ENVI Committee Meeting

37th PARLIAMENT, 1st SESSION

Standing Committee on Environment and Sustainable Development

EVIDENCE

CONTENTS

Thursday, May 30, 2002

¿

0940

Ms. Janine Ferretti (Executive Director, Commission for Environmental Cooperation of North America)

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0945

¿

0950

¿

0955

The Chair

Ms. Janine Ferretti

À

1000

The Chair

Mr. David Chatters (Athabasca, Canadian Alliance)

À

1005

Ms. Janine Ferretti

Mr. David Chatters

Ms. Janine Ferretti

Mr. David Chatters

The Chair

Mr. John Herron (Fundy—Royal, PC)

À

1010

Ms. Janine Ferretti

Mr. John Herron

Ms. Janine Ferretti

Mr. John Herron

Ms. Janine Ferretti

À

1015

Mr. John Herron

Ms. Janine Ferretti

Mr. John Herron

Ms. Janine Ferretti

The Chair

Mr. Julian Reed (Halton, Lib.)

Ms. Janine Ferretti

Mr. Julian Reed

The Chair

À

1020

Mr. Alan Tonks (York South—Weston, Lib.)

Ms. Janine Ferretti

À

1025

Mr. Alan Tonks

Ms. Janine Ferretti

The Chair

Ms. Janine Ferretti

The Chair

Ms. Janine Ferretti

À

1030

The Chair

Mrs. Karen Redman (Kitchener Centre, Lib.)

Ms. Janine Ferretti

Mrs. Karen Redman

Ms. Janine Ferretti

Mrs. Karen Redman

À

1035

Ms. Janine Ferretti

Mrs. Karen Redman

Ms. Janine Ferretti

Mrs. Karen Redman

Ms. Janine Ferretti

Mrs. Karen Redman

The Chair

Ms. Janine Ferretti

The Chair

À

1040

Ms. Janine Ferretti

The Chair

Mr. John Herron

The Chair

Mr. John Herron

The Chair

À

1045

Ms. Janine Ferretti

The Chair

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CANADA

Standing Committee on Environment and Sustainable Development

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NUMBER 076

l

1st SESSION

l

37th PARLIAMENT

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EVIDENCE

Thursday, May 30, 2002

[Recorded by Electronic Apparatus]

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[English]

    The Chair (Mr. Charles Caccia (Davenport, Lib.)): Mesdames et messieurs, good morning.

    The Commission for Environmental Cooperation is not a stranger to the members of this committee. As you know, it was formed as a parallel agency when the NAFTA agreement was signed, together with another parallel agency located in Washington that deals with labour matters. This commission is located in Canada, in Montreal. It was initially run by the present Secretary of the Environment for Mexico, Victor Lichtinger, and it is currently run by our witness today, Janine Ferretti—perhaps the next minister of the environment, but who knows?

    The publications that have been recently circulated and produced by the CEC are of considerable weight and substance, not only in size but also in content. The Environmental Effects of Free Trade is on your desks, I presume. It is a massive work of considerable importance for anyone who would like to examine free trade through an environmental lens, so to say. And then there is The North American Mosaic, which was also circulated and which will be followed, I understand, by a subsequent publication once the public has replied. It will be taking stock of summaries on pollutant releases and transfers, which could be of interest to anyone regardless of whether they live in the west, the north, or the east of Canada.

    The clerk alerts me to the fact that there is now a sourcebook entitled Taking Stock 1999: North American Pollutant Releases and Transfers as well, and it may also be very useful.

    Today, we are very fortunate to have the executive director of the commission before us. She has had tremendous experience in environmental methods, having been the executive director of Pollution Probe, in Toronto, amongst other things.

    Ms. Ferretti is here to bring us up to date on a very important issue, namely chapter 11 investor rights under NAFTA, an issue that has been plaguing governments for some time. It has affected the Government of Canada, and it is currently plaguing the Government of the United States because of a court action threatened by a Canadian company called Methanex. If that court action results in the Government of the United States having to pay a hefty amount of money to Methanex, then politically speaking, some action could be expected by the Americans in order to correct the interpretation of chapter 11. Methanex and chapter 11 are items that we may therefore want to follow closely in the media.

    It is against this background that I introduce Janine Ferretti. It is a pleasure and an honour to have her before us today, and I now invite Ms. Ferretti to speak to us.

    Ms. Janine Ferretti (Executive Director, Commission for Environmental Cooperation of North America): Thank you very much for that introduction, Charles. I'd like to thank the committee for its patience in awaiting the VIA train from Montreal. It's a lovely ride, but you can't always count on exact timeliness in terms of arrival.

    It's a pleasure for me to be here with you again, and to be given an opportunity to address the issues that you've identified. I'd like to start by putting this into a bit of a broader context. It goes back to why we have the Commission for Environmental Cooperation of North America to begin with.

    Why was it established as part of a package, along with NAFTA and a labour commission? The reason is that the three countries decided at that point that we need two things. We need to have economic growth and prosperity for our people of North America, but we also need the resources to protect the environment as well as other social objectives. Liberalized trade is an important part of and an important driver for that economic prosperity.

    But the second reason, the second assumption, or what was in fact an inexplicit but nonetheless clear political statement and message, was that we need to have strong environmental protections in order not just to protect the environment, but also to make sure we don't undermine that prosperity and well-being that is so much a part of the objectives of NAFTA and the three countries.

