Mr. Chair, thank you for the opportunity to present today on the comprehensive economic and trade agreement being negotiated between Canada and the European Commission.
My name is Graham Cox. I'm a national researcher for the Canadian Union of Public Employees.
The Canadian Union of Public Employees, or CUPE, is Canada's largest union, representing 627,000 workers across Canada. CUPE members work in health care, education, municipalities, libraries, universities, social services, public utilities, transportation, emergency services, and airlines.
Since the details of negotiations between Canada and the European Commission were first released in 2009, our membership has debated, voted on, and carried resolutions at our national and provincial conventions expressing their concerns with the inherent threats of CETA.
I'm here to outline some of those concerns.
Investor-state dispute settlement, like the controversial chapter 11 of NAFTA, is often described as a charter for corporate rights, and has been included in CETA. Investor state has also been included in the U.S.-EU transatlantic trade and investment partnership, or TTIP, agreement. In both agreements, its inclusion has led to broad civil society opposition, with members of the European Parliament and national politicians also expressing concerns over these provisions. So much opposition has come about to the EU-U.S. negotiations that those negotiations have been put on pause while the Europeans conduct a public debate on the issue.
This opposition is not built on some small detail in investor state; it is actually the entire program of investor state. It seems that allowing corporations to sue your governments after democratically passing a law just because potential profits are undermined does not sit well with people.
Canada itself has long been a victim of investor-state provisions, including uses far outside of what was originally intended. Let me give you some examples.
Eli Lilly pharmaceuticals claims Canada's court decisions invalidating one of its company's patents is a breach of international obligations. There is a challenge from Lone Pine, which claims that the moratorium against oil and gas exploration activities under the St. Lawrence River, which was adopted in 2011, is a form of indirect expropriation without compensation of the company's potential future profits, not its current profits. AbitibiBowater was paid $130 million to drop a $500-million lawsuit against Newfoundland and Labrador after the expropriation of timber, water, and hydroelectric rights and assets.
In NAFTA, the investment panel has asked the Province of Newfoundland and Labrador to remove research and development requirements on offshore oil and gas production in the Hibernia and Hebron oil fields. The wealthy oil companies are asking for $65 million in compensation for the R and D policy, which they somehow argue is a “performance requirement” that is prohibited under NAFTA.
Other governments around the world are also starting to see the threat of investor state.
In Australia, the government report on investor-state provisions warned that there is a threat to Australia's ability to maintain its pharmaceutical benefits scheme and put health warnings or plain-packaging requirements on tobacco products.
In India, they have announced an intention to pause free trade agreements in negotiations that include investor-state provisions and to renegotiate recently signed agreements that include investor state.
South Korea has also announced that they are reviewing their policy and moving towards rejecting investor state.
In the United Sates, an open letter signed in 2012 by a large number of state legislators outlined strong opposition from their states to the U.S. signing the Trans-Pacific Partnership. Its focus of opposition was the potential inclusion of investor-state dispute settlement in the TPP.
Also, Brazil's government has refused to ratify agreements that include investor state.
Under NAFTA, there are currently 13 cases against Canada and Mexico that are still standing or have been awarded, with a payment of $325 million. Canada's share of those fines is $187 million.
CUPE members believe that trade with the EU should not require an undemocratic and unaccountable third party arbitration system to ensure that corporations have the right to maximize all their profits at all costs. CUPE members are also concerned that the investor-state dispute provisions in CETA will further limit the ability of government to provide quality public services and regulate corporations effectively.
The second issue I am raising today is about restrictions on local procurement in CETA.
Municipalities have passed over 80 resolutions against CETA. These include Toronto, where well-known Conservative councillor David Shiner said that there was absolutely nothing in the agreement for the people of Toronto. While CETA will not directly cause municipalities to privatize utilities, it will have a chilling effect on those who are considering creating new, or expanding existing public utilities.
CETA will also make re-municipalization very difficult. Once privatized, a service will have to stay open to private sector providers. If a municipality decides to bring those services back into the public sector, EU corporations will be able to bring suits against this move.
Hamilton city council, as an example, has been vocal about this concern since their negative experiences dealing with privatization of their water and waste-water treatment plants. It is our understanding that contract bidding on these projects for upgrades and development of waste-water infrastructure above a certain value will be open to EU companies.
At a public consultation organized by the PQ government on October 5, 2012, Quebec's lead CETA negotiator, Pierre-Marc Johnson, conceded that since Quebec's wind energy has been privatized any re-nationalization or bringing back into the public sector of wind power generation in Quebec would have to lead to compensation paid out to the private sector and/or through ISDS provisions.
My third and final issue is the intellectual property provisions in CETA.
Intellectual property provisions that have been leaked indicate that CETA contains some of the damaging provisions that led to a mass opposition to and collapse of the anti-counterfeiting trade agreement. The drug patent provision in CETA will cause an increase in cost of about $1 billion according to the Canadian Centre for Policy Alternatives' recent study. We understand that this may be a low estimate as the estimate does not include the predicted 20% increase in the more costly biologics over the next decade.
While the federal government has said it will cover the increased cost of these new monopoly rents, this increased cost will still have to be paid for by the public. CUPE has long advocated for a public health care system, and massive increase in costs are a concern to our members as they work in and use the public health care system.
In conclusion, CUPE is calling for the text of the agreement to be released for open and democratic debate by Canadians before negotiations are finished and finalized, and that the investor-state provision be considered to be removed.