying why has this government not stood four-square behind the people of Zimbabwe and kicked the ambassador of Zimbabwe out of this country? Why did we not say that kind of tyrant was not welcome in our country and the representation was not welcome? We are starting to send messages, not armed intervention but some kind of a message that this kind of action is not tolerated.

Last, we cannot deter tyrants simply by having an international court. Tyrants are deterred by threatening to put them in front of a court for judgment.

Having a court by itself is not enough to deter tyrants from tyrannical action. They have to fear that one day they will be in front of that court facing the supreme punishment. Just to say that we hope the courts do the job is not enough. Tyrants need to know that they are one step away from judgment and when that happens, then the world will be a safer place and tyrants will be looking over their shoulders instead of committing ongoing acts of atrocity.

Supply
Government Orders

5:30 p.m.

The Deputy Speaker

It being 5:30 p.m. it is my duty to interrupt the proceedings. Pursuant to order made earlier today all questions on the motion are deemed put and the recorded division deemed demanded and deferred until Tuesday, April 8, at 3 p.m.

Message from the Senate
Government Orders

5:30 p.m.

The Deputy Speaker

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed certain bills, to which the concurrence of this House is desired.

Message from the Senate
Royal Assent

5:30 p.m.

The Deputy Speaker

Order, please. I have the honour to inform the House that a communication has been received as follows:

Rideau Hall

Ottawa

April 3, 2003

Mr. Speaker,

I have the honour to inform you that the Right Honourable Adrienne Clarkson, Governor General of Canada, signified royal assent by written declaration to the bills listed in the Schedule to this letter on the 3rd day of April, 2003 at 4:35 p.m.

Yours sincerely

Barbara Uteck

Secretary to the Governor General

The schedule says that royal assent was given to Bill C-3, An Act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act, Chapter 5; and Bill C-227, An Act respecting a national day of remembrance of the Battle of Vimy Ridge, Chapter 6.

It being 5:30 p.m., the House will now proceed to consideration of private members' business as listed on today's Order Paper.

Free Trade Agreements
Private Members' Business

April 3rd, 2003 / 5:30 p.m.

Bloc

Pierre Paquette Joliette, QC

moved:

Motion M-391

That, in the opinion of this House, any free trade agreement entered into by Canada, whether bilateral or multilateral, must include rules for the protection of foreign investments which do not violate the ability of parliamentary and government institutions to act, particularly on behalf of the common good, and must exclude any investor-state redress provisions and consequently, the Canadian government must enter into negotiations with its American and Mexican partners with a view to bringing the North American Free Trade Agreement (NAFTA) in line with the aforementioned principles.

Mr. Speaker, I am very pleased to move Motion No. 391, which calls on the Government of Canada to no longer negotiate a certain number of things in free trade agreements, whether bilateral, that is between Canada and another country, or multilateral, for example, within the current negotiation of the Free Trade Area of the Americas or the World Trade Organization.

This motion calls on the Government of Canada to no longer negotiate rules for the protection of foreign investments that would violate the ability of parliamentary and government institutions to act on behalf of the common good and in the public interest.

I will read it so that everyone can understand what this debate is about:

That, in the opinion of this House, any free trade agreement entered into by Canada, whether bilateral or multilateral, must include rules for the protection of foreign investments which do not violate the ability of parliamentary and government institutions to act, particularly on behalf of the common good, and must exclude any investor-state redress provisions and consequently, the Canadian government must enter into negotiations with its American and Mexican partners with a view to bringing the North American Free Trade Agreement (NAFTA) in line with the aforementioned principles.

As I was saying, not only do we want, through this motion, to urge the Canadian government in the future to not negotiate provisions that violate public interest or the ability of parliamentaryand government institutions to act, particularly on behalf of this public interest and the common good, but we also want the Canadian government to ban agreements including investor-state redressprovisions. I will have the opportunity to come back to this point during my presentation.

Finally, further to the opinion provided to the government by the House, we consider it appropriate for the Canadian government toenter into negotiations with its American and Mexican partnerswith a view to bringing the North American Free TradeAgreement into line with the aforementionedprinciples, particularly in Chapter 11, which provides for the protection of foreign investments. For Canada, this would obviously involve investments by Mexico and the United States. For the United States, it would involve foreign investments by the other two partners, and so on for Mexico.

I remind the House that direct foreign investments have become the biggest challenge of current negotiations, with respect to both the FTAA and the WTO.

Each year, nearly $4,000 billion US is directly invested abroad by the various countries. Of course, the vast majority of these investments come from Northern or developed countries, around the world.

As for Canada, every year, $430 billion are directly invested abroad by Canadian companies and individuals.

The negotiation of rules for the protection of foreign investments has become a major issue. Let us take, for instance, the last meeting of the Ministers for International Trade held in Doha. Nobody, including our own international trade minister, expected specific discussions over the issue of investments. Before the Standing Committee on Foreign Affairs and International Trade, the minister told us that, in terms of investments, he did not expect anything to come out of the meeting in Doha.

Suprisingly, the Ministers for International Trade agreed to begin discussions about the provisions for the protection of investments that could be included in the World Trade Organization agreement.

Therefore, we have to be very clear on the issue of protecting investments. We have a problem with the model currently included in the North American Free Trade Agreement. The House should make it clear that it is against using the current NAFTA model in the upcoming negotiations on the protection of investments.

There are at least three issues that need to be raised about chapter 11 of NAFTA. The first is the notion of expropriation, which is much too broad and would now include direct expropriation, meaning that if a firm has assets abroad that a level of government needs to expropriate for some reason, compensation will be granted, which is only normal.

Not only does direct expropriation now give rise to compensation, but if memory serves, with section 1110 of chapter 11, the concept of expropriation now extends to loss of profits, which are referred to as indirect expropriations.

For example, during a temporary Canadian government moratorium, the American company SD Myers, which was supposed to receive PCBs from Canada for destruction by burning, claimed it had been dispossessed of an economic activity and thus deprived of profits. It went before a special NAFTA chapter 11 tribunal and was awarded $6 million in compensation. This was not for activities carried out, but for activities it could have carried out, had it not been for the Canadian regulations.

In our opinion, this concept of indirect expropriation is abusive and we should revert to the concept of expropriation of actual assets.

The second problematical element in NAFTA's chapter 11 is the expanded concept of investment. Lending agencies are now also considered investors under the provisions of NAFTA and those relating to the protection of investments.

We might find ourselves in a very strange situation where a bank could loan money to a Canadian, an American or a Mexican company. While that company might not feel that it has been harmed in any way following the enforcement of this new legislation or of new regulations, the bank that has loaned the money could, under chapter 11, challenge the government decision and seek some compensation under the agreement.

Finally, the third problem is with the investor-state redress provisions that allow foreign companies recourse not available to domestic companies. These foreign companies can bring the governments before the special courts--as I have mentioned in the case of SD Myers--something a first nations company cannot do. I think it is totally unfair to put the public and private interests on the same footing. Which is why I think we should eliminate the investor-state redress provisions.

Also, the special courts set up under NAFTA are not transparent enough, as was recognized by the Minister for International Trade.

So far, there have been just over 20 suits filed by companies, either in Canada, the United States or Mexico. I think it is important to mention that almost half of these suits have involved environmental issues.

Since we have just signed the Kyoto protocol, we will soon be looking at the implementation phase. Well, chapter 11 of NAFTA could very well become, in the hands, for instance, of American companies--need I remind the House that the United States has not signed the Kyoto protocol--a weapon against any new initiative the Canadian government or the provinces might want to take.

As I said earlier, these provisions would not prevent governments from taking any action, but they would allow companies to seek compensation. Therefore, Canada and Quebec would have to pay to be able to uphold their international commitments under the Kyoto protocol.

I mentioned that there were some 20 suits. As for Canada, I can point out a few. In the case of Ethyl Corporation, there was an out of court settlement that cost Canadian taxpayers $13 million; SD Myers—I mentioned it earlier—cost $6 million; there was Pope & Talbot, which challenged an agreement that Canada had signed with the United States and which provided for quotas. It felt it had been penalized by this agreement. Indeed, the Americans forced us to sign it because they were challenging, as they are doing now, our forestry management in the case of the softwood lumber industry.

