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View Don Davies Profile
NDP (BC)
View Don Davies Profile
2015-05-11 15:44
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Thank you.
Mr. Minister, in the United States there's a vigorous debate going on among the President, Congress, and civil society concerning the TPP. In the interest of transparency, American legislators of all parties are permitted access to the negotiated text of the TPP upon signing confidentiality commitments.
Will you permit the same privilege to Canadian legislators so we can foster a similar level of debate in our country?
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2015-05-11 15:45
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Thank you for that question.
I can tell you that we have had very robust consultations with our key stakeholders. Since the TPP negotiations were launched, we've had round tables involving over 350 different stakeholders from the economy. We have had one-on-one meetings with over 500 stakeholders during that period of time. I can assure you that those consultations with stakeholders from every sector of our economy inform the positions that we take at the negotiating table.
We will not compromise Canada's ability to secure an optimal outcome for Canadians, in the national interest, by disclosing our negotiating strategy to the other parties at the negotiating table. That's something we will not do. I can assure you that at the end of the day, the standard we have set, as I've mentioned many times in the House, is that we will not sign a trade agreement unless it is in Canada's best interest.
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View Don Davies Profile
NDP (BC)
View Don Davies Profile
2013-11-07 9:23
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Thank you, Mr. Chairman.
Mr. Minister, you referred earlier to the fact that you have internal documents and studies estimating the potential increased costs for pharmaceuticals. You've also talked about your commitment to transparency.
Will you table those internal documents estimating the costs regarding pharmaceuticals with this committee in the next 30 days?
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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-11-07 9:24
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I think you correctly said that these are all estimates. We're talking about outcomes that will happen eight to ten years down the road. We have continued to refine those. We're trying to determine exactly what the impact will be on the sector. We cannot do that until we know what steps we will be taking to minimize the impact of that additional protection. For example, we have the ability, the tools, as a government, to speed up the process of having patents approved. Doing that, of course, will have a significant impact on whether the additional patent protection will even be needed, or to what degree it will be needed.
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View Devinder Shory Profile
CPC (AB)
Thank you, Mr. Chair.
My thanks to you, Mr. Verheul, and your team for coming here today. I understand you are not here in a political role. It is so unfortunate that I have to make this comment, that on the one hand, 80% of Canadians, according to an Ipsos poll, support the Canada-EU trade agreement, but on the other hand, everybody knows the NDP is anti-trade. They have never supported any trade. They have already said that it will be the worst trade agreement, that we have sold out our lumber and all kinds of things. They have been asking for the text now, and they have never asked for it before.
Is there enough information out upon which to base a decision on whether to support it or to oppose it?
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Steve Verheul
View Steve Verheul Profile
Steve Verheul
2013-11-07 9:41
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Well, this is the first time we have given out this kind of detailed information before we have had a final text. I think the technical summary illustrates all of the issues, where we've landed on the question of ambition, the question of sensitivity. All of the main core elements of the agreement are there. The text, when it finally comes out, is probably going to be about a foot high. I'm not sure there will be a lot of people reading through the entire text to look for things.
What you've seen in that technical summary is the heart of the agreement. The rest is details. We have a complicated language in the trade world, and that's what the text is going to look like.
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View Don Davies Profile
NDP (BC)
View Don Davies Profile
2013-11-07 10:02
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Yes. Thank you, Mr. Chairman.
Mr. Verheul, it's been asked why a party can't decide on the most complex and largest trade agreement in the history of Canada based on a technical summary. I'm going to refer to the technical summary and put some questions to you, and we'll see how clear they are.
Under the ISDS provision, on page 14, it says you have negotiated a “transparent ISDS process, making submissions to the arbitral panel public and generally opening hearings to anyone interested”.
With regard to the word “generally”, does that mean there are circumstances where hearings will not be open to the public? If so, what are those circumstances?
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Steve Verheul
View Steve Verheul Profile
Steve Verheul
2013-11-07 10:03
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Yes, there will be circumstances where the hearings won't be open to the public. Those are in cases where there is business confidential information that would be prejudicial to the businesses in question.
