Mr. Speaker, I am very pleased to address Bill C-14, An Act to amend the Agreement on Internal Trade Implementation Act and the Crown Liability and Proceedings Act, which proposes amendments.
I am pleased because, regardless of what members opposite may say, the NDP supports the removal of domestic trade barriers, the expansion of internal trade and also labour opportunities and mobility. More specifically, we support the parts of this bill that will facilitate the movement of Canadians from province to province to get work. So, we think that some aspects of this bill are worthwhile.
As the hon. member knows, the Agreement on Internal Trade is an agreement between the provinces and the federal government that was signed in 1994 and came into effect in 1995. Since then, it has been amended several times. We are currently addressing the content of the 10th amendment. An 11th amendment has since been proposed and negotiated. We must recognize—and this is the point that I tried to raise in my question to the hon. member—the importance of striking a balance in a free trade agreement like this one, because this is really what it is.
It is a free trade agreement that is more similar to the one negotiated under NAFTA than to those that were ratified at the World Trade Organization. It is also obvious that an agreement like the Agreement on Internal Trade results in a loss of sovereignty for the provinces. That is the foundation of the accord. The provinces have signed it, and they have accepted it. However, the fundamental issue has to do with balancing that loss of sovereignty. I will elaborate on this later on.
We should also expect that agreement to harmonize standards between the provinces which, in many cases, may be a good thing. However, a lack of balance in this regard could trigger relatively serious problems for certain sectors. Indeed, it could create obstacles to a province's ability to legislate on the environment, workplace safety and other issues that may not constitute a trade barrier as such, but may have to do with specific concerns in the province involved.
There have been cases under the Agreement on Internal Trade. There was one that pitted Ontario against Alberta and British Columbia concerning substitutes and dairy blends. In fact, Ontario banned the sale and manufacture of various products that resemble or imitate products made out of milk or milk ingredients. The 2004 panel formed to talk about this issue found that Ontario's Edible Oil Products Act contained measures that were not compliant with the Agreement on Internal Trade. The 2004 panel found that the measures were discriminatory, that Ontario’s dairy products constituted a like product and that Ontario gave them better treatment.
The panel also found that the measures interfered with the right of entry and exit, as the Edible Oil Products Act restricted or prevented the movement of goods and related services between provinces and created an obstacle to trade. After the report of the panel formed under the Agreement on Internal Trade was issued, Ontario had until February 1, 2011, to comply.
I want to know whether Ontario was denied its ability, not to protect its dairy sector, but to establish a distinction between the consumption of dairy products and edible oil products, which are different but try to imitate dairy products or milk itself.
Ontario still claims that protecting its dairy sector, not from a commercial point of view but from the consumer's point of view, is a legitimate objective. This also raises another question about supply management. We know that supply management in Canada affects the Maritimes, but it mostly affects three provinces: Ontario, British Columbia and, naturally, Quebec. Quebec and Ontario alone account for 50% of dairy production in Canada.
These two provinces are strongly committed to fully protecting the supply management system. What does the Agreement on Internal Trade say?
The chapter on agriculture allows parties to adopt or maintain measures concerning supply management systems that are regulated by the federal and provincial governments as well as measures concerning marketing boards governed by the provincial governments, which are not technical specifications.
According to the agreement, a technical specification is a technical rule or standard, a sanitary or phytosanitary measure or a compliance evaluation procedure. Based on that definition, is supply management protected? We are not entirely sure.
A technical specification is a technical rule, a document or a legal instrument that sets out characteristics of goods or their related processes and production methods, including applicable administrative provisions, and compliance with it is mandatory under the law. It may also deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a good, process, or production or operating method.
What is the point of supply management then? Can we protect the milk market? Perhaps, but we cannot regulate its manufacturing process, labelling, production method or characteristics in order to keep people from skirting the system by using analogs.
I am raising the issue of supply management because an agreement such as the Agreement on Internal Trade will surely have ramifications in terms of the free trade agreements we negotiate overseas. All of the rules that we want to apply to internal trade here are closely followed by our international trading partners. They can see the potential for loopholes and could ask for elements that were protected or were not on the negotiating table with the Government of Canada in the past.
As with any free trade agreement, it is crucial that there is a clear framework regarding the responsibilities of the parties. It is even more important to have the flexibility to protect sectors that are central to the economy of the parties, such as supply management. And this issue also brings up the question of programs that promote eating local. This is not a public health issue or a consumer protection issue. According to the Agreement on Internal Trade, it might therefore not be a legitimate objective.
Will these policies be challenged under the Agreement on Internal Trade because they give local products a higher profile? We are in favour of introducing exceptions so that the groups created under the Agreement on Internal Trade to judge cases can consider some of these exceptions. Once again, these exceptions are not there to impede commerce or to cause problems in terms of interprovincial trade. We are more in favour of a real response to the specific needs of several provinces.
Many of the concerns raised by the government and these groups warrant our attention and, accordingly, the NDP would like to call expert witnesses in committee in order to get some clarifications on the potential impact of such a bill.
As I pointed out, it is important to understand that the Agreement on Internal Trade is similar to NAFTA in terms of its structure. One of the things about NAFTA that worries us—and it still worries us because NAFTA is still in effect—is chapters 11 and 19, particularly the provisions on investor states. Those provisions allow investors to sue foreign states directly. Thus, an American investor can sue the Canadian government or the Mexican government for anything it considers a constraint on its ability to do business in a country or its ability to make a profit in that country. Of course, some exceptions exist in NAFTA, but they seem pretty weak.
This brings me to the measures that were the subject of the question I asked the Parliamentary Secretary to the Minister of Industry. We are talking about companies that launch lawsuits against certain governments for reasons that are not necessarily trade-related, but that aim to prevent a given country from enacting completely legitimate, pertinent legislation, in this case, on the environment.
I will give two examples. Dow AgroSciences sued Canada for $2 million because Quebec prohibited the use of pesticides manufactured by that company. We all agree that pesticides are a basic environmental issue that has been around for at least 40 years. A number of products sold by various companies are recognized as being harmful not only to the environment, but also to the health of people who live close to areas where these pesticides are used.
Dow AgroSciences has tried, and continues to try, to sue Canada for $2 million because of the ban. This is not the only such suit. The Crompton company has also sued Canada for $83 million because some municipalities have banned the use of the pesticide lindane. These two examples clearly show the weakness or the lack of balance in investor-state provisions when it comes to the state's ability to protect public health.
The Agreement on Internal Trade contains provisions that allow a person or a business to sue another province for decisions, regulations or laws that it deems to be contrary to its interests and to its ability to do business in that province. These aspects are dealt with in the agreement in effect negotiated between the provinces and the federal government. We will continue to talk about these aspects and any provisions of international or domestic agreements that do not uphold environmental rights or workers' occupational health and safety rights. We want the provinces to always have the opportunity to regulate their environment and to protect the health of their people.
We are in favour of the Agreement on Internal Trade to a certain extent, as long as it addresses all the points that I just raised. We want the bills related to the Agreement on Internal Trade or to international agreements to avoid encouraging policies that force deregulation or privatization on the provinces and territories. We want these bills to avoid pushing the federal or provincial government to have power of attorney over certain interests of an industry or major investor.
We also want to prevent the bills from seriously reducing a government's ability to buy products from local suppliers. That is an element that is very important, particularly when it comes to the strategy for economic recovery. We want to avoid limiting the provinces' and territories' ability to help their provincial companies and industries as part of an employment or economic recovery strategy, or preventing them from doing so.
In any free trade agreement, there must always be a balance between the various interests. Bill C-14 includes provisions that are encouraging in some respects. I mentioned the legal action taken against Canada under the North American Free Trade Agreement. At least, this bill limits the potential impacts of such legal action. We are talking about economic impacts of approximately $5 million for a fairly large province like Ontario, Quebec or British Columbia. On a per capita basis, the maximum fine would be less depending on the size and population of the province to prevent what is often frivolous legal action from being brought against the provinces and to produce what I call the litigation chill effect and avoid things like the $83 million dollar case that I just mentioned. There are even cases that involve several billion dollars. Yet, I feel encouraged that a limit such as this one was imposed.
Another one of our concerns about this bill pertains to the composition of the panels, to those who are presented by the parties to hear a specific case.
Of the five members who can be presented by the two parties involved, only one must be an expert on Canadian commercial law. The other four individuals may have other expertise not necessarily related to the case at issue. We think that is a problem, and it should be corrected.
The other problem is that only one of these five individuals must be bilingual and be able to work in French and in English. Why only one? This means that if there is one bilingual individual in a group and the other four members do not speak French, the discussions will take place in English. If we were dealing with different commercial laws, we could have required, for example, that a good proportion of members be bilingual and able to carry discussions in French and in English. However, I do not see the justification for having only one bilingual person on either side, just like we fail to see why only one individual should be an expert on Canadian commercial law.
Therefore, the NDP will definitely support this bill at second reading, so that we can discuss it in committee and correct some flaws, such as a certain lack of balance. We notice a lack of definitions or limitations that could apply to some people, businesses or provinces to prevent the possible use of the investor-state provisions. These provisions can sometime have a chill effect and result in a province being reluctant to make undertakings, to agree or to legislate, even for the good of its citizens, on environmental issues or on their own stimulus measures. I am thinking of municipalities among others.
That is why we want to take a closer look at this bill. We will have a chance to do so in committee. I really appreciate this opportunity to present our views on this legislation.
I will be pleased to answer any questions.