Debates of May 15th, 2007

Settlement of International Investment Disputes Act

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, as the member knows, only five of the provinces have signed on at this point. The representation thus far has been that there has been an expression of interest on behalf of the provinces that have not considered the matter fully as yet. I wonder if the member could give the House an idea of some sort of timeline or at least rationale for the delay on behalf of the provinces that have not yet signed on.

My second question has to do with the discussion that came up earlier with regard to NAFTA and whether or not the dispute settlement mechanisms, et cetera were adequate. We have had some difficulty. Why are we ratifying another international agreement related to NAFTA? Does this demonstrate that the existing agreement in NAFTA does not work?

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Speaker, I want to thank the hon. member opposite for his question. Indeed, as he mentioned, some provinces and territories—Ontario, British Columbia, Saskatchewan, Newfoundland and Labrador and Nunavut—as well as the federal government, have already agreed that measures should be taken to pass legislation to implement the convention. The other provinces have the luxury of being designated “constituent subdivisions”—as they are called—and talks are ongoing with the government to ensure that other constituent subdivisions can join the process.

As far as my colleague's second question is concerned, the convention is really a specific arbitration process that affects trade agreements. The convention will complete existing international agreements and—I am sure my colleague will agree—improve them to provide our Canadian companies with a level playing field when they compete in other countries with foreign companies that do business in the host country.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I am honoured to speak in support of Bill C-53, the settlement of international investment disputes act.

The International Convention on the Settlement of Investment Disputes between States and Nationals of Other States, the ICSID convention, is an international instrument sponsored by the World Bank to facilitate and increase the flow of cross-border investment. The convention establishes a mechanism to resolve investment disputes between foreign investors and the host state in which they have made their investment.

The convention entered into force on October 14, 1966. As of January 2007, as the previous speaker mentioned, 143 states had ratified the convention, making it one of the most ratified instruments in the world. The majority of Canada's trading partners are party to this convention.

Once ratified, the convention will provide additional protection to Canadian investors abroad by allowing them to include in the contracts with foreign states the option of arbitration under the convention. In addition, Canadian investors doing business in a country with which Canada has a foreign investment promotion and protection agreement will have recourse to arbitration for violations of the agreement. Becoming a party to this convention will also make Canada a more attractive destination for international investors.

As a small businessman and entrepreneur myself, I recognize that these sorts of multilateral agreements promote stability, the rule of law and confidence in the local economy.

With hugely increased trade with emerging giants such as India, Brazil, China and other countries with governance structures different from our own, it is important that Canada be part of this international convention.

I have travelled extensively to China, India, eastern Europe and elsewhere in Europe. I can see that the developing countries still have a lot of work to do when it comes to honouring those agreements. That is where this is going to be of real importance and an essential tool for Canadians who want to invest in those countries.

This is also true for Canadian investors abroad and for those international investors who choose to invest their money in Canada. I am glad that the government is moving forward with this bill.

However, the government is introducing a bill to promote cross-border investment, while at the same time it is demonstrating its complete lack of competence on this very issue. Let me summarize the government's failure to manage our economy.

There is the betrayal on income trusts. Since April 18, 2007 there have been 16 income trust takeovers, many of which have been bought by large U.S. private equity firms. Private companies will ensure that not only are these businesses no longer paying Canadian taxes, but Canadian investors will no longer receive distributions on which they are taxed.

This is of particular shame in the energy trust sector. One of the most effective investment vehicles in this country was the income trust. Over the past 20 years Canadian energy trusts have been active in buying foreign interests and repatriating foreign capital to Canada. This trend has now been reversed.

Even worse is the impact it has had on ordinary working Canadians. When we talk about ordinary working Canadians we are talking about $35 billion lost, an average of $25,000 per Canadian. My heart goes out to those seniors who are past their prime earning years, and those working families who saw their investments reduced by a staggering 25% overnight. I think people will not make their decisions based on the Conservative leader's word ever again.

The flip-flop on deductibility of interest incurred on loans used to invest overseas is another major example of how lost the Conservative Party is when it comes to managing the economy of our country.

On April 16, 2007 our Liberal Party leader along with our finance critic, the member for Markham—Unionville, called on the Conservatives to reverse these disastrous policies before more Canadian companies and jobs were lost and long term damage was caused to Canada's competitiveness in the global marketplace. The Conservatives pretended that their interest deductibility proposal was about eliminating tax havens but that is false. It was too late for the finance minister to realize it.

This policy is taking away a legitimate tool from Canadian industries that increases their competitiveness on the world stage. The Minister of Finance tried to ignore the calls from the Liberal Party to reverse this disastrous policy but he ignored us. However, he was unable to ignore his unhappy friends on Bay Street who made it clear that the Liberal Party was right and that the Conservatives should reverse the decision.

