Evidence of meeting #21 for International Trade in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was foreign.
A recording is available from Parliament.
2:45 p.m.
Liberal
The Chair Liberal Judy Sgro
Possibly you can communicate in writing between yourself and Mr. Blaikie.
We're on to Mrs. Gray, please, for five minutes.
March 26th, 2021 / 2:45 p.m.
Conservative
Tracy Gray Conservative Kelowna—Lake Country, BC
Thank you, Madam Chair.
Thank you to all the witnesses for their very informative testimony here today. There really does seem to be a lot of consensus that without ISDS it would politicize trade disputes, so that was really informative.
I have two questions, and I think maybe the easiest way of doing this is to say what both of them are, and then to call on some of the witnesses to answer. If you don't mind expediting your answers, we'll try to get through as many witnesses as we can, if that's all right.
First, we often hear criticism that ISDS measures have cost Canada and that they put our domestic agenda at risk, but we heard testimony on Monday that Canada wins ISDS cases by about a three-to-one margin, and when we lose, it usually relates to fair and equitable treatment or because of processes when municipal or provincial governments may have acted arbitrarily. What are your thoughts on that three-to-one margin?
Second, we know that Canada has started consultations on a potential free trade agreement with Indonesia, which has a significantly lower score on the rule of law index from the World Justice Project compared to Canada. Would you recommend that Canada seek to negotiate some form of ISDS provisions as they're negotiating this agreement?
Maybe we'll start with Professor Côté.
2:45 p.m.
Professor, As an Individual
Thank you for your questions. I'll try to be brief.
It is true that on the record Canada has not lost a lot of cases. For the cases that Canada lost, if you look at them carefully, you'll see that there were indeed problems in the situation where Canada was found in breach of the agreement. I don't know of any cases where Canada lost in a way that was absolutely impossible to accept. I think those were cases where Canada was, indeed, in breach of its agreements. And it continues. The latest decisions that were rendered continue.... Canada has not lost recently in cases, and this average of wins and losses is continuing, I would say.
As for Indonesia, it was mentioned that one has to think about ISDS, and one has to think about the substantive provisions. Those are two different things. It's important to continue to have very well-drafted, circumscribed and substantive provisions, possibly with exceptions, as Professor Appleton mentioned, and basically to continue what we have done with CPTPP and with CETA.
As for the ISDS, as I said, we should have a clear and coherent way of handling this, and I think we should continue to have ISDS with Indonesia, definitely. As for which type of ISDS, well, in our bilateral agreements, we have incrementally improved ISDS, and we should continue in that way. So yes, I would continue to basically apply our latest drafting of bilateral agreements with Indonesia.
2:50 p.m.
Conservative
Tracy Gray Conservative Kelowna—Lake Country, BC
That's great. Thank you very much.
I'll ask the same two questions of Professor Appleton.
2:50 p.m.
Professor, As an Individual
Thank you very much. I'll be very quick.
The answer to the first question is yes; they all come from regulatory failure.
The answer to the second question is a little bit more detailed. Canada was able to succeed. Canadian companies succeeded when we had treaties, for example, in Venezuela. When we invested in the mining sectors in Venezuela, we didn't know there would be a problem. Later on those were great success stories. Because ISDS was there, Canadians were protected. We would have had massive problems at home.
I would say for sure that I agree that we should be deeply, thoughtfully considering ISDS with any treaty we might enter into in Indonesia.
2:50 p.m.
Conservative
2:50 p.m.
Liberal
The Chair Liberal Judy Sgro
You have 28 seconds left. Perhaps we could get a quick answer, if that's possible on a complex subject.
2:50 p.m.
Emeritus professor of Law, As an Individual
It certainly doesn't help to have a Minister of Environment who wants to help Canadians and wants to stop American imports, so yes.
In Indonesia, certainly, I think we should try. We should try very hard. Canadians are there, and I think this is one of the examples where Canadians have a greater interest than Indonesians in Canada, in all likelihood.
2:50 p.m.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Professor.
Now we go to Ms. Bendayan.
Go ahead, please, for five minutes.
