International Trade Committee on May 26th, 2009

[The Chair, Conservative, Lee Richardson]

Mr. Julian.

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

Thanks to our witnesses. These are very strong presentations.

I'd like to start with you, Mr. Rowlinson. You referenced the U.S.-Peru FTA and spoke about the stronger provisions that are in that agreement. Could you take a moment to outline the provisions in the U.S.-Peru agreement that are not in Canada-Peru? And is it true, then, that Canada has essentially signed an inferior agreement?

[Mark Rowlinson]

I know we're running short on time. Let me be--

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

Oh, I have my seven minutes, so he can't cut me off. The chair's very good about that.

[Mark Rowlinson]

Obviously these are enormous trade agreements. They're long documents. They provide for different rights in different areas.

I think the central difference between the two agreements, from a labour perspective, is that the labour provisions in the Peru-U.S. agreement are subject to the same dispute settlement enforcement mechanisms and all other criteria as are the commercial provisions of the agreement. That's the essential distinction between the Canadian model and now the U.S. model.

Monsieur Cardin spoke about the side agreement versus incorporation into the main agreement, and that's a really important issue, but it's not just that. I know that the Canadian government takes the position that labour and environmental rights have to be in a side agreement for reasons connected to the division of powers under the Canadian Constitution. We won't get into that argument in its minutiae, but the question is whether or not the enforcement mechanisms, whether in a side agreement or not, are equivalent. The reality is that under the Canada-Peru agreement, they are not; under the U.S.-Peru agreement, they largely are.

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

So would you say that the Canadian government has negotiated an inferior agreement from that standpoint?

[Mark Rowlinson]

In respect of the enforcement of labour rights, there's no question that I believe the Canadian government has negotiated an agreement that is inferior to the one negotiated by the U.S. government.

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

Now, in the case of the U.S.-Peru agreement, Congress, as well, took the initial agreement and basically said, “Full stop. This isn't proceeding any further until improvements are made to the agreement.”

[Mark Rowlinson]

That's correct, and again, the labour movement was brought into that discussion. I think that's important to note.

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

That's very important, because every other legislature on the planet provides, essentially, a very good system of checks and balances on agreements that are negotiated. There are some in the Canadian Parliament who would say that Canadian parliamentarians have no right to touch agreements. Very clearly, the precedent around the world is that parliamentarians, elected members of legislatures and parliaments, take agreements, and if the agreements are inferior or not adequate, they can make changes to improve them.

[Mark Rowlinson]

In fact, the whole history of hemispheric free trade reflects the fact that the U.S. legislature has been, with respect to those present, far more engaged and active on this issue than the Canadian legislature has been. Recall that the only reason we have any environmental or labour side agreements at all in any of these provisions is because the Democrats in the early 1990s insisted that they be part of what was then the contemplated agreement in NAFTA.

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

Thank you.

I'll move on to Mr. Cameron. You said a couple of things that I think are very important for the committee to note. The first is that Peru has essentially refused to keep its obligations under the ILO, so Peru is already breaking treaties that have been signed. Second, you mentioned the Manhattan Minerals case, in which essentially there was local grassroots democracy that pushed back on a mining company and forced it not to devastate a particular area.

In both of those cases, I guess referencing this bill, my question is this. Does the bill in any way improve the situation? Does the bill make it possible, as well, for grassroots democracy to continue to play a role, for people to say, “We don't want that project in our municipality”, or does it actually make it more difficult for citizens to stop those kinds of developments? Is there anything in the agreement that actually allows for a substantive hammer to ensure that when Peru breaks its obligations under the International Labour Organization, Canada can actually intervene forcefully?

[Prof. Maxwell A. Cameron]

I think it's important to note that Peru has adopted a whole host of rules that enable participation, whether they're referenda, recalls, citizen initiatives, or others; yet most of the consultations are non-binding, so they don't require governments to comply with those sorts of initiatives, whereas these agreements are binding, and they give powerful, muscular provisions that support investor rights.

I think the critical thing is--and I think this has been picked up in this discussion--that it's not simply the provisions themselves but how they are actually enforced. What we're seeing in the case of the Garcia government is that they are using the implementation of legislation process as a way of trying to achieve changes that in fact restrict the ability of people to participate in these kinds of decisions in ways that are probably not even required by the agreement itself.

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

So what we're doing is undermining Peruvian democracy.

[Prof. Maxwell A. Cameron]

Yes.

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

It's a perverse impact of this agreement. So if Parliament adopts this agreement, we're actually undermining the ability of citizens in Peru to control their quality of life and control their area, their environment.