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Michael Geist
View Michael Geist Profile
Michael Geist
2013-06-03 15:30
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Thank you very much. Good afternoon.
My name is Michael Geist. I'm a law professor at the University of Ottawa where I hold the Canada research chair in Internet and e-commerce law. I'm also a syndicated weekly columnist on law and technology issues for the Toronto Star and the Ottawa Citizen. I've edited several books on Canadian copyright and appeared many times before committees on copyright and trade policy, but I appear before this committee today in a personal capacity representing my own views only.
I greatly appreciate the invitation, as I have some very serious concerns about Canada's participation in the TPP. I should start by noting that I'm not anti-free trade. I support the government in its efforts to explore opportunities to expand markets for Canadian businesses.
That said the TPP raises some concerns. I would like to focus on some of the TPP's substance, particularly the copyright provisions in the draft agreement, as well as address some concerns related to process.
Let me start with the substance. Given the limited amount of time available, I'll focus primarily on the copyright provisions, though copyright is only part of the broader intellectual property issues raised by the TPP. You heard recently from Scott Sinclair on some of the patent issues, and if you're interested I'd be happy to discuss the implications of the TPP for governance of the domain name system in Canada.
As members of the committee know, Canada recently completed a long, difficult copyright reform process. Over a decade of debate ultimately resulted in Bill C-11. Virtually all stakeholders would say that the bill, which received royal assent last June, was imperfect. Yet it did reflect a genuine attempt at compromise, with many made-in-Canada provisions that are often cited as progressive, effective, and forward-looking digital copyright rules.
My single biggest concern is that the TPP will undermine the Canadian compromise that the government struck, and require radical changes to our national copyright law.
I should preface the analysis by noting that last year DFAIT conducted a public consultation on Canada's potential participation in the TPP, in which copyright was the top issue cited by individual respondents. No public report summarizing the responses was ever published, yet according to documents I obtained under the Access to Information Act, the government was overwhelmed with negative comments urging officials to resist entry into the TPP and the expected pressures for significant intellectual property reforms as part of the deal.
In addition to tens of thousands of form letters and e-mails criticizing the TPP, the government received hundreds of individual handcrafted responses that unanimously criticized the proposed agreement. In fact, a review of more than 400 individual submissions did not identify a single instance of support for the agreement; rather, those submissions focused specifically on copyright-related concerns.
Now based on a leak of the draft intellectual property chapter, let me provide four examples that lie at the heart of the public concern.
First, Canadian law now features a notice and notice approach on Internet provider liability, or ISP liability. This approach establishes the obligations for Internet providers and intermediaries when there are claims of copyright infringements, and grants copyright holders powers to raise allegations of infringement with the sites and their subscribers.
Moreover, it protects the privacy of subscribers and does not result in takedowns of content based on mere allegations. During the debates on Bill C-11, Canadian Heritage Minister James Moore repeatedly pointed to notice and notice as an example of a positive Canadian-specific approach. Yet according to leaked documents, the TPP would require that Canada drop its approach in favour of a more draconian takedown system that could stifle free speech and result in the removal of content without the need for any proof of infringement.
Secondly, the term of protection for Canadian copyright is presently the life of the author plus an additional 50 years after his or her death. This term meets the international requirement as established in the Berne Convention. The TPP would require Canada to add an additional 20 years to the copyright term. The extension in the term of copyright would mean that no new works would enter the public domain in Canada at least until 2034, assuming that the agreement takes effect in 2014. Many important authors would immediately be affected, since their works are scheduled to enter into the public domain in the period, let's say, between 2014 and 2034. These include Canadians such as Marshall McLuhan, Gabrielle Roy, Donald Creighton, and Glenn Gould, as well as non-Canadians such Robert Frost, C.S. Lewis, T.S. Eliot, John Steinbeck, J.R.R. Tolkien, and Ayn Rand. Given the potential to make those works more readily accessible to new generations once they enter the public domain, extending the term of copyright as potentially required by the TPP would have a dramatic negative effect on access to literature and history, particularly Canadian literature and history.