At least the Minister of Finance is demonstrating some judgment by flip-flopping for the good of the Canadian economy. I suppose the people of Canada have not discovered what the people of Ontario already knew when it comes to the minister's stewardship of the economy. We all remember that it was the Minister of Finance's provincial--

[The Deputy Speaker, NDP, Bill Blaikie]

Order. I have listened to the hon. member for some time now and he has made absolutely no reference to the legislation on the floor or the bill that is before the House. I tend to be somewhat lax in these matters, but if the member cannot at least return to the subject at hand from time to time and demonstrate some connection between what he is saying, then I will have to make some kind of ruling as to relevance.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I certainly am honoured that you give me direction. I am getting there. When talking about agreements such as these, the government's credibility, integrity and competency are three factors that are also important to Canadians when they make their investments, which is why I was talking about that.

I can leave aside the Conservatives' mismanagement of the economy and talk about the scrapping of the visitor's tax rebate. It is totally related to these kinds of agreements. I cannot even begin to talk about how many small businesses have been hurt by this change. The tourism industry depended on that rebate. Because my riding of Newton—North Delta is so close to the border and has the closest port in British Columbia to southeast Asia--

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Mr. Speaker, on a point of order, just to follow up on your request for relevance, if the hon. member could refer to foreign investment and Canadian investors abroad just the odd time throughout his speech, it might be helpful.

[The Deputy Speaker, NDP, Bill Blaikie]

I think that is probably good advice and I hope the hon. member takes it.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Again, Mr. Speaker, we have to look at this as a whole. We cannot look at it piecemeal. We cannot look at one situation and forget about the others. As I mentioned in regard to the tourist agreement and the rebate on the GST, I am involved with all of that.

When it comes to agreements like this, I note that the Chamber of Commerce from my riding recently travelled to China. It is planning a trip to India. Agreements like this, as I mentioned, are very important to the people of my riding, but on the other hand, we have to make sure of their issues that have to do with foreign trade.

The Pacific gateway project is another example. On one side of it, we are trying to put these documents in place to encourage investors to invest overseas and the overseas investors to invest here, and we have to provide an infrastructure for these kinds of agreements. I can look at the Pacific gateway project in my own riding. The government has to listen to ordinary Canadians, including one of is own members, and I am happy to have him as my constituent. He is also opposed to the way the government is throwing projects like the Pacific gateway through my riding, which is sacrificing the quality of life and the environmental protection of my own constituency.

Coming back to this issue, I personally believe that we should have these agreements in place, because it will be very easy for the investors going out there, not only for today but for many years to come. The Liberal government worked very hard in the last 13 years to restore the trust of Canadians in the economy, both here and overseas. I would say that the Conservatives should not play politics with the prosperity of Canadians when it comes to decision making.

[Helena Guergis, Conservative, Secretary of State (Foreign Affairs and International Trade) (Sport)]

Mr. Speaker, so far in this debate I often have heard these questions. Why now? Why proceed with this after over 40 years? We had the opportunity then and did not, so why now? I want to attempt to answer some of those questions.

I think the hon. member and most members in the House recognize that foreign investment 40 years ago was not what it is today. It has increased substantially. I would also like to point out that in regard to the 143 countries that have signed on to ICSID, there have been 100 disputes, and the majority of those disputes have been just in the last five years. We are seeing a lot of uptake on ICSID and the opportunity that it provides for business and arbitration.

The hon. members in the House, particularly the member for Newton—North Delta, talked a little about business in their communities. I think it would be interesting for him to know that the Canadian Chamber of Commerce and the business community very much want to see this go forward because it is a benefit for them.

Because foreign investment has increased substantially in the last 40 years, and of course the uptake on ICSID and the arbitration process would ensure and confirm it for the House, would he agree that this is something Canada should be going forward with at this stage?

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I am in support of the bill because this is the type of decision we have to make. The secretary of state asks why now, after over 40 years. The ICSID convention was negotiated in the 1960s prior to the general inclusion of federal state clauses, provisions commonly found in international treaties that allow a state a position of ratifying a given convention in respect of some of its sub-entities.

Globalization is a reality as well. We are going through globalization today. Demographics play a key role. Canada being the most diverse country in terms of demographics, we have opportunities to invest overseas. I am very pleased to see that five of the provinces and territories have already ratified this and that the others remaining want to come to the table to make it easier for Canadians to compete in the global market today.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, my question for the Liberal member is similar to the one I asked the Conservative members. The Bloc Québécois supports the bill concerning the International Centre for Settlement of Investment Disputes.

Does my colleague agree that it is good to have a centre that will resolve disputes and act as a tribunal, but that it would be even better for international treaties to be subject to a vote in Parliament?

