SECTIONS
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And the Threat to Social Programs, Environmental Sustainability and Social Justice in Canada and the Americas
Part 4 of 6
by Maude Barlow, January 18, 2001
For the PDF version click here. 
What Is Canada's Position on the FTAA?
Canada has taken a leading role in the FTAA process (as it has in the MAI, the WTO and the GATS). The Canadian government has become an enthusiastic champion of NAFTA and its expansion, and has been pursuing individual free trade and investment agreements with Latin American countries like Chile, El Salvador, Guatemala, Honduras and Nicaragua. Canada chaired the initial 18-month phase of the FTAA negotiations set up in Santiago in April 1998, and is on record in its support of extending a model of deregulated trade and privatization to Latin America.
At a March 1999 meeting of the Standing Committee on International Trade, George Haynal, Assistant Deputy Minister, Americas, Department of Foreign Affairs and Trade (DFAIT), said: "The hemisphere has gotten its act together. It has some way to go, but our engagement is with an area that is ready to engage us on our terms." Added Bob Anderson, Vice-President, Americas, Canadian International Development Agency (CIDA): "Virtually all of the countries have bought into the Washington Consensus in some form or other. That Washington Consensus implies a whole series of sequenced reforms. What we in CIDA have tried to do is identify those kinds of reforms where Canada has some particular expertise, some comparative advantage."
DFAIT has been strongly criticized by civil society, labour, human rights and other non-governmental organizations for its past lack of consultations with any groups but business. For instance, when citizens groups in Canada heard about the MAI in late 1996, they were told by DFAIT that no such treaty existed. After they got a hold of a copy of the text in March of 1997, the groups acquired a list of government MAI consultations; it showed that DFAIT had been meeting with the Canadian Chamber of Commerce and the Canadian Council on International Issues - the international arm of the BCNI - as early as 1993, four years before the government later admitted it was even involved in such negotiations.
So on December 13, 2000, when DFAIT announced that it was releasing the government's negotiating position on the FTAA, calling it an unprecedented act of transparency, many groups were very pleased. At last, a meaningful consultation could begin. However, so much is missing from this document that, only months before the Quebec City meeting, it is impossible to gauge Canada's position on the most contentious of the issues.
Four areas - investment, services, dispute settlement and intellectual property rights - are missing altogether, and many questions remain in a number of other key sectors.
Areas of Concern
- Investment
The Government of Canada says that it has made no submissions to the Negotiating Group on Investment to date. This is hard to believe. Canada was chairing the process during the period that the Negotiating Group on Investment came up with its mandate and spelled out a very ambitious position on investment (set out in detail above) that includes national treatment, services and investor-state compensation provisions.
As well, in its introduction to its published negotiating position, DFAIT states its clear support for an investment agreement in the FTAA: "In recognizing that investment is the main engine for growth, Leaders further committed themselves to creating strengthened mechanisms that promote and protect the flow of productive investment in the Hemisphere." Then, in its own draft Preamble, DFAIT calls for all governments to commit to "establishing a fair and predictable framework for promoting and protecting investment."
International Trade Minister Pierre Pettigrew has said that he will not sign the FTAA if it contains the investor-state clause (Chapter 11) of NAFTA. This appears to be in direct contradiction to the commitments that have been made by his department's negotiators. There is an urgent need for the government to clarify its exact position on investment immediately.
- Services
Similarly, DFAIT says it has made no submissions to the Negotiating Group on Services either. Again, Canada was chairing the hemispheric Negotiating Group that came up with the sweeping definitions of services, including national treatment, universal coverage and extended market access.
It is clear from the introduction to Canada's position that the Canadian government looks favourably on including services in the FTAA: "Specifically, they (the Leaders) noted that the elimination of impediments to market access for goods and services among our countries will foster collective economic growth." In the draft Preamble, Canada calls for "enhancing market access for trade in goods and services" and acknowledges "the importance of regulatory reform to advancing trade liberalization."
Certainly, if Canada takes a position at the FTAA similar to its position at the GATS, it will be promoting negotiations in which, as the government's own WTO position paper states, "nothing is off the table, a priori, including the politically sensitive areas of health and education."
To see what Canada is likely to support, we can look to the existing GATS agreement as well as the proposed additions. The GATS currently covers all service sectors and modes of supply as well as most government measures, including laws, practices, regulations and guidelines - written and unwritten. No government measure that affects trade in services, whatever its aim, even for environmental or consumer protection, for universal coverage or to enforce labour standards, is beyond the scope of the GATS.
Essentially, the agreement prohibits discrimination against a foreign supplier in all covered areas notwithstanding the conditions under which services are provided and regardless of the human rights or environmental record of the provider. Parties have also agreed that some rules apply "horizontally" or across the board, whether or not the area has already been listed with the GATS. One "horizontal" rule is that all regulations in any given sector, including social services, must be "Least Trade Restrictive" and all member WTO countries must be prepared to include market mechanisms wherever possible, even in social programs.
At present, public services provided by government are technically applicable for exemptions. Hence, some countries have claimed exemptions for their publicly funded social security programs. But under GATS article 1.3C, for a service to be considered to be under government authority, it must be provided "entirely free." That means that the sector in question must be completely financed by government and have no commercial purpose. All government services supplied on a commercial basis - even if it is not-for-profit - are subject to GATS rules, as are government services publicly supplied but in competition with commercial suppliers. Since hardly any service sector in the world is entirely commercial-free, this exemption is increasingly meaningless.
In the new round of negotiations, GATS officials will attempt to expand access to domestic markets and governments will be under great pressure to list more of their services and exempt fewer. The powerful northern countries will be pressing for more binding market access provisions, pressing developing countries for guaranteed, irreversible access to their markets and eliminating many more policy options.
As well, GATS officials are seeking to place severe restraints on domestic regulations, thereby limiting governments' ability to enact environmental, health and other standards that hinder free trade. Article VI:4 calls for the development of any "necessary disciplines" to ensure that "measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade." This provision would also apply horizontally. Governments would be compelled to demonstrate that regulations, standards and laws were "necessary" to achieve a WTO-sanctioned objective, and that no less commercially restrictive alternative was available.
Further, the new talks are aimed at developing new GATS rules and restrictions, intended to further restrict the use of government subsidies, such as those used in public works, municipal services and social programs. A particularly threatening development is the demand for an expansion of the "Commercial Presence" rules. Commercial Presence allows an "investor" of one GATS country to establish a presence in any other GATS country and compete not only for business against domestic suppliers but for public funds against domestic publicly funded institutions and services.
All of this is taking place under Canada's leadership; Canada's WTO Ambassador, Sergio Marchi, is chairing the WTO GATS negotiations. There is no reason to believe that the Government of Canada would take a substantively different position on services in the FTAA.
- Intellectual Property Rights and Dispute Settlement
Again, the absence of Canada's position on these two crucial areas from the document is very disturbing. As with services and investment, Canada was in the chair during the negotiations that led to the proposed mandate outlined above. The notion that the Canadian government is not in full compliance with the Negotiating Group on Intellectual Property Rights and the Negotiating Group on Dispute Settlement is not credible.
- Technical Barriers to Trade
Canada is proposing a new and separate chapter on the subject of Technical Barriers to Trade (TBTs) based on the TBT provisions of the WTO. (These are the rules that state a nation must be prepared to prove, if challenged, that its environmental and safety standards are both "necessary" and the "least trade restrictive" way to achieve the desired conservation goals, food safety or health standard.) These rules are of great concern to Canadian environmentalists and groups concerned with food and animal safety, as they have been used to strike down health and safety regulations around the world.
DFAIT says there is a need for a "broader framework" of discussion and commitment than exists in the proposed FTAA and recommends establishing a new Committee on TBTs which would meet regularly and provide technical assistance to the developing countries of the Americas in order to assist them to deregulate "unjustified use of government regulatory powers that have an undue (more restrictive than necessary) or discriminatory impact on trade."
Canada's Preambular language expressing its hope of finding ways to "better protect the environment" is negated by the strong anti-environmental language of its position on TBTs.
- Agriculture
The Government of Canada is a hawk on the issue of agriculture. It is calling for the total elimination of export subsidies for agricultural products "as quickly as possible" and to prevent their re-introduction "in any form." It is also calling for the "maximum possible reduction or elimination of production and trade-distorting domestic support," even though the elimination of farm subsidies has had a devastating impact on Canadians farmers, and it wants to "accelerate the elimination of tariffs for originating agricultural products." It is bullish on non-tariff measures and regulations, calling for a zero-tolerance policy on restrictions on imports.
DFAIT also strongly endorses the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) in the FTAA. (The WTO Agreement on SPS sets constraints on government policies relating to food safety and animal and plant health, from pesticides and biological contaminants to food inspection, product labelling and genetically engineered foods.) Like TBTs, these rules are seen by many as a way to reