Bill C-53 (Historical)

Settlement of International Investment Disputes Act

An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention)

This enactment implements the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature in Washington on March 18, 1965.

Settlement of International Investment Disputes Act

[Vivian Barbot, Bloc, Papineau, QC]

Mr. Speaker, on May 15, 2007, I had the opportunity here in the House to talk about why the Bloc Québécois supports Bill C-53, which is identical to Bill C-9, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). Today, therefore, I will talk about how international treaties are now typically drafted with no regard whatsoever for democracy.

I would like to begin by saying that the Bloc Québécois wants all treaties to go through the House of Commons. The current way of doing things completely disregards democracy. Bill S-5, which provides for the coming into force of tax conventions, shows how important international treaties are to our daily lives. These days, treaties are brought before Parliament only when they require enabling legislation.

In Canada, Parliament and parliamentarians play a minimal role in negotiating and ratifying international treaties. The federal executive controls all phases of the process. The executive is also responsible for what takes place in negotiations, which are, for the most part, secret. This secrecy is an important part of the federal government's negotiation strategy. Next to nothing, and sometimes nothing at all is disclosed before the parties sign an agreement in principle on the content and even the wording of the treaty. Even though the provinces are usually kept abreast of negotiations for trade agreements, they participate very little in the process and, with few exceptions, are totally excluded from the decision-making process.

Where international treaties are concerned, democracy is totally absent. There is no complete compilation of such treaties. Governments release them when and if they see fit, and people cannot be sure they are all being disclosed. The treaty section at the Department of Foreign Affairs does not even have a list of signed treaties to consult. The government is not required to table treaties in the House of Commons. It does not even have to inform the House or the public that it has signed or ratified treaties. The House does not get to approve treaties. The government can sign and ratify any treaty it wants without consulting the representatives of the people. At the very most, treaties requiring legislative changes are brought before Parliament before ratification.

In Quebec, since 2002, a vote in the National Assembly is required. Being in no way involved in the negotiation of treaties, the House of Commons cannot consult the public. It is therefore not surprising to see people increasingly expressing their opposition in the streets. In fact, there is no other place for them to be heard. The government is not required to consult the provinces either, even though it cannot implement treaties that concern areas of provincial jurisdiction and the provinces are not bound by the federal government's signature. It is totally absurd that no formal consultation mechanism is in place.

The government is preventing the provinces from being able to act internationally by controlling their international relations and by not allowing them to reach treaty-like agreements. This is unacceptable.

It used to be that international treaties governed relations between states and had little or no impact on how society functioned or on the lives and rights of citizens. At the time, it was acceptable for the government to unilaterally sign or ratify treaties.

Now, however, international treaties, especially trade agreements, affect the power of the state, the workings of society and the role of citizens. Furthermore, they often have an even greater impact than many bills. The Canadian treaty ratification process is not in line with this new reality. The people's representatives must be involved in decisions that affect the people they represent.

During the election campaign, the Conservatives promised to bring treaties before the House prior to ratifying them, but they still have not kept that promise. Recently, the government signed an investment protection agreement with Peru. This agreement is based on chapter 11 of NAFTA, which has been criticized by many. Yet the government concluded it without putting it to the House. When the House presses the government to honour its international commitments, as it has done in the case of the Kyoto protocol, the government does what it pleases, with no regard for the will of the people or the promise it made when it signed the treaty.

As was the case when Bill S-5 was passed, the fact that Bill C-9 will be passed quickly is an opportunity to show the government that democracy is not something to be feared when concluding fair treaties. The government must honour its promise to submit to the elected representatives any treaties that it intends to ratify, as it is forced to do here today with the three tax treaties. Once it has ratified them, it must honour them, as we hope it will honour the tax treaties we are discussing here today, and the Kyoto protocol, which the House is pressing it to honour.

This failure to involve the representatives of the people is an anachronism. It is impossible to tell from the division of legislative powers provided in the Constitution Act, 1867 which level of government, federal or provincial, has authority to sign a treaty with a foreign government. No provision is made in the Canadian Constitution for a jurisdiction anything like external relations or international relations. This is understandable, however, because when the Constitution Act, 1867 was passed by the British Parliament in London, Canada was still a colony of the British Empire. In 1867, the British Parliament reserved for the British Crown the power to represent the Dominion of Canada internationally and to enter into treaties with foreign countries on its behalf.

Under section 132 of the Constitution Act, 1867, however, the federal government was given responsibility for implementing, in Canada, treaties entered into by the British Crown, where these were applicable to this country.

In 1931, pursuant to the Statute of Westminster, Canada, as well as several other dominions of the British Empire, acquired full independence and, along with it, the authority to act with all the attributes of a sovereign state on the international scene. It was then that the federal government acquired jurisdiction over external affairs. Considered a royal prerogative when the Constitution was written, this authority was transferred to the government which, as the sovereign's representative, exercises it alone and without involving Parliament.

Once the governor in council approves an agreement reached between Canada and a foreign country, no matter who negotiated the treaty, that agreement becomes an international treaty. The representatives of the people do not have a say in it because the federal government has simply inherited a royal prerogative dating back to the British Empire.

Parliament only becomes involved when the ratification of a treaty requires an enabling statute. Canadian legislation may have to be amended because of the treaty. The legislative implementation of these treaties is the only occasion when Parliament has a say in the entry into force of a treaty in Canada.

It should be pointed out that many treaties requiring the Canadian state to adopt specific standards are not presented to Parliament for the adoption of enabling legislation. In such cases, the government believes that the Canadian legislation already conforms to the international obligations adopted or that the subject of the treaty does not require the adoption of new legislative provisions.

Consequently, no amendments are made to existing laws nor is a new law adopted by Parliament. For example, Parliament did not adopt legislation to implement or approve the ratification of the International Convention on the Rights of the Child. In such cases, the treaty never goes before Parliament.

In short, Canada is less democratic today that in was in the 20's. In June 1926, Prime Minister King introduced a resolution that was unanimously adopted by the House of Commons. It read as follows:

Before Her Majesty's Canadian ministers recommend ratification of a treaty or convention involving Canada, Parliament's approval must be obtained.

In 1941, Mackenzie King reiterated his commitment to this formula:

With the exception of treaties of lesser importance or in cases of extreme urgency, the Senate and the House of Commons are invited to approve treaties, conventions and formal agreements before ratification by or on behalf of Canada.

Over the years, approval by resolution has been sought less and less. During the cold war, the government dropped the convention of seeking Parliament's approval before signing treaties or engaging in military intervention on foreign soil.

The government even stopped tabling treaties in Parliament. Except for the Kyoto protocol, not one treaty has been approved by resolution since 1966—over 40 years ago—and that was the Auto Pact. As for Kyoto, the government has refused to honour it. So much for democracy.

Furthermore, Canada is less democratic than the rest of the industrialized world. Most other major industrialized democracies support greater involvement of their parliaments in ratifying treaties. For example, the constitutions of France, Germany, Denmark, Italy and the United States require legislative approval of some types of international agreements prior to ratification.

Some countries that share constitutional traditions with Canada have tried to enshrine their parliament's role in examining treaties.

In the United Kingdom, a convention established in the 1920s, the Ponsonby Rule, requires the tabling of international agreements in both Houses of Parliament at least 21 days before they are to be ratified. This gives parliamentarians the opportunity to debate them before the government ratifies them, even though these debates are not binding. This kind of thing does not exist in Canada.

More recently, in 1996, Australia changed its procedure for concluding treaties. Under this procedure, treaties must be tabled in parliament at least 15 sitting days before any binding decision is made by the executive branch; a national interest analysis of the expected impact of the treaty obligations must be done, for each treaty, and tabled in parliament; a standing joint committee on treaties must be established to examine potential treaties and report on them. There is nothing of the sort in Canada.

As usual, Canada trails Quebec.

In Canada, the provinces pass laws in their constitutional fields of jurisdiction. As the British Privy Council ruled in 1937 in the labour conventions case, the provinces' legislative authority also extends to the implementation of international treaties.

As soon as a treaty or part of a treaty involves a provincial jurisdiction, the provisions in question can be implemented only by the provinces. Since 1964, Quebec has concluded some 550 international agreements involving many fields of jurisdiction for which it has full or partial responsibility, such as culture, economic development, drivers' licences, international adoption, the environment, science and technology, and communication.

For a major agreement to be binding, the Government of Quebec must first submit it to the Quebec National Assembly for approval. Only then will Quebec be bound by an international agreement entered into by Canada and agree to pass legislation to implement the agreement. Furthermore, under the legislation, Quebec's Department of International Relations must list and publish all of Quebec's international agreements. There is nothing of the sort in Canada.

The Bloc Québécois has introduced three bills on treaties to modernize the entire process for concluding international treaties.

The Bloc Québécois bill on treaties was designed to build transparency and democracy into the process of negotiating and concluding international treaties. Since such treaties have an increasingly large impact on our lives, it was more important than ever to make such a change. Moreover, the bill required that the federal government respect the provinces' jurisdictions.

The bill provided for five changes: all treaties were to be put before the House of Commons, the House was to approve important treaties, a parliamentary committee was to consult civil society before Parliament voted on important treaties, treaties were to be published in the Canada Gazette and on the Department of Foreign Affairs website and the government was to consult with the provinces before negotiating a treaty in an area of provincial jurisdiction.

The treaty bill came to a vote only once, on September 28, 2005. All the federalist parties voted against it.

No strangers to contradiction, the Conservatives made two promises about international treaties during the last election campaign. They promised to put international treaties before the House prior to ratification and to give the provinces a role in concluding treaties pertaining to their jurisdictions. Both these promises were broken.

Since they were elected, the Conservatives have amended NAFTA. They have signed two investment protection agreements based on NAFTA chapter 11, one of which has been ratified. They have concluded a military cooperation agreement to authorize British soldiers to train in Canada. They have signed cooperation agreements on higher education, even though education does not come under Ottawa's jurisdiction. They have concluded an agreement to facilitate technology transfers from Canada to China. And they have amended the free trade agreement with Chile.

Aside from the amended NATO treaty, which was brought before the House at the last minute for a mini-debate and vote, none of these international treaties has come before the House.

And where is the nation of Quebec in all this? The federalist parties say they rejected the Bloc Québécois bill because of two clauses, 4 and 6.

First, clause 4 provided for a mechanism for consulting with the provinces:

Canada shall not, without consulting the government of each province in accordance with the agreements entered into under section 5, negotiate or conclude a treaty

(a) in an area under the legislative authority of the legislatures of the provinces; or

(b) in a field affecting an area under the legislative authority of the legislatures of the provinces.

As for clause 6, it recognized the validity of the Gérin-Lajoie doctrine:

Nothing in this Act in any manner limits or affects the royal prerogative of Her Majesty in right of a province with respect to the negotiation and conclusion of treaties in an area under the legislative authority of the legislatures of the provinces.

The clause on consulting Quebec and the provinces is nothing revolutionary. When the federal government discusses, in an international forum, the text of a treaty having an impact on the provinces, then it consults the provinces beforehand.

Under an agreement concluded in 1975—and still in effect—between the Trudeau government and the provinces, Ottawa consults the provinces at every stage of the negotiation of treaties involving human rights.

Every federalist party in Ottawa is more centralist than Pierre Elliott Trudeau on the issue of international relations.

It is not just a Bloc Québécois bill that the federalist parties have rejected, it is a Quebec law. Section 22.1 of the Act respecting the Ministère des Relations internationales requires the consent of the Government of Quebec with respect to the signing, ratification or adherence by the Government of Canada, before the latter acts internationally on any agreement concerning matters under Quebec's constitutional jurisdiction.

As far as the section recognizing the provinces' right to negotiate and conclude international treaties in their jurisdictions is concerned, it was simply a recognition of the Gérin-Lajoie doctrine which every Government of Quebec has been following since 1965.

The Gérin-Lajoie doctrine is closely linked to Quebec's independence: the provinces are completely sovereign within their jurisdictions and they must exercise their authority over the entirety of their jurisdictions, which includes signing and ratifying international treaties.

In closing, these are some of the arguments in favour of more involvement by parliamentarians in the negotiation and ratification of international treaties for the good of democracy.

[The Speaker, Liberal, Peter Milliken]

The Chair is satisfied that this bill is in the same form as Bill C-53 was at the time of prorogation of the first session of the 39th Parliament.

Accordingly, pursuant to order made on Thursday, October 25, 2007, the bill is deemed read the second time and referred to the Standing Committee on Foreign Affairs and International Development.

(Bill read the second time and referred to a committee)

[Maxime Bernier, Conservative, Minister of Foreign Affairs]

moved for leave to introduce Bill C-9, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

Mr. Speaker, pursuant to the special order made previously, I would like to inform the House that this bill is in the same form as Bill C-53 was in the previous session at the time of prorogation.

(Motions deemed adopted, bill read the first time and printed)

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I will be happy to address that in the affirmative in a moment but there is more that we should know about in terms of the business we are doing.

We will continue today with Bill C-42, the quarantine act, Bill C-58, the railway transportation bill and Bill C-21, An Act to amend the Criminal Code and the Firearms Act (non-registration of firearms that are neither prohibited nor restricted).

Tonight we have the emergency debate pursuant to Standing Order 52 that the Speaker has determined should proceed.

On Friday we will call Bill C-33, the income tax bill and Bill C-6, the aeronautics bill.

Next week is got the job done week when the House has completed the nation's business for this spring's session. During the got the job done week we will continue and hopefully complete the business from this week, as well as some new legislation and legislation that will be out of committee or the Senate.

The list of bills that are currently on the order paper, in addition to those I have identified for this week that I would like to see completed by the House before the summer recess are: Senate amendments to Bill C-31, An Act to amend the Canada Elections Act and the Public Service Employment Act.

There are also the following bills: Bill C-32, An Act to amend the Criminal Code (impaired driving) and to make consequential amendments to other Acts; Bill C-44, An Act to amend the Canadian Human Rights Act and Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

Another bill includes Bill C-54, An Act to amend the Canada Elections Act (accountability with respect to loans).

By the end of next week, Canadians expect that the Senate will have completed its consideration of budget Bill C-52 without any amendments so that they can relax for the summer with the knowledge that $4.3 billion in the 2006-07 year end measures will be in play.

If there are amendments, we will have to be here in the House to respond and protect measures that might otherwise be lost, such as a $1.5 billion for the Canada ecotrust for clean air and climate change; $600 million for patient wait times guarantees; $400 million for the Canada infoway; $100 million for the CANARIE project to maintain the research broadband network linking Canadian universities and research hospitals; $200 million for protection of endangered spaces; and much more.

[The Chair, Conservative, Kevin Sorenson]

That gives us a Wednesday meeting with national defence. Okay.

The second issue is that the analysts from the Library of Parliament, with the clerk of the committee, will prepare a draft work plan for the study of Bill C-53. It's our first piece of legislation that we'll be dealing with. It deals with investments in Canada. We're going to get the report on that. It's a very brief bill.

Madame Lalonde, did you want to speak?

[Peter Van Loan, Conservative, York—Simcoe, ON]

I would not do that.

Tomorrow is an allotted day.

Next week is constituent consultation week, when the House will be adjourned to allow members to return to their ridings and meet with constituents to share with them the activities of Parliament since the last constituency break.

For the interest of members, I will quickly review our plan for the context of our overall legislative agenda.

As he requested, this is currently strengthening the economy week, where a number of financial bills moved forward. The budget bill was sent to committee and, hopefully, it will be reported back tomorrow, or soon, so we can deal with it at third reading when the House returns after the break.

Bill C-40, an act to amend the Excise Tax Act, was read a third time and sent to the Senate. Bill C-53, an act to implement the convention on the settlement of investment disputes, Bill C-33, the sales tax bill and Bill C-47, the Olympics symbol bill were all sent to committee and we all would like to see those back in the House for report stage and third reading.

In an earlier week, Bill C-36, the bill that makes changes to the Canada pension plan and the Old Age Security Act, was made into law after receiving royal assent.

Strengthening accountability through democratic reform week was a success with the consideration of Bill C-43, Senate consultation. We had three new democratic reform bills introduced that week: Bill C-55, to expand voting opportunities; Bill C-56, an act to amend the Constitution Act, democratic representation; and Bill C-54, a bill that would bring accountability with respect to loans. We hope to continue debate on that particular bill later today.

Bill C-16, fixed dates for elections, was given royal assent and is now law, which I think is the cause of the commotion now in all the committees where Liberals are using procedural tactics. Now they feel they can do it with a free hand.

