International Trade committee  Thank you. This is the first time I'm doing this, so thank you for the invitation. I am a Canadian lawyer, an Ontario lawyer, but I'm also a New York lawyer. Before I was a lawyer, I was an economist. I worked for Professor Alan Rugman who was one of the big advisers during the Canada-U.S.

International Trade committee  That's a complicated subject. The economic evidence, the statistical evidence, is not conclusive one way or the other. Going back to my origins, as I told you, working for Alan Rugman, who was one of the guys who worked long on these origins of foreign direct investment, I can tell you that when economists look at it, they say the greatest determinant of foreign direct investment is the size and growth of markets.

International Trade committee  It is fair to say that where we have tended to lose cases or where we see cases brought is under this idea of the fair and equitable treatment of the investor. It's not really under the expropriation heading. It's not that we're losing because panels have come in and said, “Canada, what you did is really bad by implementing this new substantive, legal obligation.”

International Trade committee  I think if we didn't have investor-state dispute settlements, then Canadian companies would have to figure out where to go to get a remedy. As I said before, they're going to either not invest—so we will lose out on the returns that come to us through taxation—or pay for it in the form of insurance.

International Trade committee  The short answer is yes, I would. I think there's no reason to depart from our practice so far. We are a capital exporter. I think the norm so far is to have ISDS in those provisions, even regionally, because, of course, it is in our existing CPTPP agreement regionally. I would see no reason to depart from that.

International Trade committee  They are obviously two very different processes. I think, from the point of view of a company, that the decision to go to the ISDS gives it more direct say, because, of course, the WTO proceedings are state-to-state proceedings, so the best a company can do is go to you, the Government in Canada, and say, “Will you take our case and will you argue it in the Geneva proceedings and go through the consultations with the governments, etc.?”

International Trade committee  I think I should, if you don't mind, refer your question to Mr. Herman, because he's written, I think, a very good article on this subject. Why don't I put him on the hot spot?

International Trade committee  Very briefly, I agree with much of what Mr. Herman has said on that subject. I would say that I think, in reality, the way it will play out for Canada is now that we have taken it out of our agreement with the United States, going forward other countries will ask for equivalent treatment.

International Trade committee  It's tough. Those are exactly the countries that are going to stand across from us in a negotiation and say, “Well, if you didn't need it with the United States, why would we put it in an agreement with you?” I don't know how we're going to answer that. It could just be that the interest in having an agreement is so substantial that they will accede to it.

International Trade committee  I suppose that once ISDS is out of the U.S. agreement, we're going to be asking, basically, to politicize every trade and investment dispute all over again. There's no shortage of things on the list of disputes with the United States, from softwood lumber to Keystone or whatever else.

International Trade committee  It seems to me that if it's EDC paying for it, then we are the ones that ultimately will be underwriting that risk as Canadian taxpayers. That's just part of, again, the unintended consequences of some of these proposals.

International Trade committee  Well, I think the answer to your question is that we have not really exited NAFTA yet from the point of view of investor-state dispute settlement. That will happen next year, because now there's this transitional period. We haven't really seen that effect. Someone mentioned Keystone.

International Trade committee  I think the reality is that it doesn't work. One famous case in NAFTA was a case involving Loewen, a funeral home. It's one of the golden oldies you can read about. Many people published it. It's a case in which the Canadian investor—well, we thought—was treated very poorly in an American courts system.

International Trade committee  Thank you again for this invitation to talk to your committee. I appreciate it very much. These are three very important topics. I guess the first one I'll start with is the issue of the WTO waiver. I'm a trade lawyer, a competition lawyer, an American lawyer and a Canadian lawyer, if you get all that.

International Trade committee  I'll start with your last question on the TRIPS waiver. Based on the limited knowledge I have of the agreements that have been made public in other countries, my really strong guess is that Canada has pretty much agreed that we're not going to invoke something like that in our agreements, if we ever get to see them.