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.