Meera Nair

TPP – the untold story

In Posts on October 9, 2015 at 7:28 am

Since the agreement in principle of the TransPacific Partnership Agreement was announced this week, our media coverage has focused primarily upon its adverse impact to the dairy industry in Canada. The Federal Government was quick to respond with some reassuring details including an offer of $4.3 billion over fifteen years to ease the pain of greater competition.

But the government has yet to release the complete text of the agreement, content to indicate that it will provide more information in the next few days. Unless “more information” is comprehensive, Canadians will head to the polls on October 19, without a detailed understanding of the potential ramifications of the TPP.

At this stage, all we have is the technical summary provided by the government; among other details, the TPP apparently:

1. Includes protection from expropriation without prompt and adequate compensation.

2. Provides access to an independent international investor-state dispute settlement (ISDS) mechanism that is prompt, fair and transparent, and subject to appropriate safeguards.

3. Preserves the full rights of governments to legislate and regulate in the public interest, including for public health and environmental reasons.

The language appears intended to assure Canadian companies who invest abroad that their money and property will be safe – that statement (2) protects the integrity of (1). What the government fails to indicate is that this settlement mechanism has already seen use – directed at Canada. Brought to life through NAFTA, ISDS is a process by which foreign corporations can sue domestic governments for practices that might diminish expected profits. Moreover, these suits do not take place in a court of law, but in private tribunals.

Our government’s claim that the process by which disputes are to be settled is “prompt, fair and transparent, and subject to appropriate safeguards” is less than credible. As has already been written, ISDS disputes “are managed by a trio of corporate attorneys who rotate among the positions of advocate and judge. These tribunals are not answerable to any electorate and do not address public well-being as a court of law would do when confronted with the same dispute.”

Furthermore, our government’s claim that Canada’s right “to regulate … in public interest” is protected (said another way, we maintain our sovereignty) also strains credulity. As I noted here, in 1997 Canada retracted its own ban on a gasoline additive because of an ISDS dispute. Retracting the ban was not the only punishment meted out to Canada, the government also paid $13 million in damages, covered the opposing corporation’s legal costs, and publicly proclaimed that the additive was safe, even though our own environmental protection agency had said otherwise.

The one area where the TPP might be held at bay is in the area of tobacco law suits. It has been reported that the agreement includes a carve out against disputes from tobacco companies who object to policy measures that reduce smoking rates. (The disputes are very real; Uruguay is paying a heavy price for its worthy efforts to reduce smoking among its population.)  Sean Flynn (Washington College of Law), writes that such a carve-out “validates, rather than assuages, the concerns of those who have been criticizing ISDS systems for many years. Without express carve outs, ISDS provisions do threaten common health and safety regulations.”

The destructive nature of ISDS in existing agreements has prompted careful study and analysis. One such paper seems to have been designed expressly for the Canadian electorate; on 29 September 2015, co-authors Brook Baker (Northeastern University) and Katrina Geddes (Harvard University) posted Corporate Power Unbound: Investor-State Arbitration of IP Monopolies on Medicines – Eli Lilly v. Canada and the Trans-Pacific Partnership Agreement to the SSRN network.

Canada’s prominence is due to its dubious honour of being the first country to be targeted for patent dispute via ISDS, even though NAFTA ostensibly shielded domestic patent decisions from ISDS. Yet, we are embroiled in a $500 million challenge. This dispute began because our courts had the temerity to invalidate a patent that did not live up to expectation. Among the details provided by Baker and Geddes is that the research underpinning the patent consisted of a study of 21 patients over three weeks, with modest improvement detected in the condition of 11 patients (p.28). Baker and Geddes’ work is meticulous in its evaluation of ISDS and ought to have been compulsory reading for every member of Canada’s negotiating team.

The lone media coverage of ISDS this past week came via the Winnipeg Free Press. In an op/ed penned by Ronald Labonté and Arne Ruckert (University of Ottawa), they write: “Canada is already the most sued country in the world. It has so far lost $170 million in NAFTA cases with hundreds of millions more still pending.”

What has been most perplexing about the mania for the TPP is the insistence that Canada could not be left out. Given our experience, can Canada afford to be left in?

That the TPP might have actual trade benefit could well be true. But will the gains be large enough to compensate for the losses we will endure by throwing away our capacity to make sound policy decisions, in keeping with our own aspirations with respect to clean air, clean water, public health and safety, labour laws, or allocation of intellectual property rights?

ISDS was originally deemed a necessary measure for situations where the country involved did not have a robust, functioning system of law. Canada does not fit that bill.

So far, Canadians have been presented with a take it or leave it conceptual view of the TPP. There remains a third approach: hold out for a trade agreement that is only about trade, with the expected give and take in tariffs that is required for fruitful growth across all parties. As Labonté and Ruckert noted, Europeans are pushing back on similarly flawed agreements.

International corporations do not need to be given absolute freedom to seek unbridled profit to the detriment of public interest. Canadians have an opportunity to express their concerns to our government. And when the dust settles on October 19, if the opposition parties hold the balance of power, we can only hope that they will set aside partisan sniping and work together. Canadians deserve nothing less.

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