12 Questions for NAFTA

Why does NAFTA favour Multinational Corporations over Public Interests?

NAFTA-Ask-Why-300x300NAFTA renegotiation has taken centre stage on the Trade Deal agenda. But as this chart shows, U.S. negotiators are planning to take sections right out of the TPP.

The questions, developed by PCM to challenge our MPs to confront the most serious trade deal issues, are still relevant.  It is still crucial that our MPs address these questions to understand what’s at stake for Canadians.

Our campaign asks Canadians to pressure our MPs, our Trade Minister and the Prime Minister to engage on this issue in a meaningful and transparent way.

1. The Liberal government promised to grow a “clean and innovative economy.” How can the Canadian government incentivize growth in Canadian clean tech industries, jobs and products without being sued by foreign corporations?

1. The Liberal government promised to grow a “clean and innovative economy.” How can the Canadian government incentivize growth in Canadian clean tech industries, jobs and products without being sued by foreign corporations?

In order to transition to a clean economy with good quality jobs for Canadians in clean tech industries, it is essential that government lead the way. But when governments have tried to do exactly this, their efforts have been shut down by trade agreements.

NAFTA-green-jobs-blockFrom Ontario to India, trade agreements have already prevented governments from creating green jobs by ruling against policies that required at least some of the equipment be produced locally.

Who Really Benefits?
To move forward with job-creating environmental initiatives it is evident that we need to change NAFTA. Currently it gives more power to international corporations through its dispute settlement process, and ineffectual environmental provisions.

NAFTA and other so-called “trade” agreements make it easy for corporations to move production to any location in the world that provides the cheapest labour, the best tax incentives or the laxest regulation.  Making the highest possible profits is obviously the benefit for the corporations. Making products at the cheapest price is the stated benefit for consumers.

But if provincial or federal incentives put Canadian tax money into projects and products that provide jobs to Canadians, who spend it in the local economy (supporting more jobs) and pay taxes to our provincial and federal governments, that policy brings much greater benefit to society than just getting the cheapest consumer product.

NAFTA, and similar deals, prevent democratically elected governments from choosing this path. [i]

Read our full analysis and access source material here.


[i] Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership
http://www.ase.tufts.edu/gdae/Pubs/wp/16-01Capaldo-IzurietaTPP_ES.pdf

2. How can government decisions taken under federal and provincial environmental protection laws be safeguarded from investor-state legal challenges?

2. How can government decisions taken under federal and provincial environmental protection laws be safeguarded from investor-state legal challenges?

NAFTA-Vince-Lawsuits-enviroThere are no safeguards from investor-state legal challenges.

NAFTA offers many past examples of how challenges are likely to unfold:
1) In 2012, the Canadian company, Lone Pine Resources used its foreign (U.S.) owner to challenge Quebec’s fracking moratorium. It is suing Canada for at least $230-million U.S. under NAFTA’s rules on expropriation and “fair and equitable treatment.” (decision still pending)

2) New Jersey-based Bilcon Construction claimed $101 million USD in damages in a case vs Canada.  It won a NAFTA challenge when its plan to build a massive quarry and marine terminal in an environmentally sensitive area of Nova Scotia and ship basalt aggregate through the Bay of Fundy, site of the highest tides in the world, was rejected by an environmental assessment panel.

3) In the 1990’s the Canadian government banned the export of toxic PCB waste, in order to comply with its obligations under the Basel Convention, (which the United States did not sign.) U.S. waste treatment company S.D. Myers (contracted to handle waste before the ban) then sued the Canadian government under NAFTA Chapter 11 for $20 million in damages. The claim was upheld by a NAFTA Tribunal in 2000. Canada paid the company over $6 million

Read our full analysis and access source materials here.

3. If new climate policies undermine foreign corporate profits, how can Canada meet its goal to reduce greenhouse gas emissions without facing prohibitive investor-state settlement payouts?

3. If new climate policies undermine foreign corporate profits, how can Canada meet its goal to reduce greenhouse gas emissions without facing prohibitive investor-state settlement payouts?

Provisions within NAFTA will impede the ability of the government to take decisive action on climate change and to make good on commitments to reduce greenhouse gas emissions.
climate-commitment-Jodie brought by foreign corporations against the Canadian government can derail new environmental policies. Under the ISDS (Investor-state dispute settlement) mechanism, tribunal decisions can require huge pay-outs to corporations, payouts that will come from our taxes. Rulings will bypass the Canadian legal system completely and there is no recourse for appeal.