UPS is currently suing the Canadian government. Last December, the Canadian government lost the first level of appeal because it claimed that the grievance filed by UPS did not come under chapter 11, but under another chapter of NAFTA. However, the court decided that it had jurisdiction.

There are also Sun Belt Water and Crompton Corporation which are suing or want to sue the Canadian government under chapter 11. There are other cases in the United States. There are also some in Mexico.

Thus, on the whole, the existence of this chapter 11 in NAFTA and in other bilateral agreements signed by Canada raises a problem of governance and democracy.

When democratic bodies, elected representatives, be it Parliament or the government, make decisions, it seems to me that these decisions must have precedence over private interests. However, NAFTA, specially chapter 11, gives equal importance to private interests and the public interest, the common good, the common interest.

Even if in general the best interest of multinationals or foreign firms operating in a country coincides with the common good and the public interest, it is not necessarily true all the time. This is why we believe we must have foreign investment protection clauses that give precedence to the public interest.

The second matter at issue, after this matter of governance and democracy, has to do with other NAFTA provisions. Some in particular, under chapter 12, which deals with trade and services, are putting pressure on our public services in Canada and Quebec.

I mentioned UPS a moment ago. This shows that private businesses and multinationals can use NAFTA provisions to challenge, for instance, Canada Post's monopoly, claiming unfair competition with regard to courier services. That is what UPS has done.

As for health care, it is clear that the current agreements are protecting our health care system as it stands now, but are preventing its expansion. In this regard, it is worth noting that several studies done for the Romanow Commission showed the dangers posed by chapter 11 of NAFTA in particular.

I am referring to, for instance, study No. 32, conducted by Richard Ouellet, of Laval University, entitled “The Effects of International Trade Agreements on Canadian Health Measures: Options for Canada with a View to the Upcoming Trade Negotiations”. Mr. Ouellet talked about potential major risks for our health care system.

Another study entitled “How will International Trade Agreements Affect Canadian Health Care?” was conducted by Mr. Jon R. Johnson. It is study No. 22. It is even more clear.

I will quote a short paragraph from page 29.

The single provision in all the trade liberalizing agreements that has the most negative potential impact on Canada's public health care is NAFTA Article 1110. If this provision and the accompanying investor/state dispute settlement procedures had existed in the 1960s, the public health care system in its present form would never have come into existence.

This is the article on expropriation and compensation that I was talking about earlier.

This is extremely worrisome, and it seems to us that this House should tell the government that the whole chapter 11 should be reviewed and that, in the future, we should not include similar provisions in the agreements that we sign.

Unfortunately, I notice that Canada has signed 18 agreements with southern countries that include chapters on the protection of investments that are similar to NAFTA's model.

So, as I mentioned, we must reject this approach and redirect it with our partners. Currently, when there is a dispute at the World Trade Organization, it is dealt with between states. It is not Bombardier or EMBRAER that sues the Brazilian government or the Canadian government. It is the Canadian government and the Brazilian government that represent the interests of their respective companies.

In the FTA, which preceded NAFTA, chapter 19 included a state-to-state dispute settlement mechanism. As for the FTAA and the WTO, the Minister for International Trade has always told us that it was out of the question to have an investment protection model similar to the one found in chapter 11.

In the proposals that it just tabled as part of the WTO negotiations, the European Union announced that it categorically rejects the investor-state dispute settlement procedure. Finally, the Standing Committee on Foreign Affairs also rejected it last spring.

For all these reasons, we must go back to a foreign investment protection mechanism that gives priority to the common good, that tightens up the definitions of expropriation and investment, and that prohibits the investor-state dispute settlement procedure and goes back to a state-to-state mechanism.

For all these reasons, I am convinced that the vast majority of members in this House will support motion M-391.

Free Trade Agreements
Private Members' Business

5:45 p.m.

Dufferin—Peel—Wellington—Grey
Ontario

Liberal

Murray Calder Parliamentary Secretary to the Minister for International Trade

Mr. Speaker, at the outset I would like to say right off the bat that the Department of Foreign Affairs and International Trade and the Minister for International Trade do not support Motion No. 391.

One of the key objectives of the Government of Canada is the promotion of prosperity. From trade and foreign policy perspectives, there are two key elements required to meet this objective.