    In terms of our role as an environmental commission, one of the things we were given as a mandate was to monitor, look at, and examine the links between trade and the environment. We therefore developed a methodology for measuring those impacts, both positive as well as negative, on the environment by trade. The book that you have before you is really the first significant result of the development of that methodology.

    Many other institutions have developed methodologies for this, but we felt it was important to bring the best North American minds together and to provide a common starting point to ensure that we were developing the right framework and asking the right questions. We then invited experts from governments, businesses, environmental groups, and universities, to apply that methodology and to experiment with their own. The book in front of you is the result of that effort.

    We commissioned fourteen or fifteen papers to be drafted. They looked at a number of trade and environment links, including everything from the textile sector to steel to fisheries. They have come up with some very interesting results.

    As you can appreciate, the data needed to do this kind of work is difficult to get. I think we have a very good handle on economic data in North America, but you'd be surprised at how underdeveloped our environmental data is. That has hampered, I believe, any kind of leapfrogging that we might like to see in terms of being really able to assess properly the impacts of trade on the environment. The other factor, of course, is that it's very difficult to pull away and to somehow segregate the economic factors. Is it just trade? Is it rising interest rates? Is it the national budget priorities in each country? How do these have an impact? It's very hard to unravel that ball of wax.

    Nonetheless, I'd like to just briefly give you a sense of the kinds of things they came up with—and some of these will probably be no surprise to you. For example, they came up with the fact that the tremendous increase in transportation across North America has contributed to increased air pollution, particularly in border areas.

    On the more positive side, emissions related to the Mexican steel industry have been reduced significantly, practically making Mexican steel production cleaner than Canadian or U.S. steel production. That's because the increased investment allowed by the NAFTA rules allowed for an updating of and basically a turning over of steel production capacity in Mexico.

    Of course, the other interesting thing that came up was an interesting note in terms of the imports of hazardous waste and where it's going, and how that's driven by differences in pretreatment requirements, particularly in Quebec and Ontario. Of course, we understand that both these jurisdictions have taken steps to address that.

¿  (0945)  

    I'd just say that these are preliminary results. They really show how we try to measure the direct effects of trade on environmental quality, air, releases to land, and so forth. But what about indirect effects? Of course, there are both types: direct and indirect effects.

    What have the effects of trade rules been on environmental policies? This is an area in which the commission hasn't done much work yet. Of course, the issue before you very nicely underlines that concern or that issue of the effects of trade rules and free trade on policies. Much attention, particularly because of the Bill Moyers program, but before it and now after it.... There's a perception that there is a regulatory clash going on between NAFTA chapter 11, the state dispute provisions in that chapter, and domestic laws, including domestic environmental laws.

    As you know from the excellent work prepared for you by the clerk and the staff, a number of chapter 11 cases either have been settled, are in the process of being reviewed, or are in the process of being arbitrated. A number of them do involve environmental laws—not all of them, but a number of them do.

    From an environmental point of view, there seem to be two issues at stake. One has to do with the interpretation of that article—and again, you have them before you, and I'm laying out what those issues are. Particularly, the first issue is what is an expropriation or what constitutes an expropriation.

    The second issue is the process. Are the procedures really in line with the standards of domestic procedures that we have in North America? In particular, we're talking about the transparency procedures. Now, “transparency” is a funny word, because it seems to mean two entirely different things to the trade community and to the environmental community. To the trade community, transparency means that the way you make your laws, the way you make your rules, is transparent to other trading partners, and that the steps that you've taken as a government to establish new rules are very clear. Have you followed good science? Have you followed particular measures? Or is it just a disguised trade barrier? That's why this issue of transparency is so important.

    From an environmental perspective, of course, “transparency” means whether or not it's transparent to the public. Is there access to information? Are the proceedings somehow transparent? Can the public see the process? What's the process behind the decisions and so forth?

    I raise this because I know “transparency” has a tendency to mean different things. I've learned that the hard way. I also think it's a little bit of an interesting anecdote to show you how much work has to be done to bring the trade and environment communities together, because we don't always share the same language. I'm happy to say that, in the last four or five years, tremendous inroads have been made in terms of bringing the two communities together, but I think this chapter 11 issue is an interesting one because it actually forces the two to work together.

    What this NAFTA chapter 11 controversy tends to do—and I think this is the unfortunate part of it, and the longer it takes to actually resolve it, the more difficult it's going to be to dispel—is create a growing perception that says, “My goodness, we were right.” Here, I'm referring to those critics of NAFTA and free trade agreements who believe trade rules will trump environmental laws every single time, and that engaging in and somehow buying into a trade arrangement means you will be giving up on environmental quality and on the policy tools necessary to protect the environment.

    I believe that perception is exists, and that this kind of controversy and this kind of lack of resolution tend to confirm or at least reinforce that view. At the same time, just to make a full circle back to our original document, I think our document shows in every case that if you have strong environmental policies, if you make the investment in strong environmental programs, in laws, and in enforcement, the North American countries are able to address and come to grips with any environmental concern or issue that might arise from increased trade or increased economic activity. The irony is that if there is in fact a perception, even amongst government rule-makers or government officials, that they're somehow prevented from taking the actions necessary to address those environmental concerns, it basically puts us in a bit of a log-jam in terms of how to advance. But I'll leave it at that.