Earlier, I put the question to two Conservative members, and they were clearly avoiding answering the question. They did not want to commit to this in the House.

Today we will vote on this bill in order to use the convention and to be able to call on ICSID. But signed treaties should first be subject to a vote in Parliament. Does my colleague agree with me on this?

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, we have this convention right here in the front of the House. We are debating it and all members of Parliament are supporting it. My Liberal colleagues and I are supporting this convention. These are the types of agreements that, once put in place, are good for years to come.

As we said earlier, decisions made by arbitration under a convention like this are not even prone to be judged by other countries, because the decisions are final. These agreements are final and they are pretty solid. We probably will see this working for many years to come.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I thank the member for his efforts to bring some clarity to the debate on this bill.

Ostensibly it has to do with establishing an agreement that would provide mutually agreeable arrangements for arbitration where there are disputes. The member has made a valiant effort to paint a picture that shows this is not a simple solution to enhancing and promoting Canadian competitiveness and our ability to have bilateral investment with our trading partners, et cetera.

I wonder if the member would care to summarize the importance of having our fiscal house in order, of having stable rules, and of government's responsibility on key issues relating to investment that have related impacts on the quality of our relationships with foreign countries in terms of investment.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, let us look at the example. It is clear that when we took over in 1993 Canada was an international credit risk. The country was almost broke. We were paying $40 billion in debt payments.

What we did as the Liberal government was that budget after budget there was a surplus or a balanced budget. Not only that, we had one of the best ratings in the G-8 countries. That is what is creating confidence in the Canadian economy. The investors invest here when they see the stability.

Let us look at the interest deductibility issue. The income trusts issue is another one. The flip-flopping of the finance minister is not putting investors' confidence in our economy in stable terms. We have to make long term decisions that promote goodwill among investors.

I am not the only one saying this. We can see it in investors' magazines, which tell us that Canada is the second best country next to Denmark to invest in. We are the best country to live in, in the part of the country that I come from, which is the lower mainland in the Vancouver area. In fact, then, we have to provide the infrastructure, as I said earlier. That infrastructure has to be done in such a way that there is no controversy.

Let us go to an area like mine, Delta and Surrey. What are constituents telling us? Constituents are coming out and speaking against something that is in the media every day, which is the expansion of the board pushing the Pacific gateway South Fraser perimeter road through the Sunbury neighbourhood in my riding, as I mentioned earlier when I spoke of the Sunbury neighbourhood association. I am not the only one. It is those constituents.

In fact, the finance minister has to go out and listen to the people. He was in my riding talking to the Chamber of Commerce and he would not even take questions. He made his speech and just walked away. That is where the real conversation happens. That is where the real dialogue happens. That is where the real input comes from real Canadians comes into play. That is what restores confidence in the government and the way the government makes decisions.

I think there are lessons to be learned by the finance minister and the government, and in fact from one of its own members, as I mentioned earlier, who luckily is one of my constituents. He is giving input right here in the House and the government has to listen to its own members.

[Vivian Barbot, Bloc, Papineau, QC]

Mr. Speaker, it is my pleasure to rise in this House to express the Bloc Québécois' support for Bill C-53.

This bill will enable Canada to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and to become a member of the International Centre for Settlement of Investment Disputes.

Bill C-53 integrates the requirements of the international convention in the laws of a country, in particular to ensure that arbitral awards are respected and to provide for the immunities required by the centre and its staff. ICSID was created by the World Bank by the Washington Treaty in 1965. There are currently 156 member countries.

ICSID is responsible for arbitrating disputes between States and foreign investors. There may be two types of disputes: disputes related to compliance with bilateral foreign investment protection agreements and disputes related to agreements between governments and foreign investors. The Government of Quebec regularly signs the latter type of agreement when eliciting foreign investment with the promise, for example, of providing electricity at an agreed price.

Canada’s membership will not have any impact on the provinces, except that they too may have recourse to the ICSID when they conclude agreements with investors. As for bilateral treaties binding the federal government, they already provide for recourse to ICSID arbitration by the additional facility rules rather than the regular process, which is available only to countries that have ratified the convention.

In fact the only thing that Canada’s membership in the centre will change is that Canada will be able to intervene in negotiations to amend the convention or the rules of the centre and it will enjoy the assurance of being able to join in the appointment of arbitration tribunals. Ultimately, the ICSID is only a tribunal. The problem is not the tribunal, but rather the poor investment protection treaties concluded by Canada.

The Bloc Québécois supports the conclusion of investment protection agreements, as long as they are good agreements. It is completely natural for investors, before making an investment, to try and make sure they will not be divested of their property or that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover.