Two other democratic reform bills are in the Senate, Bill C-31, voter integrity, and Bill S-4, Senate tenure. I really would like to have the term limits bill from the Senate for an upcoming democratic reform week if the opposition House leader can persuade his colleagues in the Senate to finally deal with that bill after 352 days. We may get 352 seconds in a filibuster, but they have had 352 days so far. They have been stalling for a year.

During the consultation week, I will be interested in hearing what our constituents think of the plight of Bill S-4 and the irony of those unaccountable senators delaying it.

We dedicated a good deal of our time focusing on making our streets and communities safer by cracking down on crime. Now that we have had the help of the NDP, we restored the meaningful aspects that the Liberals gutted in committee to Bill C-10, the bill to introduce mandatory penalties for violent and gun crimes. We are continuing to debate that bill today at third reading.

Bill C-48, the bill dealing with the United Nations convention on corruption, was adopted at all stages.

Bill C-26, the bill to amend the Criminal Code with respect to interest rates, was given royal assent.

Bill C-22, the age of protection, was given final reading and sent to the Senate, although it did spend close to, if not in excess of, 200 days in committee where the Liberals were obstructing and delaying its passage.

We made progress on Bill C-27, the dangerous offenders legislation. We would like to see that back in the House.

Bill C-9, An Act to amend the Criminal Code (conditional sentence of imprisonment) and a host of other justice bills are working their way through the system.

Members can advise their constituents that when we return, we will be reviving two themes, back by popular demand. Beginning May 28, we will begin again with strengthening accountability through democratic reform with: Bill C-54, political loans; Bill C-55, additional opportunities for voting; and Bill C-56, democratic representation.

Up next is a second go-round on strengthening the economy week with Bill C-52, the budget implementation bill, which will be called as soon as it is reported back from committee.

In the near future, we will have the improvement of aboriginal people quality of life week with Bill C-44. This bill will grant first nations residing on Indian reserves access to the Canadian charter of human rights. They have been denied this right for 30 years. Unfortunately, Bill C-44 is being delayed by the opposition. This is another bill being delayed by the opposition in committee.

After Bill C-44, I intend to debate Bill C-51. The agreement establishes the use and ownership of land and resources and will foster economic development. This bill illustrates Canada's commitment to the North and to settling land claims.

I wish all members a productive constituent consultation week and look forward to more progress on the government's legislative agenda when the House returns on May 28.

Settlement of International Investment Disputes Act

[Jay Hill, Conservative, Prince George—Peace River, BC]

Mr. Speaker, if you were to seek it I think you would find unanimous consent to apply the results of the vote previously taken to the motion on Bill C-53, with Conservative members voting yea, and I would like to add the hon. member for Edmonton—St. Albert.

The House resumed consideration of the motion that Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), be read the second time and referred to a committee.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, all the agreements that Canada has signed on the protection of foreign investment have major deficiencies and are based to some extent on NAFTA chapter 11. As I said in my speech, most of the agreements Canada has signed are bad. A tribunal such as ICSID, which is the subject of Bill C-53, will always judge, treat and evaluate things on the basis of the agreement that was signed between the two countries. We are talking here about Canadian foreign investment. One hundred and fifty-six countries have signed this convention and can go directly to the ICSID tribunal.

We have international relations and Canadian foreign investment. I understand that the laws of Canada and of the various provinces and Quebec take priority when we are dealing with people who are here. However, when we are dealing with foreigners, we need some basis. This basis is primarily the agreements that have been signed. Everything depends on that.

As I said and say once again, this is just a tribunal. There are also the agreements that were signed, and unfortunately, most of them are bad. They should all be renegotiated, just like chapter 11 of NAFTA.

This is the basis on which people can at least seek justice on the international scene for Canadian foreign investment. I do not think that the reverse happens very often because I hope that Canada treats foreign investors fairly. It does not allow them to do everything they want, of course, whenever they want, or to be more important and take precedence over all the laws and regulations of Canada, which must be obeyed. Justice should always be done, therefore, on the basis of the international agreements that were negotiated but are mostly bad. In the future, all these agreements should be submitted to the House so that we can evaluate them.

That being said, I would tell the NDP member that he should table the amendments to Bill C-53; that would reassure them.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, my Bloc colleague's comments raised as many questions as they gave information about the view of this very complex international convention. The points made by the previous speaker, the member for Timmins—James Bay, cited a number of very legitimate concerns and provided reasons why the NDP will oppose Bill C-53.

The NDP is very concerned that the ICSID falls under the jurisdiction of the World Bank, an organization that the NDP has cited numerous concerns about in the past, partly in terms of transparency but also in terms accessibility for users of this tribunal process, this quasi-judicial arbitration process.

I am concerned that the House of Commons today, as we entertain Bill C-53, is not digging deep enough into how we envision this tribunal unfolding and the precedent setting status that it will have.

One of the most alarming concerns that I would like my colleague to comment on is that one of the arguments used by the government in favour of ratifying the international convention is that ICSID shelters foreign investors from the courts of any country or jurisdiction in which the investment is made. I thought we would be alarmed that we are setting up some kind of a dual parallel process that will shelter investors from the courts in the jurisdiction in which the investment is taking place.

In other words, this quasi-judicial arbitration process being set up by the World Bank will have precedence and primacy over the courts of the provinces of Quebec or Manitoba or the Federal Court if it, in fact, is an investment in the federal jurisdiction.

Are we prepared to cede that jurisdiction to an outside party such as the World Bank? Is our confidence in the World Bank such that we are willing to forgo our own court's jurisdiction? If we are interested in the best interests of Canadians, we should be throwing our confidence and faith in our own court system and let this foreign investor be judged by our high standards instead of a new arbitration process, which will likely be residenced in Washington, D.C. and under the jurisdiction of the World Bank.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, first, I would like to confirm that the Bloc Québécois supports Bill C-53 in principle. I would also like to suggest to my colleague in the NDP that he should introduce the adjustments he would like to see in committee.

The passage of this bill will enable Canada to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and join the International Centre for Settlement of Investment Disputes.

I will certainly be referring to this centre in my speech, and since it has a rather long name, I will just call it ICSID.

Bill C-53 incorporates the requirements of the convention into our domestic law, especially in regard to ensuring that arbitration awards are upheld and granting ICSID and its staff the immunities they need.

ICSID was established in 1965 by the World Bank under the Washington Treaty. One hundred and fifty-six countries are currently members. ICSID arbitrates disputes between states and foreign investors. These disputes can be of two kinds: first, disputes over compliance with bilateral foreign investment protection agreements, and second, disputes involving agreements between governments and foreign investors. The Government of Quebec regularly concludes agreements of this kind, encouraging foreign investment through promises, for example, to provide electricity at a particular price.

Canada joining ICSID will have no effect on the provinces and Quebec, except that they too will be able to provide for recourse to ICSID in the agreements they reach with investors.

The bilateral treaties binding on the federal government already provide for recourse to ICSID arbitration, although by means of a complementary arbitration system rather than the regular system, which is only available to countries that have ratified the convention.

The only thing that Canada’s joining ICSID will change is that Canada will be able to participate in the negotiations to amend the ICSID convention or regulations and rules and will be assured of being able to participate in the appointment of arbitration tribunals. Canada will therefore be able to participate directly in ICSID.

Ultimately, ICSID is only a tribunal. The problem, however, is not the tribunal but the bad treaties that Canada signs to protect investment.

The Bloc Québécois supports the negotiation of investment protection agreements provided, of course, that they are good agreements.

It is completely natural for investors, before making an investment, to try and make sure they will not be divested of their property or that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover.

This is not a new idea. The first known agreement that included provisions relating to protection of foreign investments was signed between France and the United States in 1788, more than two centuries ago.

In the world today, there are more than 2,400 bilateral investment protection agreements. If we include the tax treaties that deal with the tax treatment of investments and foreign income, we find about 5,000 bilateral treaties concerning foreign investment.

The Bloc is in favour of negotiating such agreements and we recognize that they promote investment and growth. These agreements are almost all based on the same principles.

First, there is a respect for property rights regardless of the owner’s nationality. Second, there can be no nationalization without fair and prompt financial compensation. Third, there is a prohibition against treating property located within a country’s territory differently depending on the owner's origins. Finally, there is free movement of capital resulting from the operation and the disposal of investment.

In every case, when these rights are not respected, states may submit disputes over compliance with an agreement to an international arbitration tribunal. In the majority of cases, investors, themselves, may submit the dispute to an international tribunal, but only with the consent of the state. In many cases, the international arbitration provided in the agreement takes place before ICSID. By agreeing to this, as Bill C-53 provides, we are also agreeing to an international order in the field of investment.

In the investment protection agreements that they sign, only two countries, Canada and the United States, systematically grant investors the right to appeal directly to international tribunals. This is a deviation from the norm. By allowing a company to operate outside government control, it is being given the status of a subject of international law, a status that ordinarily belongs only to governments. The agreements that Canada signs contain a number of similar deviations that give multinationals rights they should not have and that limit the power of the state to legislate and take action for the common good.

The investments chapter of NAFTA, chapter 11, provides that a dispute can go to ICSID. That chapter is a bad agreement in three respects: the definition of expropriation, the definition of investor and the definition of investment.

The definition of expropriation is so vague that any government measure—except for a general tax measure—can be challenged by a foreign investor if it diminishes the profits generated by the investment. A plan to implement the Kyoto accord, which would have major polluters such as oil companies pay dearly, could be challenged under chapter 11 and result in government compensation. American companies have majority interests in Alberta oil companies. Chapter 11 opens the door to the most improper legal disputes.

The definition of investor is so broad that it includes any shareholder. Therefore anyone could take the state to court and attempt to obtain compensation for a government measure that allegedly reduced a company’s profits.

As for the definition of investment, it too is so broad that it even includes the future profits that an investor hopes to earn. In the case of expropriation, not only does the state find itself forced to pay fair market value, but it must also include revenues that the investor expects to earn in future. It would no longer be possible to nationalize electricity, as Quebec did in the 1960s.

Take the example of SunBelt, a corporation with a Canadian shareholder and a Californian shareholder. The corporation closed its doors when the Government of British Columbia withdrew the right it had granted for the bulk export of water. The Canadian shareholder, based on Canadian laws, received compensation equivalent to the value of his investment, or $300,000. The American shareholder, based on NAFTA chapter 11, included potential future revenue in its claim: $100 million. For better or for worse, the case was settled out of court for an undisclosed amount.

Given the amounts of money in issue, chapter 11 is a deterrent to any government action, particularly in relation to the environment, whose effect would be to reduce the profits of a foreign-owned corporation.

As well, the dispute resolution mechanism allows corporations to apply directly to the international tribunals to seek compensation, without even getting the consent of the state. How is it conceivable that a multinational could, on its own authority, create a trade dispute between two countries? And yet this is the absurd situation that the investment chapter of NAFTA permits.

Given these flaws, chapter 11 of NAFTA reduces the state’s capacity to take action for the common good and to legislate about the environment, and is a Damocles’ sword that could come crashing down at any moment on any legislative or regulatory measures whose effect was to reduce corporations’ profits.

In 2005, the United States changed some of the provisions in their standard form investment protection agreement. In 2006, Canada followed suit. Since both countries have now acknowledged the harmful and extreme nature of chapter 11 of NAFTA, the time is ripe for the government to move quickly to enter into discussions with its American and Mexican partners to amend chapter 11 of NAFTA

We say no to bad investment protection agreements. In addition to chapter 11 of NAFTA, and although its extreme nature has been widely decried, the government has entered into 16 other bilateral foreign investment agreements, carbon copies of chapter 11. All of these foreign investment agreements are faulty and should be renegotiated.

In 2006, the government recognized to some degree that these agreements were bad. Copying the amendments made by the Bush administration the previous year, the Conservative government made changes to its FIPA program to correct the most obvious shortcomings.

It clarified the concept of expropriation by specifying that a non-discriminatory government measure that is intended to protect health and the environment or to promote a legitimate government objective should not be considered as expropriation and should not automatically generate compensation. It is too soon to evaluate the real impact of that clarification, but at first glance, it looks like an improvement.

it restricted the concept of investment by specifying that the value of property is equal to its fair market value. That put an end to the folly of adding together all the potential profits that an investor might hope to earn from an investment. As for the rest, the standard investment protection agreement continues to be based on chapter 11 of NAFTA.

The government must continue to improve this standard agreement, particularly in terms of dispute settlement mechanisms. Multinational corporations must be brought under the authority of the state, like any other citizen.

Also, the government should submit international treaties and agreements to the House of Commons before ratifying them. At the start of the year, the government sent out a news release to announce that it had just ratified a new foreign investment protection agreement with Peru. It was only by reading that news release that parliamentarians and the public became aware of this agreement. Parliament was never informed and never approved it. That is completely anti-democratic.

Yet, the Conservative platform in the last election was clear: the Conservatives made a commitment to submit all international treaties and agreements for approval before ratifying them.

Since the Conservatives took office, Canada has signed 24 international treaties.

With the exception of the amendment to the NATO treaty, for which a mini-debate and a vote took place at the last minute, none of these international treaties were presented to the House.

Today, the consequences of international agreements on our lives are comparable to those that legislation may have. Nothing, absolutely nothing justifies the government quietly signing such agreements unilaterally, by going over the heads of people's representatives.

The Bloc Québécois has introduced bills in the past to restore democracy and ensure the respect of Quebec and provincial jurisdictions in the conclusion of international treaties. Since the government promised to do this, we did not bring the issue up again at the time.

We are now seeing that the word of the Conservatives is not worth very much. The Bloc Québécois will raise this issue again and will bring forward proposals to restore democracy in the conclusion of international treaties. Such proposals will include requiring the government to present to the House all international treaties and agreements it has signed before ratifying them, requiring the government to publish all international agreements by which it is bound, requiring the vote and approval of the House following an analysis by a special committee tasked with examining international agreements and major treaties before the government may ratify them, and calling on the government to respect Quebec and provincial jurisdictions in the entire process of concluding treaties, that is, all stages of negotiation, signing and ratification.

In conclusion, the International Centre for Settlement of Investment Disputes is indeed necessary to ensure that the states are treated fairly by multinational corporations. We must also ensure that the agreements signed by Canada are good agreements that respect all the stakeholders.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, I appreciate the member's question, but the issue we are looking at here is that we believe chapter 11 has failed some of the basic tests of allowing for a fair and open study of whether or not a particular company has been aggrieved.

As for this new dispute mechanism, it looks to us as though we are being asked to go from one really ugly dance partner to an uglier dance partner. We feel the situation could be improved.

We have to go with some fundamental principles. Again, there has to be open access for all interested parties. There has to be the open and full disclosure of all evidence being brought forward. There has to be the clear transparency of judges. Simply having a dispute panel working behind the scenes whereby people actually get to suggest their own arbitrators is not sufficient, especially when we have the public interest at stake, and, in this case, clean groundwater and $350 million of Canadian taxpayers' money that is on the hook.

Right now I do not feel any more confident about going under the proposal that is under Bill C-53 than I do going under chapter 11 of NAFTA. They are both flawed attempts to override the ability of a sovereign state to come forward in a House like this with clear legislation to protect the best interests of its citizens.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, the NDP member told us he would vote against Bill C-53 concerning the ICSID. In the end, it is just a tribunal. In my opinion, it is not necessarily the tribunal that presents a problem, but the poor investment protection treaties Canada negotiates and signs without the House's approval.

Consequently, does he not believe that this convention, which could be signed with the adoption of Bill C-53, could protect Canadian investments abroad and also protect Canada and other countries against investments? As I said, the centre is just a tribunal. The treaties Canada signs are not necessarily the best and should have tougher conditions with more bite. Because if necessary, the tribunal could put things right again.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, I am pleased to rise to speak to Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

One of my colleagues from the Liberal Party in the previous intervention talked about the lack of confidence in the chair and said that the eyes of the nation are upon us. I certainly believe that is the situation in the House.

People watching back home must have been wondering about the cluster of Reform Party members in the previous debate licking their wounds in outraged indignation. It reminded me of when I was a kid and Gilles “The Fish” Poisson once lost a Texas cage match to “Killer” Kowalski and he talked about how he had been hard done by.

As serious as the issues are, they are sometimes somewhat surreal. I think people back home wonder exactly what we are debating here because we seem to be in a bubble sometimes, separated from the reality of working people and their workplace.

I want to speak to this bill in terms of concrete examples. I am going to focus specifically on how a bill like this would be enacted. It is all very well to talk about the need for an international convention on the settlement of investment disputes because these happen all over the place and we need to set some high standards.

In recent years, and particularly with the chapter 11 case with NAFTA, we have seen some very disturbing trends emerging. The New Democratic Party members will certainly be voting against this bill because we have concerns about the lack of transparency, the lack of accessibility, and the lack of accountability.

