International Trade Committee on March 24th, 2009

[Steven Shrybman]

The United States federal government has the right to make submissions to the tribunal. There's no other right of intervention. You can petition the tribunal and ask for its consent to participate, but there's no right for any other party to participate in the process other than—

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

There's no intervenor status on behalf of anyone else?

[Steven Shrybman]

Only if the tribunal agrees to give it to you. The process that's been set in place for that is that you make your submission and your application for standing at the same time. You don't necessarily get to see the evidence, or any part of it the company decides should be confidential—and that has happened in every single case. A large part of it has been reserved, and there are confidentiality orders in every case. And you don't know until the decision is rendered whether or not the tribunal is actually giving you standing. It may refer to your submissions; it may not. You don't find out until the end of the day whether or not they've taken your views into account.

[William Amos]

As I mentioned earlier, it's also highly relevant that there's no open door for oral submissions. Whereas the Supreme Court can decide that a given intervenor will bring an important perspective to help them make a better decision, in the case of chapter 11 arbitration, that will not be the case. If we submit an application to be a non-disputing party and file an amicus curiae brief, they will not be inviting us to make oral submissions, whether or not they think our perspective would be useful to them.

[The Chair, Conservative, Lee Richardson]

Mr. Brison.

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

Mr. Chairman, earlier today Mr. Julian said Canada has never won a case, but we did win the UPS case, as an example.

I'm very intrigued by what Mr. Shrybman said earlier, that the Canadian government has not vigorously defended or utilized legal defence mechanisms effectively to defend Canadian interests. I don't know the cases well enough to judge that, but it strikes me that I would like to know, first of all, whether or not the Canadian government has done a good enough job using what provisions are in chapter 11 as it stands now, and what specific approaches we could take that would be different to strengthen our defence of our interests.

Then a separate issue is, notwithstanding defending our interests better with the existing chapter 11 provisions, what improvements we should make potentially with chapter 11 and NAFTA—and that would involve a reopening—or at least, further to Mr. Julian's point, for future FTAs so that we can seek to ensure that investor-state provisions are better designed, if there are any.

I'd appreciate any further insight into the specific cases where Canada did not do a good job in effectively going to the wall to defend a Canadian legislative decision. Second, Mr. Amos has actually proposed some changes that could improve that, and it's helpful to have those granular recommendations.

So there are those two points: what have we not done effectively so far in terms of defending our interests with the existing chapter 11, and what specific changes should we make, going forward, to any investor-state provisions to make sure they are better positioned to defend our interests?

[William Amos]

I'm going to leave the answer on the issue of what Canada has not done well enough to Mr. Shrybman.

What I would like to point out here answers your question, I think, but it is in the context of this specific case. What can arise and what may be arising in this case is a situation in which the Canadian government may not be in the best position to defend the interests of a given subnational entity such as a province--say, Quebec--and I'll highlight why.

Dow has invoked the Pest Management Regulatory Agency's re-evaluation of 2,4-D as a reason justifying their claim that the Quebec process has been unfair and arbitrary and unjust. They're saying Quebec has decided that on a precautionary basis they're going to ban 2,4-D for cosmetic use, but that flies in the face of the federal Pest Management Regulatory Agency's own re-evaluation. The agency apparently takes a precautionary approach, and it has decided that in fact it can be registered in Canada. They're playing off the federal and the provincial processes. What can happen is that the federal government's own approach to the precautionary principle gets called into question, but they're having to defend the province's own precautionary principle.

I would like to highlight the fact that it's well known that Canada has adopted, on several occasions, a less than progressive stance on the precautionary principle in its international negotiations. In the trade context in particular, there was the EU beef hormones case that went before the World Trade Organization. In that case the European Community argued that the precautionary principle was customary international law and justified its prohibition of beef imports from Canada and the U.S. that were produced with artificial hormones. Canada and the U.S. argued that the precautionary principle was not part of customary international law.

What we have in this case, to bring it back to Dow, is that the Government of Canada has taken certain positions vis-à-vis the precautionary principle in other international fora; now they're having to represent Canada before a NAFTA tribunal, or potentially will have to represent Canada before a NAFTA tribunal, and defend the precautionary principle in a particular circumstance. There's the potential for conflict, and that's one of the reasons groups like Équiterre and the David Suzuki Foundation, represented by Ecojustice, are so keen to be involved in the process. It's because we think we have a specific perspective on the public interest that the Government of Canada may not be able to bring or may not feel comfortable to bring, because it may find itself in a conflicted situation. That may not be the case, but it also may be the case.

[Steven Shrybman]

I agree with that analysis. That's not the only conflict of interest, I think, that resides not within the Canadian government so much as within the international trade department. The lawyers who work for the department have carriage of Canada's trade agenda; they may at one moment be assailing the precautionary principle in a dispute with the United States and in the next moment be called upon to defend it.

