TPP consultation — my submission

Earlier this year, Canadians were invited to participate in a public consultation regarding the Trans-Pacific Partnership Agreement (TPP).  The deadline for submission is 23:59 EDT, October 31, 2016.

My submission is slightly over 4000 words in length; too much for a blog post.  Below are the closing paragraphs; the entire document is available here.

Update: A thoughtful reader alerted me to a 404 response when trying to access my submission.  If the direct link does not work, try the attachment page.

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… The principle argument to join the TPP seems to be that Canada cannot afford to be left out. Even if the agreement was only a matter of tariff and subsidy reductions, that argument is weak.[1] Given the nature of the entirety of the TPP, the costs of which will be felt through heightened expenditure for medicines, diminishment of Canadian culture, elimination of future innovation, absence of attention to public well-being for fear of international reprisals, and the loss of sovereignty when such reprisals are unavoidable, one has to ask: whom is this government wishing to please by committing Canada to the TPP?  The answer does not appear to be: Canadians. One must also ask: has our existing business community been sufficiently engaged to warrant our confidence that fulfilling their wishes will lead to better living for all?

That does not appear to be the case. In 2012, Mark Carney, former governor of the Bank of Canada, indicated that instead of investing in the economy, Canadian businesses “were holding on to nearly half a trillion dollars in cash, an increase of 43 per cent since the end of the recession in 2009.”^[2] Recently, the esteemed firm Deloitte, an internationally revered organization, released a damning report concerning the willingness of Canadian businesses to take the necessary steps to reinvigorate the economy. In Deloitte’s words, too many “lack an essential game-changing quality: courage.”^[3]

By virtue of the TPP, the individuals that Canada most desperately needs to encourage – the innovative entrepreneur looking to develop new industries to drive the economy when our wood and water have been exhausted – will find that no amount of courage can overcome the hurdles put in place by their own government. As the actual trade measures of the TPP bring very modest gains to Canada, and the remaining components will inflict costs far in excess of those gains, adopting this agreement makes little sense beyond acquiescing to the corporate bullying that is likely happening behind closed doors. If that is the sole reason that Canada must go forward with the TPP, please be honest to Canadians about the government’s reasoning. Please do not pretend that this is solely about Trade.

The TPP is an international omnibus bill, the effects of which will be detrimental to Canadians. The greatest pain will be inflicted upon those youthful voters whom this government so assiduously courted.

Regards,

Meera Nair

 

 

[1] The C.D. Howe analysis estimates the loss to Canada for not joining the TPP; “The real GDP impact would be a negligible -0.006 percent in the first year, rising to about -0.026 percent in 2035.” The losses to existing industries are not taken lightly, but it is essential to wonder what industries could rise in their place, if unrestricted by the constraints embodied within the TPP.

[2] Michael Enright, “Canada’s cowardly CEOs are sitting on billions, rather than investing in the economy,” The Sunday Edition, 16 October 2016 <http://www.cbc.ca/radio/thesundayedition/timid-ceos-endless-war-in-syria-steve-earle-fall-in-vermont-1.3801572/canada-s-cowardly-ceos-are-sitting-on-billions-rather-than-investing-in-the-economy-michael-s-essay-1.3801574&gt;.

[3] Deloitte, The future belongs to the bold, <http://www2.deloitte.com/ca/en/pages/insights-and-issues/articles/the-future-belongs-to-the-bold.html&gt;.  As an aside, poetry lovers will enjoy the inference of Invictus by the report’s authors.

 

looks like it is up to the Conservatives

On Friday, counterpunch published a detailed article by Murray Dobbin, concerning the TransPacific Partnership (TPP) Agreement and what appears to be a fog of ignorance in the halls of our Federal Government. Dobbin writes:

[The] consultation process has not penetrated the ideological bubble created by … trade department officials. In spite of the fact that by far the biggest concern of critics of the deal (including Joseph Stiglitz and a United Nations report) is the Investor State Dispute Settlement (ISDS) feature (the one that allows corporations to sue governments for regulating) … [Minister Freeland] seems to be either ill-informed or misled about its impact.

Dobbin raises concerns as to how meaningful the Government’s purported consultations are proving to be. Apparently, in response to queries from Canadians concerned about ISDS, Global Affairs Canada has offered assurances that there is nothing to worry about. As quoted by Dobbin:

“With respect to Investor-State Dispute Settlement (ISDS), the TPP will not impair the ability of Canada or its partners to regulate and legislate in areas such as the environment, culture, safety, health and conservation. Our experience under the NAFTA demonstrates that neither our investment protection rules nor the ISDS mechanism constrain any level of government from regulating in the public interest.”

