International Trade Committee on May 13th, 2016

[Jacqueline Wilson]

I don't think the terms of this agreement are going to encourage that. I think there's a much bigger risk of a race to the bottom.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Is there a possibility? It's not through the terms of agreement; it's just how things evolve.

We have a great, wonderful luxury in countries like Canada to be able to put so much emphasis on the environment because, essentially, we're not starving. Historically, we've seen that as the level of income and quality of life of increases, countries also tend to increase their environmental and human rights standards.

Do you think that might be the case as well?

[Jacqueline Wilson]

I think there's a much higher risk here of environmental standards being undermined in countries that have stronger environmental records than the opposite.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move back over to the Conservatives. We have time for five more minutes.

Mr. Van Kesteren, you have the floor.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Chair.

This is an interesting discussion. I think I want to keep on going in that direction.

Ms. Wilson, have you ever been to China?

[Jacqueline Wilson]

No, I haven't been to China.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

All right. It's worth a trip.

I remember the first time I went. I arrived in the Beijing airport, and as we were driving out, the air was so thick I really thought they burned tires there. I have been to places where they burn tires and it stinks pretty badly. I thought, “Wow this is amazing. They burn tires over here.” I arrived in Beijing and after a day or so I suddenly realized, “This is the air.”

Now at that particular time I think they were building—I don't know whether it's more or less; I hope it's less—a coal plant every two weeks. There were no scrubbers. They were just polluting the air. Things were pretty bad there.

We had somebody from the Marxist–Leninist group in Windsor, and the charge was that the United States was using this treaty as a way to supplant China's influence in the Middle East. In terms of trade, there's probably some truth to it. Obviously, they want the advantage. But as some of our colleagues have mentioned, this agreement will force other countries to adopt the higher standards as the precedent.

In other words, we don't lower our standards. We raise our standards, and as a result, this forces countries like China...and you mentioned climate change. I would submit that the worst perpetrators are countries like China and India. Once we start to enact these provisions in an agreement like the TPP. this would force them to make those changes.

Would agree with a statement like that?

[Jacqueline Wilson]

I wouldn't.

Of course they aren't part of the TPP deal yet, but as I mentioned in my presentation, the overarching principle of the environment chapter is that parties have the sovereign right to establish their own levels of domestic environmental protection and environmental priorities, and to establish, adopt, and modify their environmental laws and policies accordingly.

That's in article 20.3, item 2—

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Well, you're a lawyer, and I can't argue with that.

I'm looking for an example. You mentioned Germany as an example where companies...but you know that one example was.... I don't know. I suspect, as Mr. Ritz pointed out, that there were some agreements made beforehand, but when the Germans moved towards eliminating nuclear power.... I mean, that's the one source of power that doesn't add to greenhouse gases.

Could you give us one example where it's been used by a corporation on a company so that it actually violates that nation's ability to enforce their environmental laws?

[Jacqueline Wilson]

First of all, just as an aside, we disagree with the analysis of nuclear power being a clean energy source.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I though it was. I'm sorry. Maybe I'm missing something.

[Jacqueline Wilson]

That's a different issue.

There's another case in Germany where a coal fire plant had some requirements placed on their permit to make it cleaner, and that was challenged and the case settled. What they ended up settling on was to take out some of the requirements for cleaner environmental provisions in the permits.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

So the German law prevailed for their environmental—

[Jacqueline Wilson]

No, it did not.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Maybe you could submit it, because I would like to see it. We could use it because that's what we're looking for, examples of where there's a potential for our laws in this country to be challenged. The laws we know are important, and we want to continue to make our environment cleaner and a better and healthier place for all of us here.

[Jacqueline Wilson]

Another good example is when Quebec decided to put a moratorium on fracking. A lot of people in the environmental community and others are very concerned about the environmental implications of fracking, and that's also been challenged.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Challenged. I don't know, maybe you could clarify that. I don't think it's—

[The Chair, Liberal, Mark Eyking]

You have half a minute left, Mr. Van Kesteren

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

No, that's good.

Thank you.

[The Chair, Liberal, Mark Eyking]

You're good, okay.

That wraps up this panel. I thank the panellists for coming in and creating a good dialogue between us. We will be forwarding our report when we're done, not only to this panel but to all our panellists.

We've got one more panel left before we close out a live mike. We're going to stop for 10 minutes.

[The Chair, Liberal, Mark Eyking]

We are going to start our third panel this morning in Toronto, doing our consultation process on the TPP. On the third panel, we have two people as individuals, and the Congress of Union Retirees of Canada and Martinrea International Inc.

Maybe we will start with the individuals here.

David Schneiderman, do you want to go first for five minutes?

[Professor David Schneiderman, Professor, Faculty of Law, University of Toronto, As an Individual]

Thank you very much, Mr. Chair and members of the committee. It is a real pleasure to be here today. I want to talk about the investment chapter in the TPP. Let me add that the consultation here is really welcome, so thank you for undertaking this.

I teach constitutional law, U.S. constitutional law, and international investment law at the law school at the University of Toronto. I have been following Canada's position on investor protection since 1994, when I took up a study of the subject prompted by a threat by American tobacco companies to sue Canada for hundreds of millions of dollars if we were to take up plain packaging requirements.

I should add that I have never been employed as a consultant, lawyer, or arbitrator.

After years of study, my view is that Canada can safely do without investment treaties or TPP's investment chapter. I am a realist. I recognize that Canada's position pretty much tracks the U.S. one—and, indeed, our model investment treaty looks almost identical to the U.S. one—but I think it is high time that we undertook an independent evaluation, and I am hoping that this is the kind of contribution the committee can make.

