New Democratic Party of Canada
Minority Report on the Free Trade Area of the Americas (FTAA)

Bill Blaikie, MP- October 25, 1999
NDP Critic for International Trade

1. The majority report puts forth an approach to negotiations on the Free Trade Area of the Americas (FTAA) that is remarkably similar to the elitist and uncritically commercial approach to trade liberalization that was rejected by Canadians in the Multilateral Agreement on Investment (MAI), and that, contrary to the report's title, continues to undermine the Canadian public interest through the Canada-U.S. Free Trade Agreement (CUSFTA), the North American Free Trade Agreement (NAFTA), and the World Trade Organization (WTO). That approach systematically elevates the rights of investors above those of citizens and their democratically elected governments. The NDP files this minority report because it advocates an alternative approach to globalization by which the world might achieve a stable, rules-based global economy that protects the rights of workers and the environment, provides for cultural diversity and ensures the ability of governments to act in the public interest.

2. The fundamental imbalance between investor and citizen rights is seen most clearly in the majority report's discussion of the need for an effective dispute settlement process in the FTAA. It asserts that trade liberalization agreements "remain nothing but a pious hope" if they do not include enforcement mechanisms "providing for sanctions for non-compliance." Accordingly, the report supports the inclusion of effective enforcement mechanisms for trade and investment disputes. Yet, in discussing the need to protect core labour, human rights and environmental standards, the report proposes nothing more than the "pious hope" it deems inadequate to protect investors and corporations. In these fundamentally important areas it offers only vague and empty platitudes, calling on the government to "assess" the impact of the proposed agreement on human rights; to "encourage" trading partners to respect human rights; to "continue to promote labour standards"; to "build up the presence of the International Labour Organization" (ILO) in the hemispheric initiative; to "seek to ensure" that national environmental standards are respected; and, to "work towards clarifying the rules" on the enforcement of multilateral environment agreements. If enforcement mechanisms to protect human rights are to be included, the report insists that they must be "relatively costless," unlike the proposed mechanisms for trade and investment disputes which it acknowledges to be costly. The report's incredible hypocrisy on the question of enforcement mechanisms is perhaps most evident in its rejection of binding and enforceable core labour standards even though it explicitly admits that, "in reality the ILO is void of any real enforcement powers."

The NDP rejects an approach that provides investors with ironclad protections but leaves citizens with mere "pious hope." If Canada is to sign a FTAA agreement, that agreement must either deal with social, environmental, labour and human rights issues in an enforceable way, or other international or Pan-American agreements and institutions concerned with human rights, social, labour, and environmental issues must be given "teeth," i.e. - the power to sanction behaviour which violates agreed-upon standards.

3. To protect investor rights, the report endorses the inclusion of an investor-state mechanism similar to that contained in Chapter 11 of the NAFTA and proposed in the MAI. Canadians have already seen how such a mechanism can be used by foreign investors to intimidate and sue their elected governments. Last year, US based Ethyl Corporation successfully used the NAFTA investor-state procedure to extract $19 million from Canadian taxpayers, and to force the Canadian government to rescind its ban on the potentially toxic gasoline additive MMT. A more recent action filed by Sun Belt Water Inc. of California ridiculously proposes to leave Canadians on the hook for as much as $10.5 billion (US) in compensation, and if successful, would undermine Canada's ability to protect its own freshwater resources. As the NDP argued in its minority report on the MAI, the investor-state mechanism inappropriately gives multinational corporations a status equal to that of democratic governments and greater than that of citizens, and 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. Just as the NDP has called for the removal of the investor-state procedure from the NAFTA, the NDP rejects the inclusion in any FTAA agreement of a similar mechanism, however narrowly it defines expropriation.

4. The report proposes to reintroduce several other investment provisions that were also proposed in the MAI. The NDP is particularly concerned with the proposal to entrench the right of investors to transfer their investment capital across international borders without restriction. The unfettered speculative capital flows that this proposal would encourage are the root cause of the extreme financial instability that has plagued the global economy in recent years. Although the report expresses concern about potential global financial crises, this proposal would prohibit the very regulatory tools that enabled Chile to successfully weather the global financial crisis of 1997 while free capital flows ravaged the economy of neighbouring Brazil. Rather than promoting speculative capital flows, the NDP believes that Canada should instead negotiate international rules that rein in the global financial casino and curtail the power of money speculators to destabilize national economies and blackmail governments.

5. The majority report acknowledges that the CUSFTA and the NAFTA have failed to protect Canadian cultural policies, despite the government's past assurances to the contrary. To provide better cultural protection in the future, the report proposes a new international instrument outside the FTAA framework. While the NDP is not opposed in principle to such an instrument, it must not be used to deflect legitimate criticism without actually achieving the desired protection, just as the ineffective labour and environmental side agreements were used during the NAFTA negotiations. A stand-alone instrument is only acceptable if culture, and cultural industries, are fully carved out of FTAA and WTO agreements. The carve-out must mean that Canadian cultural policies will not be subjected to countervail threats as occurred in the split-run magazine dispute. The government sell-out to the Americans in that dispute made it clear that an "exemption" like that contained in the NAFTA is completely inadequate to protect Canadian culture. A stand-alone instrument would also have to address the increasing problem of corporate concentration, cross-ownership and foreign take-overs in strategic sectors such as film production, book publishing, broadcasting and print media. It should also allow for regulation of the "New Media" in the national cultural interest.

6. Although the majority report recommends that the government and its FTAA partners actively engage civil society in a meaningful consultation process, the NDP notes that several participating civil society groups have questioned the integrity of that consultation process as it has proceeded thus far. In particular, some NGOs and labour organizations told the Committee that their input has not enjoyed the same financial and political support as that enjoyed by the business sector through the Business Forum of the Americas. The NDP rejects the decision to provide privileged treatment to the business sector of civil society above all others, and calls on the government to find ways of meaningfully engaging all segments of civil society in an equitable manner.

7. Canadians now have more than a decade of experience with the failed model of trade liberalization pursued by this government and the conservative government before it. They have watched the public policies that have made Canada a kinder, gentler nation being dismantled in order that Canada conform to the narrow free market ideology entrenched in the CUSFTA, NAFTA and WTO. Having already been forced to give up fisheries conservation, access to cheaper generic drugs, support for Canadian publishing, the auto pact's incentives for investment in Canadian jobs and communities, toxic fuel additive standards, and research and development support for Canada's high technology sectors, Canadians are clearly ready to rethink their trade policy. Negotiations on the FTAA provide an opportunity for Canada to take a new approach that places social, economic and ecological justice above the profits of multinational corporations. Unfortunately, the majority report fails to take up that challenge, and for that reason the NDP files this minority report.