By Heather Scoffield, The Canadian Press - Monday, November 26, 2012 - 0 Comments
OTTAWA – The European Union wants Canada to agree to compensate European companies for…
OTTAWA – The European Union wants Canada to agree to compensate European companies for any losses that stem from changes to health, environment or safety rules in Canada, according to documents obtained by The Canadian Press.
A recent draft of the investment chapter of the broad free-trade agreement that Canada and the EU are negotiating shows 50 pages of complex, widespread disagreement between the two governments over how their investors should be treated in the other’s jurisdiction.
Canada initially asked for the investment protections, but as the trade negotiations reach their final hours, Europe appears to be pushing for stiffer rules than Canada wants.
Specifically, the Europeans are resisting Canada’s request to carve out health, safety and the environment from rules about expropriation — even though such clauses have become standard in most of Canada’s trade and investment treaties.
In the Oct. 26 draft, Canada says that “non-discriminatory measures by a party that are designed and applied to protect legitimate public welfare objectives, such as health, safety and the environment, do not constitute indirect expropriations.”
But the text remains bracketed, which means Canada is asking for this wording and Europe has not agreed.
In other European documents published on the weekend by Montreal’s La Presse, EU officials bluntly reject the Canadian position.
“Canada’s proposed text would permit expropriation without compensation, in order to pursue legitimate policy objectives. This should not be accepted,” says the note from the European Commission to its member states, dated Nov. 6 and obtained by Quebec’s CAQ party.
Instead, the EU says companies should always be fully compensated if their businesses are hurt by government policy, regardless of the good intentions of the policy.
The EU is also pushing for stronger investor rights in Canada’s protected financial-services sector, the memo shows.
Canada has carved out financial services from the investor-state dispute settlement process, but the EU argues that Ottawa has set the bar too high.
The EU also wants Canada to narrow its protections of cultural industries from foreign investment.
“They’re opening up this Pandora’s box,” said Gus Van Harten, an associate professor at Osgoode Hall Law School and an expert on investor-state provisions.
Canada’s first full-fledged experience with investor protection clauses came through Chapter 11 of NAFTA, when Ottawa was the target of several late 1990s lawsuits from investors claiming compensation for changes to environmental legislation.
The provisions were initially included in the NAFTA trade talks to protect Canadian and U.S. firms from arbitrary expropriation by the Mexican government. But it was Ottawa that was most frequently the target, and the federal government has had to pay out millions of dollars to firms who claimed damages under NAFTA.
The NAFTA governments made some adjustments to their trade agreement as a result, increasing transparency and limiting the ability of companies to sue for any policy measure. If Europe gets its way in the Canada-EU deal, transparency would be enhanced but the limitations on companies to sue would be lost, says Van Harten.
Meanwhile around the world, investor-state arbitration has exploded, he added, pointing to a recent $1.8-billion award against Ecuador in favour of U.S.-based Occidental Petroleum Corp., under the Ecuador-U.S. bilateral investment treaty.
Investor-state provisions are the basis of much of the public opposition to the recently signed Canada-China foreign investment treaty, but the EU position is more aggressive than that treaty — even though such provisions are usually designed for developing countries.
“We’re kind of rushing into the mechanism without any study, as far as I can tell. It’s very dangerous,” Van Harten said.
Both Canada and the EU have well established courts that protect investors, he added.
“So the question is, why are we doing it? … We will be exposing ourselves to claims.”
A spokesman for International Trade Minister Ed Fast would not answer any questions about the draft investment chapter or the leaked EU memo, but Ottawa has made it clear that a trade agreement without investment protections would be archaic.
“The government is committed to a comprehensive, 21st-century agreement,” said Fast’s spokesman, Adam Taylor.
“As in all negotiations, nothing is agreed to until everything is agreed to.”
Canada’s priorities are better access to European markets for Canadian beef, pork and autos, he added.
Ministers met in Brussels last week to hammer out the most difficult issues of the trade deal, in the hope of concluding three years of talks and reaching a final agreement by the end of the year. That deadline now seems too ambitious, and negotiators will continue to meet.
Canadian officials are under intense pressure to protect supply management in the dairy and poultry industries. Many provinces and the generic drug industry also insist that Ottawa not give in to EU demands to extend patents for brand-name pharmaceuticals.
But the leaked EU memo says Ottawa wants to trade one off against the other, preparing to at least partially concede on drug patents in order to protect supply management — even though the federal government’s own analysis shows that a partial concession on drug patents would cost Canadian taxpayers up to $900 million a year extra in medical expenses.
Reached in Brussels late last week, Canadian dairy industry representatives were ebullient.
“So far so good,” said Wally Smith, president of Dairy Farmers of Canada after meeting with Agriculture Minister Gerry Ritz.
For the dairy industry, preserving supply management also means not tinkering with import quotas — something Europe has suggested.
Smith said Ritz told him Canadian negotiators “were not deviating in any shape or form” from their traditional defence of the supply-managed industries.
By macleans.ca - Thursday, September 13, 2012 at 4:10 PM - 0 Comments
Even more than a decade on, those two numerals—9/11—still have
Even more than a decade on, those two numerals—9/11—still have the power to invoke shock and sorrow. People around the world haven’t forgotten. And neither have the U.S. and its allies. This week, Yemeni forces killed the No. 2 leader of al-Qaeda’s local branch. And Ayman al-Zawahiri, now the group’s head, released an audiotape confirming other losses, including the June air-strike death of his deputy. A full 11 years on, the threat of further attacks hasn’t exactly disappeared, but it’s been greatly lessened. And that’s something we can all be thankful for.