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    I know the other issue is the transboundary environmental impact assessment. I'd just like to quickly bring you up to date on that. It is probably one of the most clearly underlined mandates of the commission.

    The commission is made up of the council of the three environment ministers, to negotiate an arrangement so that transboundary environmental impact assessment can take place. A lot of work has been done. It has all been based on the Espoo Convention. In other words, there's a strong correlation between what the governments finally came to agree to and the Espoo Convention. But I am sorry to report that, at this point in time, it's no longer on the North American commission's agenda not because there's any fundamental disagreement on whether or not there should be an arrangement or on the ins and outs of the arrangement, but primarily because of differences in implementation—in other words, who signs and what relationship has developed.

    Just to be a little bit more specific, Canada and the United States are both federalist countries with clear roles and responsibilities outlined for their federal governments, as well as for their state or provincial governments. In Mexico, it is a strongly centralized government system. The Mexicans are now very much engaged in trying to devolve some of the strong federal mandates and responsibilities to the state level and in strengthening state government, but things are nowhere near the same level as in the U.S. and Canada.

    When it came time to actually sign on the dotted line, the question was who we were actually making these agreements with. In Canada and the United States, the answer is quite easy. Things are primarily driven at the provincial and state level, with some relevant relationship at the federal level. But there's a lot of symmetry there.

    If you go to the U.S.–Mexico border, it's totally asymmetrical. In Mexico, you have a very strong federal government, and the Mexican federal government somehow basically doesn't feel it's appropriate to actually negotiate transboundary environmental impact arrangements with the American states that Mexico shares a border with. The Mexicans prefer to see this at a federal government to federal government level.That difference, that asymmetry, basically stalled the movement forward in terms of getting a North American arrangement done.

    I don't know—this is something you'd have to ask of Environment Canada—but I understand that both the United States and Canada are ready any day now to move forward with an arrangement. I don't know whether or not they're going to move forward on a bilateral basis, but these seem to be the choices before them: to move forward on a bilateral basis or to wait for some breakthrough on a trinational basis. I fear that things are not as well advanced on the Mexican–U.S. side, and I can't even begin to give you a timeframe for when they'll be able to resolve those issues. I do know the Western Governors' Association has been working very hard with state officials, as well as with some government officials, but it's that formal liaison that still doesn't seem to be emerging very clearly.

    Anyway, I think I'll close with that. I'm ready to receive any questions you might have.

¿  (0955)  

    The Chair: Before we open it up for questioning, could you perhaps give us an idea of where the commission is at in its work on chapter 11? Secondly, could you take us through or at least comment on the IISD document that your office sent to us this morning, namely the one that deals with chapter 11?

    Ms. Janine Ferretti: For those of you who don't know what the Joint Public Advisory Committee is, it's a very innovative mechanism established by the three governments in the U.S., Canada, and Mexico. It consists of fifteen people, with five nominated by each country, and they represent, as it were—not in a real sense, but in a more reflective one—civil society in North America. They provide advice to the council.

    They have provided advice to the council on this issue in the past. This year, they have decided to hold a public workshop on this issue of chapter 11 and the environment. The paper you have before you is intended to stimulate discussion at that workshop.

    It's not clear—I think it's too early, and I certainly don't want to make any conjecture—where it's going to go from here, but I know JPAC is very interested in coming to terms with ways to move forward, and ways on which they can advise council. As you can see from the report, on pages 10 and 11, there are a number of possibilities of moving forward.

    I should tell you that it hasn't been because of a lack of interest on the council's part. In fact, on a number of occasions, the council has actually signalled that it is watching the issue of chapter 11 with interest and concern, but that the lead for this issue is indeed the Free Trade Commission.

    To give you a little insight on the politics at a very large scale here, the NAFTA environment commission, the council, has in its charter, in the agreement, a mandate to cooperate with the Free Trade Commission. NAFTA was negotiated before there was ever a North American Agreement on Environmental Cooperation, and there is no similar signal or suggestion or mandate on the Free Trade Commission side. So there has been a little bit of difficulty in terms of joining them together. That's not to say that the Free Trade Commission has been antagonistic or arrogant by any means. It's just not on their top list of things to do; whereas for us, for our council, the issue of trade and the environment is very much right at the top of the list.

    More recently, in its communiqué issued at the last council session in Guadalajara, the council announced its desire to meet with its trade counterparts, the members of the Free Trade Commission, in 2002. I know a working group has been established, bringing together environment and trade officials to develop an agenda for that meeting and to identify important and possible outcomes. Whether or not chapter 11 is on that agenda, I can't tell. We haven't seen the results of that discussion, but I know a process is in place to move that forward.

    If you want my personal opinion—this is not the commission's opinion—on the International Institute for Sustainable Development's document, I think it provides a very good overview of the issues. I think it succinctly states where things are, and it will be very useful as a document in terms of providing some basic information for the public at that session on the 17th.

À  (1000)  

    The Chair: Thank you.

    For those of you who are interested in this issue, there was a debate on chapter 11 during the late show last Wednesday, May 22, in the House of Commons. If you want to read the reply from the parliamentary secretary, you will find it in Hansard.

    The nub, the essence, the quintessence, of the issue is on the third page of the International Institute for Sustainable Development paper. It's marked as page 12 in the fax listing at the bottom of the page, but it is page 3. It's covered under the title “What still remains to be done?” Particularly, it is article 1110, “Expropriation”, and particularly the last sentence, which reads:

The NAFTA Ministers need to state clearly that non-discriminatory laws serving broad public interests such as environment and public health should enjoy the police powers exemption from Article 1110 obligations.