Dobbin does not hesitate to point out the utter falseness of such a statement; not only has ISDS been used repeatedly against Canada, but particularly to inhibit measures taken by Canada to address environmental concerns. (We can only wonder if our Minister of the Environment and Climate Change, the Honourable Catherine McKenna, has been made aware of this.)

Environmental concerns overlap with health concerns. To add another story to Dobbin’s account: a sad day it was, when Canadians’ health placed second to American profits. Briefly, in 1997 the Canadian government of the day banned a manganese-based gasoline additive (MMT), deeming it harmful to human health. MMT’s American producers, Ethyl Corporation, took issue with this decision. It claimed expropriation, an actionable offense under the ISDS framework brought in by NAFTA. Facing a $350 million challenge, the Canadian government opted to settle. To fulfill the terms of the settlement, the ban was reversed and the country left poorer by some $19 million dollars (more than the entire budget for Environment Canada’s regulatory and compliance efforts at that time).

These details, and much more, were provided by Ken Traynor (Canadian Environmental Law Association) in 1998:

Most of the industrialized world does not use MMT as an octane-enhancer in gasoline. It is banned in many of the most smog-prone areas of the United States, including California and much of the Eastern Seaboard. Eighty-five percent of US oil refiners have confirmed that they are not currently using MMT. Alternatives exist and they are not that expensive. … And we’d get better air as a bonus.

If NAFTA did not exist, MMT would still be banned in Canada. Ethyl would have had to convince the US government to go to bat for it with the Canadian government, or sue Canada in a Canadian court. In a Canadian court, a judge can balance corporate property rights with the public interest, something glaringly absent from the deliberations of NAFTA arbitration panels.

We have two physicians in our Cabinet, the Honourable Carolyn Bennet and the Honourable Jane Philpott. Are they aware that any progressive action they may wish to take, should first be evaluated to ensure a foreign investor will not see its expected profits diminish? For that matter, what does our Minister of Justice, the Honourable Jody Wilson-Raybould think of the operation of ISDS? To put it plainly, if multinational corporations may operate in Canada, removed from all obligations to observe Canadian regulation or judicial oversight, do our citizens have any recourse to justice?

Canadians’ best hope for detailed discussion in Parliament may lie in the hands of our Official Opposition. Granted, they are the party that championed the TPP (and its further entrenchment of ISDS), but as Rick Mercer pointed out last week,  current Conservative Members of Parliament have comfortably reversed their stance on a number of issues already. If our Loyal Opposition will continue with their self-induced amnesia, ISDS would be a worthy issue to confront.

All levity aside, a good starting point for all recently elected members of Parliament is an article by Lisa Sachs and Lise Johnson of the Columbia Center for Sustainable Investment. Published in November, through the Globe and Mail, Sachs and Johnson encouraged the new government to pay close attention to ISDS: “[In the TPP] we see a further evisceration of the role of domestic policy, institutions and constituents, and greater liabilities for governments and domestic stakeholders.”

 

dear Ms. Freeland

The Honourable Chrystia Freeland
Minister of International Trade
House of Commons
Ottawa, Ontario
Canada K1A 0A6

Dear Ms. Freeland,

I am pleased to see your invitation to Canadians to familiarize ourselves with the Trans-Pacific Partnership agreement (TPP) and provide comments to the government. Such an overture is much appreciated, particularly in light of the style of governance that has gone before.

But, the Canadian public may need some help in understanding the issues presented through 6000 pages of text. The media are most likely their expected guides in judging the merits of the TPP. Unfortunately, the media has shown little interest in covering, let alone assessing, what may be the most deleterious aspect of the TPP, namely the Investor State Dispute Settlement (ISDS) mechanism. (At this blog, some coverage can be found here, here, here, and here.)

This mechanism, brought to Canada through NAFTA, ostensibly secures business investments from seizure by hostile governments. Sugar plantations and oil fields in alien jurisdictions come to mind. But ISDS windfalls have come through, not for Canada, but from Canada, for international corporations seeking redress when they have felt their profits unfairly curtailed by domestic regulations.