When we talk about protecting investments overseas and in Canada, we are talking about how it needs to be based on the rule of law. We certainly believe that law is a guiding principle, but there are a number of principles about law that have to be applied. A number of the dispute mechanisms seem to be basically circumventing some of the basic principles of law.

If there were to be a dispute in court, the interested parties should be able to speak to it. That is a fundamental principle of law. We do not see that, for example, in chapter 11 of NAFTA. We did not see that in what was laid out in the multi-lateral investment agreement that came out in 1997. There needs to be a transparency of judgments, and yet with this ICSID bill that is before us there is no obligation to even publish the evidence and the awards.

One of the most fundamental issues in terms of legal jurisprudence is the need for transparency and full disclosure of evidence, so that evidence can be weighed publicly, not behind closed doors. There is a fundamental difference between being judged by a jury of peers in one's community and being judged by a couple of buddies in a backroom.

I am going to speak about a specific case and how I see it unfolding under chapter 11 because I believe it resonates the application for applying the principles on a larger scale. That case is the $350 million claim against the Government of Canada by one Vito G. Gallo. I have his request for arbitration under chapter 11 of the free trade agreement. I have read Mr. Gallo's claim from start to finish and it is very interesting. I know most of the case fairly well.

He says he is the sole owner of 1532382 Ontario Inc., a company incorporated under the laws of the province of Ontario. I would agree that this company is incorporated in Ontario. I would also agree with him that the Adams Mine, a former iron ore mine, is located 10 kilometres southeast of the town of Kirkland Lake. That is in my riding. Other than that I would question most of the evidence that he has brought forward to the arbitration dispute panel.

That gets back to the issue under Bill C-53 about the need to fully disclose evidence. For example, in Mr. Gallo's claim, he states that he owns and controls the enterprise, meaning the Adams Mine as a possible site for landfill.

I find that very interesting. We have to go back a bit into the history of this site. In 1990 Dofasco shut down the Adams Mine. It was an iron ore operation in my riding which lost a number of good paying jobs. The issue then became its possible use as a landfill, but the landfill was fairly challenged because we had 360 million litres of groundwater flowing through it every year.

At that time the owners were Notre Development, a small company out of North Bay, and the City of Toronto, which was a partner. The city of Toronto paid for most of the initial costs. It was the taxpayers in Toronto, not investors, who paid for the studies.

The studies were based on an unproven concept called hydraulic containment. It stated that 360 million litres of groundwater, which people in my riding contended fed the entire agricultural belt in the valley below, flowed through the pits every year. The theory was that pipes would be installed and for 1,000 years the groundwater of northern Ontario would be used to wash 20 years worth of garbage. It was seen then as somewhat of a cockamamie plan, but the city of Toronto paid for the studies to get this to ground level.

In 1997 it went before an environmental assessment board in Ontario at a time when Premier Mike Harris, who was considered a very close supporter of the dump, changed the environmental assessment act in Ontario, and changed it dramatically.

We suddenly had a scoped EA for what would be the single largest dump project in Canadian and possibly North American history. It was subject to a very narrowly scoped EA, which looked at only the question of whether the computer models supplied by the proponent were feasible. At that time all the other issues of groundwater contamination and the potential threat in the surrounding environment were ignored.

It was actually passed at that time in a very narrowly focused area, but there were issues with 2 of the 12 or 13 drill holes. There were two serious questions about whether those proved the theory of this dump or they did not. I am explaining this just as background so everyone has the full sense of what I am talking about in terms of this multilateral investment agreement that we are looking at now.

The city of Toronto stepped back and decided it was no longer going to be a proponent. Therefore, it was no longer the key proponent, but it was possibly a customer for this site. Throughout this, it was an Ontario company bidding on a municipal contract. There was no discussion at any point that this was in any way an international project.

In 2000 the city of Toronto walked away from this proposal because of the dangerous issues of liability. Nobody wanted to accept the liability for having to guarantee that pumps on a theoretically unproven site could run for 1,000 years. It also stepped aside because it was probably the largest civil disobedience action in Ontario history at that point.

The federal and provincial governments were very cognizant of the fact that the Algonquin nation had brought forward a very serious prima facie case for unextinguished aboriginal title at that site. There were numerous questions, as well as the potential groundwater threat from this unproven site.

The city of Toronto was not willing to accept the liability. Canadian Waste Services at that time, which was the new partner, also walked away, so the site was left without a customer. If we check the records for the last seven years, regardless of what happened with Michigan, the city of Toronto said time and time again, “We will never go back to this site. No matter what, we will never go back there”. It was a site without a customer.

Then in 2002-03 a new company was formed, which was 1532382 Ontario Inc. It set itself up as the new proponent. What is this company? We do not really know.

I have a corporation profile report. What is the jurisdiction for 1532382 Ontario Inc.? It is Ontario. What is the former jurisdiction? It is not applicable. The corporation type is an Ontario business corporation. What is its registered address? It is Suite 101, Don Mills, Ontario. Its mailing address is 225 Duncan Mill Road, Suite 101, Don Mills, Ontario. If you are not seeing much of an international investor angle here, you are like me, Mr. Speaker.

Page 2 of this very paltry corporate report says that the administrator is Brent W. Swanick. His address is 104 Yorkminster Road, North York, Ontario. The first director is not applicable. The officer type is president. The resident is Canadian.

We do not see anything on this paltry two page report of any connection as to who is behind this Ontario numbered company, a company that picked up a site that was derelict, that had no customers and no possibility of a customer. Then it decided to go into business to bid on a municipal contract. We have an Ontario numbered company bidding under the province of Ontario for a municipal contract. The only contract it could get from the city of Toronto was that it would not deal with the company.

The deal was contingent upon two key issues, and they are raised in NAFTA chapter 11 challenge. First was the fact that it applied for a take water permit in 2003. The second issue was that it applied through the MNR to purchase 2,000 acres of Crown land at what we thought was the outrageously low price of $22 an acre. In fact, I helped initiate a local bidding campaign that said we would spend $5 to $10 more an acre and we would outbid it. There is a fundamental principle. If we are to dispose of Crown land assets in the province of Ontario, we have to go through due diligence and bring this out into the public. We cannot simply do this behind the scenes.

The other issue with this 2,000 acres was it was subject to a land claim issue with the Algonquin nation. It came forward very clearly with its prima facie evidence that said that there had been no consultation with the nation. It said that it had be consulted. Therefore, it was an obligation of the Ontario government to hold up the disposal of the Crown land until that was addressed.

The other issue that was very pertinent at the time was whether the take water permit at the site should have been allowed. On August 12, 2003, Dr. Ken Howard, who has been recognized as the key hydrogeologist in the province of Ontario, was brought in to review the information. Dr. Ken Howard was also brought in to deal with Walkerton and was the key provincial guy for bringing forward all the recommendations for provincial legislation out of the Walkerton report.

He studied the Adams Mine environmental assessment process. He said that the decision to issue the certificate at that site specifically was based on the results of drill holes 98-1 and 98-2. He concluded that the drill hole results were “seriously deficient” and that the director of approvals branch approved the dump on evidence that “had virtually no scientific merit” and were “effectively worthless”.

We will not find that in my mysterious friend Vito Gallo's submission. Neither will we find any of the issues before the NAFTA tribunal about this first nations land issue or the fact that there was widespread opposition to this plan or the fact that there was no customer. However, that might not matter. Under chapter 11, a mysterious numbered company is going before a tribunal and saying it wants a dispute mechanism where all this evidence does not come through and the public interest does not get to be heard.

The other question I find really interesting in this is I have never heard of Vito Gallo. Now maybe that is not an uncommon thing. There are lots of people of whom have not heard, but I have heard of many of the people who have been involved in the Adams Mine over the years because I have paid very close attention to it.

For example, I was very aware of the Cortellucci group of companies out of southern Ontario. In the May 9, 2003 issue of the Toronto Star they were identified as key owners of this Adams Mine proposal. In fact, Mr. Mario Cortellucci has given serious amounts of money through clan Cortellucci to the Conservative government. However, I am not bringing that up here because I am not being partisan. I am just pointing that out as a side issue. When Mr. Cortellucci was asked by the Toronto Star if he was in fact the owner of the Adams Mine at that point, he said he was just one of a dozen or so investors.

Now we have a situation where we have this numbered company. We do not know what it is except we know it is an Ontario company run by an Ontario administrator. Maybe we have no I.D. to prove this, but this man is purporting to be an American who has international rights to come in because he has been circumvented in all his other points. There are questions about who else is involved in this.

We know the Cortellucci Group of Companies was identified. In 2003 a lawsuit was launched by Canada Waste Services over the ownership of the site. It never mentioned Vito Gallo, but it mentioned the Notre Development Corporation and the Cortellucci Group of Companies. In fact, it referred to the Cortellucci agreement.

We would think it would be incumbent upon the Government of Canada, before we fork out $350 million to Vito, my friend, to find out who is behind this numbered company.

We do not know if any of the due diligence has been done. All we know is this numbered company tried to sue the Ontario government in 2003-04, after it was shut down when the provincial Liberal government revoked the permit based on a number of key issues. The first was new evidence. The second was as a result of the Walkerton inquiry. It was the idea that in Ontario in the 21st century we did not use groundwater to wash garbage. It is kind of an odious thought. Ontario decided that is not even a 20th century idea and it is not even a 19th century idea. We do not use groundwater to wash garbage. Therefore, it suspended the permit, not just for that site, but for any site in Ontario on the bases that we do not use a lake full of fresh groundwater in which to throw our garbage.

At that point this numbered company, 1532382 Ontario Inc., sued the Ontario government, which is fair. They are investors. They took their case of $300 million and they went against the Ontario government. However, we did not see that case go anywhere. Nothing seemed to happen.

We know there were some negotiations with some of the investors about whether to accept a payout. Then, lo and behold, just a few months ago, Vito G. Gallo said that he owned the mine, that he was the direct beneficiary of all the possible benefits that should have accrued, going back to when Toronto was paying for the cost.

We had no evidence to know at what point Vito Gallo stepped into the Adams Mine. We do not know if Vito Gallo is the only investor. We do not know if Vito Gallo is one of a hundred investors, one of ten investors, or one of five investors. We do know this company that he says he owned as an American investor is an Ontario numbered company. It was an Ontario numbered company bidding under provincial rules for a municipal waste contract in the province of Ontario. There was nothing international about this whatsoever. Yet he is now before a NAFTA tribunal, asking for $350 million, and the Canadian taxpayers will not have our lawyers there bringing forward witnesses.

One would think that if we are going to talk about international trade law that has jurisprudence on its side and accountability and fairness, then fairness would include the right of a domestic government to bring forward legislation that is fair. If it does affect business, there is a process. However, the government might have compelling reasons, such as Dr. Howard's evidence, to act on this.

Another doctor I would like to mention is Dr. Larry Jensen. He is the provincial geologist for the Kirkland Lake region. He spent 40 years studying the faults of the Adams Mine.

I found it absolutely strange when I was at the environmental assessment hearing and I looked at the maps of the experts which showed all the fault lines. They were very vague. There was hardly anything there. In fact, they were not Dr. Jensen's maps; they were maps from the 1950s.

I will conclude on this. Dr. Larry Jensen was a the provincial geologist in the Kirkland Lake region for 40 years. He studied the Adams Mine every day. He said that the Adams Mine proposal was,

—a disaster for the not too distant future, perhaps not for the residents of Kirkland Lake itself, but for all those people and the wild life to the south and southeast in the Timiskaming region and beyond, as far as to the mouth of the Ottawa River—an area hundreds of times larger than Toronto itself.

When we have evidence like that, jurisprudence says all the evidence has to be brought out. The first piece of evidence that has to be brought out in any international dispute mechanism is who are these people behind this numbered company who are going after the Canadian taxpayer for a hit of $350 million?

Until we see how the new international convention protection that ensures these kind of operations cannot put the hit on Canadian law will be merged with investor relations, we will not support any bill like this. We are doing our job in this House and in our provincial legislation to protect the public interest.

The House resumed consideration of the motion that Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), be read the second time and referred to a committee.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am pleased to take part in this debate on Bill C-53.

Although the bill is extremely technical, it does not change much for Canada. However, it still offers an opportunity to ask ourselves about the nature of the investment agreements that have been signed by the Canadian government, and more specifically the bilateral agreements, and about the content of the North American Free Trade Agreement.

The problem lies not so much in Bill C-53 as in the agreements that we are signing, that are arbitrated under that convention.

I would note that if this bill is enacted, it will make it possible for Canada to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, and will also make it possible for Canada to become a member of the International Centre for the Settlement of Investment Disputes.

As we can see, this means incorporating the requirements of the ICSID Convention into domestic law, to ensure that arbitral awards can be enforced and to provide the necessary immunities for the centre and its personnel.

The International Centre for Settlement of Investment Disputes was created, we should remember, by the World Bank, under a treaty referred to as the Washington Convention of 1965. As of today, 156 countries have ratified the convention and are members of ICSID. The purpose of the convention and the centre is to arbitrate disputes between a state and a foreign investor.

There are two possible kinds of disputes between a state and a foreign investor. There are disputes relating to compliance with bilateral foreign investment protection agreements. For example, and I believe this was mentioned earlier, we recently signed an agreement with Peru. However, hardly anyone in the government alerted us to the signing of a new bilateral investment agreement. That agreement was very quietly signed between Canada and Peru. If it results in challenges, they can be arbitrated under this convention, and by this centre.

There is a second possible type of dispute. Disputes arise regarding agreements signed by governments with foreign investors. The government of Quebec regularly signs these kinds of agreement to generate foreign investment, for example by promising to supply electricity at an agreed price.

One can think of a number of major projects carried out on the North Shore. Discussions were held and commitments were made concerning electricity rates for the aluminum sector in exchange for commitments from the companies with respect to economic benefits from second and third processing, or future investments.

As I said, Canada's membership will not have any impact on the provinces. Only the federal level will be affected, although the provinces also will have the possibility of including in agreements they might enter into with investors provisions providing for the use of the centre and the convention.

Quebec has negotiated in the past, and could do so again in the future, agreements with foreign companies involved in the exploitation or processing of natural resources for competitive electricity rates under certain conditions. In such cases, it will be necessary to ensure that the endeavours of the Government of Quebec, whose good faith I never doubt, meet all the criteria in the agreement.

I have mentioned the bilateral treaty between the federal government and Peru. This treaty already provides for the use of arbitration or the ICSID process. Canada not being a member of the ICSID, it does not have access to the regular process because it has not ratified the convention. Additional facility arbitration rules apply under such circumstances.

As we can see, nothing much will change, except that we will be able to use the regular process.

In fact, Canada's adherence to the centre and the convention will enable it to take part in negotiations to amend the convention or the centre's rules, and ensure its ability to participate in appointments to arbitration tribunals.

I believe that this is important, because we know that this centre and this sort of convention will be increasingly important not only to the economic future, but to the overall future of trading nations such as Canada and Quebec.

In the final analysis, the centre is just a tribunal, and in that respect, we do not have a problem with Bill C-53. What we have a problem with is not the tribunal, but the poor treaties Canada has signed to protect investments. In our view, it is only natural that there should be investment protection agreements, provided that those agreements protect certain rights, especially the sovereign rights of the states involved, whether the agreements are between states or between states and companies.

It is only natural for investors to try and make sure that they will not be divested of their property and that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover. They are not a new phenomenon, but have been around for more than two centuries now. In 1788, France and the United States signed an agreement to protect foreign investments. Today, there are 2,400 bilateral investment protection agreements in the world. If we add tax treaties covering the tax treatment of foreign investments and foreign source income, there are roughly 5,000 bilateral treaties relating to foreign investments.

I spoke yesterday about Bill C-33 on foreign trusts, and I will come back to that.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Mr. Speaker, I understand the concerns raised by the hon. member.

With respect to free trade and investment, I think the member understands full well that we are a trading nation with a population of 32 million and to ensure our quality of life we need to trade with other nations. However, make no mistake about it, we are also the party of fair trade. We will do everything in our capacity to ensure we promote that in every aspect where we have an opportunity to do so.

We have the South Korean free trade agreement that is potentially being negotiated right now, which the minister has indicated he wants to sign. It is our party that will ensure we stand up for Canadians and ensure there is a level playing field for Canadian companies trying to do trade investment abroad.

Bill C-53 is a very important tool and, as he has indicated, it has been around since the 1960s. Not only has it been around for a long time, it has also been implemented at the provincial levels. It is about time the federal government shows some leadership or at least follows the direction given by the provincial governments.