2:50 p.m.
Liberal
Rachel Bendayan Liberal Outremont, QC
Thank you, Madam Chair.
I would like to ask Mr. Côté a question.
Do you have any statistics on small and medium Canadian enterprises that use our ISDS system? We often sense that multinationals use the system, but it would be interesting for the committee to see your research on the subject.
I'd also like to hear your comments on a point that Mr. Fortier raised earlier.
Mr. Fortier, I believe, was quoting someone with respect to the implication of removing ISDS and how that would possibly take capital elsewhere.
We obviously have an interest in keeping our investments in Canada.
Do you have any comments to make on that subject, Mr. Côté?
2:50 p.m.
Professor, As an Individual
Thank you very much for your question.
I don't have any specific statistics on SMEs. We would also have to agree on a clear definition of what constitutes an SME. I think that's a problematic unknown in the system right now.
I personally know a very small contractor that has a dispute with Venezuela and simply doesn't have the resources to arbitrate the matter again; the cost to do so would be completely disproportionate to the matter in issue. Since Venezuela offered him no domestic remedy, he turned to Ottawa for some good old diplomatic protection, which was denied him on the ground that there's a treaty in place. Ottawa has washed its hands of the matter. It's a real problem.
The problem has even been noticed by the Court of Justice of the European Union, which issued an opinion on CETA's compliance with the European Union's law to the effect that its law includes a right of access to a tribunal. Access to justice is therefore a guaranteed right. Relying on the guarantees given, the Court of Justice determined that the right of access to arbitration justice would be violated if nothing were done for SMEs. Canada and the European Union have promised in joint declarations to improve access to arbitration Justice.
This is a subject that might be of interest to you. I had planned to discuss it with you but didn't have the time to do so. I think it's really a concern. However, I unfortunately don't have any statistics on the subject.
I'm not an economist, but one thing is certain: Brazil is an excellent example of a country where foreign investments are made despite the absence of a treaty providing for ISDS. Would there be more investment in Brazil if it had a treaty providing for ISDS? No one knows.
I'm one of those people who say that the benefit of ISDS isn't that it attracts foreign capital. I think that's one of the factors that influence a business decision, but the decision to make foreign investments is based on many factors, including an assessment of potential return. ISDS of course reassures investors. However, I don't think Americans will suddenly stop investing in Canada.
I don't think we'll necessarily run into an economic wall if we don't have ISDS. The most important aspect is the depoliticization of dispute settlement.
2:55 p.m.
Liberal
Rachel Bendayan Liberal Outremont, QC
Thank you, Mr. Côté.
In closing, I'm going to ask Mr. de Mestral and Mr. Fortier a question on the same topic.
We've discussed the fact that these disputes often concern highly specialized matters, a fact that requires the parties to ask experts to act as judges or arbitrators. In many cases, the parties may appoint their own arbitrator.
Do you think that's an important element of the system? Could we lose it without ISDS?
2:55 p.m.
Cabinet Yves Fortier, As an Individual
The answer is an unqualified and unreserved yes.
2:55 p.m.
Emeritus professor of Law, As an Individual
It's just possible that a world court of arbitration would end up being fifty-fifty men and women. That is not the case right now with arbitration, although it is changing. It is changing quite significantly. The arbitral world is definitely open to women, but that is a change that's taking time.
2:55 p.m.
Liberal
2:55 p.m.
Cabinet Yves Fortier, As an Individual
I'm sitting on two tribunals at the moment, two three-person tribunals, on which I have two female colleagues, just for the record.
2:55 p.m.
Liberal
The Chair Liberal Judy Sgro
We're gradually getting there.
Thank you to this illustrious panel. Thank you so very much for providing the committee with such valuable information and your time today. We can excuse the witnesses.
Just for the information of our committee, and to the clerk, we have approval of our agenda, so on April 12 we will deal with the two draft reports we've received from the analysts, and then we will proceed with Mr. Blaikie's motion on trade and vaccines in Canada.
To everybody, have a very happy Easter. Stay well. Stay safe. Follow all the rules so we can get through all of this together.
The meeting is adjourned.