House of Commons Hansard #52 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was chapter.


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11:10 a.m.


Dick Proctor NDP Palliser, SK

Not Hugo Chavez.

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Pat O'Brien Liberal London—Fanshawe, ON

Madam Speaker, the member asked me a question and now he wants to holler. That is the NDP way.

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The Acting Speaker (Ms. Bakopanos)

I did say earlier that we have plenty of time for questions and comments and I think we should show respect to each other in the Chamber.

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11:10 a.m.


Pat O'Brien Liberal London—Fanshawe, ON

Madam Speaker, it is the NDP way to holler down things it does not want to hear. However the reality is, and I was coming to the member's question—

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11:10 a.m.

The Acting Speaker (Ms. Bakopanos)

Respect will go both ways.

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11:10 a.m.


Pat O'Brien Liberal London—Fanshawe, ON

Madam Speaker, I am coming to the member's question. I think that is showing respect. However hollering will not get an answer. The member wanted to holler and I ask your indulgence to allow me to answer the question.

Mr. Annan's point is very clear. If we are to tackle the problems the hon. member addressed in his question, real problems of poverty and inequity in many countries of the Americas, the government must have the economic wherewithal to do so. That is achieved through globalized, liberalized trade.

The member can shake his head. However I will listen more carefully to the views of Mr. Blair and Mr. Annan because frankly, and with all due respect, they are more in touch with reality than the hon. member.

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11:10 a.m.


Alexa McDonough NDP Halifax, NS

Madam Speaker, I want to pursue two things. The member suggested that Tony Blair, the prime minister of Great Britain, is an uncritical embracer of free trade no matter what it looks like. That is simply dead wrong. Tony Blair knows that the European model for freer trade is different in substance and process from the FTAA and is based on exactly the opposite set of principles.

It is absolutely true that Tony Blair is in favour of liberalizing trade. It is also true that the New Democratic Party is in favour of opening up trade opportunities for the Americas. The countries of the Americas want and deserve freer trade. However the hon. member conveniently ignores that the European form of liberalized trade is based on a democratic and parliamentary process.

There is no parliament of the Americas. There is, however, a European parliament which sets out explicit standards for working conditions, human rights, environmental protection and cultural diversity. It enforces its standards and makes conformity to them a condition of membership in the European Union.

The FTAA model is based on exactly the opposite. There is no democratic process at an international, hemispheric wide level. Behind closed doors we have those kinds of discussions going on and we have the preferential access of the big corporations, with 500 of the major CEOs of those mega corporations having access to the text, which the people of Canada and the people of the other Americas still do not have access to. In process it is fundamentally different. As my colleague from Burnaby—Douglas has pointed out again today, in substance it is absolutely the case that there is nothing enforceable about the side agreements on labour and the environment. The record absolutely shows that.

The second thing I would like to say is that if the hon. member had been in attendance at some of the forums that made up the people's summit, he would have understood that people from countries such as Ecuador, Peru and Colombia are absolutely terrified of any agreement that would give even more power to the multinational corporations than they already have over those people's lives.

If the hon. member could have heard about the working conditions they are suffering, he would surely think twice before he would support NAFTA chapter 11, which will give those developing countries even fewer democratic instruments with which to raise their standard of living and protect their environment, their cultures and their working rights.

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11:15 a.m.


Pat O'Brien Liberal London—Fanshawe, ON

Madam Speaker, here we go again. There is other consultation possible than just that in Quebec City, whether it was inside the summit or at the people's summit. The leader does not need to lecture me on that. I very recently met with a group of aboriginal people from Colombia in my office on Parliament Hill. They expressed some of their concerns. We are consulting very widely. Unlike the NDP, we do not just consult with those who agree with us.

The leader said that I had mentioned that Mr. Blair was in favour of free trade no matter what it looks like. That is exactly what the leader attributed to me. That is absolutely and completely inaccurate. I said no such thing. I challenge her to find that in Hansard .

I simply said that Mr. Blair indicated that the critics of free trade, including the leader of the NDP, however well intentioned, cannot be allowed to stand in the way of the economic reality that globalized, liberalized free trade is very important. Small countries such as those of the Americas need investments. Their leaders get that if the NDP leader does not. Firms need rules in order to invest. Everybody understands that but the NDP.

The former Ontario premier, NDP premier Bob Rae, said it comes to this: the critics of globalized trade want to abolish capitalism. They have lost that argument. Those are arguments on the scrap heap of history.

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11:15 a.m.


Alexa McDonough NDP Halifax, NS

Madam Speaker, I would ask the hon. member this point blank. Does it concern him at all that the model of free trade that is being pursued is being pursued under the banner of the notion that there is a surplus of democracy in the world, of democracy interfering with capital investment? Does that concern the hon. member?

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11:15 a.m.


Pat O'Brien Liberal London—Fanshawe, ON

Madam Speaker, yes it does, because I do not agree that there is a surplus of democracy. This whole process has been about democratizing the situation.