This is a very simple, straightforward process. It is very transparent. It is a very fair arbitration process. I think the member would agree that this is the tool we need for investment purposes that will generate Canadian jobs and Canadian wealth so Canadians can have a good quality of life.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I find it rather ironic to hear the member for Mississauga—Brampton South talking about free trade agreements, particularly when his party opposed the free trade agreement under Mr. Turner in 1988.

When Mr. Mulroney put in free trade we all know that 525,000 manufacturing jobs were lost in Ontario alone during the first two years of the agreement. In 1993, under Mr. Chrétien, that party again opposed NAFTA. Since then, we have seen the ongoing devastation of our manufacturing sector. Therefore, to hear the promotion of free trade from that member is ironic.

It is my understanding that the process under the ICSID Convention, which Bill C-53 would implement, has been here since 1966. Since it has been in place that long, I am very curious as to why it has taken this long for the need to arise.

My party has strong concerns with the bill, particularly under transparency. It is a consent based process. People from labour, who will talk to us about arbitration, will also tell us that, overall, their sense of binding arbitration is that settlements seem to be coming down one-sided.

I cannot understand why the member opposite would use free trade in the supporting arguments for this bill.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Mr. Speaker, I would like to thank you for allowing me to speak today to Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

To begin with, it is interesting that the Conservatives are introducing a bill to promote cross-border investment at a time when they are demonstrating their complete lack of competence on this very important subject matter.

It was only yesterday, the finance minister was forced by the Liberal opposition, may I add, to make a complete reversal on his ill-advised interest deductibility proposal in the budget.

Despite the government's mishandling of the Canadian economy at the domestic and international levels, it is important that Canada join the vast majority of countries in the world that have ratified ICSID. With increased trade with emerging giants such as China, India and other nations where the government structure is different from our own, it is critical that Canada be part of an international convention on the enforcement of investors' rights.

Allow me to provide a bit of historical background on ICSID to clarify the importance of this convention. I am sure my colleagues in the past have talked about this during debate, but I think it is very important to highlight this description.

The ICSID convention is an international instrument, sponsored by the World Bank, to facilitate and increase the flow of cross-border investment. The convention establishes a mechanism to resolve investment disputes between foreign investors and the host state in which they have made their investment.

Countries agreeing to the hearings do so voluntarily on the part of each party. However, once they have agreed to a hearing, neither one can unilaterally withdraw from the process or refuse to pay damages awarded by the tribunal. Thus, no longer can we be in dispute and have one side just get up from the table and walk away.

These hearings are unbiased and to ensure this, the arbitrator is selected by the contesting parties themselves. The ICSID then provides the hearings with a venue and the administrative support required to facilitate the specific meetings.

The ICSID convention entered into force on October 14, 1966. As of January 2007, 143 states had ratified the convention, making it one of the most ratified instruments in the world. The majority of Canada's trading partners are party to the convention.

Over the past decade, there has been an increasing number of bilateral trade and/or investment treaties. Since most parties involved in bilateral investment treaties refer present and future investment disputes to the ICSID, the case load of this particular process has substantially increased.

As of June 30, 2005, ICSID had registered 184 cases; more than 30 of which were pending against Argentina. As many know, Argentina's economic crisis in the late 1990s and subsequent Argentinian government measures led several foreign investors to file a case against Argentina.

Investment disputes brought under the convention are administered by the International Centre for the Settlement of Investment Disputes located in Washington, D.C.

In the last few years, the activity at the centre has soared due to increased flows of cross-border investment and the number of investment treaties that refer to ICSID arbitration. While the centre has handled 110 arbitrations in total during the first four years of its existence, there are currently 105 proceedings under way. Since its inception, the centre has established itself as a reliable and effective organization for resolving investment disputes.

Once ratified, the convention would provide additional protections to Canadian investors abroad by allowing them to include in their contracts with foreign states the option of arbitration under the ICSID convention.

In addition, Canadian investors doing business in a country with which Canada has a foreign investment protection agreement will have recourse to ICSID arbitration for violations of the agreement. Becoming a party to the ICSID convention will also make Canada a more attractive destination for international investors.

The most significant advantage of the convention is the enforcement of the arbitral awards. Unlike awards issued by other arbitration institutions, domestic courts cannot refuse to enforce decisions issued under the ICSID convention. Rather, such awards are enforceable in any country that has ratified the convention as if they were the final judgments of the courts in that state.

Canada signed the ICSID Convention on December 15, 2006, becoming the 143rd country to do so. British Columbia, Newfoundland and Labrador, Nunavut, Ontario and Saskatchewan have already adopted their own implementing legislation.

I mentioned that some provinces and territories have adopted their own implementing legislation because in order to ratify this bill all provinces and all territories must support the convention and take the necessary action to facilitate this.

It has become known that all provinces and territories have voiced their support with the principles and guidelines outlined in Bill C-53.

What is truly the best part of this convention, though, is the fact that it is not open to interpretation. It is simple, straightforward legislation that not only our major trading partners, by and large, already agree upon, but it is the type of understanding and guidelines that many of our potential trading partners are looking for us to agree with.

By passing Bill C-53, Parliament sends a strong signal to other countries, as well as our own investors, that Canada is serious about honouring its commitment to international treaties and trades.

In my role as the critic for international trade in the opposition, I must emphasize how important the passing of this legislation is right now. Canada, as many people have read in the newspaper, is most likely being taken to arbitration by the United States over several complaints within the softwood lumber agreement.

Despite the strength of Canada's legal position, supported by numerous decisions of international trade law tribunals and domestic courts in both Canada and the United States, the Conservative government rushed negotiations with artificial timelines to maximize political value of the agreement for the Conservative Party of Canada and not the Canadian public.

The Conservatives' electoral agenda was put ahead of the interests of the industry that is a significant element of the Canadian economy in every region of this country. It is an industry that exports over $7 billion. It is an industry that represents thousands of jobs, approximately 300,000 jobs, that are directly impacted by this particular industry.

In fact, there is a possibility that the U.S. may now use the dispute resolution mechanism to their advantage. It is possible that these consultations may not result in a satisfactory resolution. In this case, the U.S. can ask that the matter be referred to the London Court of International Arbitration. In addition, under the softwood lumber agreement, the U.S. has the immediate and unconditional right to terminate, whenever it wants, the softwood lumber agreement.

The government signed an agreement with the United States to bring an end to long-standing disputes regarding a very important and key subject matter in softwood lumber. When it did so, it agreed to throw out previous rulings from NAFTA and the WTO courts and tribunals. The current Minister of International Trade then said that this agreement would provide predictability and stability.

Who would have predicted that seven months into a seven year agreement we would be going to arbitration because the U.S. is knit-picking on issues like what constitutes a surge mechanism in B.C. and why Canada is not collecting more export charges than they should?

This is the start of consultations and possibly arbitrations. Will the U.S. next have issues with stumpage fees in Alberta as it has indicated? Is that stability? I can almost predict the next seven years of stability based on the trend of the first seven months, and it is not looking good.

With any agreement there needs to be predictability and stability, and I agree with that. While it is regrettable, and it is too late to turn back the clock on the softwood lumber agreement, now is the time that we should move forward on protecting Canadian investors.

Because Canada is not an ICSID member, Canadian investors are unable to use ICSID arbitration rules in their disputes with other foreign states, including those where Canadian investors might lack confidence in the court system.

I would not be doing my job as a critic if I did not point out that the government, in implementing this convention, would go a long way to instilling a bit of confidence in its investors. They have certainly been knocked around in the past several months by the government.

As I mentioned earlier, the government had to reverse its decision to eliminate the interest deductibility policy, which, by the way, was the worst policy to come out of Ottawa in over 35 years. It has been widely condemned across the business community by economists. The implications of doing this would have been disastrous to investors if the minister had not reversed the policy.

As bad as that was, we should not forget how much the income trust reversal hurt Canadian investors, particularly seniors. The decision to tax income trusts wiped out more than $25 billion in savings overnight and reversed a key Conservative campaign promise, a promise they had in their platform. Canadians invested their money based on this promise and their trust cost them tens of thousands of dollars on an individual basis of their hard-earned savings. Not only did the income trust reversal impact Canadian investors but it also affected our international competitiveness.

All that aside, Bill C-53 is an effective tool to help protect Canadian investors and should help to mitigate the damage done by recent government flip-flops.

As we know, the government has been slow on signing free trade agreements. According to the Department of Foreign Affairs and International Trade, China will not sign a free trade agreement or do business with a country that is not a member of ICSID. India has also ratified the convention and has entered into investment dispute settlements under the ICSID Convention with 11 countries.

As I am sure many are aware, China and India are not only the two largest countries in the world in terms of population, but they are also the fastest growing economies. As these two economies continue to grow and their labour forces become more and more skilled, greater investment will flow into these economies. China is emerging as a world player in terms of manufacturing, while India is gaining notice for its knowledge based services. As their economies become more sophisticated, they in turn will increase investment outside their borders, including investment in Canada.

Over the past 11 years, China has been the largest recipient of foreign direct investment among developing countries. Cumulative investment in China has reached almost $750 billion over the past 11 years.

Since 1991, India has embarked on a wide-ranging economic reform program that has seen increased developments in terms of trade, investment and monetary and exchange rate policies. One of the highlights of India's economic reform is its trade policy. India has systematically reduced its customs tariffs from 150% in 1991-92 to 25% in 2003-04.

Both China and India have become very forward-looking in their approaches to foreign investments. By ratifying the ICSID Convention within their respective countries, they have taken a proactive approach to protecting their investors internally and abroad.

I urge the House to pass this bill so that as a country we can move forward with signing investment treaties and trade deals that will make Canada and Canadians more prosperous and so Canadians can enjoy a high quality of life for generations to come. I think this is a very important initiative and it is well overdue.

I have expressed my concerns with the government with respect to its legacy and the first 13 months of broken promises, of hurting and damaging our competitiveness and of impairing our ability to be productive. This is one small step toward that direction and I hope the government proceeds with this in a timely fashion.

[Vivian Barbot, Bloc, Papineau, QC]

Mr. Speaker, we want to make it clear that because of certain poorly worded bilateral agreements, we find ourselves having to deal with the possibility of certain companies dealing directly with foreign governments as though they were themselves a government. In reality, the problem does not lie with the convention proposed in Bill C-53, but with previous agreements. We are asking the government to review them because they contain real problems and may lead to abuses. Companies have powers that far exceed those of the government if they can act as though they were a government when dealing with foreign governments. In our opinion, this is not right.

[Vivian Barbot, Bloc, Papineau, QC]

With respect to Bill C-53 more specifically, we can note the following. While it may appear complex because the Convention on the Settlement of Investment Disputes between States and Nationals of Other States is appended to it, also called the Washington treaty, Bill C-53 is relatively simple. It is only a dozen clauses on three pages, integrating into domestic law the requirements under the provisions of the Washington treaty.

Regarding arbitration and conciliation proceedings commenced after its coming into force, the bill provides, in clause 4, that the International Centre for Settlement of Investment Disputes and its personnel have the privileges and immunities, even fiscally, that it needs to operate in Canada. In clause 8, it provides for the legal recognition of arbitration awards rendered by the centre. Clause 7 prohibits, as required under the convention, proceedings before national tribunals on the substance of matters that have already been determined by the ICSID. Under clause 9, they are further prohibited from determining matters under arbitration.

These provisions may be startling in that they take away from national legislation. They are, however, pivotal to the functioning of international arbitration tribunals. Indeed, in many countries, the judicial system is not separate and independent from the political system. That is precisely why investment agreements call for neutral arbitrators.

If national tribunals were allowed to reverse arbitration awards or to have parallel proceedings on matters already under arbitration, it would be pointless to have international arbitration tribunals, and the safeguards in investment protection agreements would hardly be worthwhile.

Under clause 6, the bill makes awards binding on the federal government. This means that Ottawa would be bound by an arbitral award that might require it, for example, to provide compensation to an injured investor. Only the federal government is bound by the bill, not the provinces. In fact, apart from chapter 11 of NAFTA, which is binding on the provinces because they joined NAFTA, no bilateral agreement to protect investments is binding on the provinces.

If, for example, a province passed a measure that injures a foreign investor who is covered by an agreement to protect investments and ICSID ordered that he should be compensated, Ottawa would be responsible for paying. It may seem absurd, but that is how it is under the Constitution. The provinces are fully sovereign in their areas of jurisdiction and Ottawa cannot unilaterally arrogate one of their powers or impose obligations on them by concluding an international treaty. Anything else would amount to depriving them of powers conferred on them by the Constitution, and the courts have refused to do that.

That is why Quebec has always insisted on being closely associated with all stages of the entire process for concluding international treaties. That is the basis of the Gérin-Lajoie doctrine.

The federal government’s refusal to respect the logic of the division of powers and its wrongful arrogation of exclusive control over international relations not only hurts Quebec but is frankly dysfunctional. Once Canada ratifies this convention and joins ICSID, the provinces can do the same if they want. If they want, they can include clauses in the contracts they sign with investors providing for recourse to ICSID. Ottawa’s ratification does not impose any obligations whatsoever on Quebec or the provinces, although it does add further arrows to their quiver in their search for foreign investment.

Finally, it was the Uniform Law Conference of Canada consisting of representatives from the justice departments of all the provinces, including Quebec, and from the federal government that recommended five years ago that the federal government should join ICSID, ratify the convention and implement it. That would be the effect of Bill C-53.

In clause 11, Bill C-53 gives the government the power to designate conciliators and arbitrators in cases involving it that fall under ICSID.

There are generally three people on the arbitral tribunals. Each country that is party to a dispute appoints an arbitrator and these two arbitrators then agree on a third, who acts as the president.

It is in light of these considerations that the Bloc Québécois supports Bill C-53.

[Vivian Barbot, Bloc, Papineau, QC]

Mr. Speaker, it is my pleasure to rise in this House to express the Bloc Québécois' support for Bill C-53.

This bill will enable Canada to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and to become a member of the International Centre for Settlement of Investment Disputes.

Bill C-53 integrates the requirements of the international convention in the laws of a country, in particular to ensure that arbitral awards are respected and to provide for the immunities required by the centre and its staff. ICSID was created by the World Bank by the Washington Treaty in 1965. There are currently 156 member countries.

ICSID is responsible for arbitrating disputes between States and foreign investors. There may be two types of disputes: disputes related to compliance with bilateral foreign investment protection agreements and disputes related to agreements between governments and foreign investors. The Government of Quebec regularly signs the latter type of agreement when eliciting foreign investment with the promise, for example, of providing electricity at an agreed price.

Canada’s membership will not have any impact on the provinces, except that they too may have recourse to the ICSID when they conclude agreements with investors. As for bilateral treaties binding the federal government, they already provide for recourse to ICSID arbitration by the additional facility rules rather than the regular process, which is available only to countries that have ratified the convention.

In fact the only thing that Canada’s membership in the centre will change is that Canada will be able to intervene in negotiations to amend the convention or the rules of the centre and it will enjoy the assurance of being able to join in the appointment of arbitration tribunals. Ultimately, the ICSID is only a tribunal. The problem is not the tribunal, but rather the poor investment protection treaties concluded by Canada.

The Bloc Québécois supports the conclusion of investment protection agreements, as long as they are good agreements. It is completely natural for investors, before making an investment, to try and make sure they will not be divested of their property or that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover.

This is not a new phenomenon. The first known agreement that includes foreign investment protection provisions was reached between France and the United States in 1788, or over 200 years ago. There are now over 2,400 bilateral investment protection agreements around the world. If we include tax treaties, which have to do with the tax treatment of foreign investments and revenues, that would mean some 5,000 bilateral foreign investment treaties.

The Bloc is in favour of concluding such agreements and recognizes that they promote investment and growth. Almost all these agreements rest on the same principles: respect for property rights regardless of the owner’s nationality; no nationalization without fair and prompt financial compensation; prohibition against treating property located on one’s territory differently depending on its owner’s origins; free movement of capital arising from the operation and the disposal of the investment.

In all cases, if there is non-compliance, states can submit a dispute respecting compliance with the agreement to an international arbitration tribunal. In most cases, investors themselves can submit disputes to an international tribunal, but only once they have got the state’s consent. In many cases, the international arbitration provided for under the agreement takes place before the ICSID. Belonging to it, as is provided for under Bill C-53, also means belonging to the international order in the area of investments.

In the investment protection agreements they have signed, only two countries, Canada and the United States, systematically give investors the right to apply directly to the international tribunals.

This is a deviation from the norm. By allowing a company to operate outside government control, it is being given the status of a subject of international law, a status that ordinarily belongs only to governments.

The agreements that Canada signs contain a number of similar deviations that give multinationals rights they should not have and that limit the power of the state to legislate and take action for the common good.

We say no to chapter 11 of NAFTA. The investments chapter of NAFTA, chapter 11, provides that a dispute can go to ICSID. That chapter is a bad agreement in three respects.

