Mr. Speaker, I am very pleased to speak today to this bill, the World Bank's investment tribunal, which is being brought forward to the House through the International Centre for the Settlement of Investment Disputes. It was set up in 1966. I guess it has been a bit of a late bloomer. Here we are 40 years later trying to actually give it some legitimacy.
I have listened to the debate and I find it interesting, but it is predicated on two fundamentally wrong principles.
The first is the principle that if we look at the failed processes that are in place now for trade, particularly the chapter 11 mechanisms for NAFTA, it has been proven time and time again that they allow certain corporate interests to override regional, state and national governments and the legitimate interests of governments to protect citizens in a fair manner. That has been used again and again as a blunt instrument to push a privatizing agenda against national interests. We are supposed to accept that this principle, which has failed again and again under chapter 11, will somehow be different with this tribunal, even though it is using basically all the same input mechanisms, and that things will somehow be better this time.
The second element in this discussion, which we are supposed to accept, is the tribunal, through the World Bank, is such an august body that it will have legitimacy in its own right. We are supposed to forget 40 years of the neo-liberal experience under the World Bank and the severe damage it has done in development.
Therefore, I will speak on practical issues of how trade disputes are actually dealt with in the real world so we can bring a bit of perspective to this debate.
I will begin with the World Bank's credibility. Certainly it has taken a number of hits because it was a dumping ground for Paul Wolfowitz, who is notorious now as one of the architects of the illegal war in Iraq. He was such a liability to even George W. Bush that the Americans could not figure a place to dump him to get his radioactive state out of Washington, so they sent him to the World Bank.
Under Wolfowitz's leadership, credibility of the World Bank was severely challenged. There was an element with his girlfriend and losing complete support of the directors of the World Bank around the entire world. Therefore, there was a coup to get this guy out. Here was a guy who even George W. Bush would not be seen beside representing the World Bank.
I refer members to a recent article in The Guardian that said we should end the hypocrisies on the World Bank because the fact was the World Bank's credibility was shot long before Paul Wolfowitz brought his girlfriend on the scene.
Naomi Klein has written extensively about the failings of the World Bank in terms of ensuring that when we do have trade pacts and we do have development deals, that communities and national economies are able to benefit from them. She writes:
First, let's dispense with the supposed hypocrisy problem. “Who wants to be lectured on corruption by someone telling them to ‘Do as I say, not as I do’?” asked one journalist. No one, of course. But that's a pretty good description of the game of one-way strip poker that is our global trade system, in which the United States and Europe—via the World Bank, the International Monetary Fund and the World Trade Organisation—tell the developing world: “You take down your trade barriers and we'll keep ours up”.
We can see that whether it is farm subsidies or any form of international trade. She goes on to say:
The more serious lie at the centre of the controversy is the implication that the World Bank was an institution that had impeccable ethical credentials—until, according to 42 former World Bank executives, its credibility was “fatally compromised” by Wolfowitz.
The truth is the bank's credibility was compromised long before Mr. Paul Wolfowitz. It was compromised when it forced school fees on students in Ghana in exchange for a loan, when it demanded that Tanzania privatize its water system, when it made telecom privatization a condition of aid for Hurricane Mitch relief and when it demanded labour “flexibility” in Sri Lanka in the aftermath of the Asian tsunami.
While the rest of the world was raising money in our schools, in Canada and around the world, to help the victims of the tsunami, the World Bank was putting the squeeze on Sri Lanka to break apart its national policies on protecting its own workers. The Paul Wolfowitz scandal pales in comparison to that.
On the issue of corruption and accountability, she says that the World Bank has absolutely no credibility to speak of because the World Bank was there when the Soviet Union was basically picked apart by an oligarch of mafia interests. We saw the role the World Bank played in Chile with, of course, Milton Friedman, the original doctor of shock and torture for the economy, and the incredible damage that was done to all segments of society in what was actually a very middle class country at that time until the World Bank was through with it.
The World Bank has a lot to answer for in terms of its credibility of being a fair arbiter, an honest policeman on the world stage. I think many people in developing countries have developed a very strong distaste for that. We need to have that in mind when we talk about any trade agreements that come before us in the House.
The issue of trade is paramount to us as a nation. We are a nation of traders and we want fair rules. In our farming sector we have come up against incredible odds because some of our major competitors, the EU and the U.S. , continually dump products on the international markets and continually distort the price of grains and other commodities through their subsidies. It has hurt us but it has had devastating effects in the third world where y the EU or the U.S. can dump grain, corn or any other product into the third world where farmers do not have nearly the same protections.