Does the leader of the NDP not remember that prior to liberalized, globalized free trade there was a dictator in Mexico and that about 20 of those countries had dictators? Does she not get it that this is a move toward democracy?

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11:15 a.m.

Canadian Alliance

Deepak Obhrai Canadian Alliance Calgary East, AB

Madam Speaker, before I start I would like to commend you for trying to bring decorum into the House during the debate. Thank you very much.

It is a pleasure for me to rise on behalf of the constituents of Calgary East to speak on the supply day motion put forward by the NDP. At this time I have to make up my mind which way I should go after what the government and the NDP have said.

Let me start by telling the House why the Alliance will not be supporting the motion put forward by the NDP. The NDP's criticism of chapter 11 or globalization, as it has embraced the anti-globalization protest movement, is on only one theme. The theme is that it is multinationals against the others. All the NDP keeps saying is that it is multinationals against the others, but I can tell them that the issue is not multinationals. The issue is small and medium sized businesses.

Under the globalization regime that has taken place opportunity has now been given for the first time to small businesses and medium sized businesses to take advantage of and participate in trade. This means for both sides, not only for Canadians. It means that other countries can also take advantage of globalization. Their business people can take advantage of it and bring prosperity to their countries.

We all know that prosperity comes through a good economic plan. If a country does not have a good economic plan and the businesses are not there, no matter what we say at the end of the day people cannot take advantage of it. People will not have jobs. Where will prosperity come from? I can tell members that the government cannot supply the needs of the people. The government is only supposed to regulate. The government does not have the resources to invest in and try to uplift the standard of living.

It is very strange to listen to the NDP. Any time the NDP is in a position of power, it quickly changes its views. The parliamentary secretary spoke about the former premier of Ontario changing his view and saying globalization and free trade are good.

I would also remind the NDP that only three days ago its former member of parliament, who has suddenly changed and is now in the government, is saying that the NDP is on the wrong track in regard to this issue of anti-globalization. I am talking about the hon. Chris Axworthy, who is now a minister in the government of Saskatchewan.

Members can see what happens. Every time an NDP member gets into the government his or her views suddenly change because the importance of free trade is realized. NDP members go around saying they are anti-globalization, saying free trade is bad, and they focus all the blame on multinationals. Multinationals are not the issue. The issue is small business, medium sized businesses, farmers and everyone whose livelihoods depend on trade.

Our farmers' livelihoods depend on trade. We can all see what a devastating impact not having a rules based system in agriculture has had on the farming communities in Saskatchewan, Manitoba, Alberta and all over Canada. It is extremely important that we have a rules based system so everyone can play a fair game and bigger economies cannot muscle in on smaller economies.

It surprises me, in that the NDP has so many members coming from Saskatchewan. Perhaps I should not say so many, but there is a little sprinkle here and a little sprinkle there of members who come from Saskatchewan and Manitoba and who stand up for their farmers. They should know how not having a rules based system can hurt ordinary farmers. These are not multinationals we are talking about. We are talking about ordinary Canadians, with medium sized farms, whose livelihoods are being threatened. This is when the NDP should get up.

To go back to the motion, and to the government on chapter 11, the NDP motion talks about what the Minister for International Trade said before the foreign affairs committee. He said “I can assure you that we are not seeking an investor state provision in WTO or anywhere else”. That is what the minister of trade stated.

This is really surprising coming as it does from Canada's trade minister, a trade minister who time after time preaches the benefits of a rules based system of trade for Canada. As the former critic for international trade, I have travelled with him many times and I know that his commitment to free trade is there. Therefore it came as a complete surprise to me when he made this statement, because he knows about the importance of a rules based system. Chapter 11 is a rules based system that has been put in NAFTA to address the issue of protection of investments. If there is no protection for investments they are not going to flow. We have seen this happen time after time.

On the one hand the minister wants rules to encourage fairness and predictability for investors. That is fair ball. On the other hand the minister seeks to change these rules in a secret backroom agreement. He has said that he would like to try to reopen this chapter 11 issue again with both the U.S.A. and Mexico. Both those governments have stated quite clearly that they are happy with chapter 11. They do not see it as a threat.

What baffles everyone is the fact that when the NDP went up against free trade and globalization, especially at the protest in Quebec City, it forgot that there were 33 heads of state there who were elected to represent the views of their people. There was the fifth party, which is not even in government, saying that these people were wrong. What else is a democracy if in a democratic system a government elected by the people cannot speak?

However, here we have people coming from a democratic system like ours saying that these people are wrong. Here is an example of the type of comments that were heard. The so-called anti-globalization protester, Jaggi Singh, said that the violence was inside when he started blaming the heads of state. This makes us wonder what a democracy is. There were people there who were elected to be democratic leaders and their views were being challenged.

I agree with one point, that is, we need a transparent system for these agreements so that Canadians know what it is they are signing. The simplest system for that is to bring this agreement into parliament. Let there be an open and honest debate in parliament. Let it be ratified by parliament. After all, parliamentarians are the voice of the people. We have committees that go out and listen to the people. Let the provinces have their say on this as well.