First, we need to foster the expansion of Canada's international and economic interests abroad. This is achieved by gaining and maintaining market access for Canadian goods and services and by supporting and protecting Canadian investment interests in foreign markets.

Second, the government policy needs to support a secure and predictable business environment. This is critical if we are to successfully attract foreign investment into Canada and create a competitive environment where the import of ideas, goods, services and capital can be combined with Canada's resources.

How can Canada benefit from investment flows? Capital flows worldwide have grown rapidly in recent years, far faster than trade over the past two decades, and have contributed to global economic integration. Canada is an active player in this global economy. For example, Canadian direct investment abroad more than quadrupled from $98 billion in 1990 to $432 billion in 2002. Over the same period, direct investment in Canada more than doubled, from $131 billion to $349 billion in 2002. It is interesting to note that since 1996 Canadian direct investment abroad has surpassed foreign direct investment in Canada.

These dramatic figures underline the fact that Canadian businesses know that if they are to prosper they must compete internationally. Many Canadian companies not only export their goods and services but have also established production facilities abroad through international investment or established a commercial presence in foreign markets in order to supply their services. Other companies have significant minority ownership in companies in foreign markets. International investment is thus becoming a central element for success in today's global economy. As such, the Canadian business community has established high standard and internationally agreed upon rules that ensure a level and transparent playing field and include recourse for impartial dispute settlements, which is critical for companies who invest abroad.

Outward investment plays an important role in promoting Canada's interests. Outward foreign direct investment creates jobs abroad and at home as it strengthens the commercial links between countries by establishing a presence in foreign markets and by sharing Canadian expertise. It also increases the export of our goods and services.

This positive link between outward investment and jobs at home was highlighted in a 1999 OECD study of 14 countries, which estimated that each dollar of outward investment generated $2 of additional exports. This is good for us as an exporting country.

On the flip side, foreign investment in Canada is a major source of economic growth and an important contributor to the creation of jobs here at home, often higher paying and more highly skilled ones. In addition, research shows that inward foreign investment spurs innovation by bringing new ideas and technologies to our companies, providing much needed additional capital, and contributing to exports. Such investment makes our country economically stronger and contributes to a higher quality of life for all Canadians.

Why does Canada need investment agreements? Given the important contribution made by international investment to the economy of all countries, it is not surprising that governments are increasingly establishing the frameworks necessary to create an attractive investment environment. For many countries, this has meant simplification or abolition of investment screening mechanisms, the easing of sectoral investment restrictions, and the opening of entire sectors to foreign investment.

Frequently, these domestic efforts to improve the investment climate have been augmented by the international agreements, which provide rules at the international level to promote and protect investments.

The desire of government to facilitate freer flows of international investment through international rule-making is reflected in the dramatic increase of the number of bilateral investment treaties, BITs, during the 1990s. These treaties were designed to provide predictability, protection and transparency, and access for investors in specific priority and emerging economies. There are now in the range of 2,000 BITs worldwide, compared to less than 400 at the beginning of the 1990s.

At the regional and multilateral level, groups of countries have begun to pursue investment rule-making. Arrangements as diverse as the Asia-Pacific Economic Cooperation, the Association of Southeast Asian Nations, the Free Trade Agreement of the Americas, and the Southern Cone Common Market have all made commitments to the development of rules reflecting and liberalizing investment policies.

Typically, these agreements focus on improving the conditions under which investments are made and include key principles such as: transparency, by providing open reporting and publishing of national investment rules and relevancy regulation changes so that investors can have a clear understanding of the rules of the game; non-discrimination, by undertaking obligations not to discriminate against investors on the basis of their nationality; protection, by ensuring fair and equitable treatment in accordance with the customary international law standards for the treatment of aliens, compensation in the event of expropriation, and free cross-border transfer of funds; and finally, the impartial dispute settlement mechanism, which we have used many times, by providing binding dispute settlement procedures to settle disputes arising from alleged breaches of the obligations taken by the parties.