There are a couple of claims that are made about investment treaties. Global Affairs Canada has previously claimed that they enhance host state investment climate and, secondly, add security for Canadian investors. Neither claim is actually borne out by the evidence. A meta-analysis that has been done of all the empirical data, looking at the correlation between signing investment treaties and attracting new inward investment, reveals that the correlation is so economically negligible as to be non-existent.

The data on Canadians benefiting from these investor protections reveals a pretty low rate of success, if you include settlements, and according to the Canadian Centre for Policy Alternatives, it didn't include one Canadian-based company invoking a Canadian FIPA, or foreign investor protection agreement.

What we do know for certain is that investment chapters like that in the TPP are intended to constrain state policy space. This is uncontroverted. Broadly drafted investor protections confer on a small cadre of investment lawyers immense discretion to determine the scope of state policy space. The evidence reveals that states often win—not all the time—and sometimes they lose for very bad reasons. I would refer the committee to the Bilcon decision, Clayton v. Canada, which was mentioned in the last panel.

I have listened to earlier testimony before this committee, and there have been claims made that the TPP text is a significant improvement over prior investment treaties. I don't think that is a fair characterization. For instance, it has been claimed that the “fair and equitable treatment” requirement in the TPP is significantly narrowed. I don't think that is true. It is still broad-based. There is some conduct that is identified as illustrative. There is another provision that, it is claimed, preserves regulatory space. This provision turns out to be pretty much redundant. The only provision in the TPP that is an innovation, I think, is the tobacco carve-out.

There are alternatives. In a paper forthcoming from CIGI, the Centre for International Governance Innovation, I suggest that we improve dispute resolution processes within host states. That would be a real contribution to the rule of law within these jurisdictions, and it might actually provide some protection. There is public and private risk insurance, and there are other proposals, I think, that we could envisage, all of which, I respectfully submit, we can safely pursue without TPP's investment chapter.

[The Chair, Liberal, Mark Eyking]

Thank you, sir, and thanks for being on time.

We are going to move over to the Congress of Union Retirees of Canada and Mr. Buchanan.

Go ahead, sir, for five minutes.

[Malcolm Buchanan, President, Hamilton, Burlington and Oakville, Congress of Union Retirees of Canada]

Thank you very much.

The Congress of Union Retirees of Canada is an organization representing over 500,000 active members, and CURC has major concerns with the TPP. The Trans-Pacific Partnership agreement was negotiated over eight years behind closed doors, with hundreds of corporate advisers, while the public and media were shut out.

The TPP has been promoted as a free trade deal. Ideally trade and economic agreements are meant to stimulate growth and social development, but the TPP is a wide-ranging deal that extends beyond traditional issues of market access.

It would leave tens of thousands of Canadians unemployed; hike prescription drug costs; affect Internet freedoms, environmental standards, and banking regulations; compromise the rights of local and national governments; and undermine trade union rights.

Free trade agreements were meant to usher in mutually beneficial relationships. Statistics Canada recently published year-end trade numbers for 2015 showing another miserable year for Canada's engagement with the global economy. Total merchandise exports fell 0.6%. Non-energy exports showed some growth, but not enough to offset reduced energy exports. Imports swelled by 4.5%, creating the biggest trade deficit in Canadian history. Research by Jim Stanford verifies the Stats Canada study, and proves that free trade deals are not synonymous with promoting trade. The TPP will only add to those problems.

Today 97% of the commercial goods Canada trades in the TPP zone are already duty free. In exchange for a fractional increase in potential market access, Canadians are being asked to give up tens of thousands of jobs in the automotive sector and dairy industries to name just two sectors that would be affected.

The TPP confirms sweeping new powers on transnational investors codified in their right to sue governments in closed arbitration tribunals for any laws, regulations, court decisions, or actions that fail to meet their expectations as investors.

Under similar trade and investment treaties, investor-state dispute settlement mechanisms have been successfully used by corporations to contest the power of government to ban or restrict the production, transport, and waste management of toxic chemicals; to license the management of land and water resources; to set rates for water and electricity services; and to restructure sovereign debt.

The TPP expands the scope for ISDS complaints to financial services, giving transnational investors the right to challenge regulatory measures that fail to meet their expectations or a minimum standard of treatment. It threatens all levels of government to enact laws and regulations for the best interests of the citizens they elected to represent. On this basis alone, the TPP should be rejected.

The TPP is not a trade agreement. It's about entrenching and expanding the power and rights of corporations. CURC is particularly concerned about the health care implications and prescription drug costs if the TPP is ratified. Canadians pay some of the highest drug prices in the world. These costs have implications for access to medications and for the health of patients, especially those living on low incomes.

The Prime Minister's mandate letter to the Health Minister states that the government's overarching goal will be to strengthen their publicly funded universal health care system and ensure that it adapts to new challenges. Health Minister Jane Philpott has promised to co-operate in reducing drug costs with the provinces.

How would this be possible, given that the TPP will lengthen the time that life-saving drugs can be patented by allowing pharmaceutical companies patented term extensions for regulatory delays and by loosening the criteria by which existing pharmaceuticals can be re-patented for new use, the so-called evergreening?

To reinforce CURC's concerns about rising drug costs, Eli Lilly, a U.S. pharmaceutical company, has recently filed a $500-million NAFTA suit against Canada over drug patents.

In April 2016, CURC wrote to Minister Freeland expressing CURC's concerns about the TPP and asked the minister to answer a number of questions.

[The Chair, Liberal, Mark Eyking]

Excuse me, sir. You have half a minute. Wrap up.