This is not a new phenomenon. The first known agreement that includes foreign investment protection provisions was reached between France and the United States in 1788, or over 200 years ago. There are now over 2,400 bilateral investment protection agreements around the world. If we include tax treaties, which have to do with the tax treatment of foreign investments and revenues, that would mean some 5,000 bilateral foreign investment treaties.

The Bloc is in favour of concluding such agreements and recognizes that they promote investment and growth. Almost all these agreements rest on the same principles: respect for property rights regardless of the owner’s nationality; no nationalization without fair and prompt financial compensation; prohibition against treating property located on one’s territory differently depending on its owner’s origins; free movement of capital arising from the operation and the disposal of the investment.

In all cases, if there is non-compliance, states can submit a dispute respecting compliance with the agreement to an international arbitration tribunal. In most cases, investors themselves can submit disputes to an international tribunal, but only once they have got the state’s consent. In many cases, the international arbitration provided for under the agreement takes place before the ICSID. Belonging to it, as is provided for under Bill C-53, also means belonging to the international order in the area of investments.

In the investment protection agreements they have signed, only two countries, Canada and the United States, systematically give investors the right to apply directly to the international tribunals.

This is a deviation from the norm. By allowing a company to operate outside government control, it is being given the status of a subject of international law, a status that ordinarily belongs only to governments.

The agreements that Canada signs contain a number of similar deviations that give multinationals rights they should not have and that limit the power of the state to legislate and take action for the common good.

We say no to chapter 11 of NAFTA. The investments chapter of NAFTA, chapter 11, provides that a dispute can go to ICSID. That chapter is a bad agreement in three respects.

The definition of expropriation is so vague that the slightest government action—other than a general tax provision—can be challenged by a foreign investor if it reduces its profits from its investment.

For instance, a plan to implement the Kyoto Accord that paid large amounts to the oil companies, big polluters that they are, could be challenged under chapter 11 and result in the government paying compensation. The Alberta oil companies are in fact mainly owned by American interests. Chapter 11 opens the door to the most abusive proceedings.

The definition of investor is itself so broad that it includes any shareholder. This means that virtually anyone can bring proceedings against the state and seek compensation in relation to a government action that allegedly reduced a company’s profits.

The definition of investment is so broad that it even includes the profits an investor hopes to earn from its property in future. In expropriation cases, not only is the state then forced to pay the fair market value, but it must add the amount of the income that the investor anticipated earning in future. In that case, it would no longer be possible to nationalize electricity as was done in Quebec in the 1960s.

Take the example of SunBelt, a company composed of a Canadian shareholder and a Californian shareholder. The business closed down when the Government of British Columbia eliminated the right to export water in bulk that it had been given. The Canadian shareholder, relying on Canadian laws, received compensation equivalent to the value of its investment: $300,000. The American shareholder, relying on chapter 11 of NAFTA, included in its claim all of its potential future earnings: $100 million. The case was settled out of court for an amount that was not disclosed.

Given the amounts of money in issue, chapter 11 is a deterrent to any government action, particularly in relation to the environment, whose effect would be to reduce the profits of a foreign-owned corporation.

As well, the dispute resolution mechanism allows corporations to apply directly to the international tribunals to seek compensation, without even getting the consent of the state.

How is it conceivable that a multinational could, on its own authority, create a trade dispute between two countries? And yet this is the absurd situation that the investment chapter of NAFTA permits.

Given these flaws, chapter 11 of NAFTA reduces the state’s capacity to take action for the common good, to legislate about the environment, and is a Damocles’ sword that could come crashing down at any moment on any legislative or regulatory measures whose effect was to reduce corporations’ profits.

In 2005, the United States changed some of the provisions in their standard form investment protection agreement. In 2006, Canada followed suit.

Since both countries have now acknowledged the harmful and extreme nature of chapter 11 of NAFTA, the time is ripe for the government to move quickly to enter into discussions with its American and Mexican partners to amend chapter 11 of NAFTA.

We say no to bad investment protection agreements. In addition to chapter 11 of NAFTA, and although its extreme nature has been widely decried, the government has entered into 16 other bilateral foreign investment agreements, carbon copies of chapter 11.

All of these foreign investment agreements are faulty and should be renegotiated. In 2006, the government recognized to some degree that these agreements were bad. Copying the amendments made by the Bush administration the previous year, the Conservative government made changes to its FIPA program to correct the most obvious shortcomings.

It clarified the concept of expropriation by specifying that a non-discriminatory government measure that is intended to protect health and the environment or to promote a legitimate government objective should not be considered as expropriation and should not automatically generate compensation. It is too soon to evaluate the real impact of that clarification, but at first glance, it looks like an improvement.

Moreover, it restricted the concept of investment by specifying that the value of property is equal to its fair market value. That put an end to the folly of adding together all the potential profits that an investor might hope to earn from an investment.