The definition of expropriation is so vague that the slightest government action—other than a general tax provision—can be challenged by a foreign investor if it reduces its profits from its investment.

For instance, a plan to implement the Kyoto Accord that paid large amounts to the oil companies, big polluters that they are, could be challenged under chapter 11 and result in the government paying compensation. The Alberta oil companies are in fact mainly owned by American interests. Chapter 11 opens the door to the most abusive proceedings.

The definition of investor is itself so broad that it includes any shareholder. This means that virtually anyone can bring proceedings against the state and seek compensation in relation to a government action that allegedly reduced a company’s profits.

The definition of investment is so broad that it even includes the profits an investor hopes to earn from its property in future. In expropriation cases, not only is the state then forced to pay the fair market value, but it must add the amount of the income that the investor anticipated earning in future. In that case, it would no longer be possible to nationalize electricity as was done in Quebec in the 1960s.

Take the example of SunBelt, a company composed of a Canadian shareholder and a Californian shareholder. The business closed down when the Government of British Columbia eliminated the right to export water in bulk that it had been given. The Canadian shareholder, relying on Canadian laws, received compensation equivalent to the value of its investment: $300,000. The American shareholder, relying on chapter 11 of NAFTA, included in its claim all of its potential future earnings: $100 million. The case was settled out of court for an amount that was not disclosed.

Given the amounts of money in issue, chapter 11 is a deterrent to any government action, particularly in relation to the environment, whose effect would be to reduce the profits of a foreign-owned corporation.

As well, the dispute resolution mechanism allows corporations to apply directly to the international tribunals to seek compensation, without even getting the consent of the state.

How is it conceivable that a multinational could, on its own authority, create a trade dispute between two countries? And yet this is the absurd situation that the investment chapter of NAFTA permits.

Given these flaws, chapter 11 of NAFTA reduces the state’s capacity to take action for the common good, to legislate about the environment, and is a Damocles’ sword that could come crashing down at any moment on any legislative or regulatory measures whose effect was to reduce corporations’ profits.

In 2005, the United States changed some of the provisions in their standard form investment protection agreement. In 2006, Canada followed suit.

Since both countries have now acknowledged the harmful and extreme nature of chapter 11 of NAFTA, the time is ripe for the government to move quickly to enter into discussions with its American and Mexican partners to amend chapter 11 of NAFTA.

We say no to bad investment protection agreements. In addition to chapter 11 of NAFTA, and although its extreme nature has been widely decried, the government has entered into 16 other bilateral foreign investment agreements, carbon copies of chapter 11.

All of these foreign investment agreements are faulty and should be renegotiated. In 2006, the government recognized to some degree that these agreements were bad. Copying the amendments made by the Bush administration the previous year, the Conservative government made changes to its FIPA program to correct the most obvious shortcomings.

It clarified the concept of expropriation by specifying that a non-discriminatory government measure that is intended to protect health and the environment or to promote a legitimate government objective should not be considered as expropriation and should not automatically generate compensation. It is too soon to evaluate the real impact of that clarification, but at first glance, it looks like an improvement.

Moreover, it restricted the concept of investment by specifying that the value of property is equal to its fair market value. That put an end to the folly of adding together all the potential profits that an investor might hope to earn from an investment.

As for the rest, the standard investment protection agreement continues to be based on chapter 11 of NAFTA. The government must continue to improve this standard agreement, particularly in terms of dispute settlement mechanisms. Multinational corporations must be brought under the authority of the state, like any other citizen.

It is important that the government submit international treaties and agreements to the House of Commons before ratifying them. At the start of the year, the government sent out a news release to announce that it had just ratified a new foreign investment protection agreement with Peru. It was only by reading that news release that parliamentarians and the public became aware of this agreement. Parliament was never informed and never approved it. That is completely anti-democratic.

Yet, the Conservative platform in the last election was clear: the Conservatives made a commitment to submit all international treaties and agreements for approval before ratifying them. Since the Conservatives came to power, Canada has ratified 24 international treaties. Except for the amendments to the NATO treaty, which were the subject of a mini-debate and vote at the last minute, none of these international treaties was submitted to the House.

International agreements today have an impact on our lives that is comparable to the impact that legislation can have. Nothing can justify the government’s going over the heads of the representatives of the people and quietly and unilaterally entering into these agreements.

In the past, the Bloc Québécois has introduced bills to restore democracy and ensure that the jurisdictions of Quebec and the provinces are respected in negotiating international treaties. Given that the government has committed to doing that, we have not taken that step this time.

We can see today that the Conservatives' commitments are not worth the paper they are written on. The Bloc Québécois will therefore start bringing forward again proposals to restore democracy in the making of international treaties, including the obligation on the government to submit to the House any international treaty or agreement it enters into, before it is ratified; the obligation on the government to publish every international agreement it is involved in; approval and vote in the House on any major treaty, following consideration by a special committee on international agreements, before the government can ratify it; respect for the jurisdictions of Quebec and the provinces at every stage of the treaty-making process: negotiations, signing, and ratification.

Am I running out of time, Mr. Speaker?

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I am honoured to speak in support of Bill C-53, the settlement of international investment disputes act.

The International Convention on the Settlement of Investment Disputes between States and Nationals of Other States, the ICSID convention, is an international instrument sponsored by the World Bank to facilitate and increase the flow of cross-border investment. The convention establishes a mechanism to resolve investment disputes between foreign investors and the host state in which they have made their investment.

The convention entered into force on October 14, 1966. As of January 2007, as the previous speaker mentioned, 143 states had ratified the convention, making it one of the most ratified instruments in the world. The majority of Canada's trading partners are party to this convention.

Once ratified, the convention will provide additional protection to Canadian investors abroad by allowing them to include in the contracts with foreign states the option of arbitration under the convention. In addition, Canadian investors doing business in a country with which Canada has a foreign investment promotion and protection agreement will have recourse to arbitration for violations of the agreement. Becoming a party to this convention will also make Canada a more attractive destination for international investors.

As a small businessman and entrepreneur myself, I recognize that these sorts of multilateral agreements promote stability, the rule of law and confidence in the local economy.

With hugely increased trade with emerging giants such as India, Brazil, China and other countries with governance structures different from our own, it is important that Canada be part of this international convention.

I have travelled extensively to China, India, eastern Europe and elsewhere in Europe. I can see that the developing countries still have a lot of work to do when it comes to honouring those agreements. That is where this is going to be of real importance and an essential tool for Canadians who want to invest in those countries.

This is also true for Canadian investors abroad and for those international investors who choose to invest their money in Canada. I am glad that the government is moving forward with this bill.

However, the government is introducing a bill to promote cross-border investment, while at the same time it is demonstrating its complete lack of competence on this very issue. Let me summarize the government's failure to manage our economy.

There is the betrayal on income trusts. Since April 18, 2007 there have been 16 income trust takeovers, many of which have been bought by large U.S. private equity firms. Private companies will ensure that not only are these businesses no longer paying Canadian taxes, but Canadian investors will no longer receive distributions on which they are taxed.

This is of particular shame in the energy trust sector. One of the most effective investment vehicles in this country was the income trust. Over the past 20 years Canadian energy trusts have been active in buying foreign interests and repatriating foreign capital to Canada. This trend has now been reversed.

Even worse is the impact it has had on ordinary working Canadians. When we talk about ordinary working Canadians we are talking about $35 billion lost, an average of $25,000 per Canadian. My heart goes out to those seniors who are past their prime earning years, and those working families who saw their investments reduced by a staggering 25% overnight. I think people will not make their decisions based on the Conservative leader's word ever again.

The flip-flop on deductibility of interest incurred on loans used to invest overseas is another major example of how lost the Conservative Party is when it comes to managing the economy of our country.

On April 16, 2007 our Liberal Party leader along with our finance critic, the member for Markham—Unionville, called on the Conservatives to reverse these disastrous policies before more Canadian companies and jobs were lost and long term damage was caused to Canada's competitiveness in the global marketplace. The Conservatives pretended that their interest deductibility proposal was about eliminating tax havens but that is false. It was too late for the finance minister to realize it.

This policy is taking away a legitimate tool from Canadian industries that increases their competitiveness on the world stage. The Minister of Finance tried to ignore the calls from the Liberal Party to reverse this disastrous policy but he ignored us. However, he was unable to ignore his unhappy friends on Bay Street who made it clear that the Liberal Party was right and that the Conservatives should reverse the decision.

At least the Minister of Finance is demonstrating some judgment by flip-flopping for the good of the Canadian economy. I suppose the people of Canada have not discovered what the people of Ontario already knew when it comes to the minister's stewardship of the economy. We all remember that it was the Minister of Finance's provincial--

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Speaker, I want to thank the hon. member for his question. That is precisely what we are doing in the parliamentary debate today. In order for Bill C-53 to come into force it has to be passed by the House of Commons and then go through the parliamentary process at the Senate, during which time all parliamentarians have the opportunity to speak to the bill. If the hon. member wants to make constructive comments on the bill, I invite him to do so now.

Nearly 153 countries have signed this convention that will allow numerous foreign companies that do business abroad to get better legal assurances that the contracts they sign with other parties in other countries are respected.

In Quebec, this has even more significance because in 2008 there will be a conference of the leading experts on the matter in order to continue to improve the arbitration process. We have to recognize that in many cases this is better than having lengthy, expensive legal disputes in foreign courts.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I would like my colleague from Lévis—Bellechasse to elaborate.

As I mentioned earlier, the Bloc Québécois supports Bill C-53 because it is a good thing to have recourse to the International Centre for Settlement of Investment Disputes when dealing with international treaties between governments or agreements between corporations and foreign governments. We are pleased with this and we will support Bill C-53.

However, there is a problem. Treaties signed by the Government of Canada with other countries are not submitted to this House for review. I would like my colleague for Lévis—Bellechasse to elaborate on this and tell us if he is prepared to undertake that, in future, the Conservative government will not sign an international treaty with any country without submitting it to Parliament for examination. This will avoid potential errors. In fact, 308 individuals are better than 100.

This will allow us to ask all the necessary questions in order to avoid making mistakes and finding ourselves before the International Centre for Settlement of Investment Disputes.

Will my colleague from Lévis—Bellechasse show us the authority he is capable of and assure this House today, on behalf of his party, that, in future, no international treaty will be signed without being submitted for review to this chamber of Parliament?

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Speaker, it gives me great pleasure to rise today in this House to express my support for the bill that was described so well by my friend from Simcoe—Grey, the Secretary of State for Foreign Affairs, International Trade and Sport, and also by my friend from Calgary East, the Parliamentary Secretary to the Minister of Foreign Affairs.

Bill C-53 implements, in Canadian law, an international convention of the World Bank, the ICSID Convention. The purpose of Bill C-53 is therefore to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. This convention covers arbitration and international conciliation between governments and foreign investors, what is commonly called investor-state dispute settlement.

These disputes can arise in a variety of situations, for example, when the country where the foreign investor is located passes laws that discriminate against the investor or in case of nationalizations.

International arbitration is a proven method for resolving disputes. It is a way of resolving them without resorting to the legal system. It has long been acknowledged that the parties to a dispute can resort to arbitration and the results of the arbitration process will be recognized by the courts. For example, commercial arbitration awards in Canada, that is to say between businesses, are recognized and enforced by the courts.

It is up to the parties to decide whether they want to resort to arbitration or the legal system. The flexibility that this provides is often much appreciated. In the case of the convention implemented by Bill C-53, which we are debating today, one of the great advantages of relying on arbitration is that it denationalizes the process. I will explain what is meant by that.

When a dispute arises between a foreign investor and the host country, the investor has the option of pursuing the matter before the courts of the host country. Usually—and this would be the case in Canada, in Quebec, or anywhere else in the country—the foreign investor would be entitled to a fair and equitable hearing. The host country’s courts would not be prejudiced against the foreign investor and would reach a decision under the law. Sometimes, though, this would not happen. The court might well lean in the direction of its own government at the expense of the foreign investor, which, in a case of interest to us, could well be a Canadian company doing business abroad. I should say as well that another advantage of the arbitration process is that the parties choose the arbiters. When the matters in dispute are highly specialized, for example petroleum development or marine issues, choosing arbiters who are experts in the field can make the process more effective and result in better decisions.

The arbitration process in the ICSID Convention is therefore one of the processes that are most often used for settling disputes between investors and states. My colleagues pointed out that more than 150 countries have already signed on to this arbitration process. The Convention has been ratified and is one of the international instruments to which the largest number of states belong. What distinguishes the convention to be implemented here in Canada by this bill is the mechanism for enforcing arbitration awards. It is an effective mechanism and that will help to protect investors. This is a key advantage of the ICSID Convention.

In the great majority of cases, the losing party in arbitration will pay the award of an arbitral tribunal without the need for the successful party to take any enforcement proceedings. The same is true for investor state arbitration.

In Canada, arbitral awards, including investor state arbitral awards, are currently enforced pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This New York convention permits a limited review of an arbitral award by domestic courts. It allows a court to refuse to enforce an award if to do so would be contrary to public policy. In addition, it permits a state to exclude certain subjects from the application of the convention and thus from enforcement.

ICSID provides a better enforcement mechanism. It does not permit a state to exclude from dispute settlement any matter which the state has consented to submit to arbitration. ICSID awards are enforceable as if they were final decisions of a local court. This simple, efficient mechanism guarantees better protection for Canadian investors abroad.

We can also think of companies like Bombardier, the mining companies, the large consulting engineering firms and SNC Lavalin, whose head office is in Montreal.

Here are a few of the elements or clauses that make this bill an advantageous one for our businesses in Quebec and Canada.

For example clause 8 in the bill provides for the automatic recognition and enforcement of an award given by an ICSID tribunal. Such an award is recognized and deemed to be a final judgment by a superior court of Canada.

Under the same clause, any superior court of Canada may recognize and enforce awards coming under the law. The superior courts include the Federal Court. The Federal court will have the necessary jurisdiction to hear requests for recognition of awards involving the Government of Canada and awards involving foreign governments and their political subdivisions.

This same convention provides explicitly that awards are binding on the parties and cannot be subject to any judicial appeal or remedy.

Thus a foreign tribunal cannot hear a request to the effect that an ICSID arbitral tribunal has gone beyond its jurisdiction or was not properly constituted. These cases, when they are undertaken for awards other than those of the ICSID, delay resolution of the dispute and payment of damages. The convention does not allow such dilatory remedies.

Clause 7 of the bill provides that an award under the convention is not subject to any remedy, such as appeal, review and annulment in a Canadian court of justice. From this we can infer the very final effect of awards given under the convention. The decision to seek arbitration is entirely voluntary, but once the parties have agreed to it they cannot seek remedy from any other body, such as a court of justice.

The only remedies allowed in erroneous decisions are those laid down in the convention. Requests for review, interpretation or annulment of an award are heard, should the case arise, by the Secretary-General of ICSID.

Thus questions of error concerning awards cannot be submitted to national tribunals, but there remains a guarantee that erroneous awards will be remedied.

The ICSID Convention provides a good mechanism for resolving disputes and enforcing awards efficiently. This is an international instrument promoting arbitration and fair solutions for international investment disputes. This is why our government is presenting for second reading Bill C-53, which implements the ICSID Convention here, in Canadian law.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, people who are watching sometimes have difficulty understanding complicated bills. I must admit that Bill C-53 is rather complex. It deals with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

My question is for my colleague. The Bloc Québécois will support Bill C-53 so that disputes over bilateral agreements can be handled by the International Centre for Settlement of Investment Disputes, which I think is a good thing.

Will my colleague agree that the problem does not lie in supporting an international dispute settlement centre, but in the fact that the conventions signed by the Government of Canada are often bad conventions?

Can my colleague promise in this House that his government will no longer sign bilateral treaties without first bringing them before Parliament for discussion with the elected members here in this House?

[Deepak Obhrai, Conservative, Parliamentary Secretary to the Minister of Foreign Affairs]

Mr. Speaker, I will be splitting my time with my colleague, the member for Lévis—Bellechasse.

I am pleased to have the opportunity to further explain Bill C-53, which implements Canada's obligation under the Implementation of the Convention on the Settlement of Investment Disputes.

Canada signed the ICSID convention on December 15, 2006. That signature was a public undertaking that Canada intended to pass legislation so we could ratify the convention. This bill is the fulfillment of that undertaking. I will say more later in my speech about the ratification of the convention.

The ICSID is an important convention for protecting investment around the world. ICSID awards can already be enforced in 143 countries. It is time to provide the benefit of ICSID to Canadian investors. However, to gain that protection for Canadian investors, Canada needs legislation to ensure that ICSID awards, wherever they are made, can be enforced in Canada.

