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May 8, 2002

Original: English



Name (s) Maude Barlow, Volunteer Chairperson
The Council of Canadians
Deborah Bourque
Canadian Union of Postal Workers
Organization (s) The Council of Canadians / The Canadian Union of Postal Workers
Country Canada



APRIL 2002

The Council of Canadians and the Canadian Union of Postal Workers (CUPW) welcome this opportunity to present our views to the Free Trade Area of the America’s Committee of Government Representatives on the Participation of Civil Society.

The Council of Canadians is an independent, non-partisan citizen group in Canada with more than 100,000 members and 60 chapters across the country. The Council is committed to raising public awareness and to fostering democratic debate about some of Canada’s most important issues: safeguarding our social programs, promoting economic justice, renewing our democracy, asserting Canadian sovereignty, preserving our environment and advancing alternatives to corporate-style free trade.

The CUPW is a union in Canada with 48,000 members in the postal, transportation and communications sectors. It has over 200 locals across the country. The majority of CUPW members are employees of Canada’s public post office, Canada Post. CUPW has been actively involved in public policy debates and actions relating to international trade agreements. It has a direct interest in a complaint about Canada Post that United Parcel Service has filed under the North American Free Trade Agreement (NAFTA).

Both the Council and CUPW are deeply concerned by plans to expand the North American Free Trade Agreement (NAFTA) to cover 34 countries in the Americas and create the Free Trade Area of the Americas (FTAA).

We believe that the FTAA will reinforce and lock-in the neo-liberal model of development that has eroded the independence of countries within Latin America and devastated Latin American economies.

We also believe that an agreement as flawed as NAFTA should not be expanded. Due to time and resource constraints, we will largely limit this submission to our concerns about proposals to extend the investment disciplines in NAFTA to the FTAA (FTAA draft agreement, Chapter on Investment, Article 10 Expropriation and Compensation)

NAFTA Investment Disciplines in Context

In 1998, the Organization for Economic Cooperation and Development’s (OECD) abandoned its efforts to establish a Multilateral Agreement on Investment (MAI) in the wake of world-wide public protests over MAI rules that would compel governments by law to safeguard foreign corporate interests, even at the expense of public interests. Unfortunately, the NAFTA, which was the prototype for the MAI, is currently being advanced as the model for both the Free Trade Areas of the Americas initiative (FTAA) and the Agreement on Trade-Related Investment Measures of the WTO. The principles of the MAI have also been embedded in almost 2000 bilateral investment treaties (BITs) quietly negotiated over two decades, most within the past few years. More than one hundred nations are parties to such treaties.

The Right of Private Enforcement

The most remarkable feature of these trade and investment treaties is the unprecedented rights they accord to foreign corporations. Under the NAFTA, for example, foreign investors are granted a virtually unqualified right to enforce the provisions of a treaty to which they are not parties, and under which they have no obligations.

According foreign corporations such enforcement rights represents a profound departure from the norms of international trade law which allow only nation-states to access dispute procedures. As a result, the powerful enforcement mechanisms of these international treaties have been freed from the diplomatic, strategic and practical constraints that often limit state-to-state dispute resolution. When investor claims do arise, they are decided, not by national courts or judges, but by private tribunals operating under international law and in accordance with procedures established for resolving private commercial claims, not disputes over questions of public policy and law. The tribunals deliberate in camera, and pleadings and evidence are routinely subject to strict confidentiality orders.

Not surprisingly, these investment treaties have become weapons with which to attack government efforts to achieve health, environmental protection, and other societal goals. They have been invoked on at least 27 occasions to challenge:

- environmental and public health laws, including groundwater protection regulations;

- hazardous waste management regulations mandated by the Basel Convention on International Hazardous Waste Trade;

- a ban on freshwater exports and other conservation measures;

- the land-use planning authority of municipal governments;

- the procurement practices of a Crown corporation;

- jury verdicts and appellate court judgments; and

- the activities of Canada Post for offending NAFTA disciplines that should not, under NAFTA rules, even be vulnerable to foreign investment claims;

Canada is now embroiled in more investor-state claims than either Mexico or the United States, and the only two cases to have been concluded, were resolved in favour of the disputing investors. In a third, Canada abandoned its defense of regulations concerning a neuro-toxic fuel additive after losing a preliminary skirmish before an investor-state tribunal. It agreed in that case to pay the disputing investor more the $19 million in costs.