When we all talk about a level playing field, it seems that they are never on the level playing field. Who is on the level playing field? Well, it is the corporations and their friends, but national economies, especially in the third world, are not on any kind of level playing field.
If a trade agreement comes before this House, we need to look at it through the prism of asking whether it will be fair, just, true and open trade or whether it continues to perpetuate a very one-sided cycle. Unfortunately, I believe that this one-sided cycle will continue.
I would like to speak to a couple of examples. It was mentioned earlier in the House the example of Metalclad in Mexico where a U.S. company felt that its rights were unfairly impinged by the fact that in its desire to use a poor neighbourhood in Mexico as a toxic waste dumping ground somehow its rights were violated by the fact that the people of that region said that certain base standards needed to be set. They said that as a municipal government, a regional government and a national government they needed to protect their country from being a dumping ground for waste.
Metalclad took that through binding chapter 11 arbitration. Anybody who says that the chapter 11 arbitration process is in any way fair or open is deluding themselves. They would be smoking the kind of stuff that I know our Conservatives are certainly wanting to snuff out.
What happened in that Metalclad decision has been repeated in numerous decisions under NAFTA, chapter 11, where basic rights of a country to set certain levels of standard have been erased by a body that is unaccountable, unelected and sets its own standards, in fact it sounds very much like the Liberal dominated Senate, but it has the ability to do worse because there is no appeal mechanism under chapter 11.
We are seeing a very similar setup with this World Bank front in terms of its mechanisms. Chapter 11 does not have to release the results of its findings. It does not have to allow any third party briefs to be brought forward. The ability of a national government to protect its interests once it has gone to a chapter 11 challenge becomes very limited.
I would like to speak about my own interest in chapter 11. We have a situation right now where the taxpayers of Canada are on the hook for a potential $350 million in damages that is being heard at a secret tribunal, a chapter 11 of NAFTA. That is being brought forward by a company 1532382 Ontario Inc. This is a company that was founded in Ontario and its board of directors is listed as being in Don Mills, Ontario. The people on the board of directors are not known to the public because they get to hide behind corporate anonymity, but this numbered company is suing the Canadian public for $350 million, claiming that its international rights were violated.
I want to go through this story so people in the House and anyone watching back home will know how this kind of, as Naomi Klein said, one-way strip poker is played.
1532382 Ontario Inc. was incorporated in the province of Ontario to go after a municipal waste contract under provincial jurisdiction. That provincial waste contract was the 1995 original bid for picking up garbage for the City of Toronto. The solution being offered by 1532382 Ontario Inc. was to ship it up to northern Ontario to the riding of Timmins—James Bay, where we have these massive iron ore pits that are filling with groundwater, and dump the garbage for 20 or 30 years in the pits. The fact that 380 million litres of groundwater flows through those pits a year is not a problem for the planners of this dump because it was actually written into this scenario that they would use the groundwater to wash the garbage and they would get 20 years out of these pits. Three hundred and eighty million litres of groundwater would flow through for all of eternity as far as we know unless something dramatic changes in northern Ontario. The guarantee was that this numbered company with no name behind it would set up a commitment that for 2,000 years it would run pumps to wash the garbage, to take the groundwater and pump it back into the surrounding environment.
In fact, when the planners came before the Ontario government with this plan, they actually costed out the cost of fixing the pumps 1,500 to 1,600 years in the future. It was amazing. They figured it would cost them $25 an hour 1,600 years in the future. That is like Clovis and the Franks talking about what it would cost to run trucks on our roads back in A.D. 600. This shows how absurd this plan was.
This plan was so absurd that it would never have made it to first base until of course the Mike Harris government came in. My God, there are certain people here who were there at the time when Mike Harris stripped the environmental assessment laws. Since they knew a deal like this would never go through with scrutiny, they put it through the biggest waste management proposal in Canadian history through a scoped EA where they were able to omit all the questions about groundwater safety so that this dump could get passed. In fact, the only question that was allowed in the entire hearing was whether or not the numbers from the computer model matched. There was nothing about real time experience at these pits. These were badly fractured pits. People who lived underneath the pits can tell us about the problems with the water flowing through. The miners who worked in the pits knew the situation in the pits.