This is the appropriate way for a democratic institution to work. If the government is committed to an open, honest, transparent system, then it would do that by bringing this into parliament and having it ratified. I do not mean the FTAA evening debate the government gave us, saying it was an open, democratic system and we could debate. We had until midnight to debate it, and the government said it also had a parliamentary committee going out to listen to the people.

Hold on a minute. If this is transparency, then we have a serious democratic problem, because we stand up and make these points but no one is listening to us. We huff and puff here in parliament but no one is listening to us. We make speeches. The NDP might have a point or two that we should listen to. That is fine, but no one is listening.

We went to the committee. I have been on that parliamentary committee. I have gone out there with the parliamentary secretary. I have seen people come out to the committee and I have seen what happens. What happens? Nothing happens. The way the parliamentary committee is set up, the way the system is set up, we can huff and puff but at the end of the day it is the way the government wants it.

Violent protests regarding anti-globalization mean nothing. People are a little concerned about globalization. They are concerned with the fact that under globalization they do not know which way to turn. This uneasiness is translated into protests because of the failure of the government to engage people in debate and to promote the benefits of free trade.

We know why the MAI collapsed and went down the tubes. It was because the government thought that it would sign the MAI and then sit back silently, not talking to Canadians and not letting them know what was happening.

The issue which concerns us the most is the transparency of the system and the unopenness of the government to talk about the international agreements that it has signed. It was only after the pressure was put on the Minister for International Trade, when he went to Buenos Aires, that he said he would make it open. I commend him for doing that and for pressuring the other governments to do it as well. That is one credit that I will give him. However it came after the fact and only when there was pressure put on him.

After daily questions in the House the minister decided that he had better do something because things were not looking good in Quebec City. The minister could have done it before. The problem is that the government reacts after the pressure. It does not have the vision to say what it will do or how it will do it. Hopefully now it will get the message.

The Alliance agrees with the government that the principle of free trade is very important for Canada. Free trade is also important for the prosperity of poorer countries as it would raise their standard of living.

In the motion there is one point dealing with chapter 11 that worries us. I do not know what the government's position is on chapter 11. Maybe it could tell us because we are hearing contradictory statements. The Prime Minister says chapter 11 is working well. That caught the Minister for International Trade off guard. The minister is running around and trying to patch it up by saying that he is just thinking of improving it. Then we have the president of Mexico and the president of the U.S.A. saying that everything is fine.

There are a number of cases that challenge chapter 11. There may be one or two cases where the rules were not followed. There are more facts to the NDP story about companies that have won damages using chapter 11. The fact is that the government has failed to follow the rules which it should have followed. That is why it ended up paying. If it had followed the rules right from the beginning this issue would not have arisen. The parliamentary secretary knows what I am talking about.

Basically chapter 11 has been working well. If it has been working well and giving guarantees to investors, I do not see why it cannot be transferred into the FTAA and the WTO. It should be transferred because it would create a rules based system. It would give investors who invest money for the prosperity of everyone the kind of rules they need to know where to put their money and how their money would be protected. Business and trade rely on investment.

I grew up in African countries and these countries are looking for investment to increase their prosperity.

The figures regarding direct aid have changed. From the 1970s to today direct aid was given from government to government to many countries to improve their living standards. After 20 years we know that the living standards in continental Africa have fallen back. The direct aid program has failed miserably.

Today the figures state that private investment that is flowing into developing countries has tripled. Governments are viewing that as a new form of investment. It would be in the form of indirect aid and it would open up borders. It would raise the living standards of these countries, and every democratic country is thinking of that.

If we look at the figures today, the flow of private investment is faster into these countries and their standards of living are also going up. There is no longer direct aid.

If this happens as a developmental process then it is necessary to have chapter 11 which protects investment so that those who are investing know the rules of the game. We do not want a system where governments can nationalize investments making investors run away. At the end of the day money would not be given as direct aid. If we wish to raise the living standards of developing countries, it has to come from private investment, contrary to what members opposite are saying.

Chapter 11 is the route to ensure that this would happen. If there are one or two little bumps, it does not mean that there is something seriously and fundamentally wrong with it. In the overall scheme of things it would help everybody. It would help developing countries, and that is what we are looking for.

I would like to say to the Minister for International Trade that he should be very careful. What he was quoted as saying is now the basis of the motion. He should be extremely careful not to fall under the pressure of the NDP and make these kinds of statements that in the longer term would hurt free trade. In the long term it would create a crack.

If investment slows down, I am sorry to say that we would be facing the same problem, which is a shame as more than three-quarters of the people on earth live in abject poverty.

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11:35 a.m.

Edmonton Southeast Alberta


David Kilgour LiberalSecretary of State (Latin America and Africa)

Madam Speaker, I thank my colleague from Calgary. We enjoyed the first half of his speech better than the second half.

