International Trade Committee on March 24th, 2009

[The Chair, Conservative, Lee Richardson]

We will come to order. The tenth meeting is in session of the Standing Committee on International Trade.

Today, pursuant to Standing Order 108(2), a study of chapter 11 of the North American Free Trade Agreement, or NAFTA, we have as witnesses Steven Shrybman, legal counsel, from the Council of Canadians; and from Équiterre, Hugo Séguin, public affairs coordinator, and William Amos, their lawyer.

We're going to start with a couple of opening statements, first from Mr. Shrybman, then from Mr. Séguin. If we're all set, I'd like to begin. We'll follow that with questions in the usual manner.

Go ahead, Mr. Shrybman.

[Steven Shrybman, Legal Counsel, Council of Canadians]

Thank you very much, Mr. Chairman. Good morning, members of the committee.

I'm a partner in the law firm Sack Goldblatt Mitchell. I'm on the board of the Council of Canadians, and I have represented them in more than one investor-state dispute proceeding under chapter 11 of NAFTA. As you know, the Dow Chemical case you're concerned with today is such a dispute.

My job is not to talk about the case but to talk about the dispute regime so that you have the context for your consideration of the Dow Chemical case. I'm going to mention also some of the other environmental cases that have arisen under this extraordinary dispute resolution mechanism that's built into chapter 11 of NAFTA. I have about 10 minutes, so I'm going to go quickly and try to keep it at a fairly high level.

Under chapter 11 of NAFTA, private parties--investors and companies--from the other NAFTA jurisdictions, namely the United States and Mexico, can make a claim for damages arising from an alleged breach. We're going to take the case of a claim against Canada--a Canadian government, be it a federal government, provincial government, or municipal government--because of something the government has done that the private investor or the U.S. company, for example, argues is in breach of the broadly worded and ill-defined constraints of chapter 11.

My colleagues will deal with the rules. I'm just going to describe the mechanism and how it has been used.

Virtually any U.S. company is entitled to file a complaint if it has an investment interest in Canada. And the threshold is low. You need only have shares in a Canadian company to be entitled to bring a complaint. The only measure of a Canadian government--policies and laws and programs and practices are described as measures--that are off limits under chapter 11 are measures under the Investment Canada Act. Everything else is fair game. There may be exceptions that are relevant to health care measures, but that doesn't stop you from getting in the door and complaining that something a province has done by way of closing the door to private health care delivery offends NAFTA rules. You may argue about whether the measure is exempt, but you have the right to a hearing before a tribunal.

The tribunal is nominated by the parties. So if I'm the disputing investor, I nominate an arbitrator and Canada nominates an arbitrator. The two choose a third, and that is the tribunal that decides whether a government measure is in breach of NAFTA rules. Typically, the disputes are heard outside Canada. For example, we were involved as intervenors in a UPS case. They brought a complaint against Canada because of the activities of Canada Post. That was argued at the World Bank headquarters in Washington, D.C.

So you have the spectre of a quasi-private tribunal making a determination about the validity of something a Canadian government has done that is otherwise lawful and proper under the Constitution. And often that tribunal will be sitting outside the country, and often at World Bank headquarters in Washington, because that just tends to be a convenient place and is often chosen for the adjudication of these disputes.

That's a broad outline of the mechanism. There is very little opportunity for judicial review of an arbiter award, and the review can only be carried out in the jurisdiction that is chosen as the place of arbitration. So in the case of the UPS claim, for example, the place of arbitration was the United States.

I practise labour law and other types of law. We routinely judicially review decisions of arbitral tribunals. Had that tribunal found Canadian postal policy and law at odds with NAFTA--they didn't, fortunately--we would have had to go to a U.S. court to challenge the award. It's an idiosyncratic feature of the regime, but it describes how removed it is not only from parliamentary scrutiny but also from judicial scrutiny once the mechanism is in play.

Now, environmental laws have become a favourite target of this mechanism. There are several cases in which environmental laws, including Canadian environmental laws, have been challenged. One of the first cases was a challenge by Ethyl Corporation. They didn't like federal regulations that restricted the use of a toxic fuel additive. Canada settled that case and wrote the company a cheque for $19 million to cover its legal fees—the case hadn't even been argued yet—and rescinded its regulations.

Another case was by S.D. Myers. Canada banned the export of PCB wastes to the United States, as it's arguably obliged to do under the Basel Convention. The tribunal found against Canada and ordered it to pay $9 million in damages to this U.S. hazardous waste company.

There are a number of other cases. They're available on the websites. A good percentage of them are about environmental matters, but there are two cases proceeding right now that aren't about environmental matters and are terribly important for the future of the country. One is brought by a forest company called Merrill & Ring. It wants to get rid of the ban on raw log exports that exists at both the federal and provincial levels in Canada. But for these raw log export controls, we wouldn't have a pulp and paper industry in Canada. Yet this dispute is proceeding with very little notoriety, and I doubt many members of the committee have heard about it.

There's another case that's been brought by a U.S. health company, which is suing Canada for $160 million. What's its complaint? It argues that it wasn't allowed to establish private health care clinics in Canada, and it says that's a breach of its rights to invest under chapter 11.

These cases just give you a sense of the terribly important issues of public policy that often find their way into a forum that is really created to resolve private disputes, not public disputes, with respect to which there are no broader public or societal interests. Under NAFTA, what's happened is that we've allowed this private dispute mechanism, which used to exist to resolve commercial disputes, to be used now as a forum to resolve disputes about broad issues of public policy and law.

The last thing I'll say is that while a fair bit of attention is focused on chapter 11, much less attention has been paid to efforts to implement a similar dispute regime as a feature of interprovincial trade, investment, and labour mobility agreements. This has actually happened in the trade, investment, and labour mobility agreement entered into between British Columbia and Alberta, which goes formally into effect on April 1, 2009. They have built into TILMA precisely this dispute mechanism, in which a private investor in Alberta or B.C. can challenge a measure by the other government—it could be a municipality, or even a school board. It could be proper and lawful—the board had the authority to do it—but if it offends the broad constraints of this mobility agreement it can be challenged. This is flying so far below the radar screen that I'd be very surprised if any of you have heard of it. So that's in place.

The ministers of trade for Canada and the provinces signed an agreement last December to expand the dispute mechanism of the Agreement on Internal Trade along the same lines. They haven't made it public. I don't know whether you've seen it. We would very much like to see it. When I speak to federal trade officials, they tell me, well, you'll see it when it's finally ratified.

So just to bring home the concerns you might have about this dispute regime, please be aware there are efforts under way now to actually implement precisely the same dispute model as a feature of Canadian interprovincial arrangements. In my view, the mechanism is unconstitutional. I don't have time to speak to you about that today.

I'll leave you with that provocative thought—I hope—which might prompt some questions.

Thank you. I think my 10 minutes are up.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Shrybman.

Monsieur Séguin.

[Hugo Séguin, Public Affairs Coordinator, Équiterre]

Good morning, Mr. Chairman and members of the committee.

My name is Hugo Séguin. I am the Public Affairs Coordinator for Équiterre, an organization based in Montreal and involved since 1993 in sustainable development issues and problems, and their solutions. We have been particularly active in matters related to agriculture, energy, transportation, sustainable development and climate change. We are also very interested in the issue of pesticides, and have been involved in this area for several years now.

This morning I am accompanied by two researchers, one from the David Suzuki Foundation and one from Équiterre, which I represent, and by Mr. William Amos, a lawyer for Ecojustice Canada, who represents both Équiterre and the David Suzuki Foundation in this case.

This morning I would like to take a few minutes to talk to you about the substance of a case that we think is extremely important because it involves two fundamental governance issues for Canada: on the one hand, its commitment to comply with the international trade treaties it has signed in the past, including NAFTA; and on the other hand, its responsibility to protect public health, especially the health of children.

On the 25^th of August last, Dow AgroSciences corporation served notice that it would challenge under NAFTA the application of the Quebec Pesticides Management Code, and in particular the ban on the active ingredient, 2,4-D, which is used as one of the ingredients in pesticides available on the market, among other reasons for the cosmetic purposes of lawn maintenance. Dow claims that this ban violates certain clauses in chapter 11 of the North American Free Trade Agreement. The Government of Quebec, which has the constitutional jurisdiction to act in the area of pesticides sales and use, is arguing the importance of protecting public health. For that reason it has banned a certain number of active ingredients used in the formulation of pesticides.

The Quebec Pesticide Management Code has been in effect since 2003. The ban on 20 active ingredients in pesticides has been in effect since 2006. For example, the Pesticide Management Code applies to turfed areas, including areas used frequently by children. Public health studies seem to show that children are exposed to even greater health risks when they play in parks, schoolyards or day care yards. Quebec has justified its actions on those grounds. I should say in passing that Quebec is not the only jurisdiction in the world to ban 2,4-D or other pesticides. This is also the case in Norway, Denmark, Sweden and Ontario where some pesticides have been banned, including 2,4-D.

