CIIT Committee Report

SUPPLEMENTARY OPINION

NEW DEMOCRATIC PARTY OF CANADA

INTRODUCTION

The NDP is appreciative to the Committee members, staff, analysts, and the witnesses who participated in this study of the potential Mercosur free trade agreement.

The NDP supports fair and progressive trade relations with key partners on the continent to create new opportunities for Canadian exporters, which would generate job creation and economic growth for Canadian workers and communities. New Democrats have always been very clear that we believe all international trade must be fair, balanced and in the best interests of Canadian industries, our environment, inclusive of Indigenous Peoples and all workers and it must be in line with our fundamental beliefs of social justice, equality, universal dignity and our international obligations.

The NDP heard from many witnesses during this study that a trade deal with the Mercosur nations is not a necessary endeavour and that the trade negotiators and officials at the department of Global Affairs should focus on more urgent trade negotiations and more global opportunities with stronger trading partners.

President of the Canadian Steel Producers’ Association, Joseph Galimberti stated, “Specific to Mercosur, …there is virtually no primary steel and very few steel-containing goods currently exported from Canada to Mercosur countries. This is unlikely to change in the context of a free trade agreement. We don't expect any noticeable increase and would in fact note that there are presently Canadian International Trade Tribunal anti-dumping remedies in place on certain Mercosur countries relating to imports on hot rolled carbon steel, alloy steel sheet, steel strips, and steel plate.

We would also note that there exists real potential for market share erosion within the steel-using community in Canada, particularly as it relates to those involved with automotive manufacturing and the makers of energy, pipe, and tubular goods, as the result of an agreement with Mercosur. I don't believe there is going to be a significant export opportunity for Canadian steel in Mercosur. The transportation alone is prohibitive. To compete you're getting into a fairly low-grade product that I don't think the Canadian industry wants to be a participant in just to have the shipping make sense. You have to compete on volume at that point, and it's not what we're doing up here.”

Claire Citeau, Executive Director of the Canadian Agri-Food Trade Alliance said, “CAFTA represents the 90% of farmers who depend on trade, and producers, processors, and agri-food exporters who want to grow the economy through better and competitive access to international markets… Trade, as I've mentioned previously before this committee, is one of our main economic drivers, as 60% of the value of the sector is generated through exports. Over half of everything we produce is exported. That's half of our beef, 65% of our soybeans, 75% of our wheat, 70% of our pork, 90% of our canola, and 95% of our pulses. Also, 40% of our processed products get exported…. We believe, therefore, that a free trade agreement with Mercosur—when viewed beside other FTAs that are in progress or being renegotiated, or new ones we see as offering important prospects for increased trade—does not provide a sufficient export growth potential to justify allocating the resources required to negotiate an agreement with that region”.

And, Mr. Paul Lansbergen, President of the Fisheries Council of Canada said, “a free trade agreement with Mercosur could hold some potential for the fisheries sector, but it's currently not a big priority for us.”

New Democrats understand the importance of our trading relationship with progressive partners all over the world and believe that progressive trade deals can improve the welfare of everyone.  To achieve this, a trade agreement must be transparent, inclusive and forward-looking. It must address important issues like income inequality, sovereignty, climate change and human rights. We must take all opportunities to change the way we negotiate and view key trade deals and make them about improving the lives of all Canadians. 

GOVERNMENT CONSULTATIONS AND TRANSPARENCY

The NDP believes that the Government of Canada can make no meaningful claims to transparency without providing Canadians with information about the subjects of negotiation.  The government must lift the veil of secrecy on trade negotiations.

To date, there remains no formal requirements set for the government to engage the public on trade agreements, and as with the previous government, the current government largely negotiates behind closed doors with very little public participation or transparency.

The work of the Standing Committee on International Trade cannot be considered as a government consultation, as the work of the committee is independent and multi-partisan, nor can it act as a substitution of a full and effective consultative process.

The government’s continued failure to uphold its commitments to the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) when it comes to trade agreements is of deep concern.  Article 19 is very clear that Canada must obtain the free, prior and informed consent of Indigenous Peoples before adopting any measures that may affect them, and the Mercosur FTA certainly falls within this classification.