    So this is the partial background of the great things being done at the commission.

    Mr. Chatters, would you like to go first?

    Mr. David Chatters (Athabasca, Canadian Alliance): Thank you, Mr. Chairman.

    Because I'm simply covering for Mr. Mills today, I'm not as familiar as probably most of you are with the issues, but I did have some observations.

    It always seems to me, at least in the experiences that I've been involved with—I'm thinking, Mr. Chairman, of the experience of the MMT debate and the chapter 11 response to the MMT debate, and even of some of your comments—that when you get into these economic-versus-trade issues, as you suggested, the economic side seems to always have the evidence and the facts to so strongly support their arguments. So much of what is presented from the environmental side, however, is based on the precautionary principle and what might be or what might not be. In all of these issues, there always seems to be such a need for stronger environmental evidence.

    As we in committee debated the MMT issue, it was plain to me, at least, that the evidence Canada was using as a base for the ban on the use of MMT was extremely weak. Even I, as a layman, could see that the evidence being used likely wouldn't stand up to the challenge. Of course, it didn't in the end.

    You've produced this huge document that will take several nights to get through as bedtime reading, it I would think. But what is being done on the environmental side to produce the kinds of facts and scientific evidence that you can then take forward to challenge the economic evidence and win based on your evidence, rather than simply saying this might happen or that might happen and we should therefore do this?

    Even in your comments, I was struck by your comment that the Mexican steel industry—and I'm trying to remember your words—practically might be cleaner than the Canadian and the U.S. industries. It either is or it isn't. There's too much of that uncertainty on the environmental evidence side. We need to get stronger wording and stronger evidence.

    That's just my observation on the issue. Maybe you'd like to respond to that.

À  (1005)  

    Ms. Janine Ferretti: Just to start off with your last point, that's one of the reasons we put out that report, Taking Stock. We are trying to track emissions, and we're looking forward to getting the Mexican emissions from these sites. Once we have Mexican facilities, we'll be able to confirm once and for all whether or not the steel industry in Mexico is cleaner than the Canadian or U.S. ones. Of course, even those kinds of judgments are difficult to make, because such a study only looks at particular chemicals, not at the whole thing. It just depends on how big the picture is. It's very tempting to draw conclusions from a small sample or from a small picture enlarged, but that's a whole other discussion.

    Mr. David Chatters: It's that temptation that gets us in trouble.

    Ms. Janine Ferretti: It sure does. That's why I said “practically cleaner” or “may be cleaner”.

    You raised a very good point, and that was the difference in the information. But I also believe that's why we have the precautionary principle. That's why it's there.

    To also follow up a little bit on the question the chair asked earlier on the commission and what it's doing, I neglected to say that we're holding another symposium on trade and environment—the symposium that led to the production of that publication—and I know chapter 11 is also on that agenda.So we hope to be able to pull out more information, particularly now that we have more cases.

    I think your point gets back to one of the two issues that are part of the chapter 11 debate, and that one issue is the process. I mentioned transparency as being probably the most important or biggest issue on process, but there's also another process or procedural issue, and that is the expertise that panel members need to be able to fairly do their work and effectively do their work. We have not gotten to that point ourselves, but I know observations have been made suggesting that perhaps the environmental expertise wasn't always available or wasn't always brought in to those procedures and processes. I know that is of concern.

    Mr. David Chatters: Thank you, Mr. Chair.

    The Chair: Thank you, Mr. Chatters.

    Mr. Herron.

    Mr. John Herron (Fundy—Royal, PC): I'd like to talk about chapter 11 and confidence within the environmental community and also the investment community. The reason we have chapter 11 is to apply certainty in investment when we invest on whichever side of the border, given that we're one trading bloc in that regard.

    I, for one, have a perspective on the MMT debate. I think it was the method of public policy that the Government of Canada chose to utilize in terms of how it would address the MMT issue. If it had banned it as a toxin under CEPA, the Canadian Environmental Protection Act, it would not be susceptible at all to a challenge. Instead, we banned it as a tradable commodity, and that was actually how chapter 11 was triggered. I know many of my dear friends in the environmental community agree with that perspective. Some don't, and they use the MMT debate as an icon of why trade is bad.

    I believe we are right in the perspective that we have on MMT, but another perspective out there is that people think our environmental laws can be challenged, and that our cultural laws and our labour laws can be challenged in that regard. How do we ratchet up the confidence of that bloc or that sector of our society that has trepidations about things like MMT, even though I think that is—pardon the pun, sir—a red herring? How can we, as public policy makers, address that swath of the population that has trepidations about these kinds of things?

À  (1010)  

    Ms. Janine Ferretti: It's very hard to address those issues or to somehow provide confidence to that critical group.

    Mr. John Herron: How can we make them all happy?

    Ms. Janine Ferretti: I think the only way to really give confidence or provide confidence on this issue is to actually clarify it, because as you pointed out, it's not all black and white. There's a lot of grey, and that's where lawyers make money. That's also where a lot of misunderstandings arise. I think chapter 11 has a lot of both elements.

    We really need to look at ways in which these issues can be clarified so that they're better understood. Once issues are clarified and isolated, it's much easier to say what has to be done and what needs to be fixed. Once policy-makers are on that track, that will be the beginning of providing confidence and trust in a process.

