Mr. Speaker, I am pleased to stand to speak about a very important part of our trade agreements in our country right now. Many Canadians are concerned about the foreign investment protection agreements and trade agreements the government signs and is currently negotiating. One of the main areas of concern in these agreements relates to what are known as investor state dispute mechanisms.
Canada has 21 FIPAs in force with countries as far afield as Russia and Argentina, Thailand and Romania. Many more are awaiting ratification or are currently being negotiated. The FIPA model has been enshrined in the North American Free Trade Agreement.
The NDP believes in setting up a rules-based system that protects investment while preserving public policy flexibility, democratic decision-making and the rule of law. However, an ISDS, as it is typically written, does not conform to principles of the rule of law. People point out that these mechanisms provide no security of tenure for arbitrators. There is a lack of an effective appeal procedure. They are rife with conflicts of interest, and they are not necessary when the state parties have mature judiciaries where investors can bring their complaints and have those complaints adjusted according to the rule of law.
The China-Canada FIPA that is currently before the Canadian Conservative cabinet even allows for arbitration to happen in secret. That is unprecedented in Canadian treaties, and it is a major step backward.
Many people question investor states in general. Criticism comes from across the political spectrum. Australia has decided not to pursue investor state provisions in trade and investment agreements, and so have India, South Korea and South Africa. Even those who are generally supportive of free trade agreements are worrying about the implications of investor state provisions.
Lawrence Herman, counsel at Cassels, Brock & Blackwell and a senior fellow of the C.D. Howe Institute, someone with long experience in international trade and international business transactions, said this:
A repeated criticism is that FIPAs grant foreign investors greater rights than those available to local companies under domestic law. This may not have been a concern when Canada was a capital exporter. But now that things have changed, how do we feel about this?
Regarding NAFTA claims, he said:
It is a fact that many more claims have been filed against Canada than against either the United States or Mexico. Canada seems to have become the target of choice for U.S. investors, not Mexico, as had been expected.
Mr. Herman further pointed out a concern he has:
—that these arbitration decisions are rendered by ad hoc tribunals, appointed for a given dispute only. The members are drawn from a variety of places around the globe and have different backgrounds. Yet these impermanent tribunals are often deciding issues of social or economic policy of national importance [with no security of tenure].
He pointed out that businesses are concerned about sovereign risk in other countries, and following Australia's lead, that Australia has decided that businesses should make their own assessments about whether they want to invest in those places.
He said:
The problem is that Canada has proceeded down the FIPA path for years without a critical look at how these agreements really help us, both abroad and at home.
Civil society is weighing in. Recent transatlantic statements signed by dozens of European, Canadian and Quebec organizations strongly oppose the inclusion of an excessive investment protection chapter and IS dispute settlement process. They point out that such provisions weaken democracy, that in terms of the CETA agreement currently being negotiated, Europe and Canada both have legal systems that are more than capable of handling disputes between investors and governments, and that ISDS forces taxpayers to pay for the public health, environmental and other regulations of their governments to foreign corporations if they are sued. They say that there is an inherent bias in the system, and it is prone to corporate bias. There is also scant evidence that these mechanisms encourage inward or outward investment.
What I want to ask the government is why it is pursuing an investor state provision in these agreements, when they subject Canadian taxpayers to potentially billions of dollars in lawsuits. Can it not construct a protection for investment that preserves a democratically elected government's ability to make policies for the economic, environmental and social development of the Canadian public? Why can we not do that?