The author of “The Lexus and the Olive Tree”, Thomas Friedman, wrote after the Quebec summit the following:

That is not surprising, because if you actually look around Africa you see that the countries that are the most democratic, where the people have the most freedom to choose—South Africa, Nigeria, Ghana—are the most pro-trade, the most integrated in the world economy and the most globalized. The countries that are led by dictators, are the least open and where the people have the least freedom to choose—Sudan, Zimbabwe, Liberia, Libya, etc.—are those most hostile to globalization, openness and trade in goods and services.

At the end of his article he refers to protesters by saying:

By inhibiting global trade expansion, they are choking the only route out of poverty for the world's poor. Which is why these “protesters” should be called by their real name: The Coalition to Keep Poor People Poor.

I wonder if my hon. colleague would answer on behalf of members of the New Democratic Party what they would say to these comments.

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11:35 a.m.

Canadian Alliance

Deepak Obhrai Canadian Alliance Calgary East, AB

Madam Speaker, I have good friends in the NDP. I do respect the view from that side, but I do not share that view. I grew up and worked in Africa and I know the devastation and the impact of unsound economic policies.

In the 1970s when countries became independent people chose two paths. They chose either a free market economy or a closed economy. Tanzania chose the socialist economy. Many countries of the world chose socialist economies while others chose free market economies.

In about 20 years a marked difference took place. Countries with freer markets were the ones that took part in trade. The best example of globalization is Hong Kong. Its prosperity is globalization. It does not produce much because it does not have anything. Yet it has one of the best standards of living.

There were two systems in the world. When the socialist closed system collapsed, countries realized that in order to raise living standards for their populace they had to open up their markets and look for private investment. Government aid was no longer the point. If they wanted to raise the standard of living of their people they had to have private investment and open trade. This was staring them in the face. We are seeing that today.

That is why dictatorships have collapsed. They have collapsed because they could not sustain economic growth. Economic growth can only come through trade, sound economic policies and good investment policies. That is what the governments of various countries are trying.

There are programs available in CIDA. I agree with CIDA when it tries to create sound policies for economic management in foreign countries, particularly business rules and investment rules which foreign countries lack. It may be a long process, but if it is done I am positive like everyone else that the economic standard of these countries would increase.

It is important that Canada have free trade access because we have a small market. Canada has only 30 million people. We need foreign trade for our own prosperity. It is a win-win situation for everyone.

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11:40 a.m.


Dick Proctor NDP Palliser, SK

Madam Speaker, early in the member's speech he said that he was surprised New Democrats from the prairie provinces would be in opposition to the motion because of how beneficial trade is for agriculture. As has been pointed out by previous speakers in our party, we do support fair trade.

I would ask the member to tell us how agricultural trade over the last seven or eight years with the United States has benefited farmers from western Canada. As Canada slashed subsidies by 60% and the Americans jacked up its subsidies, could he tell us how it has helped Canadian grain and oilseed producers in Manitoba, Saskatchewan and Alberta?

Has it helped anybody other than the multinationals, the Monsantos and the implement dealers? We do not produce any manufacturing equipment except short line equipment. The large stuff is produced outside our borders. Could the member tell us about the blessings of fair trade with the United States as it has affected agriculture over the last eight years?

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11:40 a.m.

Canadian Alliance

Deepak Obhrai Canadian Alliance Calgary East, AB

Madam Speaker, I will never understand it. At one time members of the NDP talked about fair trade and how they did not oppose free trade. They said they liked fair trade.

Fair trade can only be done if it is a rules based system. If it is not a rules based system where will we get our free trade from? Where will we get our fair trade from? I do not understand.

The member has just given the exact example of the prairie farmers he is talking about in the U.S.A. Do we know why? Because agriculture is not on the table. Agriculture fell off. If agriculture were under WTO fair trade rules, what the member is talking about would have never happened. The member should just wake up to the fact that if we want to talk about fair trade then it is going to be a fair, rules based system. That would solve the problem.

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11:45 a.m.

Canadian Alliance

Werner Schmidt Canadian Alliance Kelowna, BC

Madam Speaker, I want to commend my colleague for his comments and the hon. member opposite for the comment about the countries that have adopted open and transparent free trade and how it has created wealth in those countries.

I think it is really significant that we recognize the differences in philosophy between the two approaches to the creation of wealth. I would like to ask my hon. colleague if he could somehow explain more about why that works. It seems to me that if businesses want to invest millions of dollars into another country or anywhere, they want stability. They want to be able to predict what the rules will be as they invest their money and they want a return on that money.

That applies to governments too. They do not want to simply spend money and then not get anything for it, although I sometimes wonder whether the Liberal government really cares about that part of it, as it just seems to throw money away.

However, the real question for my colleague is this: would he expand the stabilization aspect of a rules based trading system?

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11:45 a.m.

Canadian Alliance

Deepak Obhrai Canadian Alliance Calgary East, AB

Madam Speaker, I would like to thank my colleague for asking this question.

He is absolutely right. In the long term when an investor is pouring his money into a situation, he needs investment stability. He needs to know that an investment is made and a return is expected.

