Author Archives: Lawrence Herman

About Lawrence Herman

Counsel on International trade and investment, global business transactions & public policy

Tip-Toeing Through the TPP Tulips

The release of the TPP text has spawned a vast cyber-literature, as law firms and consultants compete to provide the hottest insights on what’s really in the agreement and its many hidden traps. There are many. This note doesn’t try to do that. Rather, it looks at the structure of the agreement to shed some light of how it’s been put together.

The most obvious thing about the TPPA is that it is the broadest and most detailed trade and investment treaty the world has known, much larger in scope and vastly more complex than the World Trade Organization Agreement or any existing regional and bilateral agreement, far beyond the NAFTA and the recently concluded Canada-EU trade agreement (or CETA).

The NAFTA has 22 chapters and covers something like 800 pages of text, including annexes. The CETA has 34 chapters and covers just over 1,600 pages, including annexes. TPPA contains 30 chapters and, by one count, covers over 2,700 pages of text and about the same number of pages of annexes, about 5,500 pages in all. Quite a difference.

Quite apart from its wide scope and extremely broad coverage, the TPPA is full of side-deals, exemptions, exclusions, individual undertakings and vast array of party-specific annexes.

Separate undertakings and commitments by parties to trade agreements is not in itself unusual or unexpected, like those in the WTO Agreement, where each WTO member sets out its separately bound tariff rates on imports and its duty-reduction commitments over time. Or the WTO Government Procurement Agreement, which allows WTO members to list those procuring agencies subject to the obligations in the Agreement. A degree of asymmetry is not usual in trade agreements.

The TPPA takes this much further, however, with hundreds of special or exceptional provisions that qualify or reserve on the legal obligations of this or that that participant or limit the obligations that apply to this or that subject.

Take Canada’s carve-out from the investment dispute chapter of all investment reviews under the Investment Canada Act. Or the duty phase-out on automobiles, where Canada has agreed to eliminate duties on Japanese imports over five years, whereas the US duty phase-out period is twenty-five years. Or the many special provisions and exemptions for individual countries in the market access, investment, services and IP chapters. And on and on.

The TPPA is full of these kinds asymmetrical elements in the form of reservations, caveats and side-deals by individual countries. You could say, with only slight exaggeration, that the TPPA is as much an amalgam of bilateral deals and negotiated exemptions cobbled together under a treaty umbrella, as it is a treaty of general application with only limited or narrow exemptions or exclusions.

Another aspect of the TPPA that is different from previous trade deals are the number of cases where treaty provisions are modified by understandings, affirmations and statements of intention. In the Financial Services chapter, as an example, the right of parties to maintain certain measures for “prudential reasons” is subject to an “understanding” in a footnote as to the meaning of that term.

These expressions can give rise to interpretive difficulties. What is the legal effect of an “understanding” among the parties regarding a particular term or a statement of intention contained in a footnote?

The fact that the TPPA was put together in this way just reflects the enormous challenge in achieving consensus on so many items and issues among such a disparate group of countries. At this juncture, the better view is that these are not a serious obstacle to implementing the agreement.

But the pervasive number of these carve-outs and bilateral deals, combined with understandings and expressed intentions on the meaning of so many treaty terms, will make for unusually difficult challenges and complexities in the TPPA’s implementation, interpretation and application down the road.

TPP – Drama in Five Acts

THE TPP – DRAMA IN FIVE ACTS

[A long Way Before the Final Curtain]

Paper presented by me at the Canada-US Law Institute Colloquium, Washington, DC, 29 October 2015

The successful conclusion of the Trans-Pacific Partnership (TPP) negotiations on October 5, 2015, represented a signal achievement in international trade diplomacy, all the more significant in the face of the collapse of the WTO’s Doha Round which, to many, seemed to presage the end of multi-party collaboration in the post Uruguay Round era.

Announcement Just the Opening Prologue

The announcement on October 5th was only the prologue of a longer dramatic presentation, however. We have the agreed summary issued by the negotiating parties. Some governments, including Canada and the US, have issued detailed technical summaries.

But the curtain on Act One has only just been raised, part of a much longer process of getting the agreement operating. There are several acts to come before the final bows. Here is a run-down of the next steps in the drama, a full five acts leading to the hoped-for final curtain-calls at the end of the piece.

Act One – Preparing the Legal Text

While governments announced the ingredients of the deal on October 5th, all we got was a summary of the main terms. In Canada, we got a more detailed “technical summary” While it’s reasonably detailed, it is far removed from the actual treaty, with all I’s dotted and T’s crossed, ready to be signed.

