International Trade Committee on May 5th, 2009

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

And the issue around indirect expropriation. Of course, you've seen this with Dow Chemical. The companies can use the mechanism when their profits are infringed upon, and we've seen many examples of that under the chapter--

[Matthew Kronby]

We've seen a claim.

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

We've seen many claims.

[Matthew Kronby]

Anyone can make claims.

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

Ethyl Corporation. We can have a debate on this, but the precedence of jurisprudence is pretty clear.

[The Chair, Conservative, Lee Richardson]

If you'd like to have a debate, you can do it outside committee.

Thank you for that. I think we're going to have to move on to the next one, because we have Mr. Keddy chomping at the bit, unless you want to follow that with a quick response from Ms. Nelder-Corvari.

Just before you start, did you have something to add to that?

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

Yes, I'd like to hear the rest of the answer.

[Carol Nelder-Corvari]

I wanted to turn to the other part of Mr. Julian's question about the environment, and that's because I think we need to understand the context here a little better.

I know the question was about a sanctions-based approach as opposed to a cooperation-based approach. We can certainly argue the merits of both. But in the case of Peru--and this is important--when we went down and spoke to our Canadian companies and asked them what their expectations were on environment, the one message we heard, and they all said the same, was this: we want stronger environmental laws in Peru; we want the ability, the capacity, of the government in Peru to increase, because we're operating in the regions where the laws and the presence of government are not as strong as they could be. They're building up that presence. That's why EITI and these transparency initiatives are important. Very often, they say they do the same thing as we do in Canada, they follow the same best practices, but there's nobody there. There's not a very strong capacity to determine they're doing that.

So what they wanted was an effort to help build capacity in Peru. As for the Peruvian government itself, when we were in negotiations, we were expecting there would be.... It's a developing country. They have to build capacity, there's no doubt, and that's why this is important. So we were thinking that after the FTA with the United States, there might be some concerns about more obligations or more emphasis on environment. It was the opposite. Through the United States-Peru Trade Promotion Agreement, they had created a critical mass of civil society that had expectations on the environment, and that meant that, to be politically accountable, they wanted a chapter in the agreement and a side agreement and they wanted this to have good profile.

The efforts here are cooperative to a large extent. That's what CIDA was doing with the ombudsman effort in Peru, and that's what the mining tool kit was about in terms of getting stakeholders and civil society a voice to help make decisions in communities.

So I think it's important to look at the whole context. The Government of Peru announced its first environment minister the day before they signed this agreement with Canada.

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

Perhaps I can interject for one second before I hand the questions over to Dean. I don't want to run out of our time.

[The Chair, Conservative, Lee Richardson]

We haven't started your time yet.

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

He wanted the answer to the question. I didn't; I know the answer.

[The Chair, Conservative, Lee Richardson]

You did it in 14 minutes, Mr. Julian. I think I'd save it today.

Go ahead, Mr. Keddy.

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

I think we have to look at reality. We've had two sovereign nations, Peru and Canada, negotiate a free trade agreement between the two countries in good faith. We also have to look at the reality that we're not the United States of America, that we're roughly one-tenth the size. We don't have the same clout.

The agreement, certainly as I've read it and I've heard our trade officials talk about it, I think is pretty good agreement. But we also have to look at the Peruvians themselves. The people of Peru had a government that ran on a free trade platform, they were elected on a free trade platform, and they negotiated a free trade agreement in good faith. I'm a bit astounded when I hear some of our members say they don't have the right to do that, that somehow they're not sufficiently advanced in the democratic process to do that. I think it's a bit disingenuous on our part to say that. There are good environmental aspects to this agreement, there's good corporate social responsibility. The whole idea of non-discriminatory law allows people to negotiate in good faith and have a dispute mechanism. To me it makes a lot of sense.

That's more of a statement than anything else, and I know Dean has a real question.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

I want to thank the officials for being here today.

My question involves the investor-state dispute settlement mechanisms, with respect to what you were getting at before when you were talking about it. My understanding is that this doesn't threaten Canada's ability to regulate or legislate labour and environmental issues. Is that the case?

[Vernon MacKay]

Yes, that is the case. The investor-state dispute settlement mechanism does not prevent governments from regulating in the interests of labour, environment, or other public policy issues such as health and safety. The investor-state mechanism is there to provide Canadian investors in partner countries with an impartial process in the event of an alleged breach of the treaty. That is the main reason for that mechanism. It provides some stability and predictability for the investor. It is essentially a way for them to manage risk in our partner countries. But it does not prevent our partner countries from regulating in the public interest.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Let's talk a bit about imports. What does this do for places, like Quebec, that are adding value to raw goods? Does this not provide more opportunities as we go to the value-added and export those goods?

[Carol Nelder-Corvari]

That's right, 75% of the imports are for further processing. They're not final goods; they're creating economic activity in Canada.

The point about the benefits of this agreement also goes directly to the issue of a defensive arrangement here.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you.

Ron.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you to our witnesses.

During your presentation, I think you alluded to something like 75% of Canadian exports coming back to Canada for further processing. Is that correct?

[Carol Nelder-Corvari]

No, they're not coming back. What we were saying was that the imports into Canada from Peru are not final goods; they are goods for further processing or inputs for further manufacturing in Canada.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We're creating jobs, then, with this agreement.

[Carol Nelder-Corvari]

Yes, the exports, the imports, the investment—all are beneficial. You have to look at the whole relationship.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I have a supplementary question with regard to the timeline.

You said that on February 1 the United States ratified their agreement with Peru. That means that during the last three months our Canadian exporters have not been competing on a level playing field. Would that be fair to say?

[Carol Nelder-Corvari]

That is exactly right. I could go through some of the areas where we're placed at a significant competitive disadvantage as a result of this agreement.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Please do.