International Trade Committee on Feb. 15th, 2024

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much.

There seem to be a lot of opportunities for trade with Ecuador. I had asked the earlier panel about some of the things you were talking about—some of the recent agreements they had signed around gender and being more open with trade. Different elements are written right into the agreement, thereby defining how we can do this. Do you know what I mean? It's in black and white, right?

How do you enforce things like those as it goes on?

[Doug Forsyth]

It very much depends on the chapter and on what is being negotiated. I think many of those chapters are based on co-operation and are not subject to dispute settlement. It's very much the case that both countries are like-minded on certain issues. It provides you with the opportunity—the framework, if you will—to have those discussions and to set those up. It's about making sure that both countries have the right people in place and the right people around the table after the agreement is negotiated to be able to have further engagement on whichever topic is at issue. I think that's helpful.

Again, a lot of those areas are not necessarily subject to dispute settlement. To your point about whether there's a way to hold their feet to the fire, I think the way to do that is through engagement. I think that's what we have found over the years.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Monsieur Savard-Tremblay, go ahead for two and a half minutes, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

I want to go back to the issue of investor-state dispute settlements.

Could you provide the committee with the total number of cases brought against Canada, as well as the number of cases that Canada won?

[Reuben East]

In terms of the number of cases brought against Canada, there are 35 cases in total. Almost all of those are under NAFTA. One is under the foreign investment protection we have with Egypt. Canada won 13 of those cases. Five of those cases we did not win. Five of those cases were settled. Six of them are ongoing, and seven are either inactive, terminated or withdrawn.

Now, I've double-counted one particular case. That's the Bilcon case. There was a finding, but it is ongoing. There's a part on damages that needs to be settled.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Of those, how many were settled out of court, meaning that Canada had to change its political stance, bring changes to its legislation or withdraw an existing measure, for example?

[Reuben East]

I'll come back to the numbers first and then do the second part of the question.

As I said, five cases were settled. Seven of them were inactive, terminated or withdrawn. When they're withdrawn—and I can tell you, because in a couple of those cases I was trade counsel directly—those were cases in a consultation setting, for example. Two of them I can think of were withdrawn by the investor, who was hoping, at that point, to get some type of settlement. We said, “No, we'll be defending that vigorously.” They decided to withdraw that case to avoid costs against them, for example.

I think part of your question had to do with measures and with measures being withdrawn. Is that correct?

In my understanding, in no case was a measure withdrawn. Under investor-state, there's only one thing that a tribunal can do if there is a case in which they have found a breach, and that is to award damages. They cannot order a country under a treaty with Canada to withdraw a measure.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Cannings, go ahead for two and a half minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

At the start, Mr. Forsyth, you mentioned there will be chapters or language on indigenous peoples, human rights, the environment, and yet there will also be an investor chapter with ISDS mechanisms.

Here we have a case in Ecuador, it seems to me, where some of the main conflicts around human rights and the environment, indigenous peoples in Ecuador, happen, unfortunately, because of Canadian investors. The ISDS is being used to protect them from efforts from an Ecuadorean government to legislate to protect its own peoples and its own environment.

I'm just wondering why we're doing this. How are we helping the Ecuadorean people by combining those two things?

There's this right to regulate language, but in Colombia we have an agreement and that language proved useless. When the Colombian government tried to regulate around the Canadian mining firm, Eco Oro, it used that ISDS provision and the Colombian government lost when they felt that this mining company was damaging the environment.

I'm really struggling here with how this helps Canada or how it helps Ecuador. How can we regulate UNDRIP in this situation, when we have a clear case of an Ecuadorean government and a Canadian company that is flouting the whole free, prior and informed consent aspect of UNDRIP?

I am lost. I can't see why we're even thinking of undertaking these negotiations if that's our baseline.

[Reuben East]

I think in our current model, and the model that we've proposed to work with Ecuador on, it's careful to balance, as I mentioned earlier, the rights of investors through obligations protections and a mechanism to do that, but with the right to regulate the protection in areas such as the environment, labour, human rights, etc.