Thirdly, Canadian copyright law now features an important distinction with respect to statutory damages, as it contains a cap of $5,000 for all non-commercial infringements. While the reforms have been unsuccessful in stopping thousands of potential lawsuits against individuals, they do ensure that individual Canadians won't face the threat of hundreds of thousands or even millions of dollars in liability for non-commercial infringement.
The government, I think quite rightly, consistently argued that the reform was the right thing to do, yet the TPP would require Canada to drop the non-commercial cap and restore statutory damages that could climb into the millions of dollars for individual Canadians.
Fourthly, the digital lock rules were the most contentious aspect of Bill C-11. The provisions were widely criticized, but the silver lining, in an approach that, I have to say, went far beyond international requirements, was that the government kept the door open in the legislation to future reforms and exceptions to the digital lock rules. The TPP would close that door, increasing the penalties for circumvention and restricting the ability of Canada to create new digital-lock exceptions.
The copyright provisions in the TPP threaten a Canadian compromise that took a decade to achieve and that was strongly defended by the current Conservative government. I think undoing that compromise would constitute an enormous setback for Canadian sovereignty and for our long-term digital cultural policy.
I would be remiss if I did not also raise process concerns involving the secrecy associated with the TPP and the creation of a two-tier approach that involves special access to TPP information for some insiders.
The TPP negotiations have been ongoing for years, yet there has still been no official release of the draft text. To conduct a hearing on the benefits of the TPP without public access to the draft text forces participants to rely on leaked information that has not been officially confirmed. Canada should be demanding that a draft text be made available for all to see. Instead, it is deeply troubling that DFAIT has established a secret insider group, with some companies and industries associations being granted access to consultations as well as opportunities to learn more about the agreement and Canada's negotiating position.
I realize that Minister Fast denied the existence of such a group when he appeared before you last month. However, the documents I obtained under the Access to Information Act indicate that the first secret industry consultation occurred weeks before Canada was formally included in the TPP negotiations, in a November 2012 consultation with telecommunications providers. All participants were required to sign confidentiality and non-disclosure agreements.
Soon after, the circle of insiders expanded with the formation of a TPP consultation group. Representatives from groups and companies such as Bombardier, the Canadian Manufacturers and Exporters, Canadian Agri-Food Trade Alliance, and Canadian Steel Producers Association all signed a confidentiality and non-disclosure agreement that granted “access to certain sensitive information of the Department concerning or related to the TPP negotiations.”
I have copies of the signed NDAs right here that make specific reference to the TPP consultation group. The creation of a secret TPP insider group suggests an attempt to shy away from public consultation and scrutiny of an agreement that could have a transformative effect on dozens of sectors at a time when we should be increasing efforts to gain public confidence in the talks by adopting a more transparent and accountable approach.
I believe the TPP's highly secretive and non-transparent approach runs counter to Canadian values of openness and accountability. We should be actively encouraging participants to increase TPP transparency and should lead by example by ceasing the two-tier insider approach to trade agreement information.
I welcome your questions.
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View Guy Caron Profile
NDP (QC)
Thank you very much, Mr. Chair.
I'll be alternating between French and English, if you don't mind.
Mr. Geist, you mentioned that your research and some documents that you received prove the existence of an insider consulting group. I'd like to re-enter into the record what Minister Fast said on May 6. At this committee he said:
...we also seek the advice of stakeholders on a very regular basis. There's no stakeholder who is told that they can't have input into the process.
He also said:
I seriously challenge your insinuation that there's this insider group, but I make no apologies for meeting regularly across a broad, diverse cross-section of stakeholders to seek their input. We'll continue to do that.
He mentioned that he was meeting with stakeholders but denied the fact that there is such an insider group. How do you reconcile the information you have with his statement? Can you do that?
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Michael Geist
View Michael Geist Profile
Michael Geist
2013-06-03 15:46
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In some ways that question is better posed to the minister.
