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View Cheryl Gallant Profile
Mr. Speaker, I will be sharing my time with the member for Carlton Trail—Eagle Creek.
As the member of Parliament for Renfrew—Nipissing—Pembroke, I welcome the opportunity to participate in this debate regarding the Canada-U.S.-Mexico agreement, or CUSMA, which will replace the North American Free Trade Agreement that was negotiated by a previous Conservative government.
To paraphrase comments previously made by my Conservative colleagues, the good news is that, after rigorous debate in Parliament and at committee, Canada will continue to have a trade agreement with our largest trading partner. The bad news is that it was negotiated by the Liberal government, which made concession after concession to the United States and Mexico.
The United States is our greatest ally and our largest trading partner. The NAFTA deal that was negotiated by the Conservatives was good for Canada, with $2 billion a day in trade crossing our border, which represents 75% of Canadian exports. The U.S. direct investment in Canada was over $400 billion, which is huge.
Since NAFTA was first implemented, over five million jobs have been created, and total trilateral trade has quadrupled to $1.2 trillion. Conservative trade deals have done a good job creating jobs for Canadians.
The Conservative Party of Canada is the party of free trade. An election was fought over free trade. Luckily for Canadians, the Conservatives won that election. It was under former prime minister Brian Mulroney that the first Canada-U.S. free trade agreement was signed. Then it was under former Conservative prime minister Stephen Harper that Canada signed a record number of trade agreements, providing Canadian businesses with unprecedented access to markets around the world.
The Conservative Party is the party of free trade. We have long supported free trade and will continue to support a free trade agreement with the United States, our largest trading partner, and Mexico.
On February 25, I had the honour of presenting a private member's bill, Bill C-222, an act to amend the Expropriation Act with respect to protection of private property. There has been a disturbing trend in Canada toward what is referred to as regulatory, de facto or constructive taking of private property. This happens when government uses its statutory powers to regulate or restrict the property rights of an owner without acquiring title to the land being adversely affected. The landowner feels the impact of the regulation as if the land has been expropriated.
In the United States, the fifth amendment of the American constitution protects private property rights. In Canada, government acquisition of land without the owner's consent is not subject to the Canadian Charter of Rights and Freedoms. Private property rights were excluded from the Canadian Constitution when it was repatriated in 1982.
In Canada, landowners' rights are found in the expropriation legislation. The government must follow the law as to what land may be expropriated and must observe procedures set out in the legislation. In Canada the government can strictly regulate land, limiting its value and what a landowner can and cannot do with it without triggering the procedures in the legislation.
A de facto regulatory taking means a property owner is not entitled to compensation unless the restrictions of the owner's rights are such that they should be properly regarded within the meaning of the Expropriation Act.
I introduced Bill C-222 to provide some protections from the government taking people's property without compensation. It would appear that CUSMA addresses the issue raised by my private member's bill, Bill C-222. Canadian common law on de facto expropriation suffers from what some jurists refer to as external incoherence.
The present context of CUSMA decries the possibility that the rights of foreign investors in Canadian property are afforded more protection than the rights of Canadian property owners of Canadian property. The source of this incoherence is article 1110 of the North American Free Trade Agreement, or NAFTA, which has been carried over into CUSMA under article 14.8 on expropriation and compensation.
Article 14.8 in the new agreement provides:
1. No Party shall expropriate or nationalize a covered investment either directly or indirectly through measures equivalent to expropriation or nationalization (expropriation), except:
(a) for a public purpose;
(b) in a non-discriminatory manner;
(c) on payment of prompt, adequate, and effective compensation in accordance with paragraphs 2, 3, and 4; and
(d) in accordance with due process of law.
2. Compensation shall:
(a) be paid without delay;
(b) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (the date of expropriation);
(c) not reflect any change in value occurring because the intended expropriation had become known earlier; and
(d) be fully realizable and freely transferable.
3. If the fair market value is denominated in a freely usable currency, the compensation paid shall be no less than the fair market value on the date of expropriation, plus interest at a commercially reasonable rate for that currency, accrued from the date of expropriation until the date of payment.
4. If the fair market value is denominated in a currency that is not freely usable, the compensation paid—converted into the currency of payment at the market rate of exchange prevailing on the date of payment—shall be no less than:
(a) the fair market value on the date of expropriation, converted into a freely usable currency at the market rate of exchange prevailing on that date; plus
(b) interest, at a commercially reasonable rate for that freely usable currency, accrued from the date of expropriation until the date of payment.
5. For greater certainty, whether an action or series of actions by a Party constitutes an expropriation shall be determined in accordance with paragraph 1 of this Article and Annex 14-B (Expropriation).
The language used here was rolled over from the 1992 NAFTA and it refers to the indirect nationalizing or expropriating of a measure as being tantamount to nationalization or expropriation. The language clearly exists to ensure that compensation will be owed for both de jure and de facto expropriation by the expropriating country.
The scope of article 14.8 is indeed wide. “Measure” includes any law, regulation, procedure, requirement or practice, and the definition of “investment” is so expansive that it cannot be included here. Moreover, there is no allowance, as there is in Canadian common law, for express statutory language to extinguish the right of compensation.
How the previous NAFTA article 1110 has been treated in arbitration among the parties of NAFTA, Canada, the United States and Mexico, has, or at least should have, bearing on expropriation law in Canada generally. This is particularly so given NAFTA's, now CUSMA's, constitution-like status as a document that cannot be amended without the consent of all signatories.
The NAFTA expropriation case that has received the most attention from Canadian legal scholars is probably The United Mexican States v. Metalclad Corporation. In that case, Metalclad had received approval from the federal government of Mexico to operate a landfill in the municipality of Guadalcazar and began to construct the landfill on that basis. Mid-construction, Guadalcazar informed Metalclad that it would require a municipal permit and must cease construction pending its issuance. More than a year later, Guadalcazar finally made its decision: permit denied.
The governor of San Luis Potosi, the state in which Guadalcazar is situated, further declared Metalclad's land to be a natural area for the protection of rare cacti. The federal government took no saving action. In its decision, the tribunal stated, “these measures, together with the representations of the Mexican federal authorities”, on which Metalclad relied, “and the absence of a timely, orderly or substantive basis for the denial of the construction permit, amounted to an indirect” or de facto “expropriation.”
The tribunal's belief in the far-ranging scope of article 1110 is evident. As outlined in its decision, expropriation in NAFTA, and now CUSMA, includes not only “the open, deliberate and acknowledged takings of property” but also the “covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be-expected economic benefit of property.”
Where the ratification of CUSMA will leave expropriation law and Canadian property rights in the future is uncertain. Time will tell whether or not the law will continue to afford foreign investors more protection than Canadians. This is one example of why a detailed analysis of CUSMA is so important for Canadians to understand what is being signed.
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