International Trade Committee on Nov. 22nd, 2016

[Martin Valasek]

—but in the treaties for many years now—certainly it's been Canada's model under NAFTA, and in many other treaties—it's not a secret or confidential process. It's quite to the contrary. It's very transparent. As an example, you can go on the international trade website, and you can see all the proceedings. You can often participate in hearings.

As Pierre Marc Johnson said, there is a political voice against companies having claims against states. People say that these are terrible tribunals and that they're secret. Well, they're not—

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

They're not; that's true.

[Martin Valasek]

—so that's a misinformed criticism.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Thanks.

[The Chair, Liberal, Mark Eyking]

Before we go to Madame Lapointe, since we have four witnesses by video conference, I'll ask that you please point your question to whatever witness you want to answer it. This will help the technicians know so they can switch the audio.

Madame Lapointe, you have the floor.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

Good morning, everyone. Welcome.

My questions are for Pierre Marc Johnson, since we are both from Quebec. I know that there is also someone from Montreal.

A little earlier, you said that it was a very good agreement, that it was balanced, that it responded to Canada's offensive objectives and that it would open up a market of 500 million people to us.

In Quebec, more specifically, we have heard many comments about the fine cheeses from Quebec that make up 60% of production. We spoke about compensation.

As chief negotiator for Quebec, how should this compensation be translated on the ground? What can our producers and processors expect?

What do you think about all that?

[Pierre Marc Johnson]

First of all, I'd like to thank you for your question, Ms. Lapointe. I appreciate the opportunity to clarify this remark.

On the one hand, as you know, we have a supply management system in Canada that presupposes that diary farmers negotiate a price with processors per hectolitre and that, ultimately, the processors must put on the market a product called cheese that reflects the reality of that negotiation with the dairy producers. This is also true for other dairy products.

So it is a system of income transfer in rural areas. There must be significant tariff barriers for the system to work. The agreement recognizes that. However, it makes an exception for part of the Canadian market. The European quota will increase from 3.25% to 6.50% on the Canadian market.

That said, there is de facto compensation insofar as some of the European cheese importers are themselves dairy producer cooperatives. So there's an economic compensation that can be done in the rural community and the milk producers, because of the cooperatives, notably Agropur and a few others.

On the other hand, the federal government has made a commitment. It was Mr. Ritz who made that commitment. I understand that, a few days ago, the federal government announced its intention to compensate producers as much as $350 million. I would like to draw your attention to the fact that 60% of fine cheeses in Canada come from Quebec, and this is the most vulnerable part of the agreement. The compensation would therefore be expected to reflect this reality.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

You were the chief negotiator for Quebec. It has been said that you were proud. What is Quebec's position toward the mechanism for resolving disputes between investors and the states?

[Pierre Marc Johnson]

During the seven years of negotiations, the three successive governments in Quebec had concerns that reflected the vulnerability of the governments in the liability between investors and governments. At the time, we thought we had found the answer to these concerns in the initial text, which limited the ability of investors to sue governments for expected profits. It basically limited their demands strictly to proven actual damage.

We thought we had responded to this issue by doing so, along with a much clearer opening of the process. As Mr. Valasek said, these are no longer completely secret processes. What we had provided for in the 23 pages of the chapter about the regulation on investor-state claims in certain circumstances essentially responded to the Government of Quebec's concerns.

That said, it was not enough for the European side for the reasons that Mr. Valasek explained very well. There were prejudices about the arbitration mechanism. There was, I believe, some doubtful information in some cases as to its description. However, behind all that, there was a kind of aspiration to institutionalize this arbitration in the public process. That is why Canada finally came to an agreement on the Investment Court System.

Canada did this because there was a European consensus in favour of the system, meaning that the organization would be permanent. Of course, the problems Mr. Valasek raised may still occur. The organization will be funded from state coffers, while the previous mechanism was funded by the civil party and by the states that were prosecuted.

I would say that although I was—

[The Chair, Liberal, Mark Eyking]

Excuse me, Mr. Johnson. I'm sorry. Your time is not up, but Madam Lapointe's time is up, and I want Ms. Ramsey, with the NDP, to get some questions in here too.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you very much.

[The Chair, Liberal, Mark Eyking]

We're going to move to the NDP, and you have the floor, Ms. Ramsey.

[Tracey Ramsey, NDP, Essex, ON]

Good afternoon, everyone.