I look at these documents and to me it's readily apparent what this is. There are opportunities to discuss either Canada's position or perhaps other positions with respect to the TPP, and that's granted only to a select few who have signed these declarations of confidentiality and undertaking of non-disclosure. It's obtained under access to information. It's even described as a TPP consulting agreement. I don't have access to that, the general Canadian public doesn't have access to that. From my perspective, that means we're dealing with an environment where there are two tiers, those who have this access and those who don't.
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View Ed Holder Profile
CPC (ON)
View Ed Holder Profile
2013-06-03 15:53
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Thank you, Chair, and I'd like to thank our guests. Welcome back, both of you, to our committee.
I appreciate your testimony. It gives me some opportunity to reflect on how I want to understand better your probably divergent thoughts on the TPP.
We've studied this. We've had folks who have made representations to us before on a variety of trade agreements that we've looked at. It's interesting, and CETA is a good example. You made a brief reference to it, Mr. Geist. CETA is an example where the provinces are in step with the federal government. They've been consulted. I'm not hearing any leaks from the provincial governments about what they like or don't like about the CETA agreement. I certainly hear some things from the municipalities, but certainly not from the provinces. I'll presume that they've made certain commitments in their dialogue. I'm not sure if these are consultations or briefings or a mix—frankly, I don't know—but at certain points when a government wants to get more information from an organization or share some information to get more information, I would presume that kind of thing would be in confidence. It would seem logical to me that you would sign some kind of privacy or confidentiality agreement, because I wonder....
Maybe this is a question for you, Mr. Geist. I'm trying to understand this better. Perhaps you could give me some insights on this. What do you think the diplomatic fallout for Canada might be if we were releasing TPP documents or segments when several other countries involved aren't participating, particularly before there's a final draft. Do you have any sense of...? I presume you've been involved in negotiations before, but what impact would that have on Canada's negotiating position, or even its credibility?
That's a very sincere question. I'd appreciate it if you would give me your thoughts on that.
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Michael Geist
View Michael Geist Profile
Michael Geist
2013-06-03 15:55
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It's a fair point. I think the best reference, especially on the intellectual property provisions in this, is the Anti-Counterfeiting Trade Agreement, ACTA, wherein the U.S., as they do with the TPP, maintains quite explicitly through the Office of the U.S. Trade Representative, the USTR, special groups that do have access. They're not shy about making that clear.
That created some real contention with the Europeans and some others who felt that if we're going to keep this confidential, we're going to keep it confidential. Privileging some over others created a significant problem. But more broadly what happened within ACTA was that some of the leaks were inevitable. Some of the concerns about starting to create that two-tier approach become inevitable if in fact that's what happens. What it ultimately does is to undermine public confidence in an agreement.
I'm not here to tell you that I think Canada should go out there and say, here's the TPP for all to see. It's quite clear that we undertook not to do that. In fact, these same documents that I obtained under the Access to Information Act make it clear that the department takes those obligations very seriously in not making it widely available to the public. The problem is that if we are going to be a participant in this and at the same time hold values around accountability and transparency at the level I think we do, then it behooves us, together with as many of the TPP participants as possible, to push for more transparency, more public access, sooner.
That's actually what ultimately did happen within ACTA, as Canada and a number of other countries began to push for greater transparency. Ultimately those standing in the way relented and said, “Here are some draft agreements.”
We're pretty far along the way in these negotiations with still no draft text.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2013-06-03 16:00
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Thank you, Mr. Chair.
And thank you, folks, for your presentations.
No, Ed, I'm not going to take the bait. The fact is that under this government, we do have—
Voices: Oh, oh!
Hon. Wayne Easter: —a fairly substantial trade deficit, and for some reason, people do not want to look at the real reasons behind that merchandise trade deficit. Those are the things we should be looking at. We support trade, but we need to find ways to ensure that we're gaining value in Canada.
