Thank you very much for the invitation to speak here today on the issue of the trans-Pacific partnership.
My name is David Bruer. I am here today representing three regional working groups of the Canadian Council for International Co-operation. CCIC is Canada's national coalition of civil society organizations working globally to achieve sustainable human development and an end to global poverty.
This presentation is based on a report, which we have already provided to the committee, by the three regional working groups representing over 80 international development organizations here in Canada. Today, I'd like to mention some of the major concerns raised in the report, which speak to the negative impacts of the investor-state dispute settlement, ISDS, provisions, which form an integral part of the TPP and other trade and investment agreements.
ISDS is the enforcement mechanism for trade and investment deals. It gives corporations the right to sue countries for unlimited monetary compensation for alleged violations of the terms of the agreement. The number of ISDS cases is on an exponential growth curve as more corporations sue more countries. A record high 70 ISDS cases were filed in 2015.
Canadian mining companies are very active in their use of ISDS, often seeking amounts in the hundreds of millions and sometimes billions of dollars. Such amounts represent huge portions of southern country budgets. Pacific Rim Cayman sued El Salvador for $300 million U.S. By comparison, total aid to El Salvador in 2013 from all sources was $171 million U.S. Even though it was successful in its case, in defending itself, El Salvador came out of that with an award of $8 million, having spent $12 million to defend itself.
This mechanism has created a regulatory chill for southern governments as countries attempt to avoid what are incredibly complex and expensive lawsuits. While a country cannot be forced to repeal a law or regulation, the threat of an ISDS case can make southern governments reluctant to bring in good legislation to protect people's health, the environment, or labour rights. As Canadian organizations working for the improvement of poor people's living conditions in southern countries, we find this incredibly problematic. One single ISDS settlement has the potential to wipe out the benefit of global aid programs for a country.
In the report we note that southern governments have binding obligations under human rights treaties. They have obligations, for example, to comply with their citizens' right to health and education. If they lose an ISDS case and are forced to pay the settlement, they lose the available resources to be able to comply with those rights. U.S.-based company Renco brought an ISDS case against Peru seeking $800 million U.S., despite being responsible for what has been called one of the 10 most polluted sites in the world due to its lead smelter. By comparison, in 2013 Peru, from all aid sources around the world, received $367 million U.S. Fortunately, Renco lost. However, it has just announced it intends to re-file exactly the same claim.
As international development organizations, we strongly believe that human rights must take precedence over investors' rights, and that the ISDS system needs to be removed from Canada's trade and investment agreements, including the TPP. In response to the strong criticism of this system, Canada and the European Union recently negotiated a modification to ISDS—the investor court system, or the ICS. While judges will now consider cases, instead of only corporate lawyers, the core of the ISDS system remains the same under the new system. It is still secretive. It will still result in the same regulatory chill that we have seen under ISDS, and it puts investor rights above human rights. If Canada was committed to balance, we believe it would ensure, at least, that this new ICS could be used to hold foreign investors to account if they flout environmental, labour, consumer, and other standards.
We have to note that we find it quite ironic that while Canadian companies claim the system is needed because courts in southern countries cannot be trusted to render fair judgments, they claim at the same time that people in the global south should not be allowed to make claims against them in Canadian courts and should make use of the same national courts that they claim cannot be trusted.
As international development organizations, we do not see this new ICS system correcting the wrongs we've identified and the serious negative impacts of ISDS on millions of poor people in the global south.
In summary, we feel that the ISDS mechanism in the TPP has serious negative impacts on the very people that we as international development organizations, with the support of the Canadian government, are trying to help.
As stated in the report, we urge the government to remove the ISDS mechanism from the model foreign investment protection agreement, and we urge the government to require that domestic judicial processes take precedence when investor-state disputes occur.
Thank you very much for your attention. I look forward to questions and comments.