As in the other jurisdictions that I just listed, Quebec has justified its actions based on the precautionary principle, which says that in the absence of scientific certainty about pesticide toxicity, caution must be exercised in their use. That is the very basis of the precautionary principle.

According to the Quebec government, pesticides used for cosmetic purposes can pose a risk to human health, especially the health of children. According to the Quebec government, children are particularly vulnerable to the harmful effects of pesticides because of their behaviour (for example, their tendency to put objects in their mouth), especially when they are playing on grassed surfaces where pesticides are used. Among other things, several pesticides, some of which are frequently used on grassed surfaces, are suspected of having long-term health effects, including cancer or disruptions to the reproductive, endocrine, immune or nervous systems.

In the specific case of 2,4-D, Quebec's National Public Health Institute twice took a stand on this issue and recommended to the Government of Quebec to ban the active ingredient 2,4-D based on the precautionary principle. The National Public Health Institute is the Quebec government's main advisor on public health issues. Furthermore, the National Public Health Institute's recommendations are also based on studies carried out by the International Agency for Cancer Research, a World Health Organization Centre, that labelled the entire family of active ingredients called chlorophenoxy herbicides, which includes 2,4-D, as being potentially carcinogenic for humans.

Following action taken by Dow on August 25, Équiterre and various other partners mobilized Canadian and Quebec civil society. Currently a hundred-odd organizations and individuals, both national and international, support our action to ask the federal government to protect the integrity of Quebec's Pesticides Management Code. A letter was sent to that effect to the Minister of International Trade, Mr. Stockwell Day, to encourage him to ensure that Canada would actively intervene before a future NAFTA panel on public health protection.

In conclusion, we want to take this opportunity this morning to share with you our three recommendations for the Government of Canada.

Our first recommendation is that the federal government should vigorously defend before NAFTA Quebec's ban on 2,4-D pesticides. Furthermore, the federal Minister of International Trade should immediately and publicly announce Canada's intentions in this regard and acknowledge the appropriate precautionary basis for Quebec, and now Ontario's position.

Our second recommendation is that the federal government should state the position that non-discriminatory regulatory measures enacted for a public purpose in accordance with due process are not, under international law, expropriations or unfair treatment. As such, such regulatory measures are not subject to any compensation.

Finally, the federal government should ensure more robust application of the precautionary principle in PMRA risk assessments of pesticides.

I will now give the floor to Mr. Amos, who will cover various related issues concerning trade rules under NAFTA.

[William Amos, Lawyer, Équiterre]

Thank you, Mr. Chair and committee members.

If I'd be permitted an extra five to seven minutes—which I recognize would go over the 10 minutes allotted to us—I think it would allow a better discussion of the case itself.

[The Chair, Conservative, Lee Richardson]

If you get started now, you won't be over.

[William Amos]

Thank you.

My name is Will Amos. I'm the staff lawyer and a part-time professor at the University of Ottawa Ecojustice Environmental Law Clinic. Ecojustice is Canada's foremost non-profit environmental law organization. We're best known for our litigation work and our law reform work to help protect Canadians' right to a healthy environment. In this context, I am serving as counsel to Équiterre and to the David Suzuki Foundation.

First, I'd like to congratulate the committee for taking this step of holding this hearing. It is really important that NAFTA chapter 11 disputes the concerned matters of public importance, concerned matters of public regulation, that they're discussed in the light of day before our elected representatives. You certainly have a legitimate role to play in the context of this dispute.

I'd like to quickly give an overview of where this dispute is coming from and a very basic outline of the steps that have been taken and where it's going or where it may go.

On August 25, 2008, a notice of intent to arbitrate was filed. This is the first step Dow AgroSciences could have taken. They indicated they would be seeking $2 million in compensation from Canada in addition to further relief, including additional damages for lost profits resulting from Quebec's ban on the cosmetic pesticide 2,4-D. The claim was brought under NAFTA's chapter 11, article 1105 and article 1110. Article 1105 deals with the minimum standard of treatment owed to investors, including fair and equitable treatment in accordance with international law, and article 1110 deals with expropriation or measures tantamount to expropriation.

