International Trade Committee on Feb. 3rd, 2014

[Ed Holder, Conservative, London West, ON]

I want to thank our guests. I am the only Ontario member of Parliament here. It's great to be here in your part of the world. The eastern bastards are freezing. I just want you to know that.

What I heard from both Mr. Maynard and Mr. Finlayson was that CETA lays the foundation for greater opportunities within Canada. Mr. Finlayson, you made a comment about the TPP as well when prompted about that. Mr. Maynard, you said that what we do is we get ahead of the United States, which we clearly are with CETA, and that should be advantageous to us.

Mr. Finlayson, you indicated in the case of the TPP that the U.S. is there and is a major part of that play. Does the fact that we're ahead of the United States with CETA have any impact on the TPP as you see it? Is there any advantage? Is it neutral for us as it relates to the TPP?

[Jock Finlayson]

I don't think it's a huge advantage. We'll see whether the U.S. administration is able to get the authority that it currently lacks from Congress to actually participate in a meaningful way in both the discussions with the Europeans and the TPP. I think it would be unfortunate if they couldn't. There is a risk, and I don't think this is going to happen, but if Canada was to sit on the sidelines both in terms of Asia-Pacific and with Europe, and the Americans went ahead and finalized major comprehensive trade agreements with these two huge blocs, that obviously would be a big disadvantage from a competitive point of view for Canada. We're already a bit concerned out here that the Americans have a free trade agreement with South Korea, which has been implemented. For Canada, even though we started the discussions with South Korea prior to the Americans, our process is stretched out a bit. Korea is an important market for Canada, particularly for western Canada.

There is a competition here among countries to get access to markets. We don't want to be left out of that. I think there's a small advantage if we get the agreement with Europe ahead of the United States. I rather suspect the Americans will eventually conclude—if not under this president maybe the next one—an agreement with the Europeans because there's a huge strategic interdependence between those markets. I think in the big picture they will come together.

[Ed Holder, Conservative, London West, ON]

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for your testimony. It's very valuable and we appreciate the questions. This is exciting to be able to talk about trade opportunities for Canada, and particularly for this area. It's a privilege for the committee to be able to be here in British Columbia. I know my colleagues certainly appreciate the weather that you have here if nothing else, beautiful sunny weather.

I just had to put that into the record for those in Ottawa who are listening to us. I might as well rub it in a little bit.

Thank you very much for your time with us this morning. With that we'll suspend as we set up the next panel.

[The Chair, Conservative, Rob Merrifield]

We will call the meeting back to order. We have our second group of panellists before us.

We want to thank, from the City of Burnaby, Derek Corrigan, mayor, and Sav Dhaliwal, councillor. Thank you for joining us.

We have from CUPE BC, Blair Redlin, research consultant.

Mr. Redlin, if you are ready, the floor is yours. We want to thank you for being here and we look forward to your testimony.

[Blair Redlin, Research Consultant, CUPE BC]

Thank you very much, Mr. Chair.

Good morning, everyone. Thank you for the invitation to speak with you about CETA on behalf of CUPE BC.

CUPE BC is the B.C. division of the Canadian Union of Public Employees. CUPE BC represents more than 80,000 workers in 170 local unions across many sectors. CUPE members in B.C. work for municipalities, school boards, post-secondary institutions, and similar employers, mostly at the local level. Nationally CUPE represents 627,000 Canadians.

We have many concerns about CETA, the proposed economic and trade agreement with the European Union. Over the last few years CUPE's national president, Paul Moist, has repeatedly raised objections to the proposed treaty, and in 2011-12, toured 16 communities across the country to speak about his concerns. CUPE BC's recent past president Barry O’Neill and current president Mark Hancock have been doing likewise here in B.C. CUPE does this work in concert with a broad range of civil society groups under the umbrella of the Trade Justice Network.

For my part, I've been on the research staff of CUPE here in B.C. for the last several years, and my assignment included CETA. I've helped develop our analysis and have travelled twice to the European Parliament to meet with elected and civil society representatives there. I'm recently retired from CUPE staff now but continue to assist them with this topic.

