Good morning.
Thank you very much for the invitation today. I very much appreciate it.
My name is Ian Laird, as Madam Chair mentioned. I'm a Canadian lawyer, but I'm also a partner at the international law firm of Crowell & Moring LLP in Washington, D.C. I've been practising international trade and investment law for over 25 years now and have been resident in Washington for 17 of those years.
It's indeed an honour to be able to speak to the committee this morning. In particular, it is a pleasure to see you again, Madam Chair, addressing this topic that is very important to the work of this committee and for Canada.
I have to add one disclaimer. I wish to mention that I'm speaking here in my personal capacity and not on behalf of any other person or organization. In particular, I'm not speaking on behalf of my law firm or any of my clients.
The topic is of particular interest, and when I heard that the committee was dealing in particular with the review of other irritants and concerns within existing trade deals, I felt that I could add to the discussion in light of my personal involvement with these treaties, and treaties like them, as both a practitioner and an academic.
I wanted to focus on two elements: in particular, the international investment law and dispute resolution provisions we find in these trade agreements, as well as with respect to investment by Canada's international resource and extractive industry abroad, another area that I've worked very closely with over the time that I've been working on investment and trade issues.
Now, it really goes without saying—and I don't really have to tell this committee—that investment and trade go hand in hand. There are certain types of international business, like mining and extractive industries, which by necessity can only occur where the resources are located, and that's abroad and in foreign jurisdictions.
It's a fact that many of these jurisdictions have developing legal systems and challenging environments legally speaking. That's where international law and our free trade agreements come into place. They help to protect our investors abroad and provide mechanisms for dispute resolution. We find these types of provisions in our foreign investment promotion and protection agreements, which, as you know, are FIPAs, and our free trade agreements.
Why am I focusing on natural resources and mining? The stats—this is from 2019 from Global Affairs' office of the chief economist—show that 44% of our foreign direct investment from Canada in Central and South America relates to the extractive industry. In Africa, the figure is over 50%.
MAC has stated in its material that Canadian mining companies operate in more than 100 countries around the world and, according to NRCan, 650 Canadian companies held mining assets abroad valued at $174.4 billion in 2018. That's the most recent year for this data.
Let me put this briefly. Canadian miners are some of the best in the world and some of the most active. They represent a large proportion of the international extractive industry abroad. Seventy-five per cent of international mining companies are headquartered in Canada—in particular, in Toronto and Vancouver—and a great deal of the financing from Canada comes through the Toronto Stock Exchange.
What this means is that Canada and Canadians expend significant amounts of sweat and equity to supply the world with the essential materials to support the modern and future economy, including what is needed for the climate change transition. We have a natural competitive advantage in the world, and we should support it in our trade and investment agreements.
This is where we get to the “irritants” part. There is a concern—and I think it's one worth examining— that our investment agreements and related FTA provisions have become too defensive and don't support our industry abroad in the way that they could. We've seen recent examples of where the protections under these agreements have been diminished and in some cases even eliminated. If we are going to do what's necessary in the future to support the world economy, this is going in the wrong direction.
The final summary point on that is that Canada really needs to up its game in the investment area and engage more deeply with trading partners and the lead industries abroad in supporting these types of international investment protections.
To give you a couple of examples—I know my time is coming up very shortly—Canada is, in fact, behind in signing these types of treaties, these FIPAs and free trade agreements. If you look at other countries, like the U.K. or Italy, or even China, they have significantly more such agreements. We can see a starker example in the recent signing of the USMCA. In fact, the protections for foreign investors were withdrawn in that treaty for Canada vis-à-vis the United States, so a Canadian mining investor can no longer seek investor-state dispute resolutions in the United States as it could under the previous NAFTA.
There are other worrying signs, which I think warrant some questioning. I imagine the minister will address this when she appears, but the pace of the negotiation of free trade agreements and foreign investment promotion and protection agreements has decreased dramatically over the last few years. There are significant gaps in Canada's treaty practice that should be addressed and could be addressed.
I'm going to stop at this point. I'm open to further questions, and I look forward to the discussion with the committee.