As for the rest, the standard investment protection agreement continues to be based on chapter 11 of NAFTA. The government must continue to improve this standard agreement, particularly in terms of dispute settlement mechanisms. Multinational corporations must be brought under the authority of the state, like any other citizen.

It is important that the government submit international treaties and agreements to the House of Commons before ratifying them. At the start of the year, the government sent out a news release to announce that it had just ratified a new foreign investment protection agreement with Peru. It was only by reading that news release that parliamentarians and the public became aware of this agreement. Parliament was never informed and never approved it. That is completely anti-democratic.

Yet, the Conservative platform in the last election was clear: the Conservatives made a commitment to submit all international treaties and agreements for approval before ratifying them. Since the Conservatives came to power, Canada has ratified 24 international treaties. Except for the amendments to the NATO treaty, which were the subject of a mini-debate and vote at the last minute, none of these international treaties was submitted to the House.

International agreements today have an impact on our lives that is comparable to the impact that legislation can have. Nothing can justify the government’s going over the heads of the representatives of the people and quietly and unilaterally entering into these agreements.

In the past, the Bloc Québécois has introduced bills to restore democracy and ensure that the jurisdictions of Quebec and the provinces are respected in negotiating international treaties. Given that the government has committed to doing that, we have not taken that step this time.

We can see today that the Conservatives' commitments are not worth the paper they are written on. The Bloc Québécois will therefore start bringing forward again proposals to restore democracy in the making of international treaties, including the obligation on the government to submit to the House any international treaty or agreement it enters into, before it is ratified; the obligation on the government to publish every international agreement it is involved in; approval and vote in the House on any major treaty, following consideration by a special committee on international agreements, before the government can ratify it; respect for the jurisdictions of Quebec and the provinces at every stage of the treaty-making process: negotiations, signing, and ratification.

Am I running out of time, Mr. Speaker?

[The Acting Speaker, Conservative, Andrew Scheer]

You have five more minutes.

[Vivian Barbot, Bloc, Papineau, QC]

With respect to Bill C-53 more specifically, we can note the following. While it may appear complex because the Convention on the Settlement of Investment Disputes between States and Nationals of Other States is appended to it, also called the Washington treaty, Bill C-53 is relatively simple. It is only a dozen clauses on three pages, integrating into domestic law the requirements under the provisions of the Washington treaty.

Regarding arbitration and conciliation proceedings commenced after its coming into force, the bill provides, in clause 4, that the International Centre for Settlement of Investment Disputes and its personnel have the privileges and immunities, even fiscally, that it needs to operate in Canada. In clause 8, it provides for the legal recognition of arbitration awards rendered by the centre. Clause 7 prohibits, as required under the convention, proceedings before national tribunals on the substance of matters that have already been determined by the ICSID. Under clause 9, they are further prohibited from determining matters under arbitration.

These provisions may be startling in that they take away from national legislation. They are, however, pivotal to the functioning of international arbitration tribunals. Indeed, in many countries, the judicial system is not separate and independent from the political system. That is precisely why investment agreements call for neutral arbitrators.

If national tribunals were allowed to reverse arbitration awards or to have parallel proceedings on matters already under arbitration, it would be pointless to have international arbitration tribunals, and the safeguards in investment protection agreements would hardly be worthwhile.

Under clause 6, the bill makes awards binding on the federal government. This means that Ottawa would be bound by an arbitral award that might require it, for example, to provide compensation to an injured investor. Only the federal government is bound by the bill, not the provinces. In fact, apart from chapter 11 of NAFTA, which is binding on the provinces because they joined NAFTA, no bilateral agreement to protect investments is binding on the provinces.

If, for example, a province passed a measure that injures a foreign investor who is covered by an agreement to protect investments and ICSID ordered that he should be compensated, Ottawa would be responsible for paying. It may seem absurd, but that is how it is under the Constitution. The provinces are fully sovereign in their areas of jurisdiction and Ottawa cannot unilaterally arrogate one of their powers or impose obligations on them by concluding an international treaty. Anything else would amount to depriving them of powers conferred on them by the Constitution, and the courts have refused to do that.

That is why Quebec has always insisted on being closely associated with all stages of the entire process for concluding international treaties. That is the basis of the Gérin-Lajoie doctrine.

The federal government’s refusal to respect the logic of the division of powers and its wrongful arrogation of exclusive control over international relations not only hurts Quebec but is frankly dysfunctional. Once Canada ratifies this convention and joins ICSID, the provinces can do the same if they want. If they want, they can include clauses in the contracts they sign with investors providing for recourse to ICSID. Ottawa’s ratification does not impose any obligations whatsoever on Quebec or the provinces, although it does add further arrows to their quiver in their search for foreign investment.

