Mr. Speaker, I am pleased to speak to this controversial issue. We will not be supporting the motion simply because we believe in rules based agreements.
We need rules on issues, such as investors, and the obligations by investors and governments in cases like this. It is a very big part of international agreements. We believe in rules based agreements and in the original intent of chapter 11.
We realize there have been some contortions, distortions and aberrations that were never intended, but it does not mean that we throw out the baby with the bath water. We believe that chapter 11 needs to be reworded and the problems addressed in future agreements but we also support rules based trade agreements.
We recently got into a great debate with the U.S. over softwood lumber. Some people said that since we were in a good position on energy that we should trade off our energy for a softwood lumber agreement. I and my party do not agree with that. We have to deal on the basis of rules. We cannot deal on the basis of having a little strength now on water or on energy. We cannot bargain those off against softwood lumber. We need a set of rules to follow, a dispute mechanism to settle differences of opinion and an investor clause in any future agreements.
I also take the opportunity to compliment the minister. We in the PC Party think he did a good job with the summit of the Americas. I know it was very trying circumstances but we think the 34 participants made significant headway and made a precedent setting direction by including the democracy clause. Some people think it is not as much as it should be but to me it is a tremendous step forward.
I look at it as a ratchet mechanism. I believe every country involved will go into the agreement at a certain level of democracy. There are many levels of democracy but I believe the other participants will not let any country go backwards in democracy. They will only be allowed to increase democracy through their practices.
I personally applaud the minister and even the parliamentary secretary for their participation in this because I think they made significant progress. They should be proud of their efforts. I know the wily parliamentary secretary will pass that on to the minister.
The NDP members have been very consistent. One has to admire them for that. They have been against free trade, whether it was the free trade agreement with the United States, the NAFTA, or the free trade area of the Americas agreement we are dealing with now.
The Liberal Party, however, has not always been consistent. I remember standing in the House, I think, in 1988, having a great debate on free trade. As I recall, it was the Liberal Party that was totally against free trade. It was the Conservative Party that was totally in favour of free trade. Now we have this little flip flop where the Liberals are in favour of it. They have seen the light, the error of their ways and the benefit of following the Conservative role model and have now adopted a free trade position.
Although the Liberals do flip flop from time to time, when they land on our side of the argument we totally support and agree with them.
Our party supports free trade with the Americas, as we did with NAFTA and free trade with the United States. In fact, we propelled Canada into the free trade debate and we are proud of that. We remember very clearly fighting the Liberals tooth and nail during that debate. I look at the Deputy Speaker and I seem to remember his face somewhere on that side of the House at the time, but we will not get into that. We believe totally in expanding the global economy and trading partnerships with other nations.
Many people oppose trade agreements because they feel they will not help the people in the poorest countries who need help. From my point of view, if a country wants to improve its social status or social conditions it has to improve its economy. In the world we live in today, if we want to improve our economy we need to be part of the global economy. That means being part of trade agreements, which is what we are talking about with the FTAA.
The importance of trade for all countries, but especially Canada, cannot be lost. We trade $2.2 billion worth of business every day. It is hard to believe. Our exports of goods and services in 1999 reached $410 billion, or a whopping 43% of our GDP, the highest in the world. Canada and the U.S. are each other's largest trading partners. We are very much a part of this whole issue, which is why it is very important for us to have investor clauses to protect our investors and our businesses.
Although we support the free trade agreement and free trade in general, we always have to analyze these. We will make mistakes as these unfold. I think we all know that certain aspects of chapter 11 are wrong and have been used in a way that was never intended, but that does not mean we should throw the whole thing out and never sign an agreement.
The motion today outlines that we should never sign an agreement with a “Chapter 11-style investor-state clause”. It is too ambiguous. It would cover any kind of investor clause. We cannot agree with that at all.
We do support the intent and spirit of chapter 11 in NAFTA. It is important for everyone to know the details of how NAFTA countries must treat investors and the dispute settlement mechanism. Unfortunately those rules have been interpreted in ways that we and the government never envisaged and should now be addressed.
We support several features in chapter 11, one being national treatment. Signatories are to treat NAFTA investors the same way as they would treat their own domestic investors. We agree with that in principle. If we want to invest in other countries and we want protection there, it would only make sense that we would need to provide the same protection here.