CUPE's critique is based on extensive analysis of various leaked texts and now the 26-page agreement in principle summary released in October. Although it goes without saying that we support increased trade with Europe and the whole world, we think that trade arrangements between Canada and the EU should mostly focus on reducing tariffs rather than locking in sweeping investor rights protections that constrain the ability of elected governments to act on behalf of citizens.

Among other things, we're concerned about a big increase in pharmaceutical drug costs in Canada and now the potential federal subsidy of the drug companies through compensating payments to the provinces. We're concerned about restrictions on the ability of local and provincial governments to support local businesses and create local jobs through procurement and purchasing. We're also concerned about job losses in manufacturing sectors, the threat to public water, intellectual property, Internet issues, and that your committee, and Parliament, are reviewing and planning to endorse CETA based only on a 26-page technical agreement in principle and without the benefit of any actual text. To learn more about our analysis, I recommend committee members review the extensive body of CETA background information available on CUPE's national website, cupe.ca/ceta.

We have only a few minutes here today so I'd like to focus in my remaining time on one element of the proposed CETA that is especially worrisome and that is also the matter of intense debate and review in Europe right now. That is the matter of investor-state dispute settlements.

The European Union has an economy larger than that of the U.S. It is home to some of the world's biggest and most powerful corporations, companies such as private water giant GDF SUEZ, pharmaceutical giant Bayer, and oil giant Royal Dutch Shell, just to name a few. Canada needs to think very seriously about the implication of extending new rights to these European corporations and others to sue elected Canadian governments, suing them not in front of our long-established and respected courts, but instead at an unaccountable and secretive and non-appealable commercial arbitration panel.

If Canada does this, we will further reduce the ability of elected governments to act and regulate on behalf of Canadian citizens and it will increase pressure to privatize public services. Both the Canadian and European court systems are well developed and respected. Investor arguments against elected governments should be handled in the regular court system and not in these obscure, yet powerful, dispute chambers.

We now have lots of experience with this type of investor-state mechanism through Chapter 11 of NAFTA. It has not been positive, especially in the context of NAFTA's very broad definitions of investment, right of establishment, compensation for direct and indirect expropriation, minimum standards of treatment, and prohibitions against performance requirements—all things I recommend your committee study in CETA.

We've paid out over $160 million in taxpayer-funded damages on NAFTA claims, and Canada has borne the bulk of corporate suits. Right now, for example, there are eight active complaints against Canada versus three each for the U.S. and Mexico. If all of those eight were successful it could cost Canada some $2.5 billion.

Most important, we've been under unrelenting pressure to change public policies in response. Examples abound, including Mobil Oil's successful challenge to the research and development requirements of the Newfoundland government; Mercer International's current $250-million suit against BC Hydro's industrial power rates; the $130-million payment to AbitibiBowater by the Canadian government because Newfoundland exercised its provincial water and timber rights; Lone Pine's $250-million suit against Quebec's fracking moratorium; and perhaps most egregious, drug giant Eli Lilly's $500-million challenge of our generic drug rules in a case that the Supreme Court of Canada declined to hear.

It's not right that the NAFTA investor-state system is being used to circumvent decisions of the Canadian courts, and we certainly shouldn't expand that to Europe. Meanwhile, the U.S. is yet to lose a NAFTA Chapter 11 case, and all three North American governments have incurred tens of millions in legal costs.

Barrie McKenna described it well in the November 24 edition of The Globe and Mail, “Chapter 11 has become a way for companies either to bypass domestic courts and regulatory agencies, or to get restitution denied through normal channels.” The question is, why would we consider expanding to Europe a NAFTA dispute settlement model which has been so detrimental to us? If one accepts that we need an investor-state dispute system outside of the regular courts, why isn't Canada taking advantage of the CETA negotiations to insist on a system that better suits our interests?