Dow asserts the ban was imposed without scientific justification. It disputes the cancer risk associated with the chemical 2,4-D. It asserts the ban ought to have been lifted, that it's arbitrary, irrelevant, and unfair. At first glance, since Dow is not alleging any trade protectionism issues, this matter is purely about process. It's about Quebec's ban and the process they undertook to enact it, so this is unlike other disputes we have seen in the past under chapter 11, in particular S.D. Myers and Ethyl Corp., where allegations of trade protectionism were involved, alternative motives the Canadian government may have had. In this case there were no alternative motives. It would appear Dow assumed the motives were to protect public health and the environment. They just don't appreciate the way Quebec has gone about doing it.

After this notice of intent was filed, there was a 90-day cooling-off period, and any time after that 90-day cooling-off period Dow was at liberty to file its notice of arbitration, which would kick off the entire process, including the choosing of arbitrators. They have not filed a notice of arbitration, so in a sense, we're playing a waiting game right now. At least according to the document filed by the Department of Foreign Affairs and International Trade for the purposes of this hearing, there were consultations in January. We're not certain where those have led, if settlement negotiations are ongoing. Civil society is sitting and waiting for the notice of arbitration to be filed and waiting for the process to kick off.

I'd like to outline a couple of very simple concerns and then try to hit what I think is the key issue in this discussion.

In terms of our main concerns, even where public interest regulation is challenged by eligible investors, civil society participation in these processes can be severely constrained. We're dealing with a matter of public health and environmental protection, so this is something where civil society's voice should be heard loud and clear. However, even if an arbitration were to go forward, my client's ability to participate would be limited at best to a 20-page written memorandum to an arbitration panel that may not even be in Canada. There is no guarantee the investors won't request confidential proceedings, which would further limit our ability to understand what case they're bringing, and there will be no opportunity for us to make oral representations before the tribunal. This is totally unlike the Supreme Court of Canada, where public interest intervenors, with the leave of the court where they have a distinct and unique perspective that the Supreme Court feels is usefully brought.... We will not have that opportunity because the arbitration panel will not have that jurisdiction to ask for it.

Second, as I believe my colleague Steven Shrybman mentioned, NAFTA chapter 11 establishes an imbalance between investor protection rights and the parties' sovereign duty to protect the environment and public health. Over the past several years a series of investor claims in each of the NAFTA parties have claimed that certain domestic measures, whether they were health or environmental, conflicted with the terms of chapter 11. Although recent decisions, notably the Methanex decision, have been better than earlier decisions, some of the earlier decisions, like Metalclad, have been pretty harsh. The uncertainty generated by these claims--the mere filing of a notice of intent--really has an effect on other jurisdictions, both provincial and municipal.

I don't want to be too negative about it, but the reality is that provinces and municipalities are nervous when they think about enacting regulatory measures like pesticide bans, because they don't want to face the consequences of a NAFTA chapter 11 tribunal. Certainly the Canadian government faces those same restrictions. Despite the underlying legal risk, we're very pleased to see Ontario enact the ban following Quebec, and we're hopeful that further provinces will join the parade.

I want to go to our two key recommendations now. The first is that the federal government should vigorously defend Quebec's ban on 2,4-D lawn pesticides if Dow proceeds to arbitration. The federal Minister of International Trade should immediately and publicly announce Canada's intentions in this regard and acknowledge the appropriate precautionary basis for Quebec's action. We also want the federal government to assert the position that non-discriminatory regulatory measures enacted for a public purpose in accordance with due process under international law are not expropriations or violations of the minimum standard of treatment. As such, they should not be subject to compensation.

One of the most controversial issues in investment law raised in this claim is how to distinguish between a valid regulation that is not compensable, and direct or indirect expropriations that would be compensable. Dow argues that the ban is compensable expropriation. If this goes forward, we will argue--and we believe Canada ought to argue and will argue--that the Quebec ban is a non-compensable public interest regulation. We believe we're supported by the most recent NAFTA chapter 11 decision in Methanex. I'll quote from that decision:

But as a matter of general international law, a non-discriminatory regulation for a public purpose, which is enacted in accordance with due process and, which affects, inter alios, a foreign investor or investment is not deemed expropriatory and compensable unless specific commitments had been given by the regulating government to the then putative foreign investor contemplating investment that the government would refrain from such regulation.

Obviously we don't feel that Quebec made such representations. However, international law has yet to identify, in a comprehensive and definitive fashion, precisely what regulations are permissible and commonly accepted as falling within the police or regulatory powers of the state, and thus non-compensable. So there's no bright yellow line--that's the issue here. I think it's a critical issue of public importance, and we're very pleased that this committee has invited us here to speak on this issue.