The problem is that in the past when there was an investment, the nationalization, the taking away of properties, the seizing of properties, resulted in situations where there was no stability. Individual investors could not predict what was happening to their investments. Nobody, even the NDP, I am sure, will agree to throw money down the tubes when there is nothing there. No one will agree to that.

Chapter 11 and these rules we are trying to create are there to ensure that investors know what to expect and to bring stability to that system. At the end of the day, some questions about environmental and labour standards are issues that we have international bodies to deal with.

Under the United Nations we have the ILO and UNEP. These are international bodies that can bring pressure on the governments of countries where an investment is made to ensure that they have rules and laws that will protect their environment and their labour standards according to their needs. It is wrong to take other labour standards and dump them on other governments. Let them decide what their labour standards are. I must say it bothers me that the NGOs who sit here are in the best environment in the world and are trying to put their views on different countries while not understanding what other countries want.

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11:45 a.m.


Pierre Paquette Bloc Joliette, QC

Madam Speaker, since May 1 is International Workers Day, I want to begin by saluting workers from Quebec and the whole world.

I also want to congratulate the New Democratic Party for its initiative, which is entirely in keeping with the work that the Bloc Quebecois has been doing for the past number of weeks in this House to ensure a true public debate on the ongoing negotiations on the free trade area of the Americas.

Chapter 11, and particularly the issue of dispute settlement, is at the very core of the lessons that we should learn from the North American Free Trade Agreement and the Free Trade Agreement with the United States.

I remind the House that the Bloc Quebecois supports free trade. This being said, we are, based on the experience gained with the two agreements that we signed with the United States, and with the United States and Mexico, in a position to draw some conclusions as to what has worked well and what has not worked so well.

The motion proposed by the New Democratic Party allows us to debate an aspect of the North American Free Trade Agreement that is very problematic, even in the eyes of the government. Indeed, both the Minister for International Trade and the Prime Minister have alluded to a number of issues concerning, among others, chapter 11.

The forum of parliamentarians we helped organize during the people's summit in Quebec City was attended by representatives from every country in the Americas, particularly Latin America. These parliamentarians told us “In Canada, in Quebec, in the United States and in Mexico you know what a free trade agreement is all about. We would like to share that experience with you”. But for us to do that, we ourselves must take the time to digest the positive and sometimes less positive results of the North American Free Trade Agreement.

From this angle, it appears that today's debate is extremely useful, not just for the House, but also for all parliamentarians in the Americas. I undertake to share the results of today's debate with the parliamentarians present at the people's summit forum of parliamentarians.

When the North American Free Trade Agreement was signed, no one had assessed the full impact of chapter 11, particularly as regards the dispute settlement mechanism. I have here a quotation from the June 23, 1999 La Presse . Howard Mann, who was a member of Canada's negotiating team and who drafted the environmental portion of the trade agreement, said, and his comments were reported in La Presse , as I mentioned:

This is a situation that nobody anticipated. It was only in 1996, with Ethyl Corp.'s lawsuit, that we realized how far companies wanted to take certain provisions of the agreement.

So, it was not the intention of those who negotiated this chapter for Canada, for the United States and for Mexico, that it would be used as it has been for the past few years.

Between 1996 and 1999, seven lawsuits, for a total of $1.5 billion, were filed under chapter 11. All seven of these lawsuits, which represented half of all those filed, had to do with environmental legislation. All of them challenged environmental standards which these companies felt were discriminatory or amounted to the introduction of protectionist measures.

Last week, in the House, the Prime Minister seemed to feel that Canada's chapter 11 record was good. I wonder how he, of all people, can think such a thing, with his recent boasting about his political longevity; if his concern for a good record in the case of chapter 11 matched his concern for his own personal record, I do not think he would still be sitting in the House.

The record shows that we struck out twice. The case involving Ethyl Corporation was settled out of court, but Canada admitted its guilt by paying the company compensation. In the S.D. Myers case, we lost. There was one victory, but it was an obvious one in my opinion, that of Pope & Talbot's challenge of the provisions of the Canada-US agreement on softwood lumber, under chapter 11, on the grounds that they were contrary to NAFTA. There is still one case pending, UPS against the federal government in connection with unfair competition by Canada Post for delivery services. Sun Belt Water is still involved with the Government of British Columbia as well.

I think it is, therefore, very early to be saying that Canada has had good results relating to chapter 11. On the contrary, it seems to me that what the Minister for International Trade said—version one, that is, since there seems to have been a rather rapid change in his thinking since then—constituted an appropriate beginning of a position when he stated before the Standing Committee on Foreign Affairs and International Trade as follows:

What I have been seeking, for some time, as we discussed at this committee the last time I was here, is clarification about some elements of chapter 11 that I believe have been given extension beyond the real intention of the drafters. Some are about expropriation, for instance. You use some clauses on expropriation in a way that is, in my view, excessive and not useful.

That was last March, when the Minister for International Trade was before the Standing Committee on Foreign Affairs and International Trade.

He went on to state:

We want more transparency as well. I think chapter 11, in that clarification, which would be binding on the three NAFTA countries, would need to adopt more transparent ways of dealing with the investment, and particularly the investor-state, aspects.

So even the Minister for International Trade was, only a few weeks ago, questioning the dispute settlement mechanism.

It was totally in keeping with his April 5, 2000 statement about chapter 11, reported in the motion by the NDP, when he replied:

On chapter 11—and we had a discussion a few weeks ago, and I understand where you're coming from—I can assure you that we are not seeking an investor-state provision in the WTO or anywhere else in other agreements.

A member of the NDP asked “On the FTAA?” The minister responded “No, not on the FTAA, either”.

These are the words of the Minister for International Trade, who said a month ago, and a year ago, that the government did not intend to include a dispute resolution mechanism in the FTAA and the WTO accord equivalent to that found in NAFTA.

If it were the intention of the minister and if it were the intention of the government, there must be a problem with the mechanism. So, let us look at the problem and resolve the causes of the problem.

As I mentioned earlier, this was the position of the Minister for International Trade in the first draft. Then, in the conclusions of the summit of the Americas in Quebec City, the Prime Minister of Canada intervened. He felt reasonably satisfied with chapter 11. Afterward, here in the House the Minister for International Trade changed his position, and on April 24, we heard him say here “Mr. Speaker, the government believes strongly that chapter 11 is working reasonably well”.

It was a bit troubling to see such a quick change in the Minister for International Trade's thinking, when, for a year, he considered and stated that there were problems with the application of chapter 11, specifically the dispute regulation mechanism.

In the summary of Canada's position on the matter of investments with respect to the FTAA—because we are still waiting to hear Canada's position on investments—I quote what appears on the government's website, which we have been advised to consult regularly:

Canada is not advocating the replication of NAFTA investor-state rules in the FTAA and has not supported the proposals made so far by other FTAA countries to include such a type of dispute settlement mechanism.

The issue is one of consistency, I think. The other parties in this House may think that anything on international trade that comes from the New Democratic Party or the Bloc Quebecois lacks credibility, but the NDP motion presents the position of the Canadian government itself, as stated on its website. I would find it hard to see how the government party could vote against its own position.

This being said, it is true that this is the summary of the position on investments. We still do not know the government's final position on investments and dispute settlement in the context of the negotiations on the free trade area.

I am asking the government to state that position as soon as possible, because it is one of two elements that generate a great deal of distrust toward the whole process, the other one being the fact that last week the party in office defeated an amendment brought forward by the hon. member for Saint-Hyacinthe—Bagot to the effect that any final agreement be voted on by this House before being ratified by the government.

It is perfectly legitimate to debate and question the validity of the dispute settlement mechanism, which is found in chapter 11 of the North American Free Trade Agreement and which is, for some countries, perhaps the United States and perhaps Canada, an acceptable basis for negotiation.

It is neither the position of the Bloc Quebecois nor that of the institutions committee of the Quebec National Assembly.

The following is a passage from page 68 of the report entitled “Le Québec et la Zone de libre-échange des Amériques: Effets politiques et socioéconomiques”:

—a number of stakeholders are concerned that states no longer seem to be allowed to set their national development policies without having to constantly consult investors. In addition, the dispute settlement mechanism is a worry because it seems to circumvent governments and traditional justice and concentrate this power in the hands of trade tribunals.

As can be seen, not only is our concern shared, but it is shared by parliamentarians.

It must be realized that the mechanism provided for in chapter 11, which allows investors to sue states directly for contravention of this chapter, is almost unique in the world. In other words, Canada, Mexico and the United States have saddled themselves with an obligation that does not exist in any of the international trade agreements, whether they involve the World Trade Organization or are between European countries which, when there are international disputes, resolve them between states.

That is one of the reasons that has screwed up—the right word for it, in my opinion—all the negotiations on the Multilateral Agreement on Investment, because of the belief, by the premier of France in particular, that state sovereignty could be shared between states but could not be handed over to private enterprise. Such is the case, unfortunately, with chapter 11.

That is not, however, the only problem with the dispute resolution mechanisms contained in chapter 11 of NAFTA. I will touch on some of the criticisms that can be made.

First, the interpretation of certain provisions is unclear, because every time a dispute panel is formed by virtue of chapter 11, it is not bound by previous decisions. There is therefore no precedent, each case being judged, I would say, on its merits by adjudicators who are different every time. This creates uncertainty for government administration. Will what was valid for one case also be valid for another? There has been no jurisprudence created for administration of this chapter.

Second, there is a lack of transparency in the whole process. The decisions rendered by the dispute panels are not made public. This applies even to the number of court cases under way. I have referred to 15, while others speak of 18. Obviously, these are against the governments of Canada or the provinces, or those of the United States or Mexico.

Third, there is the whole matter of the mandate and the impact of decisions by international adjudicators relating to chapter 11 disputes. These arbitrators are perhaps experts in trade, but they do not see all of the ins and outs leading up to the decision by one or other of the governments. In this regard, public interest may have to take a back seat to a very sectorial private interest, which can be very damaging for certain segments of the population.