We think this model that we have now—much, much different from a 1997 model—strikes that balance.

I'll give you a few examples. We've talked a few times about right to regulate provisions. Those were not in our old model. They are currently, as of CETA going forward, in all of our FTAs across the board, not just on investment.

I talked about balance. We've strengthened substantive provisions, for example, in the investment chapter like expropriation. For example, the mere effect on an investor's investment does not amount to an expropriation. This is something that we've clarified in our provisions that wasn't there in the past.

Third, both parties in a treaty can take reservations to protect their public policy space in areas that they feel need protection. We do that regularly and so do our partners.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

That was a very lengthy question that would probably take the entire panel. You had an extra minute there but you do get two and a half minutes if we get to another round, so maybe they can finish the answer then.

Mr. Maguire, please. You have five minutes.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Madam Chair.

Thank you very much for your presentation today.

I just wanted to start off with a couple of simple questions that I had about the export products in wheat. You mentioned wheat and pulse crops, particularly lentils being a priority.

Do we have any idea of the volumes that we're trading in that area, in either of those products right now?

[Doug Forsyth]

I can give you a dollar value of our imports.

In fact, wheat is our top duty bill, export, into Ecuador's market and we sent an average, over the time period from 2019 to 2022, of about $261 million worth of exports.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Is that on average or total?

[Doug Forsyth]

That's the average from 2019 to 2022 per year, in U.S. dollars.

[Larry Maguire, Conservative, Brandon—Souris, MB]

In the mineral side, is potash involved in that as well?

[Doug Forsyth]

I don't see potash as a top ten export. Nevertheless, I'm not sure what their MFN duty rate is on potash.

I could check for you.

[Larry Maguire, Conservative, Brandon—Souris, MB]

I noted that Saskatchewan and Alberta are major export areas in the agricultural side, with the most potential there.

You caught my eye on the oil developments there as well.

We're exporting $178 million worth of crude oil to them. It was one of our major exports of the 679 that you had in the trade.

We send refined oil back. Is that correct?

[Doug Forsyth]

I'm not entirely certain about the oil trade in terms of what goes and what comes back, but l'll look into it.

[Larry Maguire, Conservative, Brandon—Souris, MB]

How do the Ecuadorean oil environmental standards for petroleum products in Ecuador compare to those here in Canada?

[Doug Forsyth]

Honestly, I don't know enough about it. I'd have to look into it. That might be a question we could pose to the ambassador when he comes back. We could close the loop with him in terms of providing a more fulsome answer in terms of what the regulations are in Ecuador on that.

[Larry Maguire, Conservative, Brandon—Souris, MB]

I ask that because it's a similar question to what my colleague from the NDP just asked in relation to labour intensity and that sort of thing, and the agreement of the GTAGA— the global trade and gender arrangement with the Inclusive Trade Action Group—and how we're involved with that.

If we're making sure that there are rules in place for one, are they also in place for the environmental side?

Can someone answer that for me?

[Dean Foster]

Sure, I'll take that one.

We fully intend to pursue robust provisions in labour and environment and to back those by dispute settlement, as per our usual approach in free trade agreement negotiations.

[Larry Maguire, Conservative, Brandon—Souris, MB]

I wonder if there are industries in Canada that you are aware of that benefit from this free trade agreement due to the current lack of markets here. Are there opportunities there for new products that we are processing here?

Mr. Forsyth, you mentioned that this was an agreement that we can really expand on if there are opportunities there. I just wondered if you could elaborate on that.

[Dean Foster]

I can keep going with that.

In addition to the products mentioned already—agricultural products like wheat and lentils that are largely out of western provinces going out of the Port of Vancouver—we have manufacturing goods interests in Quebec and Ontario especially, with a booming air cargo business out of Toronto Pearson. That's largely the basis of interest from Quebec and Ontario, for example.