If and when this arbitration proceeds, I would request that this committee hold a similar hearing to follow up on the arguments that are being made, formally hear the position of the Government of Canada and Dow AgroSciences, and give the Canadian public's elected representatives the opportunity to ask the questions of the government and the investor. This is not just about Dow's investment; this is about our children's best interests.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Amos and Mr. Séguin.

In addition to the statements from Équiterre and the Council of Canadians, the committee has received submissions from Meg Sears, Ph.D., from Dunrobin, Ontario--these have been circulated--and from Industry Task Force II on 2,4-D research data; and from Dow AgroSciences.

We also have a statement to be read into the record from Dow AgroSciences:

Dow AgroSciences wishes to thank the members of the House of Commons Standing Committee on International Trade for their invitation to appear. While we recognize that activities and testimony at committee falls under the banner of parliamentary privilege, because we are currently engaged in litigation with the Governments of Canada and Quebec, in the interests of prudence we must respectfully decline appearing before you today.

In our absence we have provided a written submission to the Committee which outlines our position and which we ask you to consider in your deliberations. If we could kindly highlight one theme, it is that Dow AgroSciences fully supports the responsibility of Canadian governments to establish effective regulations to protect Canadian's health and safety and Canada's environment. Furthermore, we believe that Canadian governments have a responsibility to enact effective health and safety regulation that follow established science-based risk assessments/risk management principles.

Should there be questions related to our submission, we would be pleased to address them in writing. Thank you for your consideration.

That's from Dow AgroSciences Canada, Jim Wispinski, president and CEO.

I think all of those submissions have been distributed to the members of the committee.

This is an interesting topic. We've heard from our witnesses, and we're now open to questions. We're going to begin the questions with Mr. Brison, and we're going to try to limit the first round to seven minutes for questions and answers. So I would ask the witnesses to try to keep their answers commensurate with the questions and try to keep them all within seven minutes.

Mr. Brison, please begin.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair.

Thank you very much for your interventions this morning.

The principle of chapter 11, of national treatment and inherent investor-state provisions, is one that I think most of us understand: the notion that a Canadian company doing business in another country with whom we have a free trade agreement could not be discriminated against by that government or a subnational government in that country. By the same token, we would respect the same principle in terms of a foreign company doing business here. The principle of chapter 11 is as much to defend Canadian companies doing business abroad as it is to defend the rights of American companies, or Mexican in this case through NAFTA, doing business in Canada.

We've seen cases in which chapter 11 yielded what seems to have been a just result. Based on your analysis, Methanex was one. Other cases were resolved differently. If you go back to MMT, you would allege that it was different in terms of how it was resolved.

It strikes me that legislators, whether provincial or state or federal, national or subnational, face a significant challenge in terms of designing legislation that, by nature, is not seen or demonstrably proven to be in some ways discriminatory.

For instance, with 2,4-D, if the ban had been on pesticides broadly as opposed to being on 2,4-D specifically, would it have been more tenable under chapter 11 than it is if you ban a specific chemical?

[William Amos]

It's an interesting hypothetical. The Quebec government took a targeted measure. This is about 2,4-D and lawn pesticides, cosmetic pesticides in particular.

There are specific carve-outs for different applications—for agriculture, for forestry. Whenever the argument gets mixed together, we say this is not about agricultural or forestry applications of 2,4-D; this is about a limited target group. At the end of the day, the government made a decision based on the precautionary principle to protect certain subpopulations. It would have been more difficult for them to justify, on the precautionary principle, a ban on 2,4-D in agriculture or forestry.

I don't want to take a position on whether there should be a ban on 2,4-D in agriculture and forestry, because it's neither here nor there for us today. It's obvious that the Quebec government felt they had a strong argument via the precautionary principle to say that they needed to protect their children from these pesticides, and that even in the absence of scientific certainty they were going to move forward to protect them. They went for it, and I agree with them in the strongest terms possible.

[Scott Brison, Liberal, Kings—Hants, NS]

Sure.

[Steven Shrybman]

Mr. Brison, can I respond to your premise?

It's difficult to argue that this mechanism has been of any utility to Canadian investors. We have lost every single case that we have brought against the United States. Until recently there were no cases against Mexico, though I'm not absolutely current in that regard. If you look at the cases we brought against the United States, they were arguably as meritorious, perhaps more so, than the successful cases that have been brought against Canada. I'm thinking of Loewen in particular. A jury in Mississippi ordered a $500 million damage award against Loewen because of some dispute involving $1.5 million. It actually put the company into bankruptcy, because under state law it didn't have the money to appeal, which would have meant posting a bond.