A fourth element I want to introduce is the fact that the dispute settlement mechanism benefits foreign investors over local ones. Obviously, we are talking about national treatment, and I think everyone will agree that all investors must be treated the same way. But here, with chapter 11 of NAFTA, as concerns dispute settlement, foreign investors are being given an advantage, which local investors are not. To me this seems to contradict the very spirit of these trade agreements.

More basically, I would say that the question of the dispute settlement mechanism is whether the arbitrators appointed under chapter 11 can legitimately make decisions dictating certain behaviour to governments, be it the federal government, a provincial government or a municipal one, all of which are democratically elected.

For all these reasons, it seems to us that the dispute settlement mechanism in NAFTA causes a problem and cannot serve as the basis for proper negotiations on the protection of investments—which we agree with—in the free trade agreement of the Americas.

As I mentioned, in the NDP initiative, what is interesting is that it is possible to speak as I did on one aspect of chapter 11, the settlement of disputes but I think other problems must be addressed as well. I will name two of them. There are others, but I will run out of time, I guess.

There is the definition of “investment”, which is found in Article 1139. That definition has broadened in a significant way, the definition of “investment” used in the free trade agreement with the United States.

In the free trade agreement with the United States, “investment” was defined as “an American majority interest in Canada” and conversely for Canadian interests in the United States.

In NAFTA, that definition also includes minority interests, including in portfolios. This also includes loans, real estate and majority or controlling interests by investors from signatory states.

This definition creates an extravagant situation whereby, in theory, a bank that would have loaned money to an American business in Canada could potentially feel prejudiced by a decision of the Canadian government, even though the American company located in Canada might not itself feel prejudiced. This definition of the term “investment” is much too broad. It should be restricted.

Another problem with chapter 11, and the Minister for International Trade himself alluded to it, is the notion of expropriation. As members know, in international law, the concept of expropriation traditionally included two elements: there must be an act by a state and that act must lead to a transfer of property.

This is how Article 1110 defines “expropriation” and it is extremely important to read it, because is it is the root cause of a major problem in that chapter of NAFTA:

No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment.

As can be seen, this definition of indirect expropriation of a measure tantamount to nationalization or expropriation opens up a whole series of possibilities, with the result that some companies have extended the notion of expropriation to activities that they might have engaged in and to profits that they might have made. In the case of Pope & Talbot, for example, the company's reason for suing the federal government was that it felt that if it had located in the Atlantic provinces rather than British Columbia, its sales would have been higher, its net worth would have been greater and its profits would have been higher.

The damages sought by this company had to do with this notion of indirect expropriation. In a case such as Pope & Talbot, I would say that a Canadian company would not have had recourse against the federal government. Fortunately, in this case, as with the lottery, we won. Unfortunately, we do not know what the arbitration tribunal will decide the next time around.

As I mentioned, the Bloc Quebecois is for genuine protection of foreign investments. This requires regulation. The state must assume its responsibility of protecting national and international investors but, in so doing, it must balance public and private interests. Investors must have both rights and obligations.

In the case of NAFTA's chapter 11, which we do not want to see form the basis of negotiations for a free trade zone of the Americas, investors have rights, but governments have obligations. This seems completely unbalanced to us. The Bloc Quebecois will therefore be voting in favour of the New Democratic Party motion and the amendment.

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12:05 p.m.

London—Fanshawe Ontario


Pat O'Brien LiberalParliamentary Secretary to Minister for International Trade

Madam Speaker, I listened very carefully to my colleague's comments.

In the debate, and in the time I have been parliamentary secretary and he has been critic, I found his comments for the most part to be quite constructive. However he cited an inconsistency in the government's position. I will cite what I think the inconsistency was and ask him to comment.

First, the hon. member made the point that the Prime Minister said the chapter 11 clause was good. Then a little later in his comments he was more accurate when he quoted the Prime Minister as saying he was reasonably satisfied with how the chapter 11 clause was working, given the totality of our trade relationship in NAFTA and the $1.3 billion of trade done daily back and forth across the border with the United States.

The second part was a more accurate reflection of what I recall the Prime Minister saying.

The hon. member talked about the comments of the Minister for International Trade and that he was not interested in any kind of an investor clause. That is what the motion says. Surely the hon. member recalls the minister repeatedly saying inside and outside the House that what was needed was not to scrap the clause or reopen it but to clarify it, that yes, the scope of the original signers of the deal needed to be clarified and that should be a priority.

What is the hon. member's position and that of his party on the protection of investment? Does he feel there needs to be some rules to protect foreign investment in Canada and also Canadian investment overseas? Does he not see that is required or does he subscribe to the silly notion that we should somehow scrap this altogether? I would appreciate his views on those points.

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12:10 p.m.


Pierre Paquette Bloc Joliette, QC

Madam Speaker, that gives me another chance to speak. In the NDP motion, there is reference to a chapter 11-style investor-state clause as in NAFTA.

