CIIT Committee Report

NDP Dissenting Report for CIIT - CETA Study

The NDP thanks the Committee and witnesses for the time put into this important subject. International trade is crucial to sustaining Canada’s economic growth and prosperity, and increasing trade with the European Community is an important goal. While the NDP is supportive of efforts to lift tariffs, and diversify our export markets, boosting Canada’s trade performance will require more than just free trade agreements. Our success will require a strategic plan for public investment and support of key value-added industrial sectors to help back Canadian global winners, which we are pleased to see as a recommendation from the committee.

At the same time, it is clear that trade and investment agreements, such as the Canada-EU Comprehensive Economic and Trade Agreement (CETA), are about far more than just international trade. Such treaties affect public regulation of investment, services, intellectual property, public purchasing and other matters only peripherally related to trade. The details and terms of the agreement matter and must be scrutinized to weigh costs and benefits. We do not support concluding the deal as currently framed in the time period recommended by the majority on the Committee.

Transparency is essential. The NDP objects to the lack of transparency in the current negotiation process. Closed-door meetings have created a climate of secrecy in the CETA process. Too little public information exists for Canadians and their elected representatives, at all levels of government, to reach informed conclusions on the merits and risks of CETA. It is only through a meaningful consultation process, which engages all stakeholders, that we will craft trade agreements that benefit all Canadians. Even this Parliamentary Committee study did not allow full participation for interested stakeholders, including many submitted by the NDP.

The treatment of public services in free trade agreements is controversial. Too often, treaty protections for sensitive sectors such as health care, education, social services and municipally provided services including water treatment and delivery or public transit leave the door open to trade and investment challenges. Public contracts for these and other services are a principal point of interest for the EU in the CETA negotiations. Canada must seek a clear exclusion for public services broadly understood as well as protection for future policy flexibility at all levels of government.

For health care, there is particular concern from experts and citizens groups that the government is stepping back even from the protections it built into the NAFTA. A strong exclusion for healthcare is needed, as well as a commitment to avoid inflating the costs of medicine, which are the fastest-rising component of Canadian health care costs.

CETA would be the first Canadian bilateral FTA since NAFTA to have an intellectual property rights (IPR) chapter, going well beyond Canada’s existing obligations. EU demands include adding the extra time it takes for a drug to receive regulatory approval (up to 5 years) to the regular 20-year term of patent protection, longer terms for data protection (from 8 to 10 years), and new rights of appeal that could delay the approval of generic drugs. Such changes would reduce the availability of medicines, and drive up drug costs, which could deal a critical blow to the sustainability of our health care system. A recent study estimates these extra costs at $2.8 billion annually.

Since IPR provisions are so rare in Canadian bilateral trade agreements and European negotiators have placed such great weight on these provisions, we should scrutinize the implications carefully. Further study is needed to consider the implications of harmonizing our IPR system with the EU in all relevant sectors and to determine the costs or benefits that will be witnessed by Canadian consumers and producers.

The NDP also has significant concerns about the CETA`s impact on government procurement at the sub-federal level. From available information, the proposed rules would prevent governments from considering, in covered sectors, any ‘condition’ that encourages local development in procurement contracts or bids, even if the process is non discriminatory to foreign bidders. Restricting government procurement in this way deprives provincial and municipal governments of crucial economic levers, particularly during economic downturns, to use government purchasing to stimulate the economy and encourage local spinoffs.

The NDP supports the need for open and fair government tendering practices, but this does not require sacrificing the ability for governments to use procurement to serve local economic objectives. Municipalities including Toronto, the Union of British Columbia Municipalities (representing 150 municipalities) and over twenty others across the country, have been raising red flags about the back room CETA trade talks. These municipalities have asked their provincial and federal governments to ensure their existing rights are protected under any new trade agreement and that they be excluded from the CETA. Their concerns must be heard and addressed.

As noted in the Committee’s report, participation of the provinces in the negotiations makes the process more complex. The objective to bind sub federal levels of government in the CETA on a range of issues from procurement to services raises important questions of constitutional authority, particularly in relation to enforcement of the agreement and financial liability. Further study is warranted.

The NDP welcomes any opportunities for real export growth for Canadian agricultural sectors, while noting continued European resistance at various levels. We also remain concerned about continued pressures to open Canada`s supply managed sectors, which must be protected.