Interestingly, it's just these kinds of questions and that kind of approach that caused the European Commission to announce on January 21 of this year that it's suspending investor-state dispute settlement negotiations with the United States while it undertakes a comprehensive consultation with the European public. The commission will publish proposed investor-state language in March, and then receive submissions and comments from citizens and member states.

What a contrast to the approach in Canada. As I noted earlier, I've been to the European Parliament a couple of times to discuss CETA. I must say it is much more open and transparent in these matters than in Canada where, for example, the federal government recently denied a freedom of information request for a copy of the working CETA text.

The European Commission made this review decision after extensive representations from civil society and hearing from the S&Ds, the second-largest group or caucus in the European Parliament, that the S&Ds oppose any inclusion of investor state in an EU-U.S. deal, and will vote against any deal that has it in it. The S&D caucus currently has 184 members, and they're supported in this position by the third-largest, which is the Greens-European Free Alliance. So a very significant chunk of the European Parliament is raising concerns, and the commission has been responding. Among other public inputs, the parliamentarians in Europe against investor state have been informed by a broad, four-year-long civil society engagement process that culminated in November's release of a new trade strategy for Europe, called The Alternative Trade Mandate, which I recommend to you.

The common critique both inside and outside the European Parliament is that implementing NAFTA-style investor-state dispute settlement with the U.S. would be bad for democracy and not in Europe's interest. Canada needs a similar examination of whether the NAFTA investor-state paradigm will serve our interests with Europe. The European Commission review of this in its deal with the U.S. will inevitably have implications for CETA, the details of which are still being negotiated. Our economy is closely integrated with the U.S., so it would be strange for the Europeans to agree to a model of investor state with Canada that is significantly different from that which they will agree to with the U.S.

It's not only in Europe that investor-state dispute settlement is being actively debated. Both Australia and South Africa have decided not to include the mechanism in their future trade agreements. Many South American countries are also opposed, including a big economy like Brazil, which has never included investor state in any trade deals.

The United Nations Conference on Trade and Development released a comprehensive briefing on the global status of investor-state dispute mechanisms in May 2013. It found that 58 new cases were filed against governments worldwide in 2012, a record number. I recommend that resource to you as well.

We need much more public debate of this in Canada, similar to the active process in Europe. CUPE BC urges your committee to ask for information about the European review of investor state and to give Canadian negotiators your advice about it. Ultimately, our view is the same as the S&D group in the European Parliament. We think we have advanced and respected court systems in both Canada and Europe, so there's no need to expand the undemocratic investor-state dispute system in CETA. A trade treaty dispute should be between trading partner states, not a special tool to benefit private parties.

Thank you for the opportunity to present today. I provided the clerk with my speaking notes, which include hypertext links to the sources that I've mentioned in this overview.

I welcome your questions later. Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. I'm sure you've stimulated a few, but before we get to that, we'll have the Mayor of Burnaby.

The floor is yours, sir.

[Derek Corrigan, Mayor, City of Burnaby]

Thank you very much. It is a real pleasure to be here.

Good morning to everyone.

I am going to share my time with Councillor Sav Dhaliwal.

As you mentioned, I'm the mayor of Burnaby. I've been on city council for some 27 years. I have previously been a director of the Federation of Canadian Municipalities, and for about 20 years I have been a director of the Greater Vancouver Regional District. I have been mayor for the past 12 years.

Our city is the third-largest city in British Columbia, with a population of about 230,000 people.

Councillor Dhaliwal is presently a Federation of Canadian Municipalities director and is also vice-president of the Union of BC Municipalities.

This is a very interesting issue for our city, and as you can see we've taken a great deal of interest in how federal issues affect our municipalities, through our participation in the Federation of Canadian Municipalities. So it is really nice to have an opportunity to be here today to talk about CETA and specifically about my concerns regarding its negative implications for municipalities and for the hard-working families in our communities. This proposed agreement would have a significant detrimental effect on the ability of municipalities to protect and promote local resources, employment, and an improved standard of living for middle-class families. It would further widen the growing gap in our country and our cities between rich and poor by reducing the number of working people who are able to maintain a reasonable and modest lifestyle.