Finally, it was the Uniform Law Conference of Canada consisting of representatives from the justice departments of all the provinces, including Quebec, and from the federal government that recommended five years ago that the federal government should join ICSID, ratify the convention and implement it. That would be the effect of Bill C-53.

In clause 11, Bill C-53 gives the government the power to designate conciliators and arbitrators in cases involving it that fall under ICSID.

There are generally three people on the arbitral tribunals. Each country that is party to a dispute appoints an arbitrator and these two arbitrators then agree on a third, who acts as the president.

It is in light of these considerations that the Bloc Québécois supports Bill C-53.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the government's representation in the ICSID arbitration process is less expensive than other options in that the centre provides additional support for the arbitration process. It looks like it might be an attractive option for some Canadian and U.S. investors to bring claims against the U.S. or Canada respectively.

It raises a question, though, and it relates to NAFTA. It is the fact that we would be ratifying yet another international agreement and the question really is this. In ratifying the ICSID, does that mean, given the problems we have had with dispute settlement resolution of the softwood deal, for instance, that maybe it is an indication that the existing agreement under NAFTA in fact is not working?

[Vivian Barbot, Bloc, Papineau, QC]

Mr. Speaker, we want to make it clear that because of certain poorly worded bilateral agreements, we find ourselves having to deal with the possibility of certain companies dealing directly with foreign governments as though they were themselves a government. In reality, the problem does not lie with the convention proposed in Bill C-53, but with previous agreements. We are asking the government to review them because they contain real problems and may lead to abuses. Companies have powers that far exceed those of the government if they can act as though they were a government when dealing with foreign governments. In our opinion, this is not right.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, the member spoke about concerns in regard to democracy and the democratization of this House in compelling international treaties to be discussed and agreed to here in this place. That brings me to a question about accountability. One of the things that concerns me is the transparency and accountability of the ICSID.

I wonder if the member could comment on the issue of accountability, the fact that all decisions issued through the ICSID arbitration are binding and that there is minimal appeal process clearly taking authority away from the member state and provinces and putting it in the hands of the World Bank. I would be very interested in the member's response.

[Vivian Barbot, Bloc, Papineau, QC]

Mr. Speaker, obviously that is one of the problems with all these agreements that seem to have governments taking a back seat. For this reason, we are saying once again that we should review these bilateral agreements from the perspective of the country's laws. As we stated, in the document, the various organizations or commercial entities should receive the same treatment as individuals of a given country since the law applies equally to everyone. That is why this government must revise the agreements as quickly as possible to ensure that they are equitable and also to address the matter of responsibility. We must know which courts have jurisdiction and for what purposes and we must ensure that there is coherence in the treatment of the various entities concerned, in order to prevent preferential treatment.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Speaker, first of all, I would like to congratulate my colleague from Papineau on her excellent presentation. She mentioned moreover that numerous international treaties have been signed in recent years without Parliament being apprised of them. To my mind, when the member tells us about things as disturbing as these, we have before us a rather significant distortion of the democratic process. I hope that this bill will correct the situation.

I would like to know a little more about her opinion on the following situation. When the House cannot itself give its consent to the signing of an international treaty, it is actually the elected representatives who are being thwarted. I would like to know her opinion about this.

[Vivian Barbot, Bloc, Papineau, QC]

Mr. Speaker, I thank my colleague for his question.

Obviously, the question of democracy arises in this context. We have observed this in all sorts of areas. This government is accustomed to making decisions that concern everyone when the House is not sitting. This is all the more serious when international agreements are entered into on behalf of the citizens we represent. It is a denial of democracy when the government assumes this right.

As parliamentarians, our duty to protest is intact and we ask that the government be accountable. Nonetheless, once the government enters into a treaty, the treaty becomes applicable and people feel they have been had. Worse still, they are not even in the picture since decisions are often made when everyone is away and people are not even informed of the decisions made on their behalf.

You will understand in this context that going to the polls leaves us with a bit of a bitter taste. The government goes back to the people to ask for a new mandate, which ultimately enables it to turn around and do something else, yet it does not bother to consult the people's elected representatives. That is what I think about the question.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Mr. Speaker, I would like to thank you for allowing me to speak today to Bill C-53, An Act to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

To begin with, it is interesting that the Conservatives are introducing a bill to promote cross-border investment at a time when they are demonstrating their complete lack of competence on this very important subject matter.

It was only yesterday, the finance minister was forced by the Liberal opposition, may I add, to make a complete reversal on his ill-advised interest deductibility proposal in the budget.