Finalizing the legal text of the treaty is a technically complex and time-consuming process that could take a few more weeks. Maybe more when translation is factored in.

Act Two – It Needs Signature

Once the legal text is ready and translated from English into Spanish, French and Japanese (and possibly other languages), the agreement will be open for signature by representatives from each of the 12 countries.

But signature alone won’t get the deal into force. That requires ratification by the participating governments (or “States” to be legally precise), a distinct aspect of the treaty-making process.

In the US, where all eyes will be glued in the weeks ahead, fast-track authority requires the president to provide Congress with 90 days advance notice before he can legally sign the TPP. It’s pretty certain that no other countries will sign, including Canada, until they see Obama’s name on the dotted line (and see more below).

Obviously, the president can’t send his notice to Congress without the official text. We’ve heard some influential voices in the Congress argue that the notification shouldn’t even be sent until the Congress has had a chance to examine the text and comment on it. A sort of pre-notification notice. So at this point, the timing for that initial 90 day notification stage is somewhat uncertain. This means that the unfolding of Act Two is also up in the air.

Act Three – It Needs Ratification

Signature in Act Two, when fully complete, indicates that the 12 TPP governments are politically committed and legally bound to take the necessary internal domestic approvals to get the treaty approved through their own legislative or constitutional processes.

Signature alone doesn’t bring the TPP into operation. To do that requires that the treaty be ratified by a sufficient number of governments to bring it into force.

We don’t have the details of the required number of ratifications. However, as stated below, ratification thresholds will require countries representing a high percentage of total TTP GDP of the group to get the TPP treaty into operation.

There are numerous cases where a treaty sub spe rati (signed but never ratified) withers on the vine.

Signature and ratification are therefore two very different things. And ratification and entry into force of the TPP are also two different things. The TPP, even with 12 signatures affixed, is in legal limbo until it is approved domestically, officially ratified and enters into force as binding contract among the TPP States.

Understanding this is critical in appreciating the process in which Canada and the other TPP countries will be engaged in Act Three of the piece.

According to summaries released by some of the TPP governments, there will be a two-year window for governments to finish their domestic approval and ratification processes before the curtain comes down in Act Three.

In some countries, like Vietnam, Peru, Chile and Mexico, ratification is fairly straightforward, done through an order of approval by the executive branch followed by a legislative enactment authorizing ratification. Once ratified, it becomes part of the law of the land without the need for separate implementing legislation. This is referred to as a “self-executing treaty.”

Act Four – Implementation

There is a new government in Canada. Nothing Mr. Trudeau and the Liberal Party said on the campaign trail suggests that the new government will not proceed with ratification and implementation of the deal.

There may be more robust examination of the final text by a Parliamentary committee or two but ultimately, and in step with the US, it is expected that the Liberals will pass the necessary legislation to bring the TPP into force for Canada.

The Canadian ratification process is reasonably straightforward, at least in theory. It may be useful to review the basics.

Treaty-making is the prerogative of the federal cabinet (formally, the Governor in Council) under Canada’s constitution, While there have been cases where the provinces were involved in trade negotiations (like in the Canada-EU treaty or CETA), there is no constitutional requirement in this respect.

Once a treaty is negotiated and signed by Canada, there is a need to implement treaty obligations under Canadian law. That normally requires federal legislation. So the TPP will come before Parliament with an implementing bill. This won’t likely happen until spring of 2016 at the earliest, sometime after the final TPP treaty text has been issued and signed by all parties and after the new government gives Parliament a chance to review it in detail.

Given that Mr. Trudeau has a majority in the House of Commons, it is not expected that the approval process and legislative approval will be difficult.

Once the federal government secures the Parliamentary approval and passes the necessary legislation, Canada will be in a position to issue its ratification notice to signal to the other TPP countries that it is bound by the terms of the treaty.

Whether provincial legislation may also be required to fully implement the TPP under Canadian law is not clear. Once the federal government signs on and Parliament approves the deal, most constitutional scholars say the provinces are automatically bound.

In any case, provinces that don’t comply with the obligations in the TPP through provincial legislation or otherwise can be brought to task through the international dispute settlement process, so at the end of the day, one way or another, the provinces have to fall in line.

In the US, the process is extraordinarily complicated, legally and politically. As a legal requirement, Congress has to approve TPP ratification but before it reaches that stage, as noted, the president has to give Congress 90 days’ formal notice of his intention to sign the deal.