A medium-sized and open economy such as Canada has supported these principles in the international trade and investment area. This is what Canada has promoted in numerous international negotiations, including the NAFTA and our bilateral Foreign Investment Protection and Promotion Agreements, FIPAs. The rules within the NAFTA and the FIPAs provide a framework of disciplines to encourage efficient resolution of disputes and greater consistency in legal and policy regimes. These rules are often for a greater measure of security for Canadian investors through assurances that national policies would not be changed unduly or applied in a discriminatory manner.

Canada has numerous agreements which contain investment protection rules and provide recourse for impartial investment state dispute settlement. These rules ensure that business investors would be treated even-handedly and in accordance with international law by setting out dispute resolution procedures to resolve disputes between the investor and the host government.

I believe that Motion No. 391 is redundant because we already have the rules in place.

Free Trade Agreements
Private Members' Business

5:55 p.m.

Canadian Alliance

John Duncan Vancouver Island North, BC

Mr. Speaker, I am pleased to speak to Motion No. 391 brought forward by the member for Joliette. It reads:

That, in the opinion of this House, any free trade agreement entered into by Canada, whether bilateral or multilateral, must include rules for the protection of foreign investments which do not violate the ability of parliamentary and government institutions to act, particularly on behalf of the common good, and must exclude any investor-state redress provisions and consequently, the Canadian government must enter into negotiations with its American and Mexican partners with a view to bringing the North American Free Trade Agreement (NAFTA) in line with the aforementioned principles.

This is all about chapter 11 of NAFTA. Many Canadians have heard about chapter 11 in reference to the bankruptcy rules in the U.S. and that is a large point of confusion. What we are talking about here is chapter 11 of NAFTA, something quite separate and different.

The premise of the member's motion runs contrary to the principle of national treatment which mandates that foreign based companies should be treated the same as domestic ones unless compensated. National treatment investor rules are contained in chapter 11 of the North American Free Trade Agreement, NAFTA.

If foreign companies believe they will not be discriminated against then more companies will compete to provide goods and services. Competition ensures that Canadians, or our trading partners, receive the highest value for their hard earned money.

The Bloc Québécois, Maude Barlow, the NDP, and environmental activists argue that chapter 11 of NAFTA would destroy the ability of Canada's three levels of government to make individual decisions and that corporations would be able to challenge Canadian sovereignty in areas such as health care, education, labour and environmental standards. They never talk about investor protection for Canadian companies in other countries.

Chapter 11 allows private companies to sue federal governments covered under NAFTA over policies that expropriate their profits. Chapter 11 was designed to help reduce the risk of investing in foreign countries. It embodies the strongest rights and remedies ever granted to foreign investors in an international agreement. The process allows foreign investors to utilize a country's domestic court system or alternatively to use independent arbitrators instead. This is only fair. This gives foreign investors remedies available beyond the domestic courts which may be stacked completely against them.

Chapter 11 of the North American Free Trade Agreement sets down the rules protecting foreign investors in the three countries bound by NAFTA: Canada, Mexico and the U.S.

There are two sections of the chapter, the first being substantive and the second outlining procedures for dispute resolution. The second section is where the tribunals under the authority of supranational bodies and agreements are set up, namely, the International Centre for Settlement of Investment Disputes in the World Bank and the United Nations International Convent on International Trade Law.

Despite all of the international agreements that we have seen proliferate in the world, chapter 11 in NAFTA is unique. It is the first comprehensive, international trade treaty to provide to private parties direct access to dispute settlement as a right.

Chapter 11, by all accounts, has been controversial largely because of various high profile environmental organizations that dominated much of the debate. The national treatment and most favoured nation status requirements are modeled on the similar provision in the World Trade Organization where they apply to trade in goods and services. A decision on whether to negotiate similar provisions in the WTO will be taken later this year at the ministerial meetings in Mexico.

There are reservations and exceptions to chapter 11. Various activities are excluded for all parties, including: education, health and welfare, procurement, subsidies, grants and foreign aid. Local government measures are not subject to direct claims, although non-conforming measures of local governments have been seen as indirectly the responsibility of national governments. We can talk about that when we talk about the Metalclad case which is one of the three cases trotted out as being the rationale for saying that chapter 11 should not be in NAFTA.

There are strict rules regarding expropriation and restrictions on the ability of the state to expropriate and a subsequent obligation to compensate. This section was designed primarily to protect investments from Canada and the U.S. from arbitrary government action, such as nationalization in Mexico, where the legal system was much less developed and private property rights less regularly protected.

