Evidence of meeting #94 for International Trade in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was negotiations.
A recording is available from Parliament.
Liberal
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Thank you.
Thank you for being here. It's good to see you once again.
After the completion of the Canada-U.S.-Mexico agreement in 2018, Minister Freeland, who was then international trade minister among other things, said she was very proud of the fact that we didn't include ISDS in CUSMA. She said, “ISDS elevates the rights of corporations over those of sovereign governments. In removing it, we have strengthened our government's right to regulate in the public interest, to protect public health and the environment”.
We've had a number of cases in Canada that have been very expensive to Canadians, and we've had a number of cases in foreign countries in the guise of protecting Canadian investments. As was mentioned, Ecuador, in the face of one of those, actually pulled out of its agreements, because it didn't like what it was seeing in terms of the effect that foreign governments could have on environmental and human rights legislation and work in Ecuador. Now we have a different government.
I'm just wondering why Canada has seemingly changed its mind on ISDS. The world seems to be going away from it, but we seem to be doubling down on it, especially in cases where we have the Canadian mining industry and some players in that. Why are we still so keen on it in this day, when there seems to be a movement away from it elsewhere?
Deputy Director, Investment Trade Policy, Department of Foreign Affairs, Trade and Development
I'll come back a little bit to some of the reasons I stated earlier in terms of why we use the investor-state dispute settlement. I'll bring it back to Ecuador, first and foremost. As you mentioned, and as was mentioned at the outset, we did have a foreign investment protection agreement. That was terminated in 2018. The current status is that if an investment was made I think more or less before May 2018, those investments were protected up until 2033. There's a clause in that foreign investment protection agreement that's quite common. That's how that works.
In other words, let's say a Canadian investor makes an investment pursuant to a future free trade agreement with Ecuador that includes an investment chapter, including ISDS. Until that happens, they would not have that type of protection, and neither would they have the ability to use ISDS. So there's an important element to that—
Deputy Director, Investment Trade Policy, Department of Foreign Affairs, Trade and Development
Of course.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
We hear that the new ISDS, or ISDS 2.0, has protections in it saying that this doesn't prevent either of the parties from legislating protections for human rights or the environment.
We have a situation in Ecuador with the Loma Larga mega-mining project, owned by Dundee Precious Metals, which is almost 8,000 hectares of paramo. We've had two binding referendums of Ecuadorean citizens. More than 80% are in favour of stopping these mining projects, because they're affecting the water supply for Cuenca, with 600,000 people, and yet the Ecuadorean government and the company insist on advancing the project in violation of the right to political participation.
I guess I'm skeptical; let's say a new Ecuadorean government came in and said, “Sorry, Dundee, you can't go ahead. We've had these referenda, and we are pulling the rights to mine here.” Would that protect the Ecuadorean people or would those go ahead? It seems that other situations have arisen where this doesn't really protect those governments from legislating about human rights or the environment.
Deputy Director, Investment Trade Policy, Department of Foreign Affairs, Trade and Development
I guess I have a few points.
One is that in the situation we're in, we've heard from Ecuador that they're interested in discussing an investment chapter with us. In our discussions, we've sent a model to them that includes investor-state dispute settlement. They're very aware of that. At the outset, you will have heard that Canada, if I'm not mistaken, is Ecuador's number one investor, so there's mutual interest there in terms of an investment chapter with investment protection.
However, we have a very different model from what existed in the 1997 FIPA. We created a new model— a foreign investment protection agreement—that was made publicly available, I think, in 2021. It's a very different model. It builds on more than 30 years of our experience in both receiving claims, for example under the NAFTA, and also further investment agreements and investment chapters with partners like the European Union.
It's a chapter that has the right balance of, on one hand, the right to regulate and to protect things like human rights, the environment, etc., and the ability to protect those things, while at the same time providing for investors.
Liberal
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Good morning.
Thank you for being with us this afternoon.
I don't know who can answer this, but in your opinion, what are the advantages of starting trade negotiations with Ecuador, when Canada is already negotiating with the United Kingdom, Indonesia and India?
How will this agreement be different from the others?
Director General, Market Access, Department of Foreign Affairs, Trade and Development
I hope I understood your question correctly.
From an overall trade negotiation perspective, I think we definitely have a good base of knowledge from which we work. Our negotiators get experience through the various negotiations, whether that's the U.K., India, Indonesia or ASEAN. That helps us build our positions as we move forward.
What we'd like to do during the negotiations is, if we get a negotiated outcome in one agreement that is favourable to Canada—it doesn't matter what the issue area is—then we like to build on that experience and use it to the greatest extent possible with the next negotiating partner.
In this one, some of the areas we have negotiated, not so much the U.K., but maybe some of the smaller partners, will benefit our negotiating experience and we look to make some of those similar types of arrangements in the Canada-Ecuador FTA negotiations.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Thank you.
You mentioned that this agreement would be economically beneficial.
Can you tell me what the economic benefits of a free trade agreement with Ecuador would be?
Director General, Market Access, Department of Foreign Affairs, Trade and Development
Thank you for your question.
As I had mentioned during my opening statement, I think that there will be some economic benefits in the FTA. They're small; there's no question. Ecuador-Canada trade right now is not huge, but at the same time, our chief economist's office estimates that there will be positive economic benefits in the amount of a GDP increase of about $83 million for Canada by 2030 and Ecuador's could increase by almost $50 million over the same time period.
It's not huge. When you think about how much trade is happening this year, it's $1.3 billion in bilateral trade, but it's growing. The objective here is really about trade diversification and finding new partners.
I think Ecuador does provide that for Canadian producers and exporters.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
In your opinion, can we expect problems due to current political tensions in Ecuador?
Director General, Market Access, Department of Foreign Affairs, Trade and Development
I think it would be helpful to hear from our ambassador on that particular point, but what we have noted during the preliminary discussions with Ecuador is a government and partner that is very willing to engage in the negotiations that we would look at, whether they're on the goods side, services, investments, the environment or financial services—all of the areas we would traditionally put in an FTA. That is what we're seeing from Ecuador, and that's from both levels of government.
They recently had an election. Even with the new government in place, there is an openness on the economic front to move forward with the agenda. I think their economic agenda matches well with Canada's on that front.
At this point, I would turn to the ambassador, but because he's not available, I will save that for the next time.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
Thank you very much for your presentation.
You mentioned that Ecuador is one of the only countries we don't have a free trade agreement with on the Pacific south coast. I would imagine there's also Panama, Peru and Chile. Are there any others?
Director General, Market Access, Department of Foreign Affairs, Trade and Development
Colombia and Mexico.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
What are the advantages then? You said the unilateral trade deal between Canada and Ecuador would bring modest increases, but what about the multiplier effect of a company from Canada, or whatever, being able to look at that whole area?
Maybe you can make some comments about that.
Director General, Market Access, Department of Foreign Affairs, Trade and Development
That's an excellent point. I would especially look at our western provinces, as well, in that regard, just based on location, transportation costs, etc. I would also add Chile in there, which is a bit further south.
There's the recognition that South America is a large market that's been untapped, frankly, from a broader Canadian perspective. There are a number of countries that we haven't necessarily focused on that provide tremendous advantages to Canadian companies and exporters. There are a lot of untapped opportunities, I would say, to your point.
This is another foot into the marketplace. Again, it's a small foot for the time being, but it can lead somewhere else. I think that's important, as well, as we look to negotiate the FTA. It's not just about today and where we are in terms of our trade. What about tomorrow? What about next year? What about in five to 10 years? That's also important.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
You mentioned the new president. In the past, they were considered protectionists. It's what you read. However, you mentioned the opportunities of creating a progressive agenda, not only monetarily, but through gender, indigenous people and the environment.
How does that work, and where do you see the opportunities?
Director General, Market Access, Department of Foreign Affairs, Trade and Development
Traditionally, when you talk about free trade agreements, it's a lot about trading goods and trading services. Over the last number of decades, we have expanded that trade environment to include trade and gender, trade and SMEs, and trade and indigenous peoples. These are the “trade and” issues that we often talk about.
I think this provides an opportunity for Canada writ large to promote and export the way we do things and the way we deal with all of those issues outside of the traditional trade agreement areas. It is important to recognize that and to look to try to export that.
As I said, Ecuador is a country that has indicated an openness to these other areas. It is a participant in a number of environment issues beyond trade, whether at the UN or elsewhere, but it's important to bring some of those areas into trade agreements to the greatest extent possible. When you have a willing partner, I think that makes it much easier and much more beneficial for the two parties.