Congress will begin its review of the deal once the formal notification is sent by the president. The US International Trade Commission in a parallel process has 105 days to do a separate economic review as well.

After this initial review by Congress and the Commission has been done and the President has signed the TPP, at some point an implementing bill will be sent to the Congress. There is no time limit for the introduction of that bill. Once tabled, however, Congress has a final 90 day time-frame to approve or disapprove the TPP.

All of this makes for intense political jockeying, intensely more complicated given that the 2016 US presidential campaign begins in earnest in early 2016.

Should the Congress approve the TPP and pass the bill – whether in 2016 or even 2017 – and once all other countries’ internal procedures are accomplished, each government will then issue its notice of ratification to signal that it is in a position to fully implement the TPP under its domestic laws. This will not happen simultaneously but will be done as processes are completed in each capital.

The 11 other TPP capitals will be following the ensuing events in Washington very closely. They will all wait to see what happens before completing their own constitutional requirements. This includes Canada.

Some of the developing countries in the TPP group – Vietnam, Peru, Malaysia, for example – may need assistance in getting their domestic measures up to speed to be in a position to implement. This is the old problem of capacity building and technical assistance. It is understood that the US government has made some commitment to assist these less endowed countries, although we await further details.

What About Side Letters?

There are reports that the TPP countries have exchanged numerous so called side-letters among themselves. For example, it’s been reported that at least a dozen side letters will be exchanged between the US and Japan. There are likely to be many side letters between other TPP parties as well. This will be an additional set of bewilderments for lawyers to interpret, once the TPP enters into force.

It is not clear what the legal effect of these side letters will be. They would only be legally binding if that was expressly stated in the treaty or if the side letters themselves stated that they were legally binding between the parties.

But what is uncertain is the effect of side letters on those TPP parties that are not involved. Can side letters remove the MFN rights under the treaty, for example? We’ll have to see them and try to figure out what their effect is.

Act Five – Entry into Force

The TPP will give countries a two year window to secure domestic approval and get their ratifications implementing measures complete so the treaty can enter into force.

One scenario is that the 12 countries notify their ratifications on the same date (most unlikely), in which case the TPP will enter into force 60 days thereafter.

Since it’s highly unlikely that this congruence will occur, information is that the treaty will provide for entry into force after the two year window plus 60 days when six of the twelve have notified ratification, provided these six comprise at least 85% of the combined GDP of the group.

Curtain Calls – Maybe Premature

The new Liberal government in Canada doesn’t appear likely to change course in following through with the TPP exercise. Even though the Trudeau cabinet won’t be named until November 4th, a safe prediction is that there won’t be major substantive differences on completing the drama, whoever the new trade minister turns out to be.

That being said, there is push-back in Canada on certain parts of the deal. A segment of the Canadian auto manufacturers (Ford Canada) has come out against the tariff reductions for Japanese cars. Some of the smaller parts producers are decidedly unhappy with the provisions on non-TPP content allowances.

It’s expected that other interest groups will raise loud concerns once the official treaty text is available. The same in the United States, even now some major associations are starting to pressure Congress and the administration to change key elements.

The concern isn’t with the Canadian position. And reports out of Australia, New Zealand, Malaysia and Japan are reasonably reassuring.

The concern lies in Washington.

While fast-track theoretically doesn’t allow Congress to insist on re-negotiation of the TPP, Congressional sentiment is crucial in ensuring that the deal as negotiated gets the necessary approval. It is possible that, for a whole variety of reasons, as the US election gets into higher gear, many Congressional roadblocks could be thrown up.

For Canada, the key will obviously be to see what happens to that implementing bill. If the final US legislation departs from the negotiated outcomes in one way or another, it will raise serious and possibly insurmountable obstacles for Canada and the other TPP countries to stay in the game.

Concluding Comment – Sustained Applause?

The TPP represents an important advance in international trade diplomacy and should be seen as a triumph of GATT/WTO-based plurilateralism. However, while there are 12 players on stage, the conclusion of this play will depend on the lead actor’s performance, in this case Uncle Sam. Seeing the final curtain come down with sustained applause will be up to him and his cousins in the US Congress.