What purpose does chapter 11 serve? At its most basic level, the theoretical economic and political basis for the provisions of the chapter lie in the principles of the sanctity of private property against random or unaccountable government action, and that of well-regulated market forces being most able to allocate private investment efficiently, thereby increasing productivity and general welfare.

High levels of investment are important for developing productivity and so we do not want to see discrimination between investment on the basis of origin, foreign or domestic, as it is counterproductive. Furthermore, the importance of transparency and codified regulatory frameworks are essential for attracting foreign investment. That is what chapter 11 is all about.

In a sense the chapter actually enhances national sovereignty insofar as measures which respect sovereignty are those which do not mandate unilateral sanctions or justify extraterritorial reach of national measures. I would argue that this chapter is a codified multilateral agreement entered into and maintained freely by sovereign governments who enter into it.

There have been three successful cases that are often talked about. One of the most prominent is the MMT case. In that case the Canadian government was found to have banned MMT without scientific evidence. We ended up paying a $20 million out of court settlement to Ethyl Corporation. I was in the House of Commons when that happened. I can say with certainty that we warned the government not to expropriate MMT's profits by the actions it subsequently took and it ended up paying for them.

In the case of Metalclad, it only had a case because the Mexican government had assured them they had all the necessary permits, environmental and otherwise, to build an industrial waste facility. Then the city of Guadalcazar refused to issue a building permit and the state government subsequently declared the site a nature reserve. This had nothing to do with environmental protection. It had everything to do with protection against unilateral action.

In summary, I oppose the bill.

Free Trade Agreements
Private Members' Business

6:05 p.m.

NDP

Alexa McDonough Halifax, NS

Mr. Speaker, I welcome the opportunity to briefly make some comments on the motion introduced by the member for Joliette, Motion No. 391. I congratulate the member for bringing the motion before the House. It is an extremely important discussion and one that needs a good deal more public debate and parliamentary debate.

I guess I should not be surprised, but I never cease to be disappointed, that instead of really addressing the substantive issue that has brought forward the motion, what we heard from the government member who spoke was the usual hyperbolic ecstasy about how wonderful and flawless the free trade agreements have been into which the government has entered.

Although I did not manage to hear all of his comments due to another commitment, I did hear enough to know that basically what he was doing was waxing eloquent about how much satisfaction there is among investors with the provisions of this series of free trade agreements into which Canada has entered and would propose to further involve itself.

I have no doubt that it is true that in the main investors are quite pleased with the support of the government to put in place what has been acknowledged to be a unique provision in a trade agreement which is one, we could say, I think if we were to look at it superficially, to just address the question, of being evenhanded and fair in the treatment of investors.

However, I think if we were to look more closely at the concerns that arise from a great many individual citizens, a great many parliamentarians of not just one political stripe but several, and certainly among a good many countries that have had the opportunity to look at this issue from the point of view of whether they would want to see a chapter 11, as currently included in NAFTA, reproduced and further extended to all of North America, there are indeed substantive concerns that underlie the reservations that have been raised.

I think at the very heart is not the idea that any of the critics of chapter 11, any of those who feel that chapter 11 should be eliminated or massively renegotiated, is the concern that in fact what has happened is that the rights of citizens and, in some cases, the rights of communities, have been subjugated to the rights of investors.

I know that some who would critique those concerns would ask whether we were totally unconcerned that investors can face arbitrary measures that might result in unfair expropriation of property. We are not for a moment. There is the need, absolutely, to have a rules based system that governs international trade. Let me say clearly that is why the New Democratic Party has talked in the whole debate about fair trade. We made it clear that we are very much in favour of a rules based trading system.

The question is who will really get to craft, to shape the rules. Who will be the beneficiary and who will be the victim of rules if they are not evenhanded? I think that fundamentally it is the responsibility of governments to ensure that the ability of governments to act in the public interest is not just protected and preserved but in fact enhanced.

If there is one thing that has characterized a number of very alarming decisions that have been reached under this chapter 11 provision, which in our view needs to be overhauled, it is the subjugation of the public interest, the common good.