    The irony, of course, is that we need investment to protect the environment. That's what happened in Mexico in the steel industry. At this point in time for the public at large, though, investment can be seen as something necessarily having something to do with chapter 11 and meaning that environmental standards will go down or whatever. There's a lot of confusion. It's an easy issue to not get right and not clearly understand.

    Mr. John Herron: If I may, I'd like to follow another track of questioning that relates to an article you wrote in the Gazette quite some time ago, related to power-generating plants being built in the United States. We know they need energy to drive their economy, and they're entitled to build their own power plants. That's fine. But a reference was made to the siting of those plants. That siting may be even more critical than whether they're going to be built, given prevailing airflows, etc.

    If the CEC has something like that on its radar screen, and if we reposition the CEC, how do we give your institution not necessarily more clout, but more influence on trying to help shape public policy on issues of that nature? How do we capture the attention of the three governments when a legitimate issue like that is raised and really needs that bilateral or trilateral engagement of discussion? How do we precipitate more of these kinds of conversations? Is your institution the natural vehicle to do that?

    Ms. Janine Ferretti: My response is probably a little off topic, in the sense that it goes beyond transboundary environmental impact assessment.

    Clearly, transboundary environmental impact assessment is important, but if I could just step back for a moment, that study showed what we did. We talked to people in the private sector who watch energy development and electricity development, and asked them to give us an inventory of plants either that are being constructed, for which licences have been approved, or which have been announced by developers. There are from 800 to 1200, with the 800 meaning the ones under construction and the 1200 including the ones that are just announcements.

    We did some emissions factoring to say what that would mean. If all 1200 were to be built, or if just the 800 were to be built, what would the emissions be like from a smog point of view or from a greenhouse gas point of view? What would we be looking at? It was very interesting. Clearly, the study showed some definite increases particularly in CO₂, in mercury in some cases, and in the other conventional pollutants in some cases.

    What we found and what that task underscored was that environmental policy-makers don't have access to that kind of information. In other words, you really don't necessarily know what's happening downwind from you. Or is it upwind? Sorry.

À  (1015)  

    Mr. John Herron: Stockwell Day got into that same trouble one day.

    Ms. Janine Ferretti: I better backtrack really quickly here.

    The Ohio Valley is an example. There is no way that Ontario regulators or Quebec regulators, for example, know what's being built somewhere in southern Ohio. Hopefully, things like a transboundary environmental impact assessment can do that.

    There are limitations, of course. There are limitations in terms of kilometres. I think this one was a hundred kilometres on either side of the border. But that is where those arrangements are very important.

    Mr. John Herron: How much teeth does the Espoo treaty have on these kinds of transboundary pollutants? For instance, if we're concerned of a power-generating plant being built just before the Fraser Valley or wherever it happens to be, how do we trigger that particular accord that we've signed with the Americans? I know it exists and I know what I think it should mean, but it doesn't seem to be able to be triggered.

    Ms. Janine Ferretti: The Espoo Convention really provides a framework. I think it"s almost a kind of gentleman's agreement in terms of how countries should conduct themselves and what some of the basic principles are for having a meaningful transboundary environmental impact assessment. The Canada–U.S.A.–Mexico protocol that was established or developed was very much based on that.

    These are things that can be worked out, and one of the things that we believe needs to be done.... By the way, just to inform you, in two weeks, we'll be releasing the report that culminates all the studies that we did on this issue of electricity in North America. One of the issues is a need for an inventory or some sort of a clearing house for new projects. Environmental policy-makers can have access to that to find out what's going on, to get a sense of models, and so forth, in order to help put transboundary environmental impact assessment into play and make it more meaningful.

    The Chair: Thank you, Mr. Herron.

    Mr. Reed and Mr. Tonks, followed by the chair.

    Mr. Julian Reed (Halton, Lib.): Thank you, Mr. Chairman.

    When you're looking at chapter 11, do you give any consideration to the activities of municipalities and how they may fit into that picture? For instance, one municipality in Ontario is now planning to outlaw the sale of gasoline containing MTBE, I believe, and they might also include MMT. And other municipalities are ordering the change in the content of motor fuel. The City of Brampton has announced that it will begin incorporating bio-diesel in its vehicles. The City of Montreal has too, and so on.

    We can be afraid of an action, of doing something nationally under the present law, like outlawing MMT, but if a municipality does it, what happens then?

    Ms. Janine Ferretti: I'm not sure I'm the right person to answer your question. I don't know what happens then. This is a guess on my part, but I would imagine municipal laws would somehow get equal attention, but I really don't know. I don't know if Canada's federal government is somehow responsible for municipal laws. That's a good question, but it's clearly an important question, because cities are becoming very active in carving out areas for themselves in terms of environmental protection. So that is a very important issue.

    Mr. Julian Reed: Thank you.

    Thank you, Mr. Chairman.

    The Chair: Thank you, Mr. Reed.

    I have taken the liberty of circulating two pages, on which I will comment when my turn comes. They are an indication of what is going on currently in terms of complaints, country by country.

    Mr. Tonks, Madame Redman, and the chair.

À  (1020)  

    Mr. Alan Tonks (York South—Weston, Lib.): Thank you for your deposition.