Despite the government's mishandling of the Canadian economy at the domestic and international levels, it is important that Canada join the vast majority of countries in the world that have ratified ICSID. With increased trade with emerging giants such as China, India and other nations where the government structure is different from our own, it is critical that Canada be part of an international convention on the enforcement of investors' rights.

Allow me to provide a bit of historical background on ICSID to clarify the importance of this convention. I am sure my colleagues in the past have talked about this during debate, but I think it is very important to highlight this description.

The ICSID convention is an international instrument, sponsored by the World Bank, to facilitate and increase the flow of cross-border investment. The convention establishes a mechanism to resolve investment disputes between foreign investors and the host state in which they have made their investment.

Countries agreeing to the hearings do so voluntarily on the part of each party. However, once they have agreed to a hearing, neither one can unilaterally withdraw from the process or refuse to pay damages awarded by the tribunal. Thus, no longer can we be in dispute and have one side just get up from the table and walk away.

These hearings are unbiased and to ensure this, the arbitrator is selected by the contesting parties themselves. The ICSID then provides the hearings with a venue and the administrative support required to facilitate the specific meetings.

The ICSID convention entered into force on October 14, 1966. As of January 2007, 143 states had ratified the convention, making it one of the most ratified instruments in the world. The majority of Canada's trading partners are party to the convention.

Over the past decade, there has been an increasing number of bilateral trade and/or investment treaties. Since most parties involved in bilateral investment treaties refer present and future investment disputes to the ICSID, the case load of this particular process has substantially increased.

As of June 30, 2005, ICSID had registered 184 cases; more than 30 of which were pending against Argentina. As many know, Argentina's economic crisis in the late 1990s and subsequent Argentinian government measures led several foreign investors to file a case against Argentina.

Investment disputes brought under the convention are administered by the International Centre for the Settlement of Investment Disputes located in Washington, D.C.

In the last few years, the activity at the centre has soared due to increased flows of cross-border investment and the number of investment treaties that refer to ICSID arbitration. While the centre has handled 110 arbitrations in total during the first four years of its existence, there are currently 105 proceedings under way. Since its inception, the centre has established itself as a reliable and effective organization for resolving investment disputes.

Once ratified, the convention would provide additional protections to Canadian investors abroad by allowing them to include in their contracts with foreign states the option of arbitration under the ICSID convention.

In addition, Canadian investors doing business in a country with which Canada has a foreign investment protection agreement will have recourse to ICSID arbitration for violations of the agreement. Becoming a party to the ICSID convention will also make Canada a more attractive destination for international investors.

The most significant advantage of the convention is the enforcement of the arbitral awards. Unlike awards issued by other arbitration institutions, domestic courts cannot refuse to enforce decisions issued under the ICSID convention. Rather, such awards are enforceable in any country that has ratified the convention as if they were the final judgments of the courts in that state.

Canada signed the ICSID Convention on December 15, 2006, becoming the 143rd country to do so. British Columbia, Newfoundland and Labrador, Nunavut, Ontario and Saskatchewan have already adopted their own implementing legislation.

I mentioned that some provinces and territories have adopted their own implementing legislation because in order to ratify this bill all provinces and all territories must support the convention and take the necessary action to facilitate this.

It has become known that all provinces and territories have voiced their support with the principles and guidelines outlined in Bill C-53.

What is truly the best part of this convention, though, is the fact that it is not open to interpretation. It is simple, straightforward legislation that not only our major trading partners, by and large, already agree upon, but it is the type of understanding and guidelines that many of our potential trading partners are looking for us to agree with.

By passing Bill C-53, Parliament sends a strong signal to other countries, as well as our own investors, that Canada is serious about honouring its commitment to international treaties and trades.

In my role as the critic for international trade in the opposition, I must emphasize how important the passing of this legislation is right now. Canada, as many people have read in the newspaper, is most likely being taken to arbitration by the United States over several complaints within the softwood lumber agreement.

Despite the strength of Canada's legal position, supported by numerous decisions of international trade law tribunals and domestic courts in both Canada and the United States, the Conservative government rushed negotiations with artificial timelines to maximize political value of the agreement for the Conservative Party of Canada and not the Canadian public.

The Conservatives' electoral agenda was put ahead of the interests of the industry that is a significant element of the Canadian economy in every region of this country. It is an industry that exports over $7 billion. It is an industry that represents thousands of jobs, approximately 300,000 jobs, that are directly impacted by this particular industry.

In fact, there is a possibility that the U.S. may now use the dispute resolution mechanism to their advantage. It is possible that these consultations may not result in a satisfactory resolution. In this case, the U.S. can ask that the matter be referred to the London Court of International Arbitration. In addition, under the softwood lumber agreement, the U.S. has the immediate and unconditional right to terminate, whenever it wants, the softwood lumber agreement.