Just prior to the conclusion of the TPP negotiations, Brook Baker (Northeastern University) and Katrina Geddes (Harvard University) posted a paper describing the rise in global applications of ISDS, from 50 instances in the first 50 years of the existence of the mechanism to 608 in the last 15 years. They write:

This sea change in investor-state claims was triggered by the belated realization that not only could investors bring claims against banana-republic confiscations but against emerging economies and even advanced democracies whenever their expectations of profit were thwarted … Accordingly, foreign corporations have used investor-state dispute resolution to challenge a broad array of environmental and land use laws, government procurement decisions, regulatory permitting decisions, financial regulations, consumer protection, public health, and public safety laws, and a range of other public interest policies (p.11).

Baker and Geddes draw attention to Canada’s current difficulties under ISDS: a $500 million challenge from Eli Lilly, all because our courts had the temerity to invalidate a patent which did not live up to assurances. Eli Lilly also complained that our system of patenting was not to their liking. It may be their prerogative to complain about our system, but it should not be their right to change it. Like any other regulatory measure, Canada’s system of patenting was set by a Canadian government, in full compliance with existing international norms. Eli Lilly had every opportunity to press their concerns through Canadian courts. They did, and they lost. The story should have ended there. Yet ISDS offers a venue for Eli Lilly to take a course of action that would render our courts’ decisions irrelevant.

As I noted in an earlier post, the former Harper Government presented the TPP investment protection measures in glowing terms. While such a rosy outlook did not ring true, it is plausible that, having curtailed the Civil Service from doing its job of meaningful scrutiny, the mandarins in Mr. Harper’s office truly did not know better. But with the release of the text we now know that what is encoded into the TPP is ISDS at its worst. Experts who condemned the agreement before it was released have been vindicated, cold comfort as that may be.

Among those experts is internationally acclaimed economist Joseph Stiglitz. In your 2012 publication, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, Stiglitz appears in your acknowledgement of scholars who became “important sounding boards and advisors (p.290).” It is no secret that Stiglitz views the TPP as a charade of a trade agreement; among his recent columns is this assessment:

… These agreements go well beyond trade, governing investment and intellectual property as well, imposing fundamental changes to countries’ legal, judicial, and regulatory frameworks, without input or accountability through democratic institutions.

Perhaps the most invidious – and most dishonest – part of such agreements concerns investor protection. Of course, investors have to be protected against the risk that rogue governments will seize their property. But that is not what these provisions are about. There have been very few expropriations in recent decades, and investors who want to protect themselves can buy insurance from the Multilateral Investment Guarantee Agency, a World Bank affiliate (the US and other governments provide similar insurance). Nonetheless, the US is demanding such provisions in the TPP, even though many of its “partners” have property protections and judicial systems that are as good as its own.

The tone from the participating governments of the TPP is that the agreement is good for business; they rely upon the implied orthodoxy that business well-being translates to citizen well-being. However, you have questioned this orthodoxy. In Plutocrats, you describe a heated exchange in 2011 between then-Governor of the Bank of Canada, Mark Carney and Jamie Dimon, CEO of JP Morgan Chase and write:

Are the interests of the state and its big businesses synonymous? If not, who decides? And if they do clash, does the state have the right—and the might—to curb specific businesses for the collective good (p.255)?

That our Minister of International Trade has your background suggests that the TPP will be examined comprehensively. That our civil service has been unshackled suggests that qualified personnel with backgrounds in law, commerce, human rights, and trade negotiation will be encouraged to exercise their expertise with vigour. That Prime Minister Trudeau has promised transparency suggests that, whatever decision is reached concerning the TPP, Canadians will be fully informed as to both its merits and demerits. If Canadian sovereignty must continue to be diminished, we expect to be told the truth.

But, I choose to be optimistic. The state will not be limited to serving only as a handmaiden to business. My optimism stems from an encore remark in Plutocrats:

The issue, instead, is whether the interests of business and of the community at large are always the same and, if they aren’t, whether the government has the will, the authority and the brains to defend the latter, even against the protests of the former (p.261).

You and your colleagues have been given the authority. Your collective credentials remove any doubt as to the brains. What remains to be answered is the question of will.

I wish you all the best in your endeavors.

Sincerely,
Meera

Meera Nair, Ph.D
Edmonton

 

Update — January 25, 2016

Minister Freeland has posted an open letter, detailing the state of the TPP Agreement. It is encouraging to read that the Federal Government has undertaken widespread consultation, and is committing to fully evaluate the agreement in a transparent manner: “… this should include extensive, non-partisan consideration, analysis, and testimony from all regions, sectors, and backgrounds. Most importantly, this process will be fully public.”