The CETA also needs to account for the highly integrated nature of North American production and the NDP appreciates the acknowledgement of this issue in the committee’s report. Provisions regarding rules of origin must be sufficiently broad to ensure the vast majority of Canadian exports are not subject to tariffs. The automotive industry is of particular concern given the high degree of cross-border production and the potential sensitivity of production decisions to various rules of origin thresholds.

Finally, the NDP views investor-state provisions as an inequitable element in trade agreements that privilege corporations in a way that conflicts with the public interest. Investor-state arbitration allows foreign investors to bypass domestic court systems. Arbitration tribunals, which lack accountability, can order governments to compensate investors allegedly harmed by public policies or regulations. Both Canada and Europe have highly regarded court systems that protect the rights of all investors regardless of nationality. The NDP opposes including investor-state arbitration in the CETA and recommends that Canada follow the lead of Australia in rejecting investor-state arbitration in future trade and investment agreements.

In conclusion, the NDP urges a re-think of Canada`s approach to expanding trade with Europe, and consideration of means for enhancing mutual economic prosperity in a way that contributes to a greener economy, and bolsters high quality jobs and labour rights, while respecting democratic decision making regarding public services, public regulation, local government procurement and the public interest.

Recommendations

1.   The Government should publicly disclose the negotiating text and Canada’s offers (federal, provincial, territorial) before the text of the treaty is finalized.

2.    The Government should ensure full consultation with municipal governments in Canada regarding CETA offers and negotiations, and modify its time frame for the negotiations to enable this participation.

3.   The Government should ensure that the final text does not include investor-state arbitration provisions.

4.     The Government should ensure that the final text does not include any changes to patent protection that would decrease the availability of generic drugs or increase drug costs.

5.   The Government should ensure that the final text exempts provincial, territorial and municipal government procurement.

6.   The Government should ensure that municipal drinking water and waste water services are explicitly included in its Annex II reservations.

7.    The Government should seek a clear and broad exclusion for public services including protection for future policy flexibility at all levels of government to expand public services or return privatized sectors to the public sector without threat of litigation.

8.   The Government should negotiate a new exemption for health care stipulating that nothing in the CETA shall be construed to apply to measures of a signing party regarding health care or insurance.

9.    The Government should ensure a broad cultural exemption in CETA that would exclude books, magazines, newspapers, publishing, broadcasting, film, video, performing arts and other aspects of cultural industries.

10.   The Government should exclude over-access tariffs on supply-managed products from tariff reduction, and re affirm that producers and their elected representatives will maintain the unfettered ability to collectively manage domestic supply for egg, poultry, and dairy products.

11.   The Government should effectively safeguard the capacity to institute or re-institute a single desk for grain marketing, in any geographic region, should a majority of farmers’ elected representatives decide to do so.

12.    The Government should develop an industrial strategy for Canada that partners with industry to identify competitive high-productivity sectors that can be developed into high-value export champions, as well as current export sectors in Canada that may need support to remain competitive with the European Union (including forestry, auto, etc.). This could include leveraging procurement, providing R&D support through direct grants, and improving both physical and knowledge infrastructure.

13.     Government must retain the ability to implement federal financial incentives and ensure community benefits in the development of clean power, including solar, wind, and water. Canada must develop innovative green energy technologies that will help us meet domestic needs and access a growing global market.

14.    The Government should commission an independent study of the CETA whose specific terms of reference would be to determine the true cost of harmonizing Canada’s intellectual property system with that of the European Union.

15.    The Government of Canada should insist that the CETA agreement establish a framework for ensuring market access, and continued production, for Canadian producers of comparable agricultural and food products that use designations protected under the EU`s Geographic Indications regime.

16.    That the Government of Canada undertake a study to review where the CETA addresses areas of provincial jurisdiction as it related to the distribution of powers:

-       in particular with respect to section 92 of The Constitution Act, 1867; and

-       in all areas where there is shared, overlapping, or concurrent jurisdiction, and report on key implementation and enforcement issues that could arise.

17.    That Government should ensure that CETA’s provisions related to rules of origin are broad enough to ensure meaningful market access gains for Canadian exports, particularly auto, fish and agricultural products, recognizing the reality of highly integrated North American supply chains. With Specific reference to the Canadian automotive sector, the CETA must specify low rules of origin thresholds for Canadian manufactured automobiles.