April 7, 2000

OTTAWA - Pressed by NDP Trade Critic Bill Blaikie in a parliamentary committee this week, International Trade Minister Pierre Pettigrew finally made a commitment that Canada will no longer pursue NAFTA-style investment rules that allow foreign investors to sue and intimidate democratically elected governments. Pettigrew promised that Canada will not pursue such rules at the World Trade Organization, in the Free Trade Area of the Americas, or in any other trade forum. Until now, the Liberal government had insisted that Canada should pursue such rules to protect the interests of Canadian investors doing business in foreign countries. Just such a NAFTA-style investor-state procedure was what the Liberals were pursuing as recently as the negotiations in the now defunct MAI.

New Democrats have long argued that the so-called investor-state procedure in NAFTA’s Chapter 11 is a recipe for endless corporate harassment, and gives a status to investor rights that is not appropriate. Canada has already faced several lawsuits under the investor-state mechanism in the NAFTA:

· Two years ago, Ethyl Corporation of Virginia successfully used the procedure to extract million from Canadian taxpayers, and to force the Canadian government to rescind its restrictions on the potentially toxic gasoline additive, MMT.

· Last year, a Chapter 11 action was filed by Sun Belt Water Inc. of California. It ridiculously proposes to leave Canadians on the hook for as much as .5 billion (US) in compensation for profits lost as a result of BC’s ban on bulk water exports. If successful, would undermine Canada’s ability to protect its own freshwater resources.

· Pope and Talbot Inc. (US) is seeking 0 million in damages for Canada’s administration of the Canada-US Softwood Lumber Agreement. The tribunal hearing this case has already rejected Canada’s attempt to have the definition of expropriation in NAFTA defined narrowly. This decision just paves the way for more aggressive challenges from foreign corporations.

· Arbitration continues in the case began by S.D. Myers Inc. in 1998. This US based corporation is claiming million to compensate for profits lost as a result of Canada’s ban on PCB exports to the US.

· United Parcel Service (UPS) has filed a Notice of Intent to sue Canada for 0 million under NAFTA. UPS argues that Canada Post’s Priority Courier and Xpress Post services engage in unfair competition with foreign courier companies.

Along with other New Democrats, Bill Blaikie has insisted that the investor-state procedure inappropriately gives multinational corporations a status equal to that of democratic governments and greater than that of citizens. It sets up a binding, secretive process that has not just a legal effect but also a "chilling" effect, by which governments may, out of fear of such litigation, refrain from environmental and other legislative actions intended to protect the public interest. Moreover, because only foreign investors have access to the investor-state procedure, it perversely gives foreign investors more rights in Canada than Canadian investors.

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Mr. Bill Blaikie (Winnipeg—Transcona, NDP): My second question, Mr. Chairman, to the Minister has to do with chapter 11 of NAFTA and the status of these investor-state dispute settlements in negotiations at the WTO, at the FTAA and in any other context in which these types of negotiations might be coming up. One of the things that struck me about Seattle, I had an opportunity see a text of a draft statement that was signed onto by the EU, by Japan and a number of other countries. One of the things they were very clear about in that draft statement was that there would be no investor-state dispute settlement mechanism.

To the extent that we have this investor-state dispute settlement mechanism in NAFTA, we're one of the few countries in the world—there's just the United States and ourselves and Mexico that are stuck with this. We see increasingly what a pain in the neck this is in terms of all these suits that are being brought against the Canadian Government with respect to water, with respect to the softwood lumber agreement, with respect to MMT, and the list goes on.

So I wonder, could you tell us is the position of the Canadian Government, because I think it should be, that in any further agreements that are signed having to do with investment, either at the WTO or at the FTAA, that we will not be entering into any further agreements that have this investor-state dispute settlement? We were the pilot project, we were the guinea pig in NAFTA. The guinea pig has got a rash. The guinea pig is sick. The guinea pig has found out that this isn't a great thing. So I would hope that would be the position of the Government, that not only are we not going to enter into these kinds of investor states dispute settlement mechanisms in any other agreements, but that we're going to try to find a way to get this particular chapter out of NAFTA so that we can be free of this at some point in the future.