Entrenching Private Property Rights

Several of these claims turn on a provision of NAFTA, common to other investment treaties, that prohibits government measures that directly or indirectly nationalize or expropriate foreign investments, or take a measure tantamount to nationalization or expropriation. When such

expropriation occurs, the investor must be compensated for the full market value of its investment. That the expropriation was for a public purpose, carried out on a non-discriminatory basis, and in accordance with due process of law is irrelevant.

When a tribunal ruled that a small Mexican town had expropriated the investment of a US hazardous waste company by refusing to allow the company to build a hazardous waste facility on land already seriously contaminated with such wastes, Mexico appealed to have the ruling set aside. In dismissing the appeal, the judge commented that NAFTA’s expropriation rule could be given such broad application that it would include a legitimate rezoning by a municipality or other zoning authority. By this standard, any government action diminishing the value of foreign-investment interests could provide a basis for an investor claim.

In important ways, an investor-state claim by UPS against Canada stands apart from the others because it represents one part of a global strategic campaign to expand the company’s courier business at the expense of public sector letter, package and courier services. The gist of the UPS claim is that Canada's publicly funded postal network gives Canada Post an unfair advantage over private sector courier companies. It believes that Canada Post is unfairly subsidizing its competitive courier and express services by using this publicly funded network. But in an era when many Crown Corporations and public agencies deliver at least some services in competition with the private sector, that argument could apply to virtually all public sector services - from water supply to health care.

As offensive as these investment procedures are in their own right, they are even more troubling when viewed from the perspective of Canada’s constitutional principles. Since it is our conviction that investor-state procedures deeply offend these principles, we have joined forces to challenge the validity of these NAFTA procedures in court. We are seeking a declaration by the Ontario Superior Court of Justice that NAFTA investor-state procedures, and the Canadian laws that implement them, should be declared null and void.

We will argue that by establishing these extra-ordinary procedures, the federal government has acted in a manner that:

(i) undermines the independence of Canadian courts by improperly delegating authority to adjudicate matters reserved to them by s. 96 of the Constitution Act;

(ii) infringes and denies the rights and freedoms guaranteed by s. 7 (fundamental justice) and s. 15 (equality) of the Canadian Charter of Rights and Freedoms and by s. 2(e) (fair hearing) of the Canadian Bill of Rights;

(iii) exceeds the treaty making powers of government under Canadian and international law; and,

(iv) breaches fundamental constitutional principles including the rule of law, democracy, constitutionalism and federalism.

Corporate Rights vs. Human Rights

Equally problematic are the impacts of NAFTA investment disciplines on the rights codified by the United Nations Charter, the Universal Declaration of Human Rights and several International Conventions and Declarations.

It is easy to find glaring contradictions between international agreements concerning human rights, and those established to protect foreign investors. For example, Article 2 of the UN Charter of Economic Rights and Duties of States (1974) provides that the laws governing nationalization, expropriation, and compensation are those of the nationalizing state and not those of international law. But NAFTA stipulates that such disputes be resolved in accordance with international not domestic law, and is clearly incompatible with this UN Convention.

We believe that Canada’s federal government has shown an overwhelming preoccupation with protecting the interests of powerful foreign corporations, for which it has been willing to trade away sovereignty, and even the independence of its courts. But when it comes to protecting human rights, the environment, biodiversity, or the rights of workers, this same government has repeatedly raised concerns about sovereignty to frustrate the establishment of meaningful international protections.

This systematic discrimination in favour of the interests of a wealthy and influential corporate elite, not only offends Canadian constitutional guarantees, but also the commitments that Canada has made in becoming a party to international human rights, environmental, and labour conventions.

The Council and CUPW believe that there is an urgent need to strengthen international agreements and institutions, such as those established under the International Labour Organization, environmental treaties, and human rights conventions, to ensure that governments do not continue to ignore such international commitments.

For all of the reasons outlined in this submission, the Council of Canadians and the Canadian Union of Postal Workers recommend the following:

Recommendation #1: The investment provisions of NAFTA should be rescinded, not extended to the FTAA.

Recommendation # 2: Governments should substantially strengthen international human environmental and labour rights agreements prior to the negotiations of any trade agreement.

Recommendation # 3 - Governments should review the structure of the International Labour Organization (ILO), with a view to giving the ILO more resources and powers, including an enforcement mechanism that allows the organization to bring members in compliance with international standards for human and labour rights.

cupe 1979

Due to an involuntary error, in the document FTAA.soc/civ/21 where it reads Country: Jamaica, should read Country: Canada.
This new version of the document has been released to reflect this change.

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