There have been very meritorious cases brought against the United States, even though I'm no fan of the mechanism, and we lose. The cases brought against Canada succeed. Why would that be? Why asymmetrical results? I think there are two reasons for this. These are private tribunals, and they get paid extremely well. If they want ongoing business, they have to find occasionally in favour of disputing investors. If they find against the United States, I think they understand they risk killing the goose that's laying the golden egg, because Congress wouldn't put up with it.

[Scott Brison, Liberal, Kings—Hants, NS]

But you don't dispute the merit behind the principle of chapter 11 of providing national treatment. We cannot discriminate against foreign companies simply because they're foreign companies. You don't dispute that.

[Steven Shrybman]

National treatment is one rule. There are performance requirements that would preclude, say, value-added processing requirements for Canadian resources or the types of stimulus measures that the Canadian government might want to put into place. There are rules about expropriation, which has been interpreted too broadly. There's this jackpot article 1105 about treatment in accordance with international law.

So the fairness principle I wouldn't dispute. But I would argue that it's a feature of Canadian law in any event, and no U.S. investor can claim--

[Scott Brison, Liberal, Kings—Hants, NS]

You support the principle of national treatment and the need for investor-state provisions, but you believe that chapter 11 is poorly worded.

[Steven Shrybman]

I don't support the mechanism. I don't think there's any argument that it has served Canada or Canadian investors.

[Scott Brison, Liberal, Kings—Hants, NS]

We're talking about chapter 11. I'm acknowledging that it may be poorly worded.

[Steven Shrybman]

I'm also talking about chapter 11.

[Scott Brison, Liberal, Kings—Hants, NS]

But in respect of the principle of investor-state provisions for national treatment, if you oppose that, then you oppose free trade.

[Steven Shrybman]

No. We don't have an investor-state mechanism at the WTO.

[Scott Brison, Liberal, Kings—Hants, NS]

In fact, if countries within NAFTA do violate national treatment, there is a provision there. Now, you could argue that under the WTO, which is not free trade, the WTO is not free trade to the extent that an FTA represents.... My bias is that I believe that investor-state provisions are important and I think that they are essential.

I do acknowledge that there are challenges with the wording of chapter 11. This is really helpful to us. We need a longer discussion, frankly, on chapter 11, where we bring in more witnesses at some point and we can actually go through this, because I know people from the business community who believe in investor-state provisions but who believe that chapter 11 is poorly worded.

If a Canadian company manufactured 2,4-D, for instance, it would not have the same right to challenge the government. It would not have the same right. Chapter 11 does provide more rights in some ways to a foreign company than to a Canadian company. That could be argued as being wrong. With MMT, that ban was a case of the government using interprovincial trade barriers as opposed to an outright ban, and as such it seemed to be a circuitous way to approach it, and as such it violated the principles of national treatment.

But I think the fact that we do have investor-state provisions and national treatment is very important to Canadian companies and to Canadian jobs. The question is, what are the problems with chapter 11, and how can we address those problems? I think that's where we're going to have to drill down on it at some point.

But I really appreciate your help in shining some light on this issue this morning. I just think we're going to need a lot more light from a lot more people and a lot more time to really understand this. I think we have to be fairly open-minded in looking at it.

[The Chair, Conservative, Lee Richardson]

I want you to comment very briefly. We're at nine and a half minutes.

Go ahead, Mr. Amos.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much.

[William Amos]

Very quickly, I appreciate the statements and the question with respect to national treatment. Without taking any position on the utility of investor-state provisions, without making any comments with respect that matter, I think it's very important to distinguish between a number of the provisions that are within chapter 11. Article 1102, which deals with national treatment, is entirely distinct from article 1105, which deals with the minimum standard of treatment. National treatment deals with the fact that Canadian investors are going to have to be treated the same as U.S. investors. The minimum standard of treatment deals with an objective standard of treatment that any investor must be granted.

Dow is not claiming that Canadian investors were treated more favourably. There's no article 1102 claim. This is about article 1105 and the minimum standard of treatment.

I think what we need to do is start drilling down into this issue and look at what wording in chapter 11 is simply not working right now. As I pointed out, the main issue is determining what is a compensable expropriation versus what is a non-compensable regulation. That's the key issue. The problem is that NAFTA, chapter 11, doesn't specify well enough. There's a raging debate out there as to what kind of regulations should be non-compensable. We really need the Canadian government to take a firm position and a very transparent position as to what they feel is non-compensable regulation. I think that's the core issue here.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you.