I could not believe my ears when I heard a member of the official opposition talking enthusiastically about how important it is to have regulations that provide important protections. These were welcome remarks to hear from those who have been so enthusiastic about deregulation on so many fronts embracing the importance of having regulations to govern trade relations as they should every other aspect of our economic and social relationships where there is the potential for the public interest to be overruled by powerful personal or private interests.

If we look at what has been at the heart of the Metalclad case and what has been at the heart of the MMT Ethyl Corporation case, it has been, in both of those cases, a real concern about the inability of citizens and communities to protect the public good. A suggestion was made that in the case of Metalclad the real problem was that Mexican laws were somehow inadequate or underdeveloped and therefore Metalclad had a claim to essentially say that they had interfered with its profits and therefore it had a basis for seeking redress.

Even if people are not familiar with all of the details of those cases, if what they are concerned about is protecting the public from environmental hazards, protecting the public from threats to public health, and it is determined that a municipality, in the case of Mexico, is not free to act on behalf of its citizens, then there is something wrong with the rules or the way in which the rules are being interpreted and enforced.

I do not think it is an accident that many municipal governments across this country have expressed alarm about this and some other provisions of the trade agreements into which the government has so enthusiastically entered or is trying to entice Canadians. The reality is that municipal governments are also there to protect the public interest. They have to be able to do so within a frame of reference and within a regulatory regime that allows them to act on behalf of the communities they were elected to represent.

It is regrettable in the extreme that the government appears to have moved from an earlier position. I heard this expressed again and again by the international trade minister who recognizes the problems with chapter 11. I remember on several occasions when the international trade minister stood in the House and agreed that there were serious problems with chapter 11, that chapter 11 needed to be revised and revamped because it could not be allowed for corporate interests and corporate profits to override, as has happened in several high profile cases; the public interest, the public health and the community health.

I see that my time is up. I hope there can be some further serious engagement around the issues that are at the very heart of Motion No. 391 that has been introduced for debate today.

Perhaps government members could explain how it is that the government went from having a critical analysis of the problems posed by chapter 11, that allow for investor interests and corporate profits to take precedence over individual, community, citizen and public interest, and we could move forward with understanding at least why there has been this kind of retreat from what seemed to be a welcome enlightenment, a welcome progressive insight by the government as to why this needed to be addressed.

I congratulate the member for Joliette for putting the motion before the House and I hope we will have some further constructive debate on the issue.

Free Trade Agreements
Private Members' Business

6:15 p.m.

Progressive Conservative

Greg Thompson New Brunswick Southwest, NB

Mr. Speaker, I could almost pick up where I left off earlier this morning on a completely different debate because this morning we were talking about this sense of anti-Americanism that is coming out of I guess the government side of the House in relation to the war in the Middle East.

I think there will some connection made tonight between Motion No. 391 that we are speaking to now and the earlier debate today in the House.

I agree with the Parliamentary Secretary to the Minister for International Trade. We will lay our cards on the table very quickly that we cannot support the motion for a number of reasons, primarily because if we were to open up NAFTA again or chapter 11, it just will not happen. It is a very complicated and convoluted process and we will not do that. We will make some suggestions, as we have done in the past, which the government might consider. I do not think it is inconsistent with what the government is thinking.

The ironic thing, of course, is that we are talking about the NAFTA, the North American Free Trade Agreement, which is basically the sister to the free trade agreement that we signed with the United States of America in 1988.

I cannot leave without saying, as I look across at the parliamentary secretary who will have a chuckle or two I am sure, that it was a very hotly debated issue in the 1988 election. In fact, historians refer to it now as being the free trade election. That was the first election I ever ran in and I was successful, but it was a tough election.

The truth is that the Liberal Party at that time, I guess that would have included you, Mr. Speaker, because you came to the House at the same time as I did, but your argument convinced the people down in Cornwall that you were the person and I guess my argument sustained me back in New Brunswick, on that we will agree, but the Liberal Party at the time railed against it. I cannot blame that on the parliamentary secretary because in a real sense I think he came after. I think he is a free trader and understands that issue very well and is a businessman himself, in fact a farmer.