The NDP also believes that for Canada to fulfill its obligations to Indigenous Peoples under the UN Declaration, they must have full representation at the negotiating table. 

In future negotiations, the government should consult Members of Parliament from all Parties who represent the Canadian public, in a meaningful and comprehensive way that includes Canadians from all sectors, regions and backgrounds, and the results of these consultations should be made public.

Transparency is equally as important for stakeholders and specific to the MERCOSUR trade negotiations Angelo DiCaro, representing Unifor, was critical of the government thus far when he said, “there is a clear absence of an articulated mandate going into these negotiations. I suppose our various lead negotiators, the negotiating team, and the federal government have a plan in place about some of their bottom line proposals, about some of the key areas they want to gain market access to and some social provisions they want to make progress on. However, that's not ever clear what that is, unlike other countries like the EU and like the U.S. to some degree.”

Mr. DiCaro also voiced concern for transparency in trade agreements in general by saying, “One of the things that we've also consistently called for is a more transparent process and a clarity about what it is we are trying to achieve in this. Speaking from a civil society point of view, I think it would be helpful to know this and in a way, I think that it also serves as a more appropriate strategy because it sends a signal to our negotiating partners that Canada has very clear bottom line positions, and as in the case of NAFTA, it could come to pass that a lot of Canadians and a lot of Canadian organizations will rally behind that. Therefore, I think this is something that we want to see more of, but there's no sense that will happen in Mercosur, which is the spirit behind my comment.”

The NDP will continue to push for better as the government embarks on all future negotiations.

The FUTURE OF TRADE AGREEMENTS

New Democrats believe that in many agreements, Canada has repeatedly opened market access to other countries, but instead of maximizing our exports to these partners, we’ve seen a decline. The most recent statistics from Statistics Canada show that during the first 9 months under the Comprehensive Economic Trade Agreement (CETA) with the European Union, Canada’s merchandise trade deficit with the EU jumped by 46 percent, compared to the same period a year earlier, before the trade deal came into effect provisionally. As Mr. DiCaro from UNIFOR stated, “Market access and opening doors is one thing. Is it demonstrable improvements for Canada? Is it worth the trade-off of some of the other things in trade agreements that have been proven to be very troubling for Canada? These would be things around special privileges for investors and locking us into regulatory freezes, and things of that nature.”

Mr. DiCaro continued to state the need for Canada to perform impact assessments independently and comprehensively. The NDP agrees with this and believes that Canadians need to see full economic, jobs and gender-based analyses of all trade agreements and these analyses must be made public.

Trade agreements going forward must no longer be negotiated to shift the balance of power in the economy from governments and workers to corporations. New Democrats are concerned that by continually giving enforceable rights to investors, trade agreements limit the powers of current and future governments and the citizens who elect them. This was the case in the original negotiation of NAFTA and the renegotiation of the USMCA. Any ratcheting of regulations and safety provisions over food, livestock and chemicals must be avoided.

The current government talks about creating progressive trade agreements, however there has been no real socially responsible action in any recently negotiated agreement. We must start with a fundamentally different approach from how we've approached trade deals in the past. There is a growing social unrest and concern around the rights of working people, our environment, women, and Indigenous people and them not being given the same consideration as the rights of corporate profitability. The creation of more binding and enforceable socially-responsible provisions is the first step forward and a lot of the social conditions of trade must be met before any trade agreement is signed. As was stated by Mr. DiCaro at the committee, “It's one thing to have aspiration, but the rubber is hitting the road on this. I think it's imperative that we start treating the enforceability of these social conditions on the same par as we would treat market access provisions”.

LABOUR

The current priorities and objectives of any trade deal including a potential agreement with the MERCOSUR nations must be redefined and must put the rights of working people first.

Currently, it was noted by Angella MacEwen, Senior Economist for the Canadian Labour Congress (CLC), in another study of a “Potential Agreement Between Canada and the Pacific Alliance” by the Standing Committee on International Trade that, “There has never been a successful labour complaint under a free trade agreement that has resulted in the other country having to do anything. It has never been the case that the free trade agreement labour chapter has resulted in concrete change for workers in that other country. We have other venues to do similar things that we're doing in Colombia right now, for example through the ILO, that might result in the same outcomes as this FTA, but the FTA has allowed Canadian companies there to exploit workers right now.”