Mr. Geist, you're not the first one who's come before this committee on this whole “lack of transparency” business. I submit that you are absolutely correct. This is not just a negotiation on trade in commodities and on tariffs. It's a much broader agreement that can have implications for—you named copyright, intellectual property—a whole range of other areas. In fact, previous governments did provide texts to groups that held that information confidential. So those groups could actually see the text and comment on it, and were not just given a briefing on it, which might either have been accurate or just somebody's opinion. Previous governments did have a much more.... It wasn't open to the public, no, but it was open to a cross-section of representatives of the public, who could actually deal with it. That's not happening any more, and I think that's a problem.
How would you suggest going about ensuring that transparency, in terms of a good cross-section of the public, and still maintaining confidentiality, which we have to do?
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Michael Geist
View Michael Geist Profile
Michael Geist
2013-06-03 16:02
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Right. Well, I guess there are two issues here. There's the issue of the relationships we have with other TPP partners, and concerns they would have about having a single country just simply taking the text, and, let's say, throwing it up on the Internet, which we assume, quite rightly, is a non-starter.
We joined this TPP late, and as has been widely reported, we were forced to accept a number of conditions as part of that. Perhaps one of them was the level of secrecy that's associated with this agreement. But I would submit that Canada ought to be publicly on the record pushing the various other partners. I suspect, at least from my experience within ACTA,that there are some other TPP members that were similarly supportive of greater transparency, pushing to make the text, officially and in a draft version, available as quickly as possible, and I think that's in the interests of all negotiating parties.
In terms of what takes place domestically in the establishment of essentially a two-tiered approach, from my perspective that has to stop. That's not to say that you can't have discussions with various industry groups. Certainly, where it's a conversation, where the industry group is providing them with information about their concerns, that doesn't necessitate the need for confidentiality or an NDA. You need a confidentiality or non-disclosure agreement only when you're providing information back to those groups. If they're providing that level of information back to those groups, frankly, I would submit that that information ought to be made publicly available to all.
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View Russ Hiebert Profile
CPC (BC)
You come across as a very reasonable individual, stating earlier that you understood that Canada might have entered into these negotiations under certain conditions that would have precluded them from sharing any information. Yet at the same time you're asking that the government publicly release this information.
So I'm not sure. If the government has in fact entered into the negotiations with its own version of confidentiality agreements in place, it is simply not an option—if they want to continue to be considered a viable partner—for them to do anything other than stay within the terms they have agreed to.
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Michael Geist
View Michael Geist Profile
Michael Geist
2013-06-03 16:13
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I think what I said was that in the context of the international negotiations with other countries, we ought to be trying to convince our negotiating partners to make a draft text available. With respect to what takes place domestically, what I said was that I don't think a two-tier approach is appropriate. Certainly, at a minimum, the department ought to be disclosing whom they have signed these NDAs with so that we know who has privileged access.
With respect, while it may be described as standard operating procedure in the context of the Anti-Counterfeiting Trade Agreement—which with regard to these provisions would be the closest analogy that the government has engaged in—the Department of Foreign Affairs considered creating a similar kind of insider group, but ultimately dropped that idea once people became aware that such a group would be created. So certainly in the context at least of these IP-related negotiations, it hasn't been standard operating procedure.
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View Annick Papillon Profile
NDP (QC)
View Annick Papillon Profile
2013-06-03 16:14
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Thank you.
Ms. Des Chênes, I want to steer the discussion back to a topic that seems to concern everyone, the matter of transparency or the problem of access to texts. I'd like you to describe how that can be problematic for you in your own efforts to consult your members or have discussions with them. How does that affect your work? Does it make your job difficult, if not impossible, at certain times? Are you truly able to engage in a discussion, since all you have to go by is the interpretation of a few department officials? That doesn't really address the specifics of the issue in question.
Are you able to speak on behalf of your members during those industry consultations?
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Isabelle Des Chênes
View Isabelle Des Chênes Profile
Isabelle Des Chênes
2013-06-03 16:15
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I have to say that our concerns aren't as complicated as those involving intellectual property. Things are much more nuanced. The main issues on our end are tariffs, environmental considerations and the supply programs. It's not quite as complicated.