Freeland also states the Canada will sign the agreement in February, but emphasizes that signing the agreement now does not commit Canada to full ratification in two years.  (Readers may remember Howard Knopf’s explanation during discussion of the WIPO treaties, that signing is like dating, whereas ratification is like marriage.) Freeland echoes the simile; stating that, by signing, we preserve our status as “a potential full partner in the Agreement, with all of the rights and powers that go with it.”

Canadian opinion concerning the TPP Agreement is divided. It will not be possible for any government to please everyone. Whatever decision is ultimately arrived at, if it is chosen by knowledgeable, non-partisan actors, with the aim of making the best possible, overall decision, and, with frank acknowledgement of the more deleterious consequences, then Canada will have been well-served by its government.

 

TPP – the untold story

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.

the $500 million tip of the TPP iceberg

Last week, international negotiators met in Ottawa to further discuss the Trans-Pacific Partnership (TPP) agreement. With the usual shroud of secrecy, few details regarding agenda and outcomes were released for public consumption. Nevertheless, based on a leaked copy of the chapter relating to intellectual property, there is sufficient reason for concern with respect to copyright. As reported last week (see Electronic Frontier Foundation here, Michael Geist here, Public Knowledge here, and VICE here) Canada’s copyright regime is likely to be challenged on at least two fronts:

• the role of internet service providers (will they remain as neutral providers or become key figures in policing the internet?)
• copyright duration (will Canada’s life-plus-fifty term give way to life-plus-seventy?)

Geist reminds us that the TPP will touch more than copyright; Canada’s privacy and patenting regimes are also implicated. Indeed, the question of Canadian sovereignty with respect to patenting is already at risk, via Eli Lilly’s $500 million challenge to the Canadian government regarding the loss of two secondary-use patents. The means by which Eli Lilly has launched its claim is a consequence of the Investor-State Dispute (ISD) mechanism of NAFTA.

Courtesy of Dennis Lowe and National Geographic

Our made-in-Canada copyright regime has been painstakingly crafted over ten years of deliberative thought; to watch it cast aside will be difficult. But more deleterious will be further entrenchment of the ISD mechanism through the TPP. Yet this issue has received little attention in Canada. Perhaps in part because the topic is not sexy; Investor-State Dispute sounds painfully dull. The phrase cannot be summarily equated to freedom of expression, invasion of privacy, or even the dubious claim that a hit television series could not have been made under the TPP. ISDs are constructed with arcane language that seemingly has little to do with everyday life, but they are potentially lethal as is being demonstrated by Eli Lilly.

Eli Lilly provides the bizarre spectacle of a corporation suing a government because a court decision did not favour the corporation. It has vehemently insisted that the decision of Canadian courts not to uphold two secondary-use patents is a violation of investor safeguards provided through NAFTA; specifically, those relating to minimum standard of treatment, non-discrimination, and expropriation. That the courts rejected the patents because the drugs concerned did not live up to the standard of utility set by Canadian law, was not reasonable according to Eli Lilly. To take action against Canada required contorting the ISD chapter of NAFTA, despite the fact that the chapter in question does not apply to intellectual property. The entire event would read like a lurid novel, if novels were written about intellectual property and national sovereignty.

In a report dated to March 2013, Public Citizen provides a meticulously researched account of Eli Lilly’s actions and the operation of ISDs within trade agreements. At that time, Canada was only facing a $100 million challenge (Eli Lilly has since upped the ante); even so, Public Citizen did not miss the irony at hand:

… while Canada faces an investor-state challenge from Eli Lilly, the country has joined negotiations to establish the TPP, which would expand the investor-state system further. To date, Canada alone has paid more than $155 million to foreign investors after NAFTA investor-state attacks on energy, timber, land use and toxics policies. Underlying Eli Lilly’s claim against Canada is the notion that government patent policies and actions are subject to the investor privileges provisions of the agreement.

Public Citizen observes that Eli Lilly’s actions marks the first occasion of an intellectual property challenge occurring under the auspices of NAFTA’s ISD provisions. Our previous “first”, the first challenge of any kind, does not offer much comfort, resulting as it did in a loss both monetarily and for public health. Briefly, in 1997 a ban on the gasoline additive MMT was repealed by the Canadian government in response to opposition by Ethyl Corporation, the American producer of the additive. At the time, Public Citizen wrote:

The Canadian government settled the NAFTA suit yesterday agreeing to pay Ethyl $13 million in damages and to cover the company’s legal costs. It will also proclaim publicly that MMT is “safe” in direct contradiction of the view of its national environmental protection agency.