 

Canada, TPP and NAFTA – It’s All About Preferential Treatment

Here is the link to my op-ed piece in the Financial Post, 8 October 2015, explaining what the implications are if Canada was to reject the TPP Agreement. We would retain all our MFN rights under the WTO Agreement and all the advantages under the NAFTA – but we would lose access to the better treatment accorded all TPP countries. This would really disadvantage Canadian suppliers of goods and services in places like the US and Japan. See my piece here http://bit.ly/1VGUBrG

Whatever its contents, Mulcair’s against the TPP deal

Here is an op-ed of mine published in the Globe & Mail, on line on 5 October 2015 and in the 6 October print version. You can also see it here. http://bit.ly/1MbGaqt

Lawrence Herman is a principal at Herman and Associates. He practises international trade law and is a senior fellow of the C.D. Howe Institute in Toronto

Like papal smoke appearing from the roof of the Sistine Chapel, we finally got a deal in the Trans-Pacific Partnership trade negotiations.

What’s been tabled in Atlanta is a large and complicated document, not surprising after five years in the making. It can’t be explained in quick sound bites. It will take time to examine it and make a reasoned assessment of Canada’s gains and compromises.

We do know that Canada has agreed to open up a relatively small part of its protected dairy market – about 3.25 per cent – as well as modest percentages of its poultry and egg markets, all of which are currently protected by high tariffs and low quotas. There will be a five-year phase-in.

Hardly the cataclysmic predictions we had heard. To the contrary, the dairy farmers’ reaction to the deal has been surprisingly positive. Who wouldn’t be with a $4.3-billion compensation package?

None of that will matter for New Democratic Party Leader Thomas Mulcair. He made it clear that the NDP would oppose the agreement, whatever it contained. It reminded me of theGroucho Marx song in the 1932 movie Horse Feathers:

I don’t know what they have to say, It makes no difference anyway. Whatever it is, I’m against it. No matter what it is or who commenced it – I’m against it.

Maybe Mr. Mulcair should talk to the dairy farmers to see if they really want Canada to reject the deal now.

In the auto sector, Canada managed to keep the percentage of total value of TPP content at 45 per cent for autos and higher-valued parts and 40 per cent for other parts, a drop from NAFTA thresholds but far better than the backroom deal cooked up by the United States and Japan last month.

Mr. Mulcair’s position that Canada should have taken itself out of the talks until after the election was a peculiar take on the federal government’s duties in critical international negotiations where events beyond Canada’s control require full participation.

By opting out, Canada would have been a hapless bystander. Getting back in would have posed enormous difficulties – it probably wouldn’t have been possible without making even more concessions.

By their nature, trade negotiations involve compromises. It’s naive to think that Canada could insist on the deal’s benefits without having to concede something on foreign access.

Too much attention has been focused on the issue of supply management. As many others have said in this paper and elsewhere, the Atlanta agreement is far broader and more extensive – covering 40 per cent of the global economy but extending well beyond tariffs, opening new markets for Canadian goods and services, all of which will support exporters across our economy. Not something Canada could walk away from.

Like all trade and investment agreements, this is really just a framework and a set of rules. Nothing happens automatically. Realizing newly opened market opportunities will be up to Canadian business. That also applies to dairy.

The formal text of the TPP treaty will be released when all the bugs are ironed out and the technical legal drafting is complete. In the meantime, all 12 governments have signed on, pledging to take the necessary internal steps to implement in the months ahead.

With the Atlanta marathon over, Canadians can judge the full package for themselves and decide whether it meets the national interest. They can look at the benefits and compromises and assess the deal on its merits. As Conservative Leader Stephen Harper said, Parliament will ultimately decide.

But that won’t make any difference to Mr. Mulcair. Whatever its contents, no matter what the gains, whatever it is, he’s against it.

Sanctions Against Iran – A Short Update

The July 2015 agreement between Iran and the so-called P5+1 group (the 5 permanent members of the UN Security Council plus Germany) is a complex deal that provides that once Iran ends its nuclear-weapons program, western sanctions against that country- though not all – will be lifted.

Clients have asked about the effect of this on Canada-Iran business. The bottom line is that nothing in the deal will mean an immediate end to Canada’s sanctions against that country.

  • First, under the deal, sanctions mandated by the UN won’t be terminated until International Atomic Energy Agency (IAEA) verifies that Iran has complied with all its obligations. Once the IAEA confirms this, the sanctions are lifted, Iran will recover approximately $100 billion of its assets frozen in overseas banks and will be allowed to resume international oil exports.
  • Second, the agreement is between Iran, on the on hand, and the US and other Security Council members and Germany, on the other. Canada is not party to the deal and not legally bound by it. Canada could continue to apply its Iran sanctions – although it’s likely for the reasons explained below that Canada will eventually follow its allies in this regard.
  • Third, the agreement doesn’t end all sanctions against Iran but only UN-mandated sanctions – and only when the IAEA verifies that Iran has complied with all its obligations. The IAEA report is expected sometime in 2016. Once that is issues, the P-5 will approve a UN Security Council resolution to repeal or amend those sanctions.