    I'd like to follow the line that I think the chair was probing with respect to experience under the cases that are outstanding. I would like to better understand the experiences from those cases with respect to how they impact on chapter 11, vis-à-vis the wording around “expropriation” and what is being tested through the courts.

    The background to that is that we have been hearing depositions with respect to the Canadian Environmental Assessment Act and, in particular, the harmonization with respect to provincial assessment regulations. I would like to understand your organization's role better in terms of monitoring the cases and the implications that these cases have for the whole issue that we're addressing, which is partly the harmonization of provincial assessment.

    I do note that, in the document you gave us, the whole issue of confidentiality orders was resolved with respect to sharing materials that implicated provincial jurisdictions and would, under expropriations, partially find provinces party to compensation should chapter 11 cases be awarded, through appeals, to private companies, etc. That's a great accomplishment, and I see this provides a special window for the provinces to monitor Canadian positions with respect to these cases.

    So what is the role that your organization plays? Will we have a presentation from you with respect to your organization's perception of how we should work through the Canadian Environmental Assessment Act, based on the case law that will emerge from the chapter 11 appeals presently before the courts? And if that isn't your role, you can state that. I'm really trying to establish what the role of your organization would be in that.

    Ms. Janine Ferretti: Our role with respect to transboundary environmental impact assessments was to facilitate a negotiation among the three parties—Canada, Mexico, and the United States—to come to an agreement on a protocol, as it were—I'm using that term loosely—that defines the manner in which transboundary environmental impact assessments will be done in North America. Our role was to facilitate that process, and we were able to bring it to the point at which a draft agreement was actually in place, outlining the framework, outlining the ways, and so forth.

    It all basically came to a standstill when it became clear that.... We were looking forward to nice signing ceremony, but that wasn't possible because of the asymmetrical, federal–subnational government relations that exist in North America. At this point, then, the commission has no further role because, from our point of view, a legal discussion has to occur to figure out a way in which Mexico and the United States can interact with each other. That's something we really can't contribute to very much. It's something the American State Department and the Department of Foreign Affairs in Mexico are looking after.

    So what rests right now is unfinished business, but we really have no further role at this point. Our work was on the substantive side and on the facilitative side, and we've done that. Unless there's movement, I don't anticipate the council of the environment ministers to come to us asking us to do something more. I don't see what else we can do. That's not to say we won't do anything, but I don't foresee it at this point.

    Vis-à-vis the issues related to article 1110 under chapter 11, as I mentioned, three activities are occurring right now in relation to that issue. The council of the ministers of the environment, or at least the environment departments, are in the process of discussing with the trade departments on a North American basis. This is a trinational discussion on what an agenda might look like for a ministerial meeting of North American environment and trade ministers in 2003. Will it or won't it include chapter 11? I don't know, but that's one issue that might possibly be considered.

    The second activity that's going on is, as I've mentioned, under the Joint Public Advisory Committee. JPAC is very interested in this issue and is hosting a workshop in June at the council session. Our council meets once a year. Ms. Redman knows that because she was Canada's representative last year. It's a possibility that, based on this workshop, the Joint Public Advisory Committee might make a recommendation to the council on how to proceed further. I don't know what they will do.

    And the third activity is at the secretariat level. It is a symposium that we're holding in November. A couple of the things we're looking at are the indirect effects of trade on the environment and, in this case, trade rules on environmental policies. Quite clearly, chapter 11 falls squarely in that, and we're looking forward to it.

    I have to say there wasn't a great deal of enthusiasm at the secretariat at the beginning to actually engage in this issue, because we felt there really wasn't enough to draw from. There weren't enough cases. But now there seems to be an interesting critical mass that has emerged, and I think that provides a good source for analysis in terms of what is going on.

À  (1025)  

    Mr. Alan Tonks: Just as one short supplemental, I'd like to pursue the notion that chapter 11 should or should not be on the agenda.

    In the IISD document, the following is pointed out:

The NAFTA Ministers need to clearly state that non-discriminatory laws serving broad public interests such as environment and public health should enjoy the police powers exemption from Article 1110 obligations.

Does it not occur to you how important it is to have that on the agenda if, in fact, that role is going to be achieved?

    Ms. Janine Ferretti: It certainly has occurred to me. The question is whether or not it will be an agreement that, in effect, six bodies can agree on. The six are the three environment departments and the three trade departments. And this is a—

    The Chair: No, it's not the departments, it's the ministers.

    Ms. Janine Ferretti: It's the ministers, but it's the officials who are actually meeting to have the discussion.

    The Chair: Yes, but they have instructions.

    Ms. Janine Ferretti: That's right. Absolutely. But the question is whether or not the six will come to that agreement.

    This is where I might provide you with some update in terms of why it is that we're not seeing that much movement. Part of the reason—and this is again something I can't back up with any kind of evidence, but I do know this—is that there is not necessarily 100% agreement that chapter 11 is really a problem in all communities.

    In Canada, there seems to be—and I again stand to be corrected, but this is my perspective, my understanding—more or less a coming together of the minds, both in the trade department and the environment department. It's not clear to me that the same coming together exists, for example, between the Office of the United States Trade Representative and the Environmental Protection Agency. I'm not saying the USTR and EPA don't have agreements on some aspects. I'm just not sure there's actually a very strong and deep coming together that allows them to say where they agree on these issues.