[Prof. Maxwell A. Cameron]

I think that's potentially true.

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

Thank you.

I'd like to move on to you, Ms. McClenaghan.

You spoke very eloquently about investor-state. Immediately after NAFTA was signed, the U.S. moved away from these rigid handcuffs that are the investor-state provisions of NAFTA. Other countries don't implement the kind of handcuffs that exist on investor-state where a corporate CEO basically can write his or her own cheque on any direct or indirect expropriation. Why do you think Canada is presumably the only country in the world that has this rigid, ideological adherence to strict NAFTA investor-state provisions in all its bilateral agreements?

[Theresa McClenaghan]

It's an interesting question. CELA, my organization, is doing an analysis of the bilateral agreements, not just Canada's but those of a number of countries, to figure out what are the differences in terms of protecting the right of countries to do their own environmental regulation, free from investor-state challenges. We haven't completed that, so I don't know if I want to say it's clear that Canada does and the others don't.

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

When will that be available?

[Theresa McClenaghan]

Probably over the summer we'll be finishing that. I don't know what the timeframe of this committee is. It's complex, because it turns out there are a lot of bilateral agreements.

Nevertheless, I think the reason we're doing that is that it has become evident for Canada that it's a real restraint on provincial and federal government action to have to worry about this kind of investor challenge. It's the fact that even though there's great rhetoric, even though it says we want a high standard of regulation, we want to improve environmental regulation, and we want to comply with the environmental treaties, as I said, the fact that it can be case-to-case challenged by investors is the problem. Even if we don't think those challenges are going to be won, which I hope they won't given the Methanex precedent, the arbitral panels don't have to follow each other's rulings. That's the other problem here. As soon as we're taking these questions and saying, “Fine, Canada, you decided to protect the environment; investor, you can challenge that,” that's a problem.

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

Okay. Hopefully you'll make that study available to the committee.

[Theresa McClenaghan]

Yes.

[The Chair, Conservative, Lee Richardson]

You did pretty well. You had nine minutes.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you very much, Mr. Chair.

I'd like to thank our guests for being here this morning to make representations to us.

I had the opportunity to be in Peru in March, and while I was there on behalf of the FIPA group, which is the parliamentary organization associated with parliamentary democracies throughout hemispheric America, I would say that at every turn, when we met with congresistas, companies, chamber of commerce, labour groups, what we talked about was the free trade agreement. As you know, while we've talked about some very specific things, we've talked very much about some of the labour issues--and I appreciate those representations--and some of the issues relating to expropriation.

Mr. Cameron, regarding your comments, I think you said a few things I'd like to point out. First, it's not my place to challenge other members' comments--that's not typically what I do--but I'm distressed when I hear a comment that somehow this free trade agreement is undermining Peruvian democracy. I'm troubled by that. There are some colleagues who have never found a free trade agreement they would ever support in any fashion, but I'm not trying to pick on them.

I do want to say that at the heart of what we are trying to do in Canada is as much to our benefit, because we've had a U.S. free trade agreement signed with Peru since February 1, and to the extent that while we're on to some very specific areas that our guests are extolling this morning, there are so many aspects of this agreement that in its entirety, while there may never be the perfect deal, I would suggest to you it is significant from the standpoint of what it means to both Canada and Peru. I would say that even more, probably, Peru is the beneficiary. They've had significant economic growth--which, if you've been there, you would note--of some 9% per year for the last couple of years. I think that's very, very positive.

Mr. Cameron, I want to ask you a question in a moment about the two worlds of Peru, because I found that very compelling. To the extent that we're helping provide economic stimulus throughout the country, my Cape Breton mom had an expression, “A high tide raises all ships”. In a sense, what you have is broader growth.

I thought Mr. Brison made an interesting comment earlier when he mentioned that when there are opportunities for investment economically, what you do--and I won't put words in Mr. Brison's mouth--is provide employment and you provide hope for people. My sense is that this is part of our commitment and obligation to them.

First, very quickly, Mr. Rowlinson, I have a question for you. In the labour cooperation agreement that Canada and Peru have, there are a number of things in terms of protecting workers' rights, from the freedom of association to the right to collective bargaining, abolition of child labour, elimination of forced compulsory labour, elimination of discrimination, and a variety of enforcement of labour standards respecting the LCA and a complaints procedure.

Is your concern primarily that the labour cooperation agreement is not fundamentally in the free trade agreement or that it's a side agreement that was signed? What would be your comment on that, please?