As for the interpretation that the negotiators give us, it's easier for them to provide us with pretty sound briefings that are sufficiently detailed without giving us the texts.
As I said earlier, it's always better to have the text, because it gives us a better grasp of what it says in detail and allows us to do a better job of informing our members.
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View Wayne Easter Profile
Lib. (PE)
View Wayne Easter Profile
2013-06-03 17:04
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Thank you, Mr. Chair.
I'm sorry I missed your presentations. They were the ones I really wanted to hear, especially Charlie being a fellow islander. I don't know if he's a resident there or not; we have some who are not. In any event, you both know how this place operates, so I had to go over and give the government a little praise for their current budget implementation bill.
Both of you had fairly extensive involvement in previous agreements on the inside, and one of the things that we're hearing a lot about at this committee is the extreme secrecy surrounding TPP. In some previous negotiations, committees, a broad section of Canadian society, did actually see the texts. We're under confidentiality, and that's understandable, but I think in the past it did provide the public and organizations with some confidence that they were getting firsthand knowledge of what was happening in the negotiations and that they could sincerely critique or praise that relevant sections of the agreement.
In this one there's no such thing. There are briefings but there's no text. How do you see getting around that and how important is it to be at least relatively open? You have to protect confidentiality and I think we all understand that, but how do you see getting around that?
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Michael Hart
View Michael Hart Profile
Michael Hart
2013-06-03 17:06
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This is a really ticklish issue. As a former official and a negotiator, obviously there's a great advantage in not having to deal with the political noise off-stage of people criticizing you for things that you're not doing—because that's often what happens. Much of the criticism has very little to do with what you're actually doing, but at the same time, because of the delicate nature of the negotiations, you don't want the other side to know exactly what you're thinking, and so on. So you need a certain level of confidentiality.
We worked out a compromise during the FTA and the NAFTA negotiations and the Uruguayan negotiations, which was basically the same compromise. We regularly briefed members of the sectoral advisory groups as well as the broader international trade advisory committee, and whenever we had an opportunity we wrote speeches for ministers in order to outline where we were going with things. The thing that we feared the most was ministers making statements in the House that would compromise our ability to negotiate.
You will appreciate, for instance, what kind of impact Mr. Clark's announcement in the House had one day, in response to a question, that supply management was part of the very warp and woof of this country and would not be part of the negotiations. Poof! Out went an important piece of coinage of ours that we needed to use. So, pfft, it was gone. So the less said by ministers without having a clear idea of what you're doing and thinking it through strategically, is helpful.
But in the case of the TPP, I have no idea what they're negotiating, other than a very broad outline based on the document they put out two years ago—which any first-year graduate student could write up for me as to what would be contained in a quality trade agreement. It didn't take ministers sitting around a table approving it. It's a fairly rudimentary document, and that's all we know.
I think it is not in the best interests of either the negotiators or the government to maintain this level of secrecy.
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Charles McMillan
View Charles McMillan Profile
Charles McMillan
2013-06-03 17:09
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I have talked to some of you as individuals and some of you were in Tokyo. At a conference, I talked to you as individuals and friends and whatever. To me, the current negotiations are with Japan and Europe—and I've advised various people in Ottawa.
Picking up on Michael's point, Simon Reisman was our negotiator, but inside the negotiating team—the American and Canadian—we had people on both sides who would engage on the political pitfalls for both countries of certain issues. We would meet regularly. We had a cabinet committee, chaired by Mike Wilson, and it was cabinet secrecy so you know....
Australia is the country pushing the most for the secrecy. Australia was against Canada's coming in initially and against Japan's. Unfortunately, we were basically the last country to approve Japan. But the private sector is fundamentally at this stage interested in two agreements, with Europe and Japan, because they know the practical political pitfalls of the TPP and some of these other agreements.
Some of these other agreements may be retail, but they're trivial. They don't amount to much. Trade with some of these countries, as I wrote in an article, is like a day's trade with the United States or three days or a week with Japan.
Concentrate on a limited number of issues, with a limited number of negotiators on the two big issues. The Europeans, by the way, would love a deal with us, as a prelude for negotiating with the Americans.