Canada also needs to provide the privileges and immunities needed for ICSID to function in Canada. We need to ensure that persons using conciliation under the convention cannot abuse that process. Canada needs to ensure that it can appoint qualified persons to ICSID panels.

Previous speeches have provided an overview of the bill and its provisions dealing with enforcement. I will focus in this speech on privileges and immunities, conciliation and appointments to the panel.

Let me begin with privileges and immunities. The privileges and immunities provided for in this bill do not deal with the privileges and immunities of the foreign governments against which an award is made. Those privileges and immunities will continue to be governed by the Foreign Missions and International Organizations Act.

Instead, clause 5 of the bill deals with the privileges and immunities of the ICSID and of individuals working for the centre or engaged in ICSID arbitration. Generally, clause 5 simply faithfully incorporates into Canadian law the privileges and immunities which the convention requires.

ICSID is provided with the legal capacity of a private person. This means it will be able contract, acquire property and institute legal proceedings. ICSID will be immune from legal process except when it waives this immunity.

Officers and employees of ICSID and people acting as conciliators or arbitrators will also be immune from legal process, but their immunity is limited. They will have immunity only for acts they have done in the exercise of their functions and only if the ICSID does not waive this immunity.

If they are not Canadians, these people are entitled to the same immunities and immigration restrictions, registration requirements and national service obligations as Canada extends to representatives, officials and employees of comparable rank of other states. The same rules apply to foreign exchange and travel restrictions.

These rules would also apply to people appearing in ICSID proceedings as parties, agents, counsel, advocates, witnesses or experts. However, this immunity is generally limited to the period when they are travelling to and from the place where the proceedings are held and for the period of their stay there.

There is nothing new or unusual in the privileges and immunities which the convention and the bill provide to individuals. Immunity from legal process is limited to functional immunity. As to other privileges and immunities, Canada only needs to provide them on the same basis as it provides to officials of other states.

All Canada's policies that apply to the extension of such privileges and immunities to officials of foreign states will also apply to the privileges and immunities provided to people under this bill.

I should also note that ICSID does not have to pay taxes or customs duties. Canadian may also not levy taxes on the salary or benefits of ICSID staff members who are not Canadians. Similarly, Canada will not tax ICSID conciliators or arbitrators who do their work in Canada if the only basis for such tax is that the work was done in Canada.

These tax privileges, like other privileges and immunities, are exclusively related to ICSID and its activities. They do not limit Canada's ability to tax Canadians. Indeed, if ICSID arbitrations and conciliations are not conducted in Canada, these tax privileges have almost no revenue impact.

I turn next to clause 10, the portion of the bill that deals with conciliation.

In addition to arbitration, ICSID also provides a conciliation process for investor state disputes. Conciliation is a process in which the parties to the dispute use a third party to clarify issues and to try to bring about agreement between them on mutually accepted terms. If the disputing parties reach agreement, the third party prepares a report explaining the issues and the agreement reached by the parties.

Conciliation can only work if both the investor and the state can speak honestly and openly to the conciliator, but conciliation can break down. For conciliation to work, the parties and the conciliator have to be able to say things that might be damaging admissions in any subsequent court action or arbitration.

The convention deals with this problem by requiring parties to the convention to ensure that what is said or written in an ICSID conciliation process will not be used in any subsequent proceeding. Clause 10 implements this obligation.

I now turn to clause 11, which provides for the governor in council to designate persons to the ICSID panel of conciliators and the ICSID panel of arbitrators.

Articles 12 to 16 of the convention set up two panels, one for conciliators, one for arbitrators. Each state party to ICSID may designate four persons to each panel and the ICSID secretary general may also appoint ten. Panel members serve for renewable terms of six years, but continue in office until their successors are designated. People designated to panels must have recognized competency in the fields of law, commerce, industry or finance.

Articles 31 and 40 of the convention provide that if the secretary general of ICSID is required to appoint the chairman of a conciliation commission or an arbitral tribunal, he must select the chairman from the relevant panel. However, the parties to the dispute are free to appoint conciliators or arbitrators from outside the panel and may well agree on a chairman.

Being named to the panel provides no remuneration. Historically, the chances of a panellist actually being asked to arbitrate or conciliate a case are quite small. This is because there have only been 118 cases decided by the ICSID arbitral tribunals and 5 conciliation reports issued over the last 40 years. Therefore, only 118 arbitrators have been appointed to chair arbitral panels and only 5 conciliators have been selected to chair conciliation commissions. Remember as well that the parties can appoint a chairman from outside the panel.

Once this bill is declared in force in Canada, Canada will be in a position to ratify the ICSID convention. The convention also permits us to designate provinces and territories as entities that could use ICSID arbitration.

Some provinces with an interest in the convention still have concerns about the implementation and operation of the convention. We are working with the provinces and territories to resolve such concerns.

Canada can designate a province or a territory under the convention at the same time as the ratification or at any time later.

I urge the House to consider this bill on an expeditious basis. One hundred and forty-three countries are already party to the ICSID convention. Canadians with investments abroad are asking us to make the ICSID option available to them. It is time to act.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I do not know whether it will surprise the secretary of state to hear this. I am sure many others will not be surprised to know that the Chamber of Commerce has not approached me, and I am not insulted by that. It is not surprising it has not done so.

There are various arguments in favour of signing on at this time. It is perhaps regrettable because if it had, it would have addressed some of the questions I raised, which I hope the secretary of state will choose to address in her wrap-up on the debate of Bill C-53 at second reading.

I have a great many corporations in my community, for which I have a good deal of regard and respect in terms of how they conduct themselves in a socially responsible way. In fact, it was thrilling for me that the Chamber of Commerce and the Greater Halifax Partnership jointly sponsored a major event on corporate social responsibility. One of the outstanding commentators on this topic came to address the subject, Stephen Lewis. There was a huge turn-out from the corporate community to address the questions of corporate social responsibility, and it made me feel very good about my community.

I do not want to misrepresent that speech and I would not even try to begin to articulate the thrust of the case for corporate social responsibility having been put to the business community in Halifax by Stephen Lewis, but it was well received.

Issues of transparency, accessibility and accountability in such disputed matters would rank very high with responsible corporations that take seriously the need to take responsibility for their actions and to ensure that people understand what kinds of disputes have occurred and then what kinds of decisions have come out of them.

With those comments, I look forward to the secretary of state addressing the question of why now. Other that having cited the Chamber of Commerce. I did not hear her speak about what other kinds of representations from other citizens or corporations were made to the government that brought it to the decision to bring this forward as legislation at this time. I look forward to hearing her comments on that.

[Helena Guergis, Conservative, Secretary of State (Foreign Affairs and International Trade) (Sport)]

Mr. Speaker, I have a couple of comments for the hon. member and perhaps she would want to comment on them.

With regard to the business community in Canada, the Canadian Chamber of Commerce has written to the government and expressed that the business community very much would like to see Bill C-53 proceed. It would like to see Canada join along with the other 143 countries to date that have ratified.

I think what is important for the hon. member to know is that this is one of the most ratified instruments in the world. Of course, the international community is starting to realize the benefits of ICSID.

Perhaps the member would like to comment on whether she has had any conversations with the local business communities across the country. The member was a former party leader and I know that she would have had some connections with the business community. It would be very helpful to know what they have said to her.

I also want to point out that we are negotiating a foreign investment and protection agreement with China right now. I have been advised that having ICSID in place is something that would help us to proceed with this FIPA and go forward with respect to working with China. Does she have any comments on that?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I am pleased to speak to Bill C-53. As I understand it, the purpose of the bill is for Canada to implement the provisions of the international convention on the settlement of investment disputes.

I was not able to be here when the secretary of state introduced the bill and she may have addressed one of my questions that I posed to one of the Liberal members speaking to the bill. However, I reiterate the question because it seems to me it is something on which it is important for us to have some understanding. It has to do with the fact this convention has been open for signature for literally 42 years, from March 18, 1965 to this day. The obvious question that arises is, why now? What is the reason that today the government is proposing that something that has been on the books internationally and available for Canada to sign on to for years is suddenly a matter of sufficient importance and urgency to bring it forward in this Parliament?

In the absence of understanding that, I have proceeded to try to make sense out of the bill. I want to make it clear at the outset that the members of the New Democratic Party will not be voting to support Bill C-53 at this time. We have a number of concerns. I will try in the time available to me to summarize those concerns in three categories, first, with respect to matters of transparency, second, the issue of accessibility and third, matters of accountability. We find that this proposed agreement fails to meet the minimal test that we think is appropriate for a sovereign state to be able to seek reassurances that simply are not there.

First, I will speak briefly about transparency. The international convention on the settlement of investment disputes, proposes a consent based process for settling disputes. It is a difficulty that it is specified that once the consent of a party is given, there is no provision for there to be any revocation regardless of how flawed the process may be or how many concerns may arise in terms of how the whole process is being conducted.

The dispute settlement mechanism proposed by Bill C-53 will not just adjudicate individual contracts between foreign companies and sovereign states; it will in fact become the principal international process through which other investment agreements will be interpreted and applied with binding results. Article 48(5) of the convention clearly states:

The Centre shall not publish the award without the consent of the parties.

This creates a real concern about the transparency of the process. It seems that if matters are of sufficient import to our government, or for that matter to the corporations that are a party to such processes, there needs to be the assurance of there being some transparency around what has actually transpired.

The mechanism that is being proposed will exist under the aegis of the World Bank. That is an organization with which a great many NGOs have concerns. A great many countries, particularly the poorest of the poor countries in the world have major concerns with the World Bank. The New Democratic Party has raised concerns about it as well and in fact is pleased that the foreign affairs and international development committee currently is seized with some of those concerns and is looking at the issues of transparency, accountability and accessibility.

It seems to me at the very least that the government should not be jumping ahead without a more thorough examination of some of the concerns that have been brought to our attention through the experience of respected NGOs. One such NGO is the Halifax Initiative, an organization that was established after the G-8 was held in Halifax. It has nothing to do with me or my riding specifically. There was concern that there were no adequate responses to some of these serious issues. Another of the NGOs that presented on the matter before the committee was KAIROS, a highly respected multi-faith organization which is very involved in international development work around the world.

Concerns have not only arisen around the transparency and accountability of the World Bank operation which have massive implications for countries in the south but actually about the transparency of the Canadian government's decision-making as it relates to our participation in the World Bank.

These are issues that need to be examined more carefully with more satisfactory responses before we plunge into what is proposed here in the way of signing on to a convention. If for 42 years it has not been of sufficient or adequate usage by a series of Conservative-Liberal governments and the problems of transparency still remain with respect to the World Bank, it seems to me that it would be better if we put our house in order before we proceed with this new agreement.

Let me move briefly to the issue of accessibility. The process that is set out in the ICSID, which is the international convention that we are dealing with here, does not allow for third party testimony whatsoever. No matter how adversely some communities or other citizens may be impacted by certain contentious agreements between two parties, there is no allowance for what is called in legal terms amicus curiae briefs and is very problematic except with the full consent of the two parties to the arbitration.

There are citizens, communities and probably in some cases regional interests that could be massively impacted by some of these disputed agreements. It is not acceptable to us that there is no provision for some third party testimony being brought before an arbitration hearing. Couple that with the fact that there is no requirement for the decisions and the awards to be published, it is just a further reason for not being able to support this proposed process in its current form.

Most proceedings will probably be held in Washington. There is provision for a few designated centres elsewhere around the world, but they will take place in a small number of capital cities and will be entirely inaccessible in many instances to those third parties who may have a distinct and legitimate interest in the proceedings. Therefore, there are issues about accessibility. There is no question that countries in the southern hemisphere will most likely be impacted in adverse ways around such procedures and disputes.

Third, with respect to accountability, as I have already indicated, all decisions issued through the proposed dispute mechanism will be binding. The provisions for any appeals that could be launched to such binding decisions are very narrow and minimal.

According to article 52 in Bill C-53, annulment of a decision could only be permitted under five conditions: first, that the tribunal was not properly constituted in the first place; second, that the tribunal has manifestly exceeded its powers; third, that there was actually documented corruption in the tribunal itself; fourth, that there was a breach in the rules of procedure; and fifth, the award failed to state the reasons on which the decision was based.

Those are really very narrow legalistic provisions that would permit for any kind of appeal process whatsoever. Given the severe impact, the magnitude of the implications of decisions that may be rendered by such a dispute resolution body, when we combine the lack of transparency, the lack of accessibility with the lack of accountability, one has to be very concerned about why we need sign on to provisions that are this lacking in terms of really being transparent and accountable for its decisions.

Citizens cannot know which decisions are taken or how much their government is expected to pay in some cases where decisions are made that the government is a party to these decisions. We are talking largely about huge corporations, and in the instance of the government losing the decision, there is not even any kind of mandatory disclosure. In fact, the opposite is true.

It is not permissible for there to be disclosure of how much a government may actually be forced to pay in the event of such a decision being made that has the government, representing the people of one's country, on the losing side.

In that event, how is it possible for citizens to hold their government accountable, or foreign corporate entities for that matter? How is it possible to judge the legitimacy of ICSID decisions that are reached? I think it fundamentally erodes the democratic accountability and the transparency that needs to be obtained.

In conclusion, a great many Canadians remember, and certainly New Democrat members of Parliament remember all too well, the attempt of the previous government to plough ahead with the introduction of the multilateral agreement on investment. It was truly astounding when this came to light, it was actually a process that was so kind of clandestine and so below the radar that I remember asking questions on the campaign trail.

I hope my memory serves me correctly. It was either in 1997 during the federal election campaign or 2000, and my colleagues confirm that my first instinct was right. My memory is never perfect, I have to confess to that, but in 1997 the multilateral agreement on investments had just barely risen to public awareness and it was impossible to get any information about what this agreement was really all about.

Overwhelmingly, what we were hearing from people, the more we were able to delve into it, was that they were very concerned about the extent to which this multilateral agreement on investment would have severally curtailed the sovereign rights of states and citizens to the benefit, overwhelmingly, of large, transboundary, multinational corporations.

Had the ICSID process, the dispute mechanism that is here proposed in Bill C-53, existed at the time and had the multilateral agreement on investment gone ahead, cases of arbitration under the multilateral agreement on investment would actually have been channelled through the ICSID. As I mentioned at the outset when I raised questions about why now, why is this so-called new Conservative government now saying it has become very important for us to move ahead with this when it has been available for signature for 42 years, one really has to consider the adverse implications that would have accrued to Canada had we found ourselves in the situation of the MAI having gone ahead.

Thank goodness Canadians were not prepared for that to happen, but had it gone ahead it would have become subject to this disputes mechanism body with all the additional concerns that I have already raised.

With those reservations, the NDP has reached the conclusion that this is not a piece of legislation that we can support. We would have no recourse for arbitration decisions that would seriously erode the sovereign authority of the Canadian state had MAI gone into existence. We would have had no say whatsoever in the course of proceedings.

These are not light matters. These are not casual concerns. The ICSID process, while not substantive in itself, in our view has the very dark and worrisome potential to make bad financial investment agreements even worse. As I indicated at the outset, the New Democratic Party members of Parliament will not be voting for Bill C-53.

[Francine Lalonde, Bloc, La Pointe-de-l'Île, QC]

Mr. Speaker, from the beginning the Bloc Québécois has supported Bill C-53. Passing this bill will enable Canada to ratify the convention on the settlement of investment disputes between states and nationals of other states, and to become a member of the International Centre for Settlement of Investment Disputes, better known by its acronym, ICSID.

Bill C-53 integrates the requirements of the international convention in the laws of a country, in particular to ensure that arbitral awards are respected and to provide for the immunities required by the centre and its staff. As my colleague opposite said, ICSID was created by the World Bank by the Washington Treaty in 1965. There are currently 156 member countries. ICSID is responsible for settling disputes between a state and a foreign investor. There may be two types of conflicts. The first type are disputes over bilateral foreign investment protection treaties. The second are disputes over treaties between governments and foreign investors, for example the type that the Government of Quebec concludes regularly by eliciting foreign investments with the promise of providing electricity at an agreed price.

Canada’s membership will not have any impact on the provinces, except that they too may have recourse to the ICSID when they conclude agreements with investors. As for bilateral treaties binding the federal government to other countries, they already provide for recourse to ICSID arbitration, but not through the regular mechanism, since Canada has not ratified the convention. In fact the only thing that Canada’s membership in the centre will change is that Canada will be able to intervene in negotiations to amend the convention or the rules of the centre and it will enjoy the assurance of being able to join in the appointment of arbitration tribunals.