Reports that the Conservative government will explore a free-trade agreement with China couldn’t be more timely. Our need to expand beyond a stalled U.S. market is obvious, yet uncertainty reigns on both sides of the Pacific when it comes to the ground rules for investment (to wit, confusion over whether Ottawa should approve the takeover of Calgary-based oil giant Nexen by a state-owned Chinese company). A mutual framework could ease these doubts and is worth pursuing—provided Ottawa simultaneously presses Beijing on democracy and human rights.
By Philippe Gohier - Sunday, January 25, 2009 at 11:41 PM - 1 Comment
Less than 20 years ago, 60 per cent of Canadians said they were struggling to get by
For many, life during the recession of the early ’90s is a distant, rapidly fading memory. And for anyone under 40, it’s the equivalent of a natural disaster in a far away place: You know it happened, and you know that it made many people’s lives miserable, but there’s no visceral connection to it, all of which makes it hard to truly grasp what life was like in the midst of it—and, by consequence, what might await Canadians this time around.
To describe the Bank of Canada’s economic forecast for 2009 as grim would be an understatement. The Bank expects the recession to peak sometime in the next six months, with no tangible rebound until 2010. “Our exports are down sharply,” Bank of Canada Governor Mark Carney told reporters last week, “and domestic demand is shrinking as a result of declines in real incomes, household wealth and confidence.” In all, Canada’s GDP will shrink by 1.2 per cent in the coming year, he predicts. And yet, there was a sprinkle of good news amidst the bad: 2010 could turn out to be a banner year, with growth projected to settle at an “above potential” 3.8 per cent. In the meantime, 2009 will bring both the best and the worst of the recession. The wave will crest but it will also break—just like it did in 1992.
So what was Canada like in 1992? In a word: unemployed.
After steady increases in 1990 and 1991, the unemployment rate hit an eight-year high in 1992: a whopping 11.2 per cent for the year and a peak of 11.8 per cent that November. (An economic think tank suggested the rate would have topped out at 13.7 per cent had 345,000 people not given up altogether on their search for work.) Making matters worse, those who lost their jobs had few prospects for a quick turnaround: the average unemployment spell across the country was 22.6 weeks, a hefty 23 per cent increase from 1989. Ontario—and especially its crucial manufacturing sector—was among the hardest hit, accounting for more than 70 per cent of the country’s job losses. In all, 123 manufacturing plants shut their doors in 1992, leaving 250,000 highly-paid workers out of a job. One restaurant owner in Kitchener was overwhelmed with job applications after posting an want ad for a full-time cashier—at $6.50 an hour. “When you have 290 people apply for one position,” he said, “it makes you wonder what’s happening.” By the time the recession was officially over, 1.6 million Canadians were out of work and another 2 million were on welfare.
At the time, many blamed free trade for those staggering unemployment numbers. A Gallup poll taken in the summer of 1992 found that only four per cent of Canadians supported Canada’s free trade agreement with the U.S. and an overwhelming majority opposed its expansion into NAFTA. On both sides of the border, politicians opposed to the agreement gained significant traction. Jean Chrétien’s Liberals were handed a crushing parliamentary majority in 1993 partly on a promise to re-negotiate NAFTA. (The federal government would later consecrate the deal without pressing for any notable changes.) But no political figure benefited from the debate more than Ross Perot, whose quixotic campaign for the White House was epitomized by a plea to voters to listen to the “giant sucking sound” symbolizing flight of U.S. jobs toward Mexico.
Most of all, though, the wave of unemployment prompted a massive loss of confidence in the Canadian economy. An Angus-Reid poll of residents in 16 countries found Canadians were among the most pessimistic in the world: only 68 per cent expected the economy to improve in the next decade, while 27 per cent figured things would get worse; 60 per cent said they were struggling to get by and 65 per cent were afraid they wouldn’t be able to support themselves in their old age. Even those whose businesses were making money during the recession were aware of just how grim the prospects were for the majority of people. An industrial auctioneer interviewed by Canadian Press in late 1992 said he was making record profits selling off the remnants of failed businesses, but conceded that it was coming at a heavy price: “The last recession cut out the fat. This is cutting out the heart.”
Many of the same trends are re-emerging this time around. Last month, Canada’s consumer confidence level continued its three-month slide, dropping even lower than it did during the early ’90s. “I think what we have on our hands right now,” says Pedro Antunes, the director of national economic forecasting at the Conference Board of Canada, “is very much confidence-led decline.” According to the Conference Board’s report, Canadians have not only seen their financial situation worsen over the past six months, they expect things to become worse still in the near future. Another poll taken earlier this month found 23 per cent of Canadians are worried for their jobs and 33 per cent believe they wouldn’t be able to find work should they be laid off.
Meanwhile, the debate over NAFTA has made a brief reappearance and there are fears—unfounded, so far—that Barack Obama’s presidency could mean a return to protectionist trade policy south of the border. On the employment front, Canada’s job numbers have gotten tangibly worse over the past year. The unemployment rate, currently at 6.6 per cent, hit a three-year high in December—and there are worrying signs it will soon climb much higher, led by a steady decline in Canada’s, and especially Ontario’s, manufacturing sector. (TD Economics predicts Canada could shed as many as 251,000 jobs before the year is over.)
Financial Times columnist Martin Wolf expects 2009 to be the year the underlying institutions that make up the global economy undergo a seismic shift. “Some entertain hopes that we can restore the globally unbalanced economic growth of the middle years of this decade,” Wolf wrote in a recent column. “They are wrong. Our choice is only over what will replace it. It is between a better balanced world economy and disintegration.” Should Wolf’s predictions prove true, it could very well signal an end to the boom-bust cycles that have characterized the economy for the better part of the last century and a half. But if the final year of the last severe recession is a reliable indicator, twelve months of massive unemployment, knee-jerk protectionism, and widespread panic may, in the end, not change much at all.