There is a proviso that if future IAEA verifications reveal Iran has broken its commitments, these UN-ordered sanctions will snap-back into place.

Canada applies part of its Iranian sanctions under the United Nations Act, to implement binding Security Council decisions. So when the Security Council repeals its Iran sanctions resolution, Canada will follow through and revoke sanctions under that act by repealing or amending the United Nations (Iran) Regulations.

However, the July agreement with Iran only covers the ending of nuclear-related UN sanctions imposed by the US and the others. Sanctions on Iran for its conventional arms and ballistic missile programs will remain in place for several more years.

And significantly, other non-nuclear-related sanctions against Iran for its human rights abuses and support for international terrorism are not affected at all by the agreement.

This means that, even if Canada’s UN-mandated Iran sanctions are terminated, Canadian sanctions countering Iran’s human rights violations and its support for international terrorism under the Special Economic Measures Act (SEMA) will not be affected. These are not tied to UN Security Council resolutions or the requirements of Canada’s United Nations Act.

The Canadian government has provided little information so far on its position on these sanctions following the July agreement. What is pretty certain, however, is that even if Canada ends its UN-imposed sanctions and un-freezes Iranian assets in Canadian banks, it will continue to apply a wide range of sanctions against commercial and financial dealings with Iran to counter that countries terrorism activities and human rights violations.

Developments respecting Canada’s sanctions against Iran should be monitored carefully by Canadian business, keeping an eye on news releases and the web-site of the Department of Foreign Affairs, Trade and Development at: http://www.international.gc.ca/sanctions/countries-pays/iran.aspx?lang=eng

COOL Frustrations

The trade dispute between Canada and the US over American country of origin labelling requirements (referred to everywhere as “COOL”) is entering its eighth year. It presents a history of delay, frustration and prevarication that, sad to say, tarnishes the utility of the WTO dispute settlement system.

Canada took the matter to the WTO back in 2008. After over five years of Canadian legal victories, the US still hasn’t repealed the COOL measure.

It’s a US law that requires separate labelling of beef and pork products based on country of origin. That measure discriminated against Canadian products, because it requires American processors to segregate Canadian imports from US products. Given the complexities and costs in doing this, it resulted in US processors taking less beef and pork from Canadian sources.

In November 2011, a WTO panel said the law was contrary to US treaty obligations and had to be replaced with a compliant measure. The US appealed. In June 2012, the WTO Appellate Body turned down the appeal, siding with Canada.

The US brought in a new COOL regulation in 2012. Canada argued that this new measure was even more restrictive than the original one and took the case back to the WTO. In October 2014, a WTO panel agreed with Canada and said the US was still non-compliant with its treaty obligations. The US appealed this decision as well. They lost.

In June 2015, Canada advised the WTO of the retaliatory measures it proposed to take against the US in the form of tariff surcharges. The US objected to the amount of tariff hikes Canada was seeking. It appealed that to a WTO arbitration panel. This new panel will hear arguments this September and will issue its decision before the end of the year.

The COOL dispute is now over seven years old and still not at an end. There are machinations underway to find some sort of solution. The Canadian agriculture minister, Mr. Ritz, in the middle of an election, said he expects the US to comply in full with the panel ruling. He can’t afford to be seen as caving in. Retaliation may be in the offing.

If the US continues to refuse to comply with the 2011 panel decision and Canada finally does retaliate, by the time it does the dispute will have been around for eight years. And, of course, retaliation doesn’t end the dispute. It simply puts it into another chapter.

This is clearly one of the most frustrating of WTO cases and, regrettably, illustrates the weaknesses in the WTO dispute settlement system. It shows that if members want to prevaricate, delay or dissemble in meeting their WTO obligations, there are endless routes available.

While solutions are not easy, serious thought is needed on ways to improve the process and make it more efficient – without opening up the WTO Agreement, which is a non-starter anyway. Kicking around a trade dispute for the better part of a decade, is out of step with the real world of trade and commerce. It weakens public confidence in the value of multilateral dispute settlement.

 

TPP and Supply Management – Western Interests

Supply managed industries – such as the dairy producers – are largely centred in Eastern Canada and concern a very specific market segment. There are other parts of Canada’s agricultural industry, such as the beef, pork, grains and oilseeds, that are negatively impacted by Canada’s steadfast refusal to reduce supply-managed protectionism in international negotiations, notably the Trans-Pacific Trade negotiations.