I would do two things. I would take carriage of Canada's defence of its measures out of that department. There are many talented lawyers who work for the federal government, or you could retain outside counsel. I often am involved in cases with the federal government, and often on the same side, happily. We often have a collaborative and cooperative working relationship with lawyers within the federal government. In fact, my firm represents the lawyers in the federal government in labour-management relations.

When it comes to these trade cases, even though we're on the same side, you wouldn't know it, because I don't get my calls returned. It's very difficult for us, because they know we're critics of the regime, and I think they haven't removed themselves from their support for the regime. They negotiated these agreements. They're still negotiating them, and they need to vigorously defend the interests of the government writ large, and even of departments whose values they maybe don't share, such as Environment or Health, in defending Canadian measures.

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

On that point, simply taking the legal carriage out of Trade and putting it with, say, Justice—Justice lawyers can work in the Department of the Environment—is a very specific and constructive approach that could make a real difference.

Thank you very much. I hope this is not our last discussion on chapter 11.

[The Chair, Conservative, Lee Richardson]

Thank you.

We have about five minutes here, so I'm going to ask Mr. Julian to sum up and keep the questions and answers to five minutes, if we can, and we'll adjourn at 11:55.

Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair. I appreciate the opportunity for a supplementary.

I have two very quick questions, one to Mr. Shrybman. My question to you is this. When we're talking about bilateral trade agreements, have we found that the chapter 11 provisions Canada has signed on to in bilateral trade agreements—and I'm thinking of Canada-Chile, Canada-Costa Rica, Canada-Israel—have essentially maintained intact the chapter 11 structure? That's my first question.

My second question is for Mr. Séguin. You said that there needed to be a strong response from the federal government. Are you satisfied with the way the federal government has reacted up until now in the case of Dow AgroSciences against the Government of Quebec?

[Steven Shrybman]

The basic structure of investor-state dispute resolution is intact in the Peru agreement. Is it the Peru agreement? The one I've seen is the one with Colombia.

But I think Mr. Amos is correct. There has been some softening around the edges, and I'm sure Canada is reflected in those new agreements, the trilateral statements that have been made by the commission, which he referred to. But those weren't Canadian initiatives; those were three-party initiatives. However, the essential features of allowing private investors to claim against the state under an agreement to which they are not a party and to walk away with damage awards if they succeed remain intact.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you for clarifying that.

So with the bilaterals that Canada is signing, we're essentially maintaining the chapter 11 provisions, which means we have a NAFTA template that Canada is continuing even though the U.S. has clearly moved away from it. That's an important point for the committee, so I appreciate that.

[Steven Shrybman]

You know, I'm not sure how much light exists between the reforms the U.S. has put in place and those Canada has put in place. I wish I were more up to speed on this, but I understand the U.S. has negotiated a bilateral without an investor-state mechanism in the agreement. Now, that would be a significant reform, if I'm correct in my recollection.

And when I responded to your question previously, what I tried to bring home was that the federal government is fully supportive of implementing a regime like this domestically, which doesn't moderate these disciplines; in fact, it arguably expands them, if you look at the TILMA model.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you.

Monsieur Séguin.

[Hugo Séguin]

Thank you for your question.

If I understand correctly, you want to know whether we received a clear and unambiguous response from the federal government. The answer is no. Questions were asked in the House of Commons, and Stockwell Day, the Minister of International Trade, gave an answer that we find is ambiguous. We would like for the government to clearly state that Canada will defend Quebec's Pesticides Management Code. But we are still awaiting that response.

Our coalition has also sent a formal letter to the minister, but we have yet to receive a response. We recently heard that consultations were held with the company and the Government of Canada in January. That could perhaps explain the ambiguous response. This is of concern to us because we do not know what was actually discussed or what is going on. In the absence of a clear position from the minister or the government, we would welcome a motion from committee members stating that they would like the Canadian government to vigorously defend this case before the courts.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you. This is simply to clarify...

[The Chair, Conservative, Lee Richardson]

I'm sorry, Mr. Julian, I think we've gone over time with that one.

I'm going to say thank you for your questions and thank you to our witnesses. It was very useful, and I think the committee was very pleased with the presentations and the questions, so thank you very much. With that, I'm going to dismiss the witnesses with thanks.

I want to remind the committee that on Thursday I will be bringing to the committee a budget for travel to Washington. There will have to be discussion about that. Apparently there are two other committees visiting at the same time, and that may be one.... So I want you to bring your thoughts to the committee for Thursday with regard to the Washington trip.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Will you be bringing the budget, or do you want us--

[The Chair, Conservative, Lee Richardson]

No, I'll bring the budget, and that will focus on debate. All right, so we'll debate that on Thursday.

The meeting is adjourned.