Any new trade agreement must learn from and address the limitations of those that have come before it and change the way labour is considered. We must include full Labour Chapters into the main text of the agreement to ensure that labour regulations are binding and include penalties and standards for all three countries.

The NDP believes that in order to equally raise labour rights and standards in trade agreements, a fully enforceable and comprehensive Labour Chapter must include requirements from all member states to sign and ratify the International Labour Organization’s (ILO) eight core conventions, adhere to its Decent Work Agenda, sign and ratify the ILO’s convention 81, which is the labour inspection convention and the chapter must include the creation of an independent labour secretariat to oversee a dispute-settlement process for violations of labour rights as there is no current or adequate mechanism to combat the widespread violation of labour rights.

The NDP also agrees with the CLC that the Government of Canada must, “look at due diligence for Canadian companies and funding agencies… and create a framework for transnational bargaining to allow unions to represent workers in multiple countries.” The NDP believes that trade negotiations, including those with the MERCOSUR countries should be guided by the principle that no one should be disadvantaged; working people cannot continue to be an afterthought in trade agreements.

MANUFACTURING SECTOR

The NDP believes that integration and trade liberalization has benefitted corporate stakeholders but has not been shared with workers or small and medium sized manufacturing businessses.

The Canadian government must defend auto and manufacturing jobs, address the unfair share of wealth and implement a National Auto and Manufacturing Strategy to ensure the strength of the sector.

Mark Nantais, The President of the Canadian Vehicle Manufacturers’ Association was clear in his testimony when he stated, “When we (Canada) sign agreements that give hundreds of millions of dollars of new incentives for car companies that do not produce any vehicles or manufacturing jobs here, that reduces the incentive for our manufacturers to keep producing here and keep employing here. That is your policy. Despite all the intentions and efforts, that is what Canada is doing with the CPTPP. Like CPTPP, Mercosur represents a potential opportunity for increased Canadian vehicle exports, but also represents significant market access challenges to broadly apply protectionist domestic policies in those countries.”

DISPUTE SETTLEMENT MECHANISMS

The NDP believes investor-state dispute settlement (ISDS) provisions that privilege corporations in a way that conflicts with the public interest do not belong in trade agreements. These provisions allow foreign investors to bypass domestic court systems, thereby undermining our sovereignty. Arbitration tribunals, which lack accountability, can order governments to compensate investors who are allegedly harmed by public policies or regulations.

Regarding Mercosur, Scott Sinclair a Senior Research Fellow from the Canadian Centre for Policy Alternatives voiced concerns that, “The prospects for moving towards such a model in the context of a Canada-Mercosur FTA are limited at best. In their external trade negotiations, Mercosur countries, particularly Brazil, have traditionally been cautious about embracing WTO-plus commitments on intellectual property, trade and services, investment, and regulatory co-operation provisions of the sort that have been problematic in many recent Canadian bilateral FTAs.

This creates some space for a more progressive or at least less intrusive trade treaty model. If talks proceed, we strongly recommend that any Canada-Mercosur FTA not include investor-state dispute settlement mechanisms. Currently, Brazil has no foreign investment protection agreement with Canada. In fact, Brazil has never ratified an investment protection treaty that includes investor-state dispute settlement. Canada should also pursue the opportunity to eliminate ISDS from its current FIPAs with Argentina and Uruguay.”

Mr. Sinclair continue to point out that ISDS provisions have the most egregious impact on global environmental assessment processes. He said specifically in regard to the mining sector, “I also want to say that Canadian companies, and I would say, particularly in the mining sector, have used investor-state dispute settlement abroad in a way that I think brings Canada into disrepute. We've seen three recent cases against Colombia that were to do with setting aside an important natural area that provides much of the country's water. We've seen three Canadian-registered companies bringing challenges under the Canada-Colombia Free Trade Agreement, which is something we predicted would happen.”

It is important to note that Brazil has stated they would not accept trade deals with ISDS provisions in place.