That being said, the Prime Minister of course was the man who said that he was going to renegotiate NAFTA. His predecessor, Mr. Turner, was the man who was going to tear up the free trade agreement. He lost that debate in the election of 1988.

Of course, between 1988 and 1993, not a day went by in the House without the mention of the free trade agreement and how the Americans basically duped us and we were done in by them. In the early days of the free trade agreement there were some readjustments for Canadians. There was legitimate concern whether it would benefit us as we told the Canadian people it would.

History has proven us right, as you well know, Mr. Speaker. Some of the statistics that I will point to are proof of that. These are not my statistics. They come from the parliamentary secretary's office, from the Minister for International Trade.

Let us take a look at exports. The Americans are our biggest export market. Let me speak of Newfoundland for the member for St. John's West. The percentage of increase in exports from his part of the country since the inception of the free trade agreement in 1988 has been 246%.

In P.E.I., one of our smaller provinces, there was an increase of 603% since 1988. In my home province of New Brunswick there has been an increase of 257%. Actually some of the smaller provinces have done better than the larger ones on a percentile basis, although we could argue that the province that benefited the most obviously was Ontario, the industrial engine of Canada, if we listen to the Liberal members from Ontario.

Free Trade Agreements
Private Members' Business

6:20 p.m.

An hon. member

Nova Scotia.

Free Trade Agreements
Private Members' Business

6:20 p.m.

Progressive Conservative

Greg Thompson New Brunswick Southwest, NB

And then Nova Scotia, just for the record. If we could step through all the provinces, and maybe we will do that, 211%, and a lot of that is value added. At one time we were hewers of wood and drawers of water, but with the free trade agreement we were allowed to put that value added on our products and move them into the American market without the tariffs and restrictions that normally would have kept us out of that market.

The truth is that our logic prevailed in that big debate of 1988. I will go back to some of my earlier comments. Of course the prime minister of the day was the prime minister who was going to renegotiate NAFTA. That was part of the 1993 Liberal red book promise. As we stand here, not one comma, not one sentence, has been changed in NAFTA. If he had been paying attention to detail, he could have focused on chapter 11, in all sincerity, and he could have said that we do have a problem with it. Perhaps we should take a harder, tougher look at chapter 11. If we have any desire to change anything in the agreement, it would be chapter 11.

The PC Party is firmly committed to rules based trade and free trade, but we do acknowledge that there have been some misinterpretations of chapter 11. That is a given. Therefore, all future bilateral and multilateral agreements must be sure to include clauses in the agreements that address the original intent of chapter 11, clearly leaving no room for misinterpretation or distortion. That has happened in the past. But I do not think that in this case we should throw the baby out with the bathwater, if that is the correct analogy. I do not think we should do that. I think we should hold onto what we have because it is working, but we should address those deficiencies within the trade agreement. As I mentioned earlier but more precisely, rewording chapter 11 would be very difficult and therefore our party has suggested the inclusion of an interpretive clause to clarify chapter 11 provisions in the current NAFTA agreement.

We want to be the party that encourages global trade, free trade and open markets so that we are not subjected to the punitive actions of regimes that want to keep out our products. We are international traders and we want to continue to be international traders and play by the rules, as we always do.

Therefore, unfortunately, we cannot support the bill. As the parliamentary secretary said, and it is hard to believe I am actually in agreement with a Liberal member of Parliament in the House today, we might as well lay our cards on the table. We cannot support it. The agreement is working. NAFTA is working. The free trade agreement is working. We are global traders. If we have to make amendments to chapter 11, I am not sure that we want to sacrifice the trade agreement. It is working for us. We want to be free traders. We believe in international rules based trade. Let us continue on the path that has led us to the kind of prosperity that we have achieved in this country in the last 14 years.

Free Trade Agreements
Private Members' Business

6:25 p.m.

The Deputy Speaker

The chair realizes that one member is seeking the floor, but I just want to point out that there is a minute left in the time provided for consideration of private members' business. With the consent of the House, we could see the clock as 6.30 p.m. and have the second hour of the debate on this motion on another day.

Free Trade Agreements
Private Members' Business

6:25 p.m.

Liberal

Clifford Lincoln Lac-Saint-Louis, QC

Mr. Speaker, I move that we now see the clock as 6:30 p.m.