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Ian Burney
View Ian Burney Profile
Ian Burney
2012-10-18 16:33
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Thank you very much, Mr. Chairman. We certainly appreciate this opportunity to appear before the committee to provide a briefing on the Canada-China foreign investment promotion and protection agreement, or FIPA.
I've been introduced, so let me introduce my colleagues who are here with me from the Department of Foreign Affairs. I have Laurent Cardinal, who is the director general for the North America trade policy but also has oversight for our FIPA program; Cam MacKay, who I think you've seen recently in a different capacity, but his day job is director general for China trade policy. John O'Neill is the director of our investment policy division and runs the FIPA program; Vernon MacKay, to his left, was the lead negotiator for the Canada-China FIPA.
We're hoping that Sylvie Tabet will join us in a moment. She's the director and general counsel of the trade law bureau.
Mr. Chair, the signature of the Canada-China Foreign Investment Promotion and Protection Agreement, or FIPA, the combination of many years of effort, is a significant milestone in the continuing roll-out of the government's ambitious global commerce strategy. Indeed, deepening Canada's trade and investment ties with the largest, most dynamic and fastest-growing markets in the world, such as China, is an essential feature of the government's pro-trade plan for creating jobs, growth and long-term prosperity.
The FIPA is a tangible expression of the government's determination to help Canadian businesses compete on a level playing field in markets abroad, and will serve as an important plank in our burgeoning economic relationship with China.
Mr. Chair, a FIPA is a bilateral investment treaty designed, first and foremost, to protect Canadian investment abroad through legally binding provisions. By ensuring greater protection against discriminatory and arbitrary practices, and enhancing the predictability of the policy framework in markets abroad, a FIPA allows businesses to invest with greater confidence. An improved business environment can lead to new investments, thus expanding and deepening the economic relations between the treaty partners.
The Canada-China FIPA, Mr. Chairman, is a high-standard agreement. It's comprehensive in its scope and coverage.
This treaty covers various forms of investment, including tangible assets such as real estate or other property acquired for business purposes, portfolio investments and other forms of participation in a company or joint venture, and intangible assets, such as a mining concession or intellectual property rights.
In terms of its commitments, this agreement includes reciprocal obligations related to non-discrimination, a minimum standard of treatment under international law, expropriation, free movement of capital, performance requirements, and dispute resolution, among others.
In fact, this agreement contains all of the core substantive obligations that are standard in all 24 of our FIPAs currently in force.
One of the most important obligations in the treaty is to provide non-discriminatory treatment on a national treatment and most-favoured-nation basis. The national treatment obligation requires, with respect to activities after the establishment of an investment, that Canada and China treat each other's investors and their investments no less favourably than national investors or their investments in similar circumstances.
The most-favoured-nation obligation requires, with respect to activities leading up to and after the establishment of an investment, Canada and China to treat each other's investors and their investments no less favourably than investors or investments of a third country in similar circumstances. For Canadian businesses seeking to set up in China, this obligation means that China cannot treat a Canadian company less favourably than they would any other foreign company seeking to do the same.
Like our other FIPAs, the agreement with China includes an obligation not to fall below an absolute standard in the treatment of investments of the other party. Thus, Canadian investments in China have a right to treatment not lower than the minimum standard established under customary international law. This means, for example, that they may not be denied justice or due process of law or may not be treated in a manifestly arbitrary manner.
Also noteworthy are the obligations on parties to provide compensation to investors in the event of an expropriation. Such compensation must be based on fair market value and paid in a timely manner. As well, the treaty provides that investors are permitted to make financial transfers related to their investments freely and without delay.
As in all of Canada's FIPAs, this agreement provides mechanisms for the resolution of disputes. Disputes may be brought on a state-to-state basis, or an investor may bring a claim directly to international arbitration for resolution. This latter mechanism, known as investor-state dispute settlement, is a key element of the protection provided by the FIPA to Canadian investors abroad. Indeed, it is a common feature in most modern investment agreements. This allows Canadian companies to be assured of access to an impartial dispute resolution mechanism, which can be particularly important in operating environments where the local judicial system may not be well developed or independent of political influence.