ENVIRONMENTAL PROTECTIONS, ENERGY AND WATER

Scott Sinclair “The flip side of Brazil's cautious approach is that it has also been critical of including binding labour and environmental standards in trade agreements. This creates a problem for our federal government's recent embrace of a progressive trade agenda. To be called progressive, a trade agreement must, at a minimum, include strong, fully enforceable labour standards. It is also essential to include obligations to ensure that each country enforces high domestic environmental standards while abiding by commitments under multilateral environmental agreements. Achieving these two prerequisites of a progressive trade agenda will likely be difficult in the context of an FTA with Mercosur.”

The NDP believes any environmental chapter or provisions must be brought into the main text of an agreement to ensure they are binding and fully enforceable. All provisions must also be in line with Canada’s already set international environmental obligations such as those held by the Paris Agreement reached on December 12, 2015. The protection from the disastrous impacts of climate change and the continuing degradation of our environment must be of prime concern.

The NDP also reject any regressive energy proportionality provisions and any attempt to treat water as a tradeable or marketable good instead of as a human right.

GENDER RIGHTS

The NDP was disappointed that the committee chose to only reflect a vague statements of gender rights in their recommendations instead of truly reflecting the full importance of a Gender rights chapter.

The NDP calls for a mainstreaming of gender rights throughout the entirety of trade agreements.  It should not be solely limited to one chapter, and gender equality does not concern only issues that women entrepreneurs and business owners face. Labour rights must also address injustices to women like pay inequity, child labour and poor working conditions. The NDP believes that for an agreement to be truly progressive when it comes to gender rights, it must address the systemic inequalities for all women. The NDP believe that both a gender-analysis and a gender impact assessment must be applied to all trade agreements.

INDIGENOUS RIGHTS

The NDP believes the government must abide by Article 19 of the UN Declaration and obtain the free, prior and informed consent of Indigenous Peoples before adopting any measures that may affect them. 

It was noted by Pam Palmater, Associate Professor and Chair in Indigenous Governance at Ryerson University stated that Indigenous rights should be addressed throughout the entirety of a trade agreement, not only relegated to one chapter. She also noted that throughout the Mercosur nations, there are large numbers of Indigenous people, who experience a great deal of violence from transnational corporations involved in trade.

Palmater also noted that Canada was founded on a strong trading relationship between Indigenous nations and colonial settlers, and even though the trade treaties have been recognized by the Supreme Court of Canada and are constitutionally protected, Indigenous people are not seen as equal partners over our shared jurisdiction. The failure to recognize this partnership is unacceptable.

The government’s continued failure to uphold its commitments to the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) when it comes to trade agreements is also of deep concern.  The NDP also believes that for Canada to fulfill its obligations to Indigenous Peoples under the UN Declaration, they must have full representation at the negotiating table.

INTELLECTUAL PROPERTY, DIGITAL AND PRIVACY RIGHTS

There are growing concerns over the level of preparedness of the Canadian government to defend and advance Canada’s interest with respect to intellectual property (IP), digital and privacy rights. The Committee heard witnesses raise concerns over potential and extensive changes to IP rights related to copyright, patents and trademarks throughout other trade agreements, which may unfairly benefit big. corporations over Canadian consumers or innovators.

Canadian copyright policy must not be sacrificed at the altar of free trade. Maintaining balanced and sensible copyright policy is particularly critical considering the fundamental connection between copyright law and the ability to exercise free expression online—through sharing knowledge, research, and art; participating in public and political discourse; contributing to the cultural commons; and inspiring and building upon creativity. The NDP emphasizes the fact that notice-and-notice is an effective system that achieves objectives with respect to copyright infringement, while mitigating (albeit not completely) the harms that arise from notice-and-takedown. As was stated by Elliot Anderson from the Alliance of Canadian Cinema, Television and Radio Artists, “ACTRA believes it is time to take a new approach to culture and trade agreements. It would be based not on a negative exemption approach but on a positive commitment to promote diversity of cultural expressions, cultural collaboration, and exchanges.”