This agreement has been prepared without a meaningful public consultation process for municipalities. A confidentiality agreement, signed by the provinces and territories as a condition of their participation in the CETA negotiations, has made effective public consultation for municipalities and the resident businesses and individuals impossible. Lack of consultation on the details of the agreement will inevitably lead to inclusion of rules that will detrimentally affect local procurement policies. For example, the agreement will prohibit municipalities from using procurement as a local economic social development tool by requiring municipalities to remove any preference for local companies, goods, or services.

Foreign companies will have the right to claim damages if CETA rules are not strictly met, and the decision as to whether or not the municipality has violated the rules will be made by a tribunal of business people, in secret, without our participation. This is truly a threat to democracy as we know it in Canada. To add insult to injury, even when we win the occasional hearing, in some cases repeatedly, the so-called partners ignore the rulings and continue to practise protectionist policies where it benefits them to do so, and we cower from enforcing our rights. Have we learned nothing from the softwood lumber dispute?

We all seem to be programmed to light up when we hear that anything is free, whether it is a free sample, free enterprise, or free trade. We do this despite the fact that we know nothing that businesses do is for free. There is always some benefit to be gained by their shareholders. This proposed agreement is certainly not free. Ask Canadians in the auto industry, the forest industry, and the manufacturing industry how free trade has worked out for them.

Though its details are vexing, our ability to be involved in a tweaking process won't change anything. The real damage is inherent in the deal itself because it is designed solely to meet the interests of big business and multinational corporations. The root of the problem is our federal government's willingness, and in fact its zeal, to engage in these negotiations in the first place, again, of course, without any real consultation with municipalities and without any real understanding by the citizens who will be affected.

I am convinced that the majority of the provisions in these agreements are not for the benefit of Canadian citizens. They are instead a charter of rights and freedoms for multinational corporations. The international trade agreements protect the interests of big business and ensure that multinational corporations can exploit the resources of our country without impediment. It is patently absurd that we are providing multinational corporations more protection from expropriation than we do for our own citizens. Unfortunately we end up with the very businesses that stand to benefit as part of our negotiating team while democratically elected representatives are kept in the dark.

Trade agreements are about exporting jobs to the jurisdictions with the least protection for workers and the lowest wages and environmental standards. That is what makes manufactured goods cheaper and allows corporations the greatest profit. There is a reason that generation after generation of politicians provided protection for their country's internal production and markets. Tariffs and duties were imposed to protect jobs, to stimulate industries, and to ensure the legitimate autonomy of nation states.

Globalization is all about breaking down national identity, driving living and working standards down, and empowering the very rich, those who control these multinational companies.

Wealth is being concentrated in the hands of fewer and fewer people, but the greatest fear is that individual citizens will assert their democratic rights and change the rules of the corporate game. They have figured out, along with their legions of accountants and lawyers, that the best way to protect their financial interests is to establish that there are international consequences should any local or provincial authority interfere with their assets or their opportunities. Many of these corporations are bigger than nations in terms of their economic power, and most of them have directors who are part of the societal elite. Among them, they continue to acquire and accumulate, while the middle class dissolves into nothingness and the gap between rich and poor widens exponentially.

On the World Bank's website there is a file that shows the world's top 100 economies based on GDP and revenues. Thirteen of them are companies with $406 billion GDP revenues. For example, Walmart has a bigger economy than Switzerland, Sweden, or Israel.

So what happens when citizens wake up and smell the coffee? If they do, they face international consequences for daring to assert their desire for local control of their own resources and jobs for their own people. In effect, they are powerless to act locally because their government has negotiated away their ability to stand up for their own community.

As local government, we have no control over what the national government does. We can only ask that you not trade away our limited ability to promote our local interests.

Thank you. I'll be available for questions.

[The Chair, Conservative, Rob Merrifield]

Mr. Dhaliwal, you have less than three minutes. Go ahead.