The government signed an agreement with the United States to bring an end to long-standing disputes regarding a very important and key subject matter in softwood lumber. When it did so, it agreed to throw out previous rulings from NAFTA and the WTO courts and tribunals. The current Minister of International Trade then said that this agreement would provide predictability and stability.

Who would have predicted that seven months into a seven year agreement we would be going to arbitration because the U.S. is knit-picking on issues like what constitutes a surge mechanism in B.C. and why Canada is not collecting more export charges than they should?

This is the start of consultations and possibly arbitrations. Will the U.S. next have issues with stumpage fees in Alberta as it has indicated? Is that stability? I can almost predict the next seven years of stability based on the trend of the first seven months, and it is not looking good.

With any agreement there needs to be predictability and stability, and I agree with that. While it is regrettable, and it is too late to turn back the clock on the softwood lumber agreement, now is the time that we should move forward on protecting Canadian investors.

Because Canada is not an ICSID member, Canadian investors are unable to use ICSID arbitration rules in their disputes with other foreign states, including those where Canadian investors might lack confidence in the court system.

I would not be doing my job as a critic if I did not point out that the government, in implementing this convention, would go a long way to instilling a bit of confidence in its investors. They have certainly been knocked around in the past several months by the government.

As I mentioned earlier, the government had to reverse its decision to eliminate the interest deductibility policy, which, by the way, was the worst policy to come out of Ottawa in over 35 years. It has been widely condemned across the business community by economists. The implications of doing this would have been disastrous to investors if the minister had not reversed the policy.

As bad as that was, we should not forget how much the income trust reversal hurt Canadian investors, particularly seniors. The decision to tax income trusts wiped out more than $25 billion in savings overnight and reversed a key Conservative campaign promise, a promise they had in their platform. Canadians invested their money based on this promise and their trust cost them tens of thousands of dollars on an individual basis of their hard-earned savings. Not only did the income trust reversal impact Canadian investors but it also affected our international competitiveness.

All that aside, Bill C-53 is an effective tool to help protect Canadian investors and should help to mitigate the damage done by recent government flip-flops.

As we know, the government has been slow on signing free trade agreements. According to the Department of Foreign Affairs and International Trade, China will not sign a free trade agreement or do business with a country that is not a member of ICSID. India has also ratified the convention and has entered into investment dispute settlements under the ICSID Convention with 11 countries.

As I am sure many are aware, China and India are not only the two largest countries in the world in terms of population, but they are also the fastest growing economies. As these two economies continue to grow and their labour forces become more and more skilled, greater investment will flow into these economies. China is emerging as a world player in terms of manufacturing, while India is gaining notice for its knowledge based services. As their economies become more sophisticated, they in turn will increase investment outside their borders, including investment in Canada.

Over the past 11 years, China has been the largest recipient of foreign direct investment among developing countries. Cumulative investment in China has reached almost $750 billion over the past 11 years.

Since 1991, India has embarked on a wide-ranging economic reform program that has seen increased developments in terms of trade, investment and monetary and exchange rate policies. One of the highlights of India's economic reform is its trade policy. India has systematically reduced its customs tariffs from 150% in 1991-92 to 25% in 2003-04.

Both China and India have become very forward-looking in their approaches to foreign investments. By ratifying the ICSID Convention within their respective countries, they have taken a proactive approach to protecting their investors internally and abroad.

I urge the House to pass this bill so that as a country we can move forward with signing investment treaties and trade deals that will make Canada and Canadians more prosperous and so Canadians can enjoy a high quality of life for generations to come. I think this is a very important initiative and it is well overdue.

I have expressed my concerns with the government with respect to its legacy and the first 13 months of broken promises, of hurting and damaging our competitiveness and of impairing our ability to be productive. This is one small step toward that direction and I hope the government proceeds with this in a timely fashion.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I find it rather ironic to hear the member for Mississauga—Brampton South talking about free trade agreements, particularly when his party opposed the free trade agreement under Mr. Turner in 1988.

When Mr. Mulroney put in free trade we all know that 525,000 manufacturing jobs were lost in Ontario alone during the first two years of the agreement. In 1993, under Mr. Chrétien, that party again opposed NAFTA. Since then, we have seen the ongoing devastation of our manufacturing sector. Therefore, to hear the promotion of free trade from that member is ironic.

It is my understanding that the process under the ICSID Convention, which Bill C-53 would implement, has been here since 1966. Since it has been in place that long, I am very curious as to why it has taken this long for the need to arise.

My party has strong concerns with the bill, particularly under transparency. It is a consent based process. People from labour, who will talk to us about arbitration, will also tell us that, overall, their sense of binding arbitration is that settlements seem to be coming down one-sided.

I cannot understand why the member opposite would use free trade in the supporting arguments for this bill.