Trans-Pacific Partnership is mostly an investor protection agreement

By Blair Redlin

Inasmuch as 97% of Canadian exports to TPP countries are already duty free, it’s our view that the proposed Trans-Pacific Partnership is mostly an investor protection agreement, which should be primarily assessed on that basis.

The arguments that this is about trade versus no trade and whether we’re in favour of trade or not are sterile arguments, in our view. Of course Canada is a trading nation, and we need to continue to trade. That’s not, in our submission, what these agreements are primarily about.

It’s also an important context that the TPP was negotiated by the recently defeated former government and was concluded in the midst of the last federal election campaign. Many Canadians who voted against the last government had the TPP as one of their reasons.

It’s also important to note that the TPP is in considerable political difficulty in the United States right now, with major presidential candidates for both parties opposing it, and with very considerable opposition in Congress as well. It’s not clear that the TPP will be ratified in the U.S. within the two-year ratification window. There’s considerable civil society opposition in many other TPP countries as well, with New Zealand and Peru as two notable examples.

Given all that uncertainty, there’s certainly no need for Canada to be rushing with regard to this. We should assess this very deliberately and very carefully.

It’s concerning to us that the new Canadian government has not yet commissioned any kind of thorough economic or environmental assessment of the impact on Canada of proceeding with this deal. We recommend that the government proceed immediately to commission a comprehensive and independent public study of the likely economic, environmental, social, and community impacts of such a wide-ranging and potentially significant agreement.

Our network recently joined with the University of Ottawa and the Communications Workers of Canada to sponsor a one-day forum on the TPP at the University of Ottawa. Amongst others at the event, we heard from Nobel Prize-winning economist Joseph Stiglitz, who characterized the TPP as “the worst trade deal ever”.

We additionally heard from Tufts University research fellow Jeronim Capaldo, who is one of the authors of a thorough study of the economic impacts of the TPP recently published by the Tufts globalization and environment institute. Among other findings, the Tufts report found that Canada is likely to suffer a net loss of 58,000 jobs if it enters into the TPP. The study also found that by 2025 the TPP will result in greater income inequality in every one of the TPP countries as it transfers wealth upwards. A loss of jobs and an increased inequality are the opposite of what most Canadians were seeking in last fall’s election.

The potential for such results calls out for further independent studies.

The investment chapter of the proposed TPP includes the very controversial investor-state dispute settlement system, something we in Canada have considerable experience with since the advent of the NAFTA in 1994. This system permits foreign investors to sue elected national governments for policy or legislation that the investors argue may limit their potential future profits.

It operates by means of secretive and unappealable commercial arbitration panels, rather than the domestic court system that the rest of us must rely upon. Investor-state arbitrators are empowered to award monetary penalties against participating governments. ISDS provides extrajudicial protection to foreign investors that are enjoyed by neither domestic investors nor us regular citizens.

Canada is now the most sued developed country under ISDS. There have been 35 investor-state claims against Canada under NAFTA, and the number continues to grow. We’ve lost six claims and have paid out more than $200 million in taxpayers’ money in penalties. Canadians have also paid out tens of millions of dollars in legal fees in defending these claims.

Environmental policies, such as our ban on the gasoline additive MMT, our ban on exports of hazardous waste, provincial water and timber protection policies in Newfoundland, and research and development requirements in the Exxon Mobil case have all been successfully challenged. Meanwhile, we face very considerable new challenges with claims in the billions of dollars. Since time is short, I won’t go into those.

We have very significant court cases that we’re facing. As NAFTA expands into the TPP with the addition of nine more countries, Canada runs the risk that our negative investor-state experience with NAFTA will expand several times over as well. If the TPP goes ahead, we’ll soon be sued for our public policies, not only by U.S. and Mexican corporations but by corporations based in countries like Japan, Australia, Chile, and Malaysia as well. It’s not clear why we want to do that, and it’s also unclear what all these investor protections have to do with the promotion of trade, in any event.

Blair Redlin is a Vancouver-based public policy researcher and co-chair of the Trade Justice Network, which is a network of union, environmental, farm, and other civil society groups that raise awareness in English Canada about trade agreements like the proposed TPP and the Canada-EU trade agreement.