With respect to Eli Lilly’s present action, Michael Geist and E. Richard Gold (Professor, Faculty of Law, McGill University) have both indicated that the corporation’s chances of winning are slim. Notably, in a briefing session recently held in Washington DC, Gold indicates that “… no competent tribunal could rule in Eli Lilly’s favor”. We can only hope that both Geist and Gold are correct. But competence might prove a relative term; so far, arbitration tribunals have not distinguished themselves in weighing public interest (as a domestic court of law would) into the decision-making process. (Public Citizen has thoroughly documented past arbitration decisions, with added detail for some of the more egregious outcomes.) Moreover, even if Canada secures a win, that does not necessarily exclude involvement in costs.

The Washington DC briefing session was hosted by the firm of Stern, Kessler, Goldstein and Fox on 5 June 2014, with all the presentations posted online. I am hard pressed to choose a favorite but Simon Lester (Trade Policy Analyst, Cato Institute) raises the issue of Canada’s increasing involvement with ISDs. Despite some indication from the Canadian government that CETA (the impending trade deal with the European Union) will mitigate the ISD risks, Lester notes that Canada is simply trying to “tweak the language” to ensure that court decisions cannot be challenged. “…  what I have seen written is that the only changes are that no claims can be made under expropriation, but there are more avenues [of claim]… the slight tweaks that Canada wants to make are probably not enough.”

If the Canadian government is not decisively protecting sovereignty within a bilateral trade negotiation, it is unlikely that we will do better in the multi-national forum of the TPP.

There is much more that could and should be written about ISDs but, for now, Lester shall have the last word. In his presentation, he asks an important question: “Normally, the Supreme Court gets the final word. But apparently, there’s an international court system above the domestic Supreme Court system.  … Is everybody okay with that?”

 

 

 

 

 

TPP and ISDS – more acronyms

“Countries that want to preserve flexibility on copyright term pretty much have no strategy in the TPP. Canada is about to fold.”

This tweet came early Friday morning from James Love, Director of Knowledge Ecology International. Love is in Singapore watching the latest drama of the TransPacific Partnership (TPP) negotiations. However, given that Canada officially has no negotiating power, its efforts to opposing copyright maximalism may not matter anyway. (Thomas Walkom, of The Toronto Star reported in 2012 that Canada’s admittance to the group did not include the right of negotiation.)

As many readers know, the TPP is a trade agreement in the making, negotiated in secrecy (except for privileged members of the business class). In November, Wikileaks published details of the negotiations with respect to intellectual property rights; they did not look promising. At that time, Michael Geist offered a series of posts detailing the shortcomings of the agreement. In his first post, Geist wrote:

The good news is that Canada is pushing back against many U.S. demands by promoting provisions that are consistent with current Canadian law. Canada is often joined by New Zealand, Malaysia, Mexico, Chile, Vietnam, Peru, and Brunei Darussalam. Japan and Singapore are part of this same group on many issues. Interestingly, Canada has also promoted Canadian-specific solutions on many issues. The bad news is that the U.S. – often joined by Australia – is demanding that Canada rollback its recent copyright reform legislation with a long list of draconian proposals. …

And in his regular column with The Toronto Star, Geist added:

The U.S. finds itself relatively isolated on many issues, with only Australia offering consistent support for its positions. For example, Canada and most other TPP countries support a general objectives provision that references the need for balance, promotion of the public domain, protection of public health, and measures to ensure that intellectual property rights themselves do not become barriers to trade. The U.S. and Japan oppose these objectives.

If the U.S. is successful in pressuring other countries to meet its demands, Canada would be required to radically overhaul its current law, reversing course on many of the rules the government recently enacted as part of its long-awaited copyright reform package or negotiated in the trade agreement with the European Union.

Returning to Love’s assessment of the current talks, the prospects of Canada (or any country) maintaining a sovereign system of copyright looks bleak. Copyright term extension is high on the list of demands; earlier today Love tweeted: “One USTR official I talked to said, yes, 70+ life copyright terms [are] wrong. But Europe made us do it, and now, we need everyone to follow.” Even more disturbing was the news that Mexico is arguing for “at least” life plus 100.