    It's the same thing with Mexico. It's not clear to me. I haven't seen anything that would suggest that for Mexico. That's not to say it's not there, but I don't see the same kind of oomph that I see here on the Canadian side. I don't know why that is, though. I don't know if it's just because the homework hasn't been done or because the pinch hasn't been felt like it has been here in Canada. I don't know why we're not seeing that same kind of energy and enthusiasm.

    Perhaps it's just a matter of time, or maybe the Americans and Mexicans haven't had a chance to get their ducks in order. It could be that there have been elections in both countries and that they've had to take time to review their files and pull everything together. But that is where we are. We're trying to ensure that there's agreement at that level—between the trade departments and ministers and the environment departments and ministers—that this is something they really want to come together on.

À  (1030)  

    The Chair: Thank you, Mr. Tonks.

    We will go to Madame Redman, followed by the chair, and then we'll begin the second round.

    Mrs. Karen Redman (Kitchener Centre, Lib.): Thank you, Mr. Chairman.

    It's good to see you again, Ms. Ferretti. I have two questions for you.

    As Mr. Tonks has already said, we're dealing with the Canadian Environmental Assessment Act. This question has to do with the Friends of the Oldman River. When she made her submission to this committee, Martha Kostuch presented a major concern around the alleged failure of the Department of Fisheries and Oceans to comply with the Fisheries Act. Indeed, under CEAA, the complaint related to the fact that she felt DFO's practice of using letters of advice characterized, in her view, an illegal tool. I know a submission has been made to the CEC. In fact, in December, the secretariat posted a work plan for the factual record of the documents on the website.

    I'm just looking for an update. Can you tell us how the development of the factual record regarding the Oldman submission is progressing? Are you receiving the kind of cooperation you would need from those involved in order to get the facts? Are you going to be able to submit a draft to the council in September? And as a supplemental to that whole issue, can you tell us how you would anticipate that people reading that factual record might draw conclusions as to whether or not Canada's departments and DFO officials acted appropriately or inappropriately?

    Ms. Janine Ferretti: If I may, I'd like to provide you with a better response in writing than I'm able to give you now, because, at this point, I don't know. I do know it is something we're working on, but I don't know for sure that we're going to miss the deadline for a month or so. I don't know how well things are going.

    Let's put it this way: I haven't heard anything to suggest that a problem exists, and I usually do hear about those. If there's some difficulty in getting information or in securing meetings, I do hear about it. I haven't heard about that in this case. I'd like to be able to get back to you on that, though, on whether or not we can provide you with a draft factual record in September.

    Was your other question related to what happens afterwards?

    Mrs. Karen Redman: Can you speculate.... In your view, how will people draw a conclusion from the factual record in terms of whether or not the Friends of the Oldman River complaint is legitimate or is in fact not accurate?

    Ms. Janine Ferretti: I don't have the work program in front of me to be able to tell you exactly what steps we're taking, but I can draw my response from our experience with the first factual record that we did hear in relation to the hydro operations in British Columbia and the Fisheries Act. I don't have any reason to believe we would do it any differently with this one.

    We took great pains to make sure the information was drafted in such a way that the reader could actually draw his or her own conclusions. We talked to experts and brought the expertise in. In other words, it was not just a reiteration of what the governments said, what the NGOs said, and there you go. It went beyond that. It went into actually developing information. Could we develop more information? Could we develop more facts that would help the readers to actually draw their own conclusions?

    As Ms. Redman's question implies, the factual record, by the agreement, is not allowed to actually come out with a sweeping conclusion at the end of the day on whether the party—in this case, Canada—did or did not effectively enforce its law. It has to be written in such a way that it is the reader who is able to draw the conclusions.

    Mrs. Karen Redman: Thank you.

    My other question is actually very personal in nature. I appreciate the fact that there is so much grey area in the environment aspects of so many issues, as you mentioned earlier. In your opening statement, you talked about the need for a strong environmental law. From the context in which you said that, I assume that was within each country, in order to come together and reach some kind of area of cooperation.

    I think one of the things this committee has long dealt with or grappled with is the subtle difference that may exist between strong legislation and what would be viewed as effective legislation. We've certainly spent years in this country dealing with our endangered species law, and it's certainly the intent to bring in effective legislation that isn't always necessarily.... I guess whether or not it's strong legislation is a subjective question.

    I don't know if I'm asking you to step out of your role at CEC, but in the context of your comment on strong legislation, can you comment on the subtle differences, if there are any, in your view, between strong legislation and effective legislation?

À  (1035)  

    Ms. Janine Ferretti: I'd have to think about that one, because I don't know. As I was listening, I wondered if that had to do with red herrings, in terms of the little.... I understand that there's probably some history in this committee about that kind of discussion. I haven't followed the discussion, so I won't be able to...

    Mrs. Karen Redman: To be fair, I'm not asking you to comment on endangered species.

    Ms. Janine Ferretti: I understand that.

    Mrs. Karen Redman: If you want to, take it away and think about it.

    Does strong legislation necessitate a legal framework so that it's in lockstep, such that if A happens, then B happens, so that there's a certainty to that piece of legislation within a national border? Is that necessary so that when you're using it on the international stage, you can say that if A happens, it leads to B or C, obviously subject to the process of the courts within a country?

    Ms. Janine Ferretti: Off the top of my head, I really am not able to comment on the difference. When I used the word “strong”, I didn't really think about whether or not that means “effective”. I just assumed it, did but I hadn't thought about such things. One of the things we are spending a lot of time thinking about it is effective enforcement, but not the legislation itself.