The Harris government thought this was a great deal because some of the people involved in 1532382 Ontario Inc. happened to be from the city of North Bay, which was the home base of Mike Harris. It almost came to fruition but the people of northern Ontario and the Abitibi region of Quebec came together and said that was enough. They said that they would not go through with a project that was so risky, so unproven and so potentially disastrous to the health of their region that it literally took railway and road blockades to get this government's attention that there were problems with this plant, problems that would have easily have been identified if we had a proper environmental assessment in process. The dump plant for the Adams mine fell through, which is no surprise. Sometimes really bad ideas do not fly.
The reason I mentioned that dump is because a very curious thing happened afterward. At the time, 1532382 Ontario Inc. was identified with Gordon McGuinty, a North Bay businessman. He had Notre Development. He had a number of investors and many of those investors were well known. Many of them were from various parts of Ontario. When he had a problem, after the deal fell through and waste management walked away, he was looking for partners for this dump, and this is where another number of investors came through. Some of those investors were also identified with the Conservative Party. People who identified names who were involved in this were all from Ontario.
I could name them here. I am not afraid to name them. Mr. Cortellucci was identified as someone who certainly seemed to have an interest in this mine. Of course it was all behind numbered companies, so how do we find out?
This Ontario numbered company actually donated money to the leadership bid of the present finance minister. This Ontario company gave donations to the Conservative Party. It was clearly based in Ontario and it was dealing with a municipal contract. After the Adams mine deal fell through, the company sued the present Ontario Liberal government for $300 million for the fact that it was robbed of its deal. That lawsuit went nowhere so we did not hear anything more about this numbered company until last year. It was not interested in going through the Canadian courts anymore. It was taking its case to chapter 11 of NAFTA. How is it that an Ontario company that is donating money to Ontario political officials dealing with a municipal waste contract can go to chapter 11 as an international investor?
Lo and behold, Vito Gallo, a man nobody has ever heard of, steps out of the wings and says that he is the sole owner of this mine. I asked the Toronto city councillors who were involved in the negotiations if they had ever heard of Vito Gallo. They had never heard of him. I had to tell them that he was suing the Canadian public for $350 million claiming that he owned the Adams mine and that his mine has gone up in smoke. I was involved in those negotiations with the Algonquin nation when I worked with them and we had never heard of this man. Now he has this deal and is going before chapter 11.
There will be no appeal at chapter 11. We have no right to bring forward briefs about who was involved and who the potential Canadian investors were. We do not have the ability to do that. The Canadian public is trusting three guys in Washington to dispense justice on $350 million. In any kind of fair deal, as in the case of taking this dispute to a Canadian court, there would be depositions from both sides, there would be witnesses and there would be cross examinations. We would squeeze the Charmin to see if this case had any legitimacy at all. That is what the courts are there to do.
In a large dispute where a large amount of money is involved and where a provincial or federal law is in question, that dispute must be brought forward to be tested to ensure there is full due diligence. That does not happen with chapter 11. We have seen it time and time again where even dispute resolutions do not need to be made public.
How can something be transparent and open when third party briefs are not allowed to be brought forward and there is no right to full legal representation? How can something be transparent and open when a panel of three get to decide and their word is law? There is no appeal and no challenge process. If anybody tells me that is good for the business of the nation then we are certainly not on the same political wave length. I believe that certain issues need to be brought forward before any of these kinds of decisions are allowed.
This brings me to the World Bank's investment tribunal. I think we are dealing with many of the similar concerns that we saw with NAFTA's chapter 11. We have not seen that anyone has learned anything from chapter 11 about making these deals more open and more fair. In fact, this really seems to be just another way for the government and its friends in the Liberal Party to resurrect the multilateral investment treaty. When that treaty was brought to the public's attention, Canadians said that there were issues of national sovereignty and our economy that they were not going to give away to some arbitrary, unaccountable, unelected body to make binding decisions. That simply undermines our national sovereignty. There was a national response against the multilateral investment treaty. I know that certain people from certain ideological stripes felt the pain of losing that.
Under article 52, an annulment of this decision may only be allowed if:
(a) that the Tribunal was not properly constituted;
(b) that the Tribunal has manifestly exceeded its powers;
(c) that there was corruption on the part of a member of the Tribunal;
(d) that there has been a serious departure from a fundamental rule of procedure; or
(e) that the--