The Canadian government, should reject any proposal to extend copyright terms beyond its current term of 50 years after the author’s death, knowing that current Canadian copyright terms are already largely in compliance with international copyright treaties.

With drug prices in Canada already the second-highest in the world, the government must resist further patent extensions that will cause drug prices to rise even further, ensuring Mercosur or any trade deal will not impede the creation of a Pharmacare program in Canada.

The NDP believes that Canada must preserve its longstanding approach to exempting culture from trade agreements.  Cultural policy must be determined domestically by the Canadian government.  Trade agreements must not be able to limit our sovereignty and dictate our cultural policy.

SUPPLY MANAGEMENT

Supply management must be protected by the government against the recent US attempts to dismantle it. This will help ensure Canadians have access to high-quality, locally produced food, while supporting small family farms and rural communities. The supply managed sector is a major contributor to our economy contributing more than $26 billion to our economy and generating 310,000 jobs.

Supply management must not continue to be eroded in trade agreements as was the case CETA, the CPTPP and within the USMCA.  No further market access should be granted in a potential Mercosur agreement.

NDP RECOMMENDATIONS

• 1. That the Government of Canada ensure that safeguard measures are in place to protect our steel and aluminum sectors from international partners that dump large amounts of low-quality product into Canada.
• 2. That the Government of Canada provide greater transparency during trade negotiations by directly engaging Canadians through consultations and providing regular briefings to Parliamentarians during all rounds of negotiations.
• 3. That the Government of Canada protect future policy flexibility at all levels of government to expand public services or return privatized sectors to the public sector without the threat of litigation.
• 4. That the Government of Canada commit to strong and enforceable currency disciplines within all trade agreements.
• 5. That prior to the conclusion or signing of any future trade agreements, the Government of Canada commission an independent study of the agreement's expected costs and benefits, a jobs assessment, ensure that gender-based analysis is applied and that a gender impact assessment is undertaken.
• 6. That the Government of Canada ensure all future trade agreements do not include investor-state arbitration provisions.
• 7. That the Government of Canada promptly disclose all costing estimates relating to potential increases to prescription drug costs to all provinces, territories, individual Canadians and employers resulting from any proposed changes to patent laws in a negotiated trade agreement, as well as details of financial compensation that should be paid to Canadian provinces, territories, individuals and employers.
• 8. That the Government of Canada defend intellectual property rights that benefit Canadian consumers and innovators in all future trade and investment agreement negotiations and commit to retaining Canada’s current copyright regime, specifically (a) commitment to balance through a “made in Canada” approach; (b) notice-and-notice; and (c) current copyright terms (i.e. reject all term extension proposals).
• 9. Ensure that any provisions regarding data localization preserve Canada’s ability to make substantive domestic law protecting Canadians’ personal data and privacy rights.
• 10. Retain Canada’s strong net neutrality regime and reject all attempts to weaken net neutrality in Canada.
• 11. That the Government of Canada should negotiate environmental provisions that would strengthen the enforcement of environmental standards and targets specified through our international obligations, in particular those agreed to in the Paris Agreement reached in 2015.
• 12. That the Government of Canada, avoid all provisions that make water vulnerable to exportation and privatization.
• 13. That the Government of Canada pursue strong and enforceable labour standards within this and all future trade agreements. The government should pursue the inclusion of a labour chapter that would require ratification and enforcement of the International Labour Organization’s eight core conventions and adherence to its Decent Work Agenda. As well, the government should ensure the creation of an independent labour secretariat with the power to oversee a dispute-settlement process for violations of labour rights and enforce penalties upon the violators.
• 14. That the Government of Canada work with all international partners to ensure that, consistent with the United Nations Declaration on the Rights of Indigenous Peoples, the rights of Indigenous peoples are respected. As well, before agreeing to any trade agreement provisions that could affect Indigenous peoples, the government should obtain their unqualified, free, prior and informed consent.
• 15. That the Government of Canada safeguard food sovereignty, mechanisms of production and supply management, rural livelihoods and the right to know about what is in our food and how and where it is produced.
• 16. That the Government of Canada strengthen the Investment Canada Act to protect Canadian jobs and ensure that foreign takeovers of domestic companies provide a net benefit to Canada.