Ultimately the ICSID is only a tribunal. I could have said so at the beginning, but I am saying it at the end. Where there are settlement difficulties, however, the problem is not usually the tribunal, but rather the poor investment protection treaties concluded by Canada.

The Bloc Québécois, of course, supports the conclusion of investment protection agreements, as long as they are good agreements. It is completely natural for investors, before making an investment, to try and make sure they will not be divested of their property or that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover. In fact this is not a new phenomenon. Agreements to protect investments have been signed by France and the United States since 1788. Today there are over 2,400 bilateral investment protection agreements around the world.

The Bloc is in favour of concluding such agreements and recognizes that they promote investment and growth. However—and it is important to say so—almost all these agreements rest on the same principles: respect for property rights regardless of the owner’s nationality; no nationalization without fair and prompt financial compensation; prohibition against treating property located on one’s territory differently depending on its owner’s origins; free movement of capital arising from the operation and the disposal of the investment.

In all cases, if there is non-compliance, states can submit a dispute respecting compliance with the agreement to an international arbitration tribunal. In most cases, investors themselves can submit disputes to an international tribunal, but only once they have got the state’s consent, and this is something to be noted. In many cases, the international arbitration provided for under the agreement takes place before the ICSID. Belonging to it, as is provided for under Bill C-53, also means belonging to the international order in the area of investments.

In the investment protection agreements they have signed, only two countries, Canada and the United States, systematically give investors the right to apply directly to the international tribunals, and we have repeatedly spoken out against this.

This is a deviation from the norm. By allowing a company to operate outside government control, it is being given the status of a subject of international law, a status that ordinarily belongs only to governments.

The agreements that Canada signs with other countries contain a number of similar deviations, giving multinational corporations rights that they should not have and limiting the power of states to legislate and take action for the common good.

We said no—and we still say no—to chapter 11 of NAFTA. That chapter of NAFTA, the trade agreement between the United States, Canada and Mexico, deals with investments and provides that a dispute can be taken to ICSID. That chapter is a bad agreement in three respects.

The definition of expropriation is so vague that the slightest government action—other than a general tax provision—can be challenged by a foreign investor if it reduces the profits from its investment. For instance, a plan to implement the Kyoto accord that forced the oil companies, the big polluters, to pay large sums could be challenged under chapter 11 and result in the government paying them compensation.

Let us remember that the Alberta oil companies are mainly owned by American interests. Chapter 11 could open the door wide to the most abusive proceedings.

Second, the definition of investor is so broad that it includes any shareholder. This means that virtually anyone can bring proceedings against the state and seek compensation in relation to a government action that allegedly reduced a company’s profits.

Third, the definition of investment is so broad that it even includes the profits an investor hopes to earn from its property in future. In expropriation cases, not only is the state then forced to pay the fair market value, but it must add the amount of the income that the investor anticipated earning in future. In that case, it would no longer be possible to nationalize electricity as was done in Quebec in the 1960s.

The dispute resolution mechanism allows corporations to apply directly to the international tribunals to seek compensation, without even getting the consent of the state—if they do, without going through the dispute resolution mechanism under the agreements signed in NAFTA.

How is it conceivable that a multinational corporation could, on its own authority, create a trade dispute between two countries? And yet this is the absurd situation that the investment chapter of NAFTA, chapter 11, permits.

Because of these flaws, chapter 11 of NAFTA reduces the state’s capacity to take action for the common good, to legislate about the environment, and is a sword of Damocles that could come fall at any moment on any legislative or regulatory measure that might reduce corporate profits.

In 2005, the United States changed some of the provisions in their model investment protection agreement. In 2006, Canada followed suit, thus agreeing that they were extreme.

Since both countries have now acknowledged the harmful nature of chapter 11 of NAFTA, the time is ripe for the government to move quickly to initiate discussions with its American and Mexican partners to amend chapter 11 of NAFTA. It is important to bring this up now. Obviously, therefore, we are saying no to bad investment protection agreements.

In addition to chapter 11 of NAFTA, and although its extreme nature has been widely decried, the government has entered into 16 other bilateral foreign investment protection agreements, and all are identical. All those foreign investment protection agreements—sometimes called FIPAs—are bad and should be renegotiated.

In 2006, the government more or less acknowledged that these agreements were bad. It copied the changes made by the Bush administration the previous year.

Indeed, the Conservative government made some amendments to its FIPA program to correct the most glaring weaknesses. For example, they clarified the concept of expropriation by specifying that a non-discriminatory government measure that seeks to protect health and the environment or promote a legitimate government objective should not be considered as expropriation and should not automatically generate compensation. It is too early to evaluate the final effect of that clarification, but at first glance, it seems to be an improvement and we salute that.

It also restricted the concept of investment by specifying that the value of a good is equal to its fair market value. That put an end to the folly that added together all the potential profits that an investor hoped to earn from an investment. As for the rest, the model investment protection agreement continues to be based on Chapter 11 of NAFTA.

In our opinion, the government must continue to improve this model agreement, especially in terms of dispute settlement mechanisms. Multinational corporations must be brought under the authority of the state, like any other citizen.

Before ending my remarks, I want to emphasize that the government must submit treaties and international agreements to the House of Commons before ratifying them. At the beginning of the year, the government issued a news release to announce that it had just ratified a new foreign investment protection agreement with Peru. It was only by reading that news release that parliamentarians and the public became aware of this agreement. Parliament was never informed and never approved it. That is completely anti-democratic.

During the last election, however, the Conservative election platform was clear: the Conservatives made a commitment to submit all treaties and international agreements for approval before ratifying them. Since the Conservatives came to power, Canada has ratified 24 international treaties.

Apart from the amendments to the NATO treaty, which were the subject of a brief, last-minute debate and vote, none of these international treaties were submitted to the House. Today, international agreements have an effect of our lives that is comparable to the impact that the law can have on the lives of the citizens of all the countries with which Canada has signed bilateral agreements. There is no way to justify these treaties being concluded unilaterally and stealthily by the government, going over the heads of the representatives of the people.

The Bloc Québécois has introduced bills in the past to restore democracy and ensure the respect of Quebec and provincial jurisdictions in the conclusion of international treaties. Since the government promised to do this, we did not bring the issue up again at the time.

We are now seeing that the word of the Conservatives is not worth very much. The Bloc Québécois will raise this issue again and will bring forward proposals to restore democracy in the conclusion of international treaties. Such proposals will include requiring the government to present to the House all international treaties and agreements it has signed before ratifying them, requiring the government to publish all international agreements by which it is bound, requiring the vote and approval of the House following an analysis by a special committee tasked with examining international agreements and major treaties before the government may ratify them, and calling on the government to respect Quebec and provincial jurisdictions in the entire process of concluding treaties, that is, all stages of negotiation, signing and ratification.

I repeat, the Bloc Québécois is in favour of Bill C-53, which will open the door to signatory countries and foreign investors with which agreements have been signed. However, ICSID is a tribunal that simply hands down decisions regarding agreements. I would like to emphasize that, based on the principles of Chapter 11 of NAFTA, the 16 bilateral agreements signed by Canada are all bad agreements and that, unfortunately, even direct access to the ICSID tribunal could not replace the agreements that would be good for the countries with which we are signing them.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I have a brief question. I very much regret that I was not able to be here when the secretary of state spoke on the introduction of Bill C-53. When this bill was introduced, she may very well have addressed this question.

I am not now in a position to ask her the question, but I am interested in asking members of the official opposition a question. Why now we are seeing a bill to propose that Canada become an implementer of this international convention on the settlement of investment disputes?

It is my understanding, and perhaps the hon. member for Mississauga South can correct me if I have not understood this accurately, that this convention has actually been open for signature ever since March 18, 1965. During many years of Liberal government, the decision was taken not to be a signatory to this, not to bring in legislation that would implement it. I wonder if he could comment on the reasons for not having done so.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, earlier I heard the member for Mississauga South say that if Bill C-53 is passed, it will enable Canada to become a member of the International Centre for Settlement of Investment Disputes, or ICSID. He added that to become a member, all Canadian provinces and territories must commit.

What does he think the impact of becoming a member will be for Quebec and the other provinces?

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Mr. Speaker, when the Liberals and other members in the House rise to speak about Bill C-53, which is about protecting our Canadian businesses abroad, I would hope that they at least could use the words “business” or “foreign investment” at some point and at least keep some of the debate relevant to what we are talking about today, just a small attempt--

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in the debate on Bill C-53, the settlement of international investment disputes act.

Should this bill pass, it will bring Canada one step closer to becoming a signatory country of the 1965 World Bank convention on the settlement of investment disputes. The convention is designed to facilitate the settlement of investment disputes between governments and foreign investors, thereby improving the conditions for international investment, which is what has been discussed today and certainly has been reflected in the questions that hon. members have posed to the government.

Any such disputes are argued before a tribunal at the International Centre for Settlement of Investment Disputes or ICSID, as members have been referring to it. Canada signed the treaty last December in Washington and in so doing, as has been mentioned, became the 143rd country in the world to sign on.

It will not come into effect until all the provincial and territorial governments have also signed on. Five have already done that, including Ontario in 1999. It is my understanding and the government's representation that the remaining provinces and territories have expressed approval in principle and interest, and are hopefully going to be signing in the near future.

Essentially, what the ICSID convention does is ensure that the domestic courts and any of the signatory countries have the power to enforce any arbitration amounts awarded by this tribunal. Although agreeing to the hearings is voluntary on the part of each party, once they have agreed to a hearing neither one can unilaterally withdraw from the process or refuse to pay any damages awarded by the tribunal.

In order to ensure an unbiased hearing, the arbiters are selected by contesting parties themselves. The ICSID then provides the hearings with a venue and the administrative support required to facilitate them.

At this time we in the official opposition will be supporting this bill. We believe it will help to provide recourse for Canadian investors who are sometimes hurt by the actions of foreign governments when those actions violate existing trade or investment treaties.

It will also let investors around the world know that Canada is committed to honouring its international treaties on trade and investment. This sentiment was expressed by the Minister of International Trade who said in his press release of March 30:

The ICSID Convention will contribute to Canada’s prosperity by providing additional protection to Canadian investors and reinforcing Canada’s investment-friendly image abroad.

With regard to the last part of that quote, the Conservative government has kept itself very busy over the past year doing just the opposite and in fact tarnishing Canada's investment image abroad. The most glaring example was the broken promise on income trusts. This particular event caused the largest meltdown in the financial markets in the history of Canada. There was $25 billion of investment value wiped out by a broken promise.

To remind members, it was the promise of the government not to tax income trusts. In fact, the Prime Minister himself said that the greatest fraud is a promise not kept. That promise was not kept to Canadians. During the election campaign the Prime Minister said that he will never, never, never tax income trusts.

That gave assurances to the marketplace and particularly seniors, 70% of whom do not have defined pension benefit plans and, as a consequence, were looking for investment instruments that would emulate a pension plan, and that was income trusts. That meant that they could receive regular cashflows from these investments in income trusts to pay their bills. On Halloween of last year, $25 billion worth of wealth was wiped out simply by that broken promise.

This has to do with the credibility of Canada. It has to do with foreign and bilateral investment. Investors feel secure dealing with a country when they know the rules of the game and they know they are not going to be arbitrarily changed at the whim of a government for whatever reason.

I had the opportunity to participate in the public hearings before the finance committee. It was clear that foreign investment issues were very key in this regard. The change of the rules of the game in the middle of the program had damaged the credibility of Canada in terms of foreign investment.

There is no question that there will be more on this subject. Over 2 million Canadians are very angry with the government.

The finance committee heard from some of the seniors. Some members would say that they were paper losses. However, that is like me saying I paid $50,000 for my house, which is now worth $300,000. However, if my property taxes go up 31% and my house value goes down that is okay because I still have the $50,000 value or more than that. The appreciation in the house price is not a paper gain.

Anyone who held an income trust lost that kind of money. One of my own constituents lost $125,000. An 82-year-old veteran has no way of recouping that lost investment value. The credibility of the financial markets of Canada is extremely important in terms of foreign investment.

There is also another angle to this issue that has not been discussed as much in the House. I am speaking of the damage that has been done to Canada's international reputation as a safe place to invest. In the weeks following the announcement many investors were likening Canada's Conservative government to a banana republic.

I realize the term “banana republic” gets thrown around a bit. If we take the time to consider it in this instance, there are some striking parallels. The term is considered to have been coined to describe Honduras in the late 19th century and the early 20th century. At that time the Honduran government was eager to encourage as much foreign investment as possible in its agricultural sector in the hopes of improving the nation's overall economy. In particular, the government sought out investment in its burgeoning banana sector and in new railroads to support that growth.

In 1893, in order to protect local farmers, the government unveiled a new tax on banana exports that caught all those foreign investors off guard. It was the new 2¢ tax levied on every banana exported from the country. That would be almost 50¢ per banana in terms of 2007 dollars.

Needless to say, investors, particularly American investors who had invested millions of dollars in the industry under one set of rules, were not very happy when the Honduran government changed the rules in mid-game. It is exactly what I described with regard to the income trust decision in Canada, a broken promise.

This is not the 19th century in Honduras. This is Canada and we have a 21st century G-7 economy. When the leader of a G-7 country promises never to tax something, a lot of people around the world will believe him and make their investment decisions accordingly.

When the Prime Minister promised arbitrarily that he wanted to levy a 31.5% tax hike on the trust sectors that affected particularly seniors. It undoubtedly raised questions about Canada's image as a safe and secure place to invest. That is the crux of this. It is nice to be part of treaties, but if people break their word, if promises are broken, if the rules of the game are changed in midstream, then their credibility and integrity certainly come into question.

That is one example of where the government has dropped the ball involving foreign investment.

Let us not forget the finance minister's ever changing story on interest deductibility. We can talk about relevant issues to the security of foreign investment and the implications to that investment, the credibility of that.

Earlier when I asked a question and I wanted to put a couple of quotes on the table. I should take the opportunity to do this now.

The question of interest deductibility is another flip-flop. It is to announce one thing, disrupt the marketplace and then all of a sudden change the story. It is a moving target. It is not will I tax it, will I allow the deductibility of interest on foreign investments or will I not. Now we are talking about double-dipping and double deductibility of interest in an offshore tax haven. We are talking about tower schemes.

There is more smoke and mirrors on the interest deductibility issue simply to confuse Canadians about the facts. The facts are the government, the finance minister particularly, did not do the homework. When we look at the reaction of the market and of the key leaders in the investment community, the retired senior partner of Ernst & Young and immediate past president of the Canadian Tax Foundation, Mr. Allan Lanthier, said, “this is the single most misguided proposal I've seen out of Ottawa in 35”.

Thomas d'Aquino, president and chief executive officer of the Canadian Council of Chief Executives said:

—we are worried that the change announced in the budget may seriously undermine the competitiveness of Canada’s homegrown champions—the companies that are most active and most successful in building global businesses from head offices in Canadian communities. It may also damage Canada’s standing as an international centre for financial services.

Nancy Hughes Anthony, president of the Canadian Chamber of Commerce, said:

The proposal appears to be driven by revenue enhancement rather than a desire to build a competitive advantage....It's a real step in the wrong direction.

How about Len Farber, senior adviser at the law firm of Ogilvie Renaud, who said:

I thought this government was interested in Canadian companies having a competitive edge...This takes away that competitive edge.

What can I say? If members of Parliament cannot have their words accepted by the government, we have to look at the words of those who are responsible, the leaders within the business community, the leaders who look to having a competitive economy, to making Canada a real force not only domestically but certainly abroad.

In his March 19 budget, the minister said that he was intending to end the deductibility of interest incurred on loans to invest overseas. The budget was very clear that he meant all interest deductibility on foreign investment would come to an end by 2009.

We have gone through a litany of changes and the minister has flip-flopped on many occasions, saying that he is open to changes to the measure and the next day saying that there will not be any changes. At some point in time we have to take a decision, but when we keep changing direction, it makes it very difficult for the investment community to understand where we are.

On May 14, this past Monday, we saw the finance minister in full retreat in Toronto. He was taking advice in fact from the Leader of the Opposition. We even had an opposition day to encourage and to urge the government to fix this serious mistake that would damage competitiveness in Canada. He came up with a cute slogan. He said that today the budget was known as the anti-tax haven initiative.

We can keep calling things by different names, but the fact is there is back pedalling going on, and we need some clarity. That is really important in this issue.There has to be some clarity on these important matters on which Canadian businesses make decision.

There is something particularly interesting about how this issue has played out over the past six weeks. As legislators, we know that on every decision we can always find a number of interest groups or experts who are able to support a point of view or attack a point of view. In this case, however, everyone in the country, every serious commentator on this issue, were unanimous in their condemnation of the measure. In fact, as I read in some of the quotes, they basically said that this was the single most misguided policy Ottawa had seen in 35 years.

