Thank you very much, Mr. Chairman. I am with the Smart Prosperity Institute at the University of Ottawa. We're a clean economy think tank with a research network of academic researchers across the country in this area.
You might be asking yourselves why a trade agreement should concern itself with environmental issues. You've had three environmentalists today, more or less. Isn't life complicated enough without making the poor trade negotiator's life even more difficult by adding in something else?
I was involved with the original NAFTA. I'm old enough to have done that. Clyde was actually involved with the creation of the GATT, so we're both ancient in all of this. I was right there at the WTO. We asked ourselves the same question, and the answer is still the same. Under sustainable development, the environment and the economy are joined at the hip. Policies in one sphere that ignore the other are bound to fail. We have all sorts of examples at hand to illustrate this mutual interdependence. Think pipelines. Think the management of natural resources.
Canadian industry has learned a great deal about environmental performance since the beginnings of NAFTA. We're now among the world's leaders in forest management. Our mining industries continue to improve their performance. Our fisheries management practices are vastly improved. The Canadian brand is now a trade advantage in all sorts of commodities markets, potentially.
NAFTA was a pioneering agreement with its environmental side agreement. The environment is now a staple of every major trade agreement and now a common topic at the WTO, so we welcome the stated desire of all parties to bring the environment into the main text of the agreement and to strengthen it. It's a side agreement now. It's now much more modern to put the environment into the main text of the agreement.
I want to talk about two things. One, which you've heard about already, is chapter 11, the investor state dispute resolution mechanism. The second is Canada's obligations under the Paris agreement on the road to a clean economy.
You probably all know about chapter 11, but in brief, it gives investors the right to take governments to an arbitration tribunal, should they feel they've been mistreated by any level of government in the three countries. It was included in the original agreement to reassure investors in Mexico that they would be compensated in the event of expropriation. Canada was indifferent, but the U.S. and Mexico were strongly in favour. It has since become a very blunt instrument. It has in it phrases like “fair and equitable treatment” and “expropriation”, which have been very broadly construed by the panels. We're the victims of this. There have been 39 claims against Canada. We've lost almost all of them. It's cost the federal government $215 million. The majority of the claims have been based on environmental issues, in many cases effectively challenging the rights of government to regulate. These are international arbitrators in a system that's used for commercial arbitration, contract disputes. They are now deciding whether or not the Government of Saskatchewan, or Alberta or Ontario, has the right to regulate on a particular issue.
Gordon Ritchie, who's no softie, who was one of Canada's top negotiators on the original Canada-U.S. deal, described it the other day as an unbelievable intrusion into sovereignty.
What to do about chapter 11? It seems as if the government's preferred position is a regime similar to that constructed under CETA. It is more structured. It has appointed members who serve without the conflict of interest common under the present system. It has an appeals body, and perhaps most importantly, it contains a clear statement on the ability of governments to regulate as they see fit. If this doesn't work with the other two countries, Canada should at least insist on a clarification of the terms “expropriation” and “fair and equitable treatment”, or we'll be beaten over the head with this thing forever.
Turning to Canada's climate strategy, Canada's greatest challenge over the next 30 years or so will be twofold: to move toward an economy that is far less carbon dependent than it is now, and continue to support a robust energy sector. That is not an easy task. This transition to a lower-carbon economy will present unprecedented opportunities for the clean-tech sector in particular, and will require a complex set of government actions to bring it about.
President Trump's decision to withdraw from Paris, and the actions of his EPA director in denying the basic science of climate change, and relaxing many of the main environmental laws and regulations, presents Canada with a set of difficult choices. Here, again, I think there are two potential NAFTA strategies.