Mr. Chairman, it is Canada's long-standing policy to permit public access to such proceedings. Canada's FIPA with China reflects this policy, and will allow Canada to make all documents submitted to an arbitral tribunal available to the public, subject to the protection of confidential business information. It is noteworthy that this is the first bilateral investment treaty in which China has accepted language on transparency of proceedings.
The Canada-China FIPA, like our other FIPAs, ensures that the federal, provincial, and territorial governments have full policy flexibility in key areas such as health and public education.
In addition, all foreign investors in Canada, including those from China, are subject to the same laws and regulations as domestic investors. This includes laws aimed at protecting the environment and those ensuring the highest labour, health, building, and safety standards.
Of course, as is the case with all proposed foreign investments of significance into Canada, we will continue to have the ability to ensure that investments from China bring concrete benefits to Canadians. Under the Canada-China FIPA, Chinese investment in Canada will continue to be subject to the Investment Canada Act for review under both the net benefit test for acquisitions above the applicable thresholds and for national security concerns with respect to any investment. Moreover, any decisions taken by Canada under the Investment Canada Act are specifically excluded from challenge under the dispute settlement provisions of the FIPA.
An important feature of Canada's FIPAs is the so-called ratchet provision. This means that with few exceptions, China's existing nonconforming laws and regulations are locked in and cannot become more restrictive with respect to Canadian investments. Moreover, as the laws are liberalized over time, the new level of openness is locked in at each reform. This provision brings policy predictability to Canadian investors, and is a large gain for Canada, as China has agreed to it in only a few of its other investment treaties.
Mr. Chair, it is clear that Canada's investment relationship with China is significant and in constant growth. The stock of foreign direct investment into Canada from China was C$10.9 billion at the end of 2011. Statistics for that same year show that the stock of Canadian direct investment in China was valued at nearly C$4.5 billion. With China destined to become the largest economy in the world during the coming decade, the opportunities for Canada will only grow.
China is not, however, an easy market for entry of foreign investments. Almost all investments coming into the country must go through an approval process. Some sectors are completely off limits to foreign investment, such as mining of certain minerals. In other sectors, foreign investments are restricted or "encouraged", meaning that they are subject to foreign equity caps or requirements for Chinese control or joint venture arrangements.
While the FIPA with China is not meant to and does not remove these barriers to entry, it does assure Canadian investors that they will be treated at least as favourably as investors from third countries as they go through the approval process.The Canada-China FIPA will support Canadian businesses' efforts to explore the growing investment opportunities in the world's second-largest economy across a range of key sectors, including financial services, natural resources, transportation, biotech, education, information technology, and manufacturing.
In closing, Mr. Chairman, I will say that Canada obviously wants to continue to expand its relationship with China, but we want to see it expand in a way that produces clear benefits for both sides.
Canadian companies that do business abroad rely on fair, transparent, predictable, and non-discriminatory rules. In the absence of a FIPA, Canadian investors rely primarily on the laws and institutions of the host country for protection, which adds a variety of risks to their ventures.
By ensuring greater protection against discriminatory and arbitrary practices and by enhancing policy predictability, the FIPA will allow Canadians to invest in China with greater confidence. This agreement will help Canadian companies in their efforts to compete and win abroad, which in turn will help build a stronger Canadian economy here at home.
I thank you, Mr. Chairman.
My team and I will be pleased to answer any questions.
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View Ron Cannan Profile
CPC (BC)
Does Canada achieve anything in this investment agreement that China has not provided to previous countries with which it has signed similar agreements?
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Ian Burney
View Ian Burney Profile
Ian Burney
2012-10-18 16:55
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Yes, this is the first time China has accepted any language on transparency provisions in one of its investment treaties. As I indicated, the ratchet mechanism is very rare in China's investment agreements, so there are a number of areas where Canada made significant strides in the negotiation of this investment agreement.
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