Another feature was the most favoured nation treatment. This obligated governments to provide NAFTA investors with the best type of treatment they could provide any investor, whether domestic or foreign. We would want the same treatment in other countries and we must offer that as well.
Another feature dealt with senior management. Signatories of the agreement must not impede NAFTA investment. Signatories must intervene as little as possible. We all know, especially in the business we are in here, how bureaucracies and officials can interfere with any project, event or circumstance with which we deal. This says that they should intervene as little as possible.
There is also a performance requirement. This restricts the imposition of performance requirements on investment by signatories. These provisions are to reduce the ability of government to require that businesses conform to these measures when investing in a party.
The intent of chapter 11 was to protect investors from excessive nationalization and protectionism. We think that is appropriate. We think investors should be able to invest in other countries and not be subject to nationalization and protectionism. We have seen examples of that lately in some of our trade agreements where protectionism has raised its ugly head. They use a set of rules in a way that was never intended, such as to stop our potatoes, our airplanes and even our softwood lumber.
This is an ongoing situation. It is not only investor clauses. It is many other clauses. We need to be ever vigilant, be on our toes and be a part of this great debate to ensure that these things do not interfere with our trade.
We support, in principle, the measures in chapter 11. In order for trade to work effectively, investors must be allowed to operate in a given country. These obligations are not new. They have existed before.
To enforce these rights, NAFTA provided for an arbitration process. This is something that was not available prior to the original free trade agreement but it has helped resolve many issues in Canada's favour, even though we are dealing with a much larger partner. It has helped us much more than our other partner, the United States, when it comes down to disputes over free trade.
However, we acknowledge that chapter 11 has been tarnished. It has been tarnished because it has been abused, distorted and used in a way that was never intended.
One example is the Metalclad v Mexico case. It did not affect us so much but a U.S. waste management firm sued the Mexican government and won. Metalclad argued that the government's environmental laws hurt its ability to operate a plant. The plant was allegedly a hazardous waste treatment plant.
Canada banned the export of PCB contaminated waste in 1995 but was forced to revoke that ban after U.S. companies said they would challenge the law under NAFTA.
Another example is Ethyl's $250 million lawsuit against the new Canadian environmental law. A short while ago parliament banned the import and interprovincial transport of toxic gasoline additive MMT. The Ethyl Corporation sued the Canadian government under NAFTA, chapter 11. Nobody envisioned that would ever happen. That is the reason we have to address it in future agreements. We have to make sure we are not vulnerable in these things.
Another area of interest is UPS threatening to sue Canada Post for unfair competition. We have had Canada Post for 150 years and all of a sudden UPS says that it cannot compete in an open market so it is suing under chapter 11. We think this is another example where we need to fine tune this clause in the agreement and make sure it does not happen again.
Of the 15 known lawsuits under chapter 11, 6 involve challenging the health and environmental measures we in Canada hold dear. It is clear that chapter 11 has not gone too far, but the interpretations have been in such a fashion that we never envisaged. We never foresaw that governments and companies in other lands would take advantage of them in the way they have.
Having said all that, we still do not support the motion to say we will never have a chapter 11 style clause again. That rules out any rules or regulations with regard to investment. It is far too broadly worded. It does not hone in on the problems. It hones in on the chapter, but it does not hone in on the problems within the chapter. Therefore we cannot support it.
We support the intent of the chapter 11. Chapter 11 needs to be clarified. We are determined to help restore chapter 11 to the original intent. That will be our focus as this unfolds and as it goes through committee.
Another issue was raised by an hon. member. I agree with him wholeheartedly that the government should bring proposed wording for the investor clause to parliament to ensure that everyone has a chance to pass an opinion on it and vote on the wording so that we all make sure we do not make the same mistake we made the last time.
We need to work on chapter 11. We need to be careful when drafting and signing all new agreements. We have to avoid mistakes and in this case the potential for other parties to interpret these clauses in ways we never intended.
I want to wind up by saying we will not be supporting the motion. We do think that chapter 11 needs to be fine tuned and adjusted to address the problems that have risen since the last trade agreement, but we do not think it should be thrown out and we believe in rules based trade agreements.