I'd like to continue the conversation about the ICS and the changes that were made. What we see coming forward in implementing legislation in the treaty itself really leaves a lot to the imagination. There's mention of an appellate mechanism, but there certainly is no language around that. There's mention of a code of conduct, but again there is no language around that. It's not clearly laid out in the agreement what that court system will look like. In part, I think that's because of the pushback that you're all recognizing is happening in the EU.

I would like to address my question to Ms. Barrington.

Ms. Barrington, thank you for touching on points that many Canadians have expressed in saying such things as “Why are we using this? We have domestic courts. Why is there an avoidance of our domestic courts here in Canada?” That's a grave concern, and I believe that came up in the EU, as well.

Can you give your thoughts on why our domestic court system is not good enough for use in these disputes? Why do we need this secondary layer of a court system?

[Louise Barrington]

First of all, I just wanted to mention to you that there is a code of conduct for arbitrators and mediators. It's set out in the papers that go along with Bill C-30. I have it here. It's annex 29-B. You can look at that. That code of conduct is very similar to other codes of conduct that you'll find for arbitration and mediation specialists in the industry.

As to why not use the domestic courts, traditionally there has been a certain distrust of courts that are not our own. That's one of the reasons that arbitration grew up. It's to give a level playing field, so that if there were—

[Tracey Ramsey, NDP, Essex, ON]

Sorry. I don't want to interrupt you. I understand a developing and a developed country, but we're talking about developed countries, such as country to country, with much more in common. They have progressive court systems, as well.

[Louise Barrington]

I agree with you entirely. I'm just saying that's the history of it.

There is still a perception that a Canadian court would be perhaps more...I won't say “biased”, but they would want to take into consideration the public policy of Canada to an extent that might not be acceptable by the other party. I think it's really that.

There have been cases where the court system has not, perhaps, given a result.... There have been rather strange results in courts, results that can only be rectified by action from the government, because you can't use the appeal system. I'm thinking of a case, the name of which I forget—

[Tracey Ramsey, NDP, Essex, ON]

That's okay.

My next question goes into the appeal system and into the appellate mechanism.

What exists in this agreement that lays out that appellate mechanism? There's nothing there to touch upon what that will look like. This is an area of concern, because in the EU we see these side letters that determine that they will not be part of the investor state dispute until it goes to the member states. In Canada, we're mirroring that for provisional application, but at the end of the day it's part of our agreement in Canada in a way that it isn't in the EU. We have no understanding of what the appellate mechanism or the court system will look like. We're essentially being asked to sign on to something that will never come before us as legislation.

[Louise Barrington]

Yes. I agree. It's pretty vague.

What I've read is that it's going to be like the WTO system, which has an internal appellate body. The appellate body is made up of senior jurists, and many of them are Supreme Court judges from around the world.

How will it work? I guess they'll look at the WTO and take their cue from there, but I don't have any details either.

[Tracey Ramsey, NDP, Essex, ON]

Okay. Thank you.

My next question is to Mr. Langrish.

I appreciate the caution that you encourage us all to take in the regulatory changes that go along with CETA in Bill C-30. Have you had a chance to look at Bill C-30 and its implementing legislation, and what regulations, in particular, are you referring to with that caution?

[Jason Langrish]

Whatever I'm referring to would be with regard to the Patent Act.

What was agreed to by the parties in the negotiation was patent term restoration and right of appeal. Data protection was not accepted, but then there's going to be additional movements to remove the dual litigation provisions. That goes above and beyond what was agreed to by the parties, and that's a unilateral move by the Canadian federal government.

[Tracey Ramsey, NDP, Essex, ON]

I think this is one of the—

[The Chair, Liberal, Mark Eyking]

I'm sorry, but your time is up.

[Tracey Ramsey, NDP, Essex, ON]

Oh. I'm all done.

Thank you so much.

[The Chair, Liberal, Mark Eyking]

We're going to move over to you, Madam Ludwig. You have the floor.

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

Thank you.

Good morning, and thanks to all of you for your excellent presentations this morning.

My questions are for you, Mr. Langrish. I represent the area of New Brunswick Southwest. We border on the State of Maine, and we're within seven hours' driving distance to the Boston-New England area.

How do you see Atlantic Canadian businesses benefiting from increased access to the EU through services and investment by EU and American investors? Which sectors do you think will most likely benefit? Also, what might be some of the unintended consequences?