Thank you very much. I'm very pleased to be able to present my views.
Let me just say that I have followed Gus Van Harten's writings for years now. He is one of Canada's leading experts on this matter, and I have a great respect for his points of view.
I'm going to approach this a little bit differently, from the point of view of a former diplomat many years ago when I used to serve in Geneva at the Canadian mission to what was then called the General Agreement on Tariffs and Trade. I've been involved in these matters for years since. It's been a long time since I've been in government service.
ISDS is a fact of life in international relations, and it is not going to disappear. In my view, as meritorious as Professor Van Harten's points are, and they do have a lot of merit, it's going to be impossible to change the ISDS system. It's ingrained and it's built in to not only trade agreements but separate foreign investment protection agreements. There are between 2,500 and 3,000 of these agreements globally, and of course Canada has a number of them.
As the committee knows, ISDS is built into our regional trade agreements like the NAFTA, now the CUSMA. ISDS is built into the Trans-Pacific Partnership agreement, the CPTPP. ISDS is built into the Canada-European agreement, and it is part of bilateral trade agreements we have with Latin American and Caribbean countries, including a bilateral trade agreement we have with South Korea.
Withdrawing from ISDS, frankly, is politically, diplomatically and legally very difficult, and I would say it's probably not going to happen. The question is, what do we do about this?
There are a couple of things I want to point out to the committee, and they're relevant.
Professor Van Harten is correct. ISDS was initially conceived of as a means of stabilizing the investment situation for wealthy countries—northern countries, if you like—the industrialized countries that would help to stimulate investment flows to the developing world. That was the basic rationale. It has morphed into a system where private enterprises can challenge national measures for a variety of reasons. We can go into the details during the question and answer period.
By the way, I should say that if the committee wants a good review of the issues and the facts respecting ISDS, there was an excellent study done by the Canadian Centre for Policy Alternatives a couple of years ago. I reread it over the weekend and it still is very pertinent. I'm not saying I agree with the Canadian Centre for Policy Alternatives in many respects, but as a review of ISDS, there isn't, I don't think, a more useful document. I recommend you have a look at that.
There are a couple of things about ISDS that do indicate where Canada and the Canadian provinces are exposed. One of the things I would mention, which is not widely appreciated, is that Canada has a bilateral investment treaty with China. It was concluded in 2012 and entered into force in 2014. It lasts for 16 years after entry into force. It runs until 2030, with a carry-over period for investors, providing them with rights for 15 years after that.
One question before the committee is, does that give Canadian investors practical legal rights vis-à-vis China when they invest in China? On the other hand, is Canada exposed to private investment arbitration brought by Chinese companies that have invested in Canada? That's an issue, and it's not going to go away.
I want to mention the Canada-European Union trade agreement. There have been improvements in the ISDS process in the Canada-European Union agreement, CETA. I don't believe those will enter into force. CETA is being applied provisionally. The parts of CETA on ISDS with the reforms in the system require ratification by all of the member states. I am very skeptical that will come about, so CETA will continue for some time without those ISDS provisions.
The factor that I think has to be weighed in all of this is whether ISDS gives Canadian investors advantages, rights and certainty in their investments abroad. That's an issue that has to be examined.
The Centre for Policy Alternatives study rightly points out that most of the treaty provisions, the protective rights for investors, have been used by the Canadian mining sector, the extractive sector. However, there is arbitration going on beyond the extractive sector where Canadian investors have sought recourse to these provisions in ISDS. There is a benefit to Canadian outbound capital that has to be considered in all of this.
The final point I would make about withdrawing from ISDS is, as I indicated before, that where ISDS is embedded in our international bilateral or regional trade agreements, we can't simply withdraw from ISDS. That's because it's embedded in our trade agreements, including in the CPTPP and the NAFTA-CUSMA. CUSMA carried over some of the NAFTA provisions for three years, so you can't just withdraw from ISDS when it's embedded in trade agreements. It is possible for Canada to abrogate its bilateral investment treaties, but one thing that has to be mentioned—and it's very important—is that investment protection treaties, our foreign investment protection agreements, contain two things.
They contain rights of private investors, ISDS rights of private Canadian investors, to bring binding arbitration, but they also contain important obligations of governments to respect the rights of investors. This means that Canada can bring arbitration proceedings against a foreign government that doesn't give adequate protection to Canadian investors.
The state-to-state obligation in these treaties is of great value. Withdrawing from these treaties would mean that no longer would there be any binding treaty obligations between the host government abroad and Canada. In my view, that would limit, as a policy option, withdrawing from these foreign investment protection agreements.
What can be done? Picking up on points that have been made by others, in Canada's future negotiations of foreign investment protection agreements I think strong consideration should be given to not having ISDS provisions in those bilateral treaties.
My final point is that the options, realistically speaking, are regrettably quite limited in this area.
Those are my comments. I'd be happy to answer any questions.