[Sav Dhaliwal, Councillor, City of Burnaby]

Thank you, Mr. Chair and committee members, and good morning.

Further to Mayor Corrigan's cited concerns for municipalities, I would like to say although he speaks specifically for the City of Burnaby, I believe that the City of Burnaby's concerns are shared by municipalities throughout our region, province, and country.

As Mayor Corrigan mentioned, as a director of the Federation of Canadian Municipalities, an executive member of the Union of British Columbia Municipalities, and past president of the Lower Mainland municipal government association, today I do not speak for these organizations, but my involvement in them over many years has given me some knowledge of our shared goals and objectives. This makes me feel confident in stating that most, if not all, share our deep concern about the implications for municipalities of implementation of this agreement, CETA.

It is at the local level, the municipal level, that we see and hear most directly the needs of all the individuals, workers, and businesses that are affected by trade agreements. It's here that we can directly interact to support the goals and the development of these businesses and address their needs.

The proposed CETA, and in fact all trade agreements developed by our federal government, diminish and sometimes completely remove those opportunities. In spite of these facts, we have no opportunity to stop or shape these agreements, and experience tells us that once they're in place, any amendments proposed to the federal government are rejected when they come before Parliament for review, regardless of the fact that everything from how we purchase most goods and services to the establishment of local economic development policies would be subject to new trade disciplines and possible court challenges under CETA.

Because of their many concerns, more than 80 Canadian municipalities have passed resolutions and motions against CETA. More than 40 municipalities are seeking a clear, permanent exemption from the deal. The UBCM has called for the exclusion of local governments from this agreement. The FCM has passed resolutions that they hope will enable local governments to be heard on this issue. In addition, municipalities across the country have opposed CETA's proposals, as proposed by local provisions.

The executive director of the Columbia Institute and policy analysts have noted—

[The Chair, Conservative, Rob Merrifield]

Excuse me. I see the text you're reading from, and you don't have the time to finish that text. I'll allow you to wrap up very quickly.

[Sav Dhaliwal]

I will then, Mr. Chair, by saying that given what Mayor Corrigan has said and what I have stated, and everything we know about CETA, Burnaby is concerned. Clearly, our concern is broadly shared by municipalities across our country. As Burnaby continues to work towards exposing all of the detrimental implications of CETA and to fight to ensure it will not be implemented as proposed, we will do so with the municipalities across the country knowing that they share our many legitimate, substantiated, and significant concerns about the dramatically detrimental effect CETA implementation would have and working to mitigate against those effects with every tool we have at our disposal.

Thank you, Mr. Chair, and committee members.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. I'm sure you stimulated some good questions here.

We'll start with Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Redlin, Mayor Corrigan, and Mr. Dhaliwal, thank you for being with us today. Welcome to the committee.

Mayor Corrigan, I want to start with you. There has been concern expressed that once a municipality privatizes its services, CETA may work to prohibit the retaking of that privatized service back from the public sphere, or it may impair it by subjecting the retaking of that to investor-state lawsuits which would effectively chill....

Is that a concern that has been expressed by your council or any other municipal leaders in your experience?

[Derek Corrigan]

It has certainly been expressed by our council. It has also been expressed at our meetings of the regional government here in the Lower Mainland. There is a concern that public-private partnerships, the effective privatization of infrastructure, will mean that in the future it will be impossible to take that infrastructure back into public hands. That concern has not been allayed despite our efforts to obtain legal advice and to establish some kind of protocol to ensure we are not eliminating an option from future public bodies.

It is a big concern for us locally and a concern for regional government also, and something that's shared right across Canada in my experience. Will we as a result of any privatization initiative lose the ability to make that a public enterprise?

[Don Davies, NDP, Vancouver Kingsway, BC]

How long have you been mayor of the City of Burnaby?

[Derek Corrigan]

For 12 years I've been mayor.

[Don Davies, NDP, Vancouver Kingsway, BC]

Can you tell us briefly, how does local economic development factor into the decisions you make as a council on a day-to-day basis?