The chair of the task force, Jack Mintz, also backed away from the government on this one. As I indicated, the president of the Canadian Council, the chief executives and the chair of the Canadian Chamber of Commerce were quick to tell the government it made a mistake and to fix it before the damage is irreparable.

A minister stood alone defending the merits of the policy until last week when he said he would clarify his position. It turns out, according to the minister, that every CEO, every commentator and journalist in the country had simply misunderstood his intentions. It is hard to make that argument when the statement in the budget is as clear as clear can be.

I think it is pretty clear to all Canadians that the finance minister is in full retreat from his original plan, thanks largely to the efforts of the leader of the official opposition who saw this was a bad policy for Canada.

It is absolutely clear, once again, that the finance minister did not think things through before acting. He tried to change the very complicated area of tax policy with a very simplistic blanket solution.

This is key. There is a pattern of not thinking things through. There are consequences and they are not linear, they are multi-dimensional. When we get situations, for instance, on income trusts, where there is a gap between the tax paid by income trusts compared to dividend-paying corporations and we close that gap so there is some equity, we want to be sure that there are no other consequences. What were the consequences? It was to tax the income trusts and not only close that gap, but actually tax it so much that we had a $25 billion meltdown.

It even gets worse than that when we look a little further down the road. Ever since the Halloween massacre of income trusts, there have been 20 or more takeovers of income trusts by private equity, a couple Canadian, but mostly foreign. Why? Because the value of these income trusts were driven down enormously. Private equities can purchase these at fire sale prices. They can structure their affairs so they do not pay taxes to Canada.

Now it gets more complicated. In fact, those 20 income trust takeovers, because their structure permits them to no longer pay Canadian taxes, will pay in a foreign jurisdiction. What is the loss of tax revenue to the Canadian government, in fact, to the taxpayers of Canada? It is $6 billion per year of tax hemorrhaging, lost revenue to the Government of Canada. The problem the finance minister said he was trying to fix was that there might be about $5 billion of tax leakage over six years. This seems to indicate the minister did not think it through.

That is the issue. We cannot take a nuclear bomb to every problem. Sometimes it takes a little thinking and a little consultation before these snap decisions are made, which have such devastating consequences not only to Canadians, but to Canada's credibility and integrity in terms of foreign investor relations.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of International Trade and Minister of International Cooperation]

Mr. Speaker, it is a pleasure to speak to Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

The convention is also known as the ICSID Convention. We are renowned in the House for using acronyms but it is far simpler to use that when we are referring to the International Centre for the Settlement of Investment Disputes established by the convention.

I was first made aware of ICSID by a constituent of mine, a Mr. David Haigh, an internationally renowned dispute settlement arbitrator and a lawyer with Burnet, Duckworth and Palmer in Calgary, who has long advocated for Canada to bring ICSID into force. This gentlemen brought this to my attention back in my dark days when I was in opposition. We tried at that time to bring it forward at that time but were unsuccessful. However, now that we have a new government in this country we are actually able to get on with creating a business environment that is friendly to businesses.

I know that David, along with many Canadian investors, will be pleased that the government is moving forward with Bill C-53, and it is my pleasure to take part in the debate today.

Before a country can ratify the ICSID Convention, it needs to pass legislation providing for ICSID awards to be enforceable in its courts. For Canada, this means that it must pass and bring the act into force. In addition, any province or territory that is designated a constituent subdivision must bring similar legislation into force.

I would first like to discuss some of the pressing reasons for hastening Canada's ratification of the convention. I hesitate to use “hasten” because, as my hon. colleague just raised, we have been working on this since 1966.

There are three reasons why Canada should become a party to the ICSID Convention. It would provide additional protection to Canadian investors abroad by allowing them to have recourse to ICSID arbitration in their contracts with foreign states. It would also allow investors of Canada and foreign investors in Canada to bring investment claims under ICSID arbitral rules where such clauses are contained in our foreign investment protection agreements and free trade agreements. Also, it would contribute to reinforcing Canada's image as an investment friendly country.

I will tell the House more about the other advantages. When Canada ratifies the ICSID Convention, Canadian businesses investing abroad would finally be afforded the same level of protection as their competitors. There are numerous disadvantages associated with the absence of Canada from this convention. Canadian businesses are hurt. Even though Canadian investment abroad continues to rise, the ability of Canadian businesses to arbitrate investor state disputes is hurt by the fact that they must arbitrate without the infrastructure that ICSID would and could afford them.

Investors prefer ICSID to other arbitration mechanisms for many reasons, such as: the ICSID regime is an extremely efficient mechanism for the resolution of investment disputes; it provides better guarantees regarding enforcement of awards and more limited local court intervention; and ICSID's roster of arbitrators gives investors access to well-qualified arbitrators at ICSID at controlled rates and with extensive experience in international investment arbitration.

Since Canada has not ratified ICSID Convention, we are not granted a voice on ICSID's administrative council and cannot vote on changes to the ICSID arbitral rules.

I will turn now to the second advantage of ICSID: improving the dispute settlement process available under our treaties.

NAFTA and Canada's foreign investment protection agreements, or FIPAs, provide for ICSID dispute settlement as one of several options. However, up to now this option could not be used. Ratification of ICSID will provide investors with the option to use ICSID to resolve certain investor state disputes.

Chapter 11 of NAFTA provides that ICSID arbitrations may be used in cases where both the state of the complaining investor and the state complained against are party to ICSID. The U.S. is party to ICSID but not Mexico.

In the case of FIPA, most of our FIPA partners are already party to the ICSID convention. Consequently, when Canada ratifies the ICSID convention, arbitration using ICSID will become available under those agreements.

My final point is a simple one. Canada's absence from ICSID does little to augment our international image as a country which is open to free trade and foreign investment.

Already, as earlier mentioned, 143 countries are party to ICSID. It is time for Canada as well to become a party to ICSID. I will now explain why ratification is increasingly urgent.

First, we do not know when an investment dispute might arise in which Canadian membership in ICSID might be an important factor in preserving a Canadian investor's rights. Periodically, and again this year, we have been approached by investors who could have benefited significantly if Canada had already ratified the convention.

Second, some states that have ratified ICSID restrict enforcement of investor state arbitral awards unless such awards are made by an ICSID tribunal. It is difficult to persuade such a state to modify this practice when a solution is as simple as Canadian ratification of ICSID. Yet, until there is a solution, Canadian investors lack the protection provided by the availability of effective investor state dispute settlement mechanisms.

The Canadian business and legal communities support Canada's ratification of the ICSID convention.

The provinces and territories support ICSID. The convention allows Canada to designate provinces or territories as constituent subdivisions that will also be able to use the ICSID arbitration for disputes with international investors.

The Chamber of Commerce passed a policy resolution unanimously. Over 200 local chambers of commerce from coast to coast, at their AGM in September of 2006, passed a resolution which calls on the Government of Canada to ratify this convention.

I urge the House to listen to the call of Canada's investors, legal community and constituents like Mr. Haigh, and give expedient consideration to the bill in the interests of Canada's continuing international stature and healthy economy.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, it sounds like a good idea to ratify this convention with Bill C-53. I initially think, of course, of Canadian oil companies in a country like Venezuela, for example, where Mr. Chavez has gone on a rampant nationalization program. I am not sure if we have Canadian companies in Venezuela but I think it would be a good thing to be part of that if the compensation is fair.

However, another thought occurs to me. What would happen if foreign countries, through state-owned enterprises, were to come to Canada to try to nationalize some of our energy assets or some of our national resource companies? What comes to mind is the case of China Minmetals, a state-owned enterprise in the People's Republic of China, that made a proposed takeover bid of Noranda but which did not proceed.

With the failed policies of the government with respect to energy trusts and with respect to the non-deductibility of interest, many energy and natural resource companies will become subject to takeovers.

The more preferred way, certainly from my perspective, would be to make changes to the Investment Canada Act so that the government would need to deal with these in terms of the national interest. However, the government has been totally silent on that issue.

Will this convention at least help with the nationalization of Canadian companies by foreign and state-owned enterprises?

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Mr. Speaker, it is with great pleasure that I speak at second reading of Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The convention is an international treaty establishing the International Centre for the Settlement of Investment Disputes, ICSID. Bill C-53 will implement the ICSID convention for Canada.

Allow me to give hon. members of this House, first, a description of what ICSID is, second, an overview of the bill and what it does, and lastly, an explanation of the benefits of this convention for Canada and Canadian businesses.

ICSID is an organization devoted to the resolution of international investment disputes between states and nationals of other states through arbitration and conciliation.

ICSID provides mechanisms for arbitration and conciliation of such disputes provided that both the state of the investor and the host state are parties to ICSID. This means that once Canada ratifies ICSID, a Canadian investor abroad in any of the 143 countries that have already ratified ICSID may have recourse to ICSID to resolve disputes that may arise with the country in which it is doing business.

ICSID is a highly reputable World Bank institution based in Washington, D.C., and one of the most frequently used institutions for investment arbitrations.

ICSID and international investment arbitration have traditionally been used in cases of expropriation or nationalization. A hypothetical example is a takeover by a host government of a Canadian business exploiting natural resources such as oil or minerals. Such an expropriation may represent a substantial loss for the investor and fair compensation is not always easily obtained.

However, the Canadian investor may have insisted on an investment agreement with an ICSID arbitration clause before investing, or Canada may have an investment treaty with the host government making reference to ICSID arbitration. If so, once Canada ratifies ICSID, the Canadian investor owning the business will have the right to use ICSID arbitration to pursue fair compensation for its losses before an independent arbitral panel.

ICSID provides an efficient, enforceable mechanism for such dispute resolution. This is why our government believes ICSID is a good way to protect Canadian business and its investment in foreign countries. It also complements our investment protection treaties and existing arbitration clauses in investment contracts of Canadian businesses.

Bill C-53 will implement this convention. This bill needs to be passed before Canada can ratify the convention. This bill will make an ICSID award enforceable in a Canadian court. It will ensure that persons using conciliation under the convention cannot abuse that process. This bill also provides for governor in council appointments of persons to ICSID lists of potential panellists and it provides privileges and immunities as required by the convention.

The key provision making ICSID awards enforceable is clause 8, which states:

(2) The court shall on application recognize and enforce an award as if it were a final judgment of that court.

This provision will apply to an ICSID award for or against Canada or a foreign government. This provision is the key to the ICSID system for enforcing arbitration awards.

An ICSID award is reviewable by an ICSID tribunal, but not by national courts. Once final, an ICSID award will be recognized and enforced in Canada as if it is a final judgment of a Canadian court.

While Canada will be giving full effect to awards, in turn the convention guarantees similar enforcement in all states that are party to ICSID. Thus, Canadian businesses with an ICSID award in their favour have a very powerful tool to ensure the award is paid. This ensures the protection of their rights and interests in foreign countries.

There are three important related provisions. Clause 6 makes the act binding on the Crown. This ensures that awards against the federal government can be enforced.

Clause 7 prevents a party from seeking court intervention by way of judicial review applications or applications to a similar effect. A party cannot therefore attack the validity of a final ICSID award.

Clause 8 also gives all superior courts, including the Federal Court of Canada, jurisdiction to enforce ICSID awards.

The provisions with respect to conciliation are brief. Clause 10 ensures that the ICSID conciliation process can be conducted in a manner that is without prejudice to the rights of the parties. In other words, testimony given during conciliation cannot be used in other proceedings. This gives investors a further option to ensure their rights are respected.

I should also mention that the bill proposes provisions ensuring the required privileges and immunities for the centre, its employees and its arbitrators. Such immunities guarantee the independence of the tribunal when seated in Canada.

As I indicated before, once adopted, the settlement of international investment disputes act will allow Canada to ratify the ICSID Convention. In today's world, there are many situations where Canadian businesses could be significantly harmed by foreign governments' activities or decisions.

Canadian businesses are increasingly active in foreign markets. They invest in foreign countries by buying plants, establishing new businesses or acquiring rights to natural resources, for example. While disputes with foreign governments affect only a small portion of the $465 billion in assets owned by Canadian investors abroad, when disputes do arise, mechanisms such as ICSID are necessary to ensure that the dispute is resolved fairly and efficiently.

We as a government have worked hard to promote Canada abroad, facilitate the free flow of international investment and help Canadian businesses succeed abroad.

To date, Canada has negotiated 22 foreign investment protection and promotion agreements, or FIPAs, and is actively negotiating others. These agreements provide for investor state dispute settlement by means of arbitrations.

ICSID arbitration is an option under these agreements but only if both countries are party to ICSID. These agreements create a more predictable and transparent climate for Canadian investors abroad by setting out rules for the treatment of investors and offering dispute settlement to adjudicate claims when their rights have been violated.

Canadian investors who need to use dispute settlement to enforce their rights, whether those rights exist pursuant to a FIPA, an FTA or an investment contract with an arbitration clause will welcome this bill. Promoting fair trade rules and equitable treatment for our businesses must go hand in hand with efficient dispute resolution mechanisms that allow investors to obtain redress.

We have proposed this bill today to pave the way for ratification of the ICSID Convention. Canadian businesses demand that Canada join this important convention to ensure protection of their investments abroad and because it is consistent with our foreign trade investment policy.

This convention entered into force in 1966, over 40 years ago, and 143 states have ratified the convention, including most of our major trading partners. This represents virtually three-quarters of all the states in the world. By way of comparison, there are 191 states that are members of the UN.

The ICSID Convention represents one of the most ratified treaties in the world and Canada is not yet a party to it.

This government is committed to fair international trade rules. We are committed to protecting Canadians' interest throughout the world and this is why we take action today for the implementation of the ICSID Convention.

Canadian businesses support the adoption of this convention. The convention is good for investment in this country, as well as Canadian investors abroad. It ensures efficient resolution of disputes between governments and foreign investors. Those are the reasons that our government presents Bill C-53 for second reading.

[Carol Skelton, Conservative, Saskatoon—Rosetown—Biggar, SK]

moved that Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), be read the second time and referred to a committee.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, as you are aware, this week is strengthening accountability through democratic reform week. It has been a busy week for the democratic reform family of bills.

We sent out invitations for the first birthday of Bill S-4, the Senate tenure bill, which Liberal senators have been delaying for almost a year now.

While we are disappointed with the behaviour of Bill S-4's caregivers, we did have some good news this week with the successful delivery of two new members of the family: Bill C-54, a bill to bring accountability with respect to loans; and Bill C-55, a bill to expand voting opportunities.

There is more good news. We are expecting.

Tomorrow, I will be introducing an act to amend the Constitution Act, 1867, on democratic representation, which is on today's notice paper.

Bill C-16, fixed dates for elections, was finally allowed by the clingy Liberal-dominated Senate to leave the nest when it was given royal assent last week.

With respect to the schedule of debate, we will continue today with the opposition motion.

Friday, we conclude strengthening accountability through democratic reform week with debate on the loans bill, possibly the Senate consultation bill and, hopefully, Bill C-52, the budget implementation bill.

Next week will be strengthening the economy week, when we will focus on helping individuals, families and businesses get ahead.

Beginning Monday, and continuing through the week, the House will consider: Bill C-52, the budget implementation bill; Bill C-33 to improve our income tax system; Bill C-40, to improve the sales tax system; Bill C-53, relating to investment disputes; and Bill C-47, the Olympics bill, which help us have a successful Olympics. Hopefully, we can get to Bill C-41, the Competition Act.

If time permits, we will also call for third and final reading Bill C-10, the minimum mandatory sentencing bill.

Thursday, May 17 shall be an allotted day.

Wednesday, May 16, shall be the day appointed, pursuant to Standing Order 81(4)(a), for the purpose of consideration in committee of the whole of all votes under Canadian Heritage of the main estimates for the fiscal year ending March 31, 2008.

Thursday, May 17, shall be the day appointed for the purpose of consideration in committee of the whole of all votes under National Defence of the main estimates for the fiscal year ending March 31, 2008.

Finally, there is an agreement with respect to the debate tomorrow on the 13th report of the Standing Committee on Public Accounts. I believe you would find unanimous consent for the following motion.

I move:

That, notwithstanding any Standing Order or usual practice of the House, the debate pursuant to Standing Order 66 scheduled for tomorrow be deemed to have taken place and all questions necessary to dispose of the motion to concur in the 13th Report of the Standing Committee on Public Accounts be deemed put and a recorded division be deemed requested and deferred to Wednesday, May 16, 2007, at the expiry of the time provided for Government Orders.

Settlement of International Investment Disputes Act

[Jay Hill, Conservative, Prince George—Peace River, BC]

moved for leave to introduce Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

(Motions deemed adopted, bill read the first time and printed)