The interests of these other – and very economically important – parts of the ag sector are often forgotten in public discussion of the TPP exercise. These producers have much to gain from a successful conclusion of the TPP.

See my comments in a recent edition of the Western Producer here.

Investment Disputes – Hot-Button Topic

I confess I’m not a fan of the Canadian Centre for Policy Alternatives. I find much of their stuff to be ideologically-driven and one-sided. I’m put off by their anti-free trade rhetoric and their congenital hostility toward the WTO and liberalized trade generally.

As a believer in the progressive development of international law, I don’t agree with those that dismiss the efforts of the global community to conclude legally-binding codes of conduct, whether in trade or other economic matters.

But I must say, the CCPA’s August 2015 report on Investor-State Dispute Settlement – “A Losing Proposition – The Failure of Canadian ISDS Policy at Home and Abroad” – is an interesting document.

Whether one agrees with its overall conclusion, and while some of its analysis can be questioned, it makes a useful contribution to the growing debate over ISDS. It’s definitely worth reading.

After reviewing the recent history of investment disputes involving Canadian investors around the world, the report says that Canadians have lost a high percentage of those cases. It concludes that ISDS hasn’t been particularly helpful in that regard and dismisses its utility as an instrument of Canadian policy.

In the reverse situation, it notes that Canada has been targeted in more investor-driven arbitrations under the NAFTA than the US and Mexico combined – a valid point. Because arbitrators found against Canadian environmental regulations, notably the recent Clayton/Bilcon decision, the report says Canadian policy in signing investment protection treaties is wrong-headed.

Typical of opponents of investor arbitration, there is questionable use of some of the data and the historical record in the document.

It throws in the Abitibi-Bowater settlement of $130 million in the list of NAFTA cases Canada has lost, when in fact that was a negotiated settlement and Newfoundland had made it clear at the very outset, when it expropriated Abitibi’s assets, that it would pay compensation.

Apart from the recent NAFTA panel award in the Clayton-Bilcon case where the damages haven’t yet been assessed, the amount paid out by Canada under NAFTA awards is less than $20 million, in comparison to the hundreds of millions of dollars claimed by disputing investors.

In typical CCPA fashion, the report raises the spectre of Canada being threatened in future investor claims under the NAFTA and other bilateral investment treaties, predicting that Canada will come under assault in a range of public policy areas, including environmental and public health and safety measures.

In its selective use of the record, the report doesn’t mention important NAFTA cases Canada has won such as Chemtura Corporation v. Canada, where the arbitrators dismissed the claim involving Canadian pesticide regulations, saying nothing in the NAFTA prevented governments from legislating or regulating for the public good. Or Dow Agrosciences v. Canada, where the case was withdrawn, the company conceding the right of Quebec to regulate the use of 2,4-D.

That being said, and whether one agrees entirely with its overall thesis, the report raises legitimate questions about the value of ISDS for Canadian investments abroad, given the record of Canadian losses over the last decade or so. Whether or not the scorecard is 100% accurate, it’s a valid question.

The irony is that, by pointing to the number and scope of unsuccessful Canadian investor arbitrations against foreign governments, the report implicitly recognizes that arbitrators have tended to side with governments as opposed to foreign corporations.

With those reservations, I find the report to be a useful document. It addresses growing interest – and concern – in the legal and trade policy community about the dramatically increased use of investment litigation and the enlargement of the scope of measures that are being challenged, not only in Canada but around the world.

Parenthetically, I guess when an investment treaty is concluded where governments say to corporations “You can sue me”, it’s not hard to understand why that option is taken advantage of.

The real shortcoming in the report is that it doesn’t come to grips with the central challenge governments are facing. With over 2,500 or so of these investment protection treaties around the world, it’s impossible to roll them back, cancel and re-negotiate them. Governments could choose to abrogate these treaties en masse but that just isn’t going to happen.

So what’s the solution? What can be done to re-calibrate ISDS going forward, to improve the process, enhance procedural transparency and, importantly, to allow appeals from arbitration decisions on matters of law?

The debate in legal and policy circles has taken us to the point where there is a fair degree of consensus over need re-balance ISDS, between the interests of foreign investors to be safeguarded against arbitrary governmental measures and the legitimate right of governments to legislate for the public good.

That’s really what we need to be talking about.

******

There was an article about the CCPA reports in the August 5 edition of Embassy where I offered some comments. Click here