[Derek Corrigan]

I think this is true even in a city like ours where we're in the middle of a big metropolitan area—we have about 10% of the population of metro Vancouver—we're focused on improving the economy of our city in relation to the economies even of the cities around us. We're attempting to develop business, to provide initiatives so business will in fact locate in our city. To ensure we are supporting the businesses that are local, we do attempt to put in rules that will establish a local preference, an opportunity for local businesses to be able to participate.

There has been a significant chilling effect in regard to that, and local businesses request that, request a benefit if they in fact are participating as taxpayers. We're finding the advice we're getting from our lawyers is that is not available to us, that we may very well suffer a challenge under the existing NAFTA.

[Don Davies, NDP, Vancouver Kingsway, BC]

I was going to move to that. When we mention lawyers, the first thing that comes to my mind is the lawyers' costs and money.

Has your city council done any estimate, or do you have any concerns about the costs that complying with CETA will fall to the City of Burnaby?

[Derek Corrigan]

As a lawyer myself for some 30 years, I'm well aware of the implications in regard to these agreements, and the requirement that we get legal advice and accounting advice consistently. These agreements have been a big benefit to lawyers. My profession has become wealthy as a result of interpreting these agreements, particularly since often they are so vague. Interpretations really are going to be subject to multiple challenges in front of tribunals and eventually in the courts. We have seen that already.

Canada has not had a good record in winning those battles, and so we're nervous. Each time we get a question, we look to get legal advice in order to deal with it. That is not something that was a factor in our ongoing procurement policies, that each time we went out to have a procurement decision we needed to hire a lawyer in order to make the decision about whether or not we could in fact follow the policy we had implemented.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Redlin, I'm going to talk about the investor state. I have the press release from the EU Trade Commissioner Karel De Gucht from January 21, and I will quote from this:

Governments must always be free to regulate so they can protect people and the environment.

He continues:

But some existing arrangements have caused problems in practice, allowing companies to exploit loopholes where the legal text has been vague. I know some people in Europe have genuine concerns about this part of the EU-US deal. Now I want them to have their say. I have been tasked by the EU Member States to fix the problems that exist in current investment arrangements and I'm determined to make the investment protection system more transparent and impartial, and to close these legal loopholes once and for all. TTIP will firmly uphold EU member states' right to regulate in the public interest.

The press release then goes on to say that, “The Commission wants to use the opportunity to improve investment provisions already in place.... In practice this would mean referring explicitly in the deal to states' right to regulate in the public's interest.”

Is there anything that you've seen in the leaked documents that satisfies you that CETA has a clear statement that protects Canada's ability to regulate the public's interest?

[Blair Redlin]

Not at all. I haven't seen anything like that.

The quote that you are citing there is very important because that is the direction that the European Commission is going with the United States of America. Are we really considering that we will have a completely different arrangement than the U.S. has with regard to Europe, with regard to investor state?

I think that we should be stopping at this point and saying, “What about Canada?” Do we think that CETA should have language in it that protects the ability of governments in Canada to regulate on behalf of citizens and act on their behalf in the type of way that you've just described and that the European Commission is exploring in Europe?

This is an important moment, given the European Commission's decision, for Canada to say, “What kind of investor state, what kind of dispute settlement mechanisms do we want to see in CETA?” That is very challenging to do, given that we are in the dark, looking at leaked texts. I think the 26-page summary doesn't address that question and I think it's a very important question.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Redlin, can Canada have a trade agreement with a jurisdiction that increases trade but also protects the ability of the jurisdictions to take decisions in the interests of the citizenry to protect the environment and pursue local economic development? Is that possible?

[Blair Redlin]

Absolutely. I cited some examples of major trading partners in the world. Australia, South Africa, Brazil, many countries in South America have entered into trade agreements that are about trade and not about trying to constrain the ability of democratically elected governments to act on behalf of their citizens.

We can have trade agreements that reduce tariffs and reduce other real, concrete impediments but not this vague concept of non-tariff barriers. As I mentioned in my presentation—