    Mrs. Karen Redman: Thank you.

    The Chair: Thank you, Mrs. Redman.

    Ms. Ferretti, you outlined three events. Among them was a possible environment and trade ministers' agenda in the year 2003. Could someone in your office provide the members of this committee with an outline of these three events so that we can make representations, if necessary, and so that we have a reminder as to the time, place, and title of each event?

    Ms. Janine Ferretti: I'd be very happy to.

    The Chair: May I ask the members of this committee to allow me to take you through the two pages that I circulated a moment ago, beginning with Mexico?

    If you look at page 2, you will notice that, in the case of Mexico, there are seven cases or seven claims. They all originated in the United States, and one of them has been settled, that being Metalclad. Those of you who were on this committee in early March will remember the Bill Moyers video on chapter 11 that came from the commission. You will recall that name Metalclad, the situation in Mexico, and how it evolved. For those who haven't seen it—Mr. Chatters, for instance, and Mr. Herron—I would urge you to ask the library for a copy. It is a most worthwhile item to see. You can see that Mexico has been stung once, and it could be stung six more times.

    In our case, as you can see, there are nine cases against us. They all emanate from the U.S., except for one. We also have been stung once, by Ethyl Corporation. The claim was for $251 million, and we settled for $30 million U.S. in 1998.

    Let's turn to page 1 now. You'll find the four cases against the U.S. there. Actually, they emanate from Canada, and I understand that one of them is presently being heard. It is a massive item, at $1 billion. The U.S. has not been stung yet, but should that happen to the U.S. administration as well, then it will, to use Ms. Ferretti's terms, feel the pinch, hopefully. Politically, something could then be triggered. This is why the Methanex case is being watched so carefully.

    To conclude this intervention, actually, I would say the issue is whether international corporations can subvert national laws and, on top of that, obtain financial gain. In the case of Canada, the Parliament of Canada passed a law in 1997 that banned MMT. Therefore, the Parliament of Canada's law had to be suspended, so to say. And not only that, but Ethyl Corporation was also compensated for Canada's action suspending the use of MMT. So we are being touched by that experience—the taxpayers of Canada, I should say—and so are the taxpayers of Mexico. All that remains to be seen is what will happen in the case of the U.S.

    We are fortunate that the IISD in Winnipeg has conducted some very good studies on this. We're also fortunate that there is a lawyer here in Ottawa who is very active on this file and is extremely knowledgeable from a legal point of view.

    I'm sure the CEC would like to do more if it had the consent of the necessary ministers. This was why Ms. Ferretti mentioned the first event in 2003, the meeting between environment and trade ministers. It isn't even certain, if I understood her correctly, that this item will be on the agenda. Therefore, it is important that, together with our American friends in Washington and with our Mexican friends in Mexico City—our parliamentary friends in both capitals, I should say, because these things can be easily misinterpreted these day— we get them to put pressure on their respective environment and trade ministers. Then it will happen, because departments follow the instructions of ministers.

À  (1040)  

    Ms. Ferretti, would you like to comment on this little monologue?

    Ms. Janine Ferretti: I'd only comment by way of reinforcing what you said about the interesting development. This is something I know you're aware of, but I think one should actually see how interesting it is that the three parties did develop an interpretive note, a statement.

    I know that note doesn't address all the issues. In fact, it seems the primary interpretive issue that they talked about was the issue related to protection under international law. The issue that seems to be the really more difficult issue was not addressed, and that is the issue of expropriation. It is still something out there, but I think it's a good sign that they actually went ahead.

    As you'll recall, even before they drafted that interpretive note, there wasn't really common agreement to do so. Therefore, the fact that they actually drafted an interpretive note is a good sign, in my view. It's a sign that there's a willingness to look at these issues, although they perhaps went with an issue that was easier to address than the tougher issue.

    It's also a good sign that, in that same interpretive note, they did make a comment about the process. I think you mentioned the idea of actually making the documents available. However, there is a caveat that says each panel has to agree beforehand on whether or not to do so. It is therefore back into the hands of the panel. I know that doesn't necessarily satisfy those who believe there needs to be more transparency, but, again, just to say there is a movement is a good sign.

    I think this movement exists because of the concerns. I don't believe the negotiators who drafted this article had actually thought about how it might be used.

    The Chair: Mr. Herron, you wanted to intervene.

    Mr. John Herron: I was just going to make a different comment. When there's diversity of thought, it's sometimes helpful to have that.

    It is true that we had a chapter 11 engagement with Ethyl Corporation on MMT, but there is an immense amount of sentiment out there, even amongst the environmental community, including the Sierra Club of Canada, that it is how we banned MMT, not whether we should have banned it. There was clearly enough preponderance of evidence that manganese could have a potential effect on human health.

    Some people perceive that to be a self-inflicted wound, so I don't like using that example. At least, I like acknowledging that there's a diversity of thought.

    That's all I want to say, sir.

    The Chair: Would you like to have a second round?

    Mr. John Herron: I just got pulled out of here.

    The Chair: Is there anyone for a second round? No?

    Ms. Ferretti, thank you very much for your appearance. You have given us a tremendous insight into the commission. We look forward to working with the commission, and we wish you well.

À  (1045)  

    Ms. Janine Ferretti: Thank you very much.

    The Chair: The meeting is adjourned.