I was very clear on this. We do not want to see any possibility under the FTAA of companies being able to take direct proceedings against governments.

That said, as with the WTO and the European Union, I have no problem with the states having the responsibility to protect foreign investments and being answerable to other states within a multilateral treaty.

When the Standing Committee on Foreign Affairs and International Trade examined it, when the MAI was studied—and we in the House were extremely critical of that—it must be realized that the MAI was a more general application of dispute resolution mechanisms already contained in NAFTA's chapter 11, along with certain additional provisions of course.

In this context, I would say that not all of NAFTA and Chapter 11 needs to be rejected. I will not say “scrapped” because that is not a proper French word.

For me, and for the Bloc Quebecois, one thing is certain. The dispute resolution mechanism needs to be corrected so that states can deal with it.

Second, the concept of expropriation must be tightened up so as to ensure that what is protected is direct and not indirect expropriation.

That said, these are things that are accessible for the three governments, in my opinion. Moreover, the Minister for International Trade has told us that he was working along these lines with the U.S. and Mexican governments in order to tighten up these definitions.

As far as negotiation of the FTAA is concerned, therefore, it seems to me that this is not the basis on which negotiation ought to begin.

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12:10 p.m.


Svend Robinson NDP Burnaby—Douglas, BC

Mr. Speaker, I would like to thank the member for Joliette, his party's critic on international trade, for supporting our motion today.

I would like to ask him about the role of parliamentarians, elected officials, in this process of negotiating the FTAA and about chapter 11 of NAFTA.

I was very pleased to work with the hon. member for Joliette on the parliamentary forum of the people's summit recently. I would like to congratulate the member on his work in the forum and his work within COPA as well.

I would like to ask the member to speak a little about the lack of a significant role for parliamentarians within these negotiations, within the summits and within the process of dialogue on the free trade agreements.

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12:10 p.m.


Pierre Paquette Bloc Joliette, QC

Mr. Speaker, as I mentioned at the start of my remarks, one of the problems we have with the whole process is growing public distrust, not only due to the lack of transparency but to the lack of a role for parliamentarians.

One of the things I deplore about the final statement of the summit of the Americas, by the 34 heads of state, is that at no point in the final statement is mention made of the role of parliamentarians, when one of the objectives set was the strengthening of parliamentary democracy.

How is it possible to strengthen representative democracy while denying parliament a decisive role in the negotiations? I think one might expect—as is done in most parliaments based on the British tradition, be it in Great Britain or Australia—that a vote would be held in this House on the entire final agreement on the free trade area of the Americas, before the government ratified it.

As I say, our British tradition is no obstacle to this method, since even the parliament of Great Britain uses this method.

Obviously, we must not find ourselves at the end of the process faced with a fait accompli. This is why the mechanisms must be tightened to allow parliamentarians to be involved on an ongoing basis, and not only through the Standing Committee on Foreign Affairs and International Trade.

The issues relating to continental trade agreements have an impact on agriculture, work, health and many aspects of our daily lives. In that sense, the proposal unanimously adopted in this House last week to put in place a transparent and ongoing process involving parliamentarians should make them contribute in a much more continuous and articulated basis because, as I mentioned, it is not just an issue of trade or relations with other countries.

As Canadian and Quebec parliamentarians—and considering that the North American Free Trade Agreement has now been in effect for seven years—we have a responsibility to take stock and to share our findings with all the parliaments and people of the Americas, so that they can make a judgment on the positive effects, but also on the dangers of a free trade agreement.

As I indicated at the beginning of my speech, this was requested by Latin American parliamentarians. They want us to inform them of our conclusions on this agreement.

In that sense, I hope that we will continue this type of work and debates on the provisions found in NAFTA, to avoid making the same mistakes in the negotiations on the free trade of the Americas.

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12:15 p.m.


Robert Lanctôt Bloc Châteauguay, QC

Mr. Speaker, I must say that we have learned more about this in the space of 15 minutes than from all the explanations given us by the government. My colleague, the member for Joliette, was very clear in his remarks about chapter 11 on investment, which includes several aspects. He was not able to cover them all, but he mentioned several of the most important.

Given that the government's position is unknown—and a position must be known when a debate as important as this is involved—I hope that people really took in the remarks of the Bloc Quebecois critic, which were very clear. I hope that the government will also take note of these remarks, which are truly well thought out.

I would like the member for Joliette to explain succinctly why this chapter 11 must not exist or whether it is really possible to improve on it. I personally see no possibility that it can be improved, as the government claims. Should this chapter exist or not?

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12:15 p.m.


Pierre Paquette Bloc Joliette, QC

In one sentence, Mr. Speaker, I would say that chapter 11 and all of NAFTA take a negative approach rather than a positive approach, because everything that is not excluded is included, while at the WTO, everything that is not included is excluded. I far prefer the WTO approach.

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12:20 p.m.

Progressive Conservative

Bill Casey Progressive Conservative Cumberland—Colchester, NS

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.