Yet copyright may be the least of our problems.

By far the most insidious part of the TPP is the determination by the Office of the United States Trade Representative (USTR) to further entrench the Investor State Dispute Settlement (ISDS) process. This mode of dispute resolution allows corporations to sue governments, not through courts of law, but in private tribunals. Earlier this year, law professor Brook Baker published a comprehensive examination of the risks ISDS poses to access to medicines:

Suddenly intellectual property rights, already hugely protected, are given another mantle of protection, namely protections as investments.  In addition, investors are given rights to bring claims for private arbitration directly against governments whenever their expectations of IP-based profits are frustrated by government decisions and policies.   Decisions of these private arbitral tribunals consisting of three international trade lawyers are not subject to judicial review, but are reducible into court judgments that can be levied against government property.

The principle behind compensation for thwarted expectation may have seemed rational at its outset (investor-state dispute mechanisms were first introduced in NAFTA in 1994) — to ensure corporations have recourse against unstable governments whose court systems may lack objectivity and rigour. But the mechanism has allowed egregious actions by corporations directly against governments, sidestepping robust courts of law. That health, environmental, or financial regulations seem to hinder corporate profit, is considered sufficient cause to bring action. That these regulations serve the citizens of that elected government is irrelevant.

In a TPP information session in Singapore, Melinda St. Louis of Public Citizen gave a presentation describing actions brought under ISDS; video available here.  Some of the highlights:

• Even municipal actions can provoke claims of frustrated expectation.
• The private attorneys who participate in the proceedings rotate between serving as arbitrators and serving as judges.
• Tribunal rulings are not bound by precedent.
• There is no means for appeal.
• Governments cannot counter-sue investors.
• The proceedings are very expensive for governments; it is in the interests of the tribunal arbitrators to drag out proceedings as even if the government wins, “almost always they are ordered to pay half the tribunal costs.”
• Tribunals have the discretion to award unlimited damages.
• Each year, the number of disputes increases.
• An example from St. Louis’ list (there were many): Occidental Petroleum (OP) breached their contract with the Ecuadorian government; the tribunal recognized the breach of contract but still awarded OP $2.4 billion to be paid by the government.
• Canada features in the list a few times; including the matter of Eli Lilly.  As I have written before, the U.S.-based pharmaceutical company has taken issue with Canadian courts’ invalidation of patents for two drugs and is seeking $500 million. St. Louis emphasizes how significant this case is: “[Eli Lilly is] actually challenging Canada’s entire patenting system.”

As a result of numerous actions against governments, many countries are starting to question whether ISDS should be part of trade agreements. Intriguingly, all 50 state legislatures in the United States passed a resolution opposing ISDS in trade agreements. Which makes it all the more perplexing that Canada appears to have already agreed to such terms in the purported Canada-EU free trade agreement. Announced in October by the Harper government as an agreement in principle, the text has not yet been publicly disclosed.  But in the summary document provided by our government, discussion of ISDS is artfully worded:

The process that investors follow to seek compensation is called “investor-to-state dispute settlement” (ISDS) and involves an independent arbitral panel hearing facts and making a decision on the merits of an investor’s claim. ISDS rules have been a standard feature of Canada’s comprehensive free trade agreements since the North American Free Trade Agreement and give assurance to investors that their investments will be protected from discriminatory or arbitrary government actions (p.21).  …

When individuals have disagreements, they have various ways to resolve them. They can try to negotiate  among themselves or, if that doesn’t work, they can seek the help of an impartial third party such as a mediator, an arbitrator or a court. Trade disputes between countries work much the same way. Trade agreements include various dispute resolution mechanisms so that governments can resolve their disagreements. For instance, when consultations fail to resolve a problem, trade agreements provide governments with the option of using impartial third parties to help resolve the dispute. In some cases, these third parties act like courts in the sense that they hear evidence from both sides and ultimately render binding decisions (p.38).

While our government assures us that the agreement, “includes provisions to guard against frivolous claims in order to ensure that the process will not be abused,” the disparate bargaining positions vis-à-vis the Europeans do not bode well for Canadians; see this assessment of the imbalanced negotiation by Gus Van Harten (an Associate Professor at Osgoode Law and well-versed in international trade).

Our best hope seems to be that saner Canadian heads will prevail before the final language is set. And that other countries can remove the deleterious conditions of ISDS from the TPP.