The Chill Effect
 can prevent governments from even pursuing new environmental policies. Just the threat of a lawsuit can be enough to make a government back off. It’s clear from NAFTA and other trade agreements that this will happen. (See examples in the Safeguarding the Environment section)

The reality is that NAFTA will not help reduce emissions or protect the earth. It will however put a screen on all environmental policies to make sure they do not hurt trade and investment. The only winner from this situation is climate change.
Paraphrased from http://canadians.org/tpp-info

Please consider this scenario:
If Canada commits to a higher GHG reduction goal than the current inadequate one set by the Harper Government, we may find that we cannot meet it without eventually curtailing tar sands oil production, especially when oil prices rise again and increasing production becomes more profitable for multinationals.

Would deep-pocketed multinational oil companies acquiesce to new regulations or would they launch ISDS lawsuits  that would stop any attempt by the federal or provincial governments to curtail tar sand extraction?

Read our full analysis and access source material here.

4. If they come into conflict, which of Canada’s international agreements will take legal precedence: our climate change commitments or compliance with the NAFTA?

4. If they come into conflict, which of Canada’s international agreements will take legal precedence: our climate change commitments or compliance with the NAFTA?

Climate change is not acknowledged, let alone factored into NAFTA.

NAFTA-enviro-protection-SilThe ISDS process in NAFTA’s Chapter 11 is designed specifically to allow multi-national corporations to safeguard their profits if any changes are made by governments that will affect them.
Climate regulations already in effect when/if the NAFTA is ratified may hold up, but any new initiatives will be subject to corporate lawsuits that are likely to go against the environment, and/or require enormous compensation payments for “lost” profits.

Read our full analysis and access source material here.

5. Canada has one of the best health care systems in the world. Pharmaceuticals are the second largest component of our health spending. Given that NAFTA will increase intellectual property rights for pharmaceuticals and will drive up this cost, how will the Canadian government be able to maintain the current standard of health care?

5. Canada has one of the best health care systems in the world. Pharmaceuticals are the second largest component of our health spending. Given that NAFTA will increase intellectual property rights for pharmaceuticals and will drive up this cost, how will the Canadian government be able to maintain the current standard of health care?

The Intellectual Property Chapter of the TPP will be imported to NAFTA – and impact on Healthcare in Canada

NAFTA-drug-pricesThe excessive intellectual property (IP)provisions will increase pharmaceutical product prices, not only hindering low income countries in meeting the health needs of their populations, but also countries like Canada that are struggling to maintain inclusive health care systems in the context of an aging population.

The patent provision changes are very significant since they lock Canada into extending the term of patent protection, which will ultimately increase health care costs.[1]

Innovation is actually hindered, even though it is used as an argument for stringent IP laws. More stringent IP laws incentivize “evergreening” where companies make slight modifications to their products and use the change to significantly extend the life of their patent, rather than creating a new drug. This allows them to maintain a monopoly on the market, delaying the entry of generics.

Read our full analysis and access source material here.


[1] Geist, M. (2016, January 16). The Trouble with the TPP, Day 7: Patent Term Extensions. Accessed at: http://www.michaelgeist.ca/2016/01/the-trouble-with-the-tpp-day-7-patent-term-extensions/

6. Will the Canadian government uphold Aboriginal Title, treaty rights and the “duty to consult” First Nations if they come into conflict with protections afforded to foreign corporations under the NAFTA?

6. Will the Canadian government uphold Aboriginal Title, treaty rights and the “duty to consult” First Nations if they come into conflict with protections afforded to foreign corporations under the NAFTA?

NAFTA-indigenous-HalynaThe Canadian government has promised to develop a new nation-to-nation relationship with Indigenous peoples in Canada, but has not been forthright about how the NAFTA will impact its constitutional and legal obligations in this regard. Aboriginal Title, treaty rights and the government’s “duty to consult” First Nations have all been established in Canadian law,[1] but are likely to come into conflict with the interests of foreign investors, particularly when Indigenous peoples exercise their right to say no to developments on their territory such as pipelines or extractive activities. Under NAFTA, the rights of Indigenous people in Canada would be subordinated to those of foreign investors.

Now that Canada has now officially adopted the UN Declaration on Rights of Indigenous Peoples (UNDRIP),[5] our government must respect and uphold the principle of free, prior, and informed consent with regards to any development that might impact traditional Indigenous lands and territories. NAFTA will have the potential to compel Canada to renege on its ethical and legal commitments to Canada’s Indigenous peoples and undo our reconciliation process, which has only just established a fragile foundation for building trust and addressing past injustices.

Read our full analysis and access source material here.

[1] The historic decision Supreme Court of Canada on the Tsilhqot’in Nation’s case was the first time that any court formally declared that Aboriginal title exists (within the existing legal framework). In June 2014, the Court unanimously declared that the Tsilhqot’in Nation have Aboriginal title to approximately 1,700 square kilometres in BC and that the province breached its duty to consult the Tsilhqot’in Nation when it issued logging licences on their traditional lands nearly 20 years ago. The Court held that once Aboriginal title is established by a court declaration or agreement, the Crown must seek the consent of the title-holding Aboriginal group before approving developments on their land. The “duty to consult” and accommodate First Nations applies even if a land claim is underway. This decision has implications for approvals for projects such as the Northern Gateway pipeline proposal by Enbridge (the proposed route crosses four territorial claims). More information can be found at: http://raventrust.com/case/tsilhqotin-nation

[5] CBC News. (2016, May 10). Canada officially adopts UN declaration on rights of Indigenous Peoples. Accessed at: http://www.cbc.ca/news/aboriginal/canada-adopting-implementing-un-rights-declaration-1.3575272

7. The investor-state dispute settlement (ISDS) mechanism in international trade agreements establishes tribunals that operate outside the normal court system to rule on lawsuits brought by foreign corporations against the Canadian government. How will Canada’s rule of law be upheld when there is no process to appeal decisions that may be deemed unlawful?

7. NAFTA-corp-rights-above-citizensThe investor-state dispute settlement (ISDS) mechanism in international trade agreements establishes tribunals that operate outside the normal court system to rule on lawsuits brought by foreign corporations against the Canadian government. How will Canada’s rule of law be upheld when there is no process to appeal decisions that may be deemed unlawful?

In NAFTA(Chapter 11), the investor-state dispute settlement process (ISDS) gives a foreign investor the ability to sue the Canadian government for the loss of “expected future profits” that has resulted from an action (e.g. a law or policy) taken by the federal or provincial governments. Curently tribunals operate outside the Canada’s public court system to rule on ISDS cases. The ISDS process undermines the integrity of Canada’s legal system, since investors are not be obligated to go through our court system first before seeking recourse at the tribunal,[1] and there is no clear mechanism for Canadians to ensure the legality and constitutionality of rulings since they would not be bound by Canadian law.

Furthermore, the system is one-sided. Foreign corporations may choose among the different legal instruments available to them under different trade agreements as a basis for litigation. In contrast, governments and their citizens cannot sue foreign investors under ISDS, which gives these corporations greater rights than the Canadian public.[3]

Read our full analysis and access source material here.


[1] Van Harten, G. (2016, January 18). Seven Ways TPP Favours Mega-Rich Foreign Investors, Not Canadians. The Tyee. Accessed at: http://thetyee.ca/Opinion/2016/01/18/TPP-Foreign-Investors/

[2] ibid.

[3] ibid.

8. How can ISDS tribunal arbitrators be trusted to make fair and impartial decisions
when they are financially motivated by the frequency and length of ISDS legal cases?

NAFTA-Canada-most-sued8. How can ISDS tribunal arbitrators be trusted to make fair and impartial decisions when they are financially motivated by the frequency and length of ISDS legal cases?

The ISDS tribunal would be composed of for-profit lawyers, who are paid for their time – providing a financial incentive to rule in favour of foreign investors to encourage them to bring future cases before the tribunal – unlike Canadian judges who have tenure and receive a salary.[1]


[1] Van Harten, G. (2016, January 18). Seven Ways TPP Favours Mega-Rich Foreign Investors, Not Canadians. The Tyee. Accessed at: http://thetyee.ca/Opinion/2016/01/18/TPP-Foreign-Investors/

9. As the most sued developed country in the world under trade agreements, how much has Canada paid to international corporations in settlements under NAFTA? How can the Canadian government ensure this amount won’t increase exponentially under the renegotiated agreement?

9. As the most sued developed country in the world under trade agreements, how much has Canada paid to international corporations in settlements under NAFTA? How can the Canadian government ensure this amount won’t increase exponentially under the renegotiated agreement?

NAFTA-lawsuits-cost-Cdn-taxpayersUnder the TPP (Chapter 9), the investor-state dispute settlement process (ISDS) would give a foreign investor the ability to sue the Canadian government for the loss of “expected future profits” that has resulted from an action (e.g. a law or policy) taken by the federal or provincial governments. There have been many such cases filed by foreign corporations against Canada under the North American Free Trade Agreement (NAFTA),[1] making Canada the most sued developed country in the world.[2] If ratified, the TPP could create a crushing financial burden for future generations.

To date, the effect of ISDS mechanisms has been to transfer billions of dollars of public money to wealthy multinational corporations, without imposing equivalently enforceable responsibilities to respect basic labour, environmental and anti-corruption standards, for example.[3][4]

Read our full analysis and access source material here.


[1] Government of Canada. NAFTA – Chapter 11-Investment. Accessed at: http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/gov.aspx?lang=eng

[2] Barlow, M. (2015, October 23). NAFTA’s ISDS: Why Canada Is One of the Most Sued Countries in the World. Common Dreamshttp://www.commondreams.org/views/2015/10/23/naftas-isds-why-canada-one-most-sued-countries-world

[3]Van Harten, G. and Malysheuski, P. (2016, January 11). Who Has Benefited Financially from Investment Treaty Arbitration? An Evaluation of the Size and Wealth of Claimants. Osgoode Legal Studies Research Paper No. 14/2016.

[4] Van Harten, G. (2016, January 18). Seven Ways TPP Favours Mega-Rich Foreign Investors, Not Canadians. The Tyee. Accessed at: http://thetyee.ca/Opinion/2016/01/18/TPP-Foreign-Investors/

10. How can the government encourage and support the development of more sustainable local farming initiatives (which strengthen national food security) and ensure Canadian-produced food remains affordable?

10. How can government encourage and support the development of more sustainable local farming initiatives (which strengthen national food security) and ensure Canadian-produced food remains affordable?

NAFTA- food-PriyanCanadians have access to food from around the world but we generally don’t think about “food policy” and the consequences of leaving it to market forces and trade deals.  Does Canada have the power to regulate for safety, environmental protection, sustainable land use and reduced GHG emissions?

Issues of international trade deals and agriculture are complex but some things are clear. The TPP and deals like it give more power to multinational agri- business corporations to control seeds (through GMO products and patents) and to put local smaller farms out of business with cheaper imported food  produced by large-scale mono-culture farming, using pesticides & fertilizer that deplete the soil, shipped over long distances with a high GHG output.

The TPP will impact Canadian agriculture and food sovereignty in many ways:

1) Prevent government support for agriculture
2) Restrict food labeling
3) Decrease food safety
4) Prevent improved regulation
5) Increase multinational agri-business control through patent restrictions

Read our full analysis and access sources here.

11. How will the government maintain its ability to act in the public interest, if the “right to regulate” is not enshrined in NAFTA?

NAFTA-green-jobs-Sarah 11. How will the government maintain its ability to act in the public interest, if the “right to regulate” is not enshrined in NAFTA?

The TPP does not uphold a government’s “right to regulate” – the ability to enact laws, policies or regulations in that are in the public interest (e.g. protection of the environment or public health and safety). Without this protection, the ISDS could create a “chilling effect” on governments’ willingness to create new laws and policies that respond to our ever-changing world and emerging challenges (e.g. climate change) for fear of being sued. It could also impede the government’s ability to incentivize or invest in the development of local industry and jobs to combat unemployment and grow our green economy, since this is seen as an “unfair advantage” and a basis for legal action. Protecting the interests of Canadians can become subordinated to those of foreign corporations when it becomes “too risky to regulate”.

12. How will the government track the positive and negative impacts of NAFTA? What mechanism for recourse will be in place to correct the course if NAFTA doesn’t deliver the anticipated benefits for Canadians?

12. How will the government track the positive and negative impacts of NAFTA? What mechanism for recourse will be in place to correct the course if NAFTA doesn’t deliver the anticipated benefits for Canadians?

The impacts of trade agreements are seldom systematically tracked by national governments, especially the negative ones. They are more often documented by third sector organizations and academic institutions.

The onus is on any Parliamentarian who plans to vote in favour of ratifying the new NAFTA to show how it will benefit ordinary Canadians e.g. create good jobs and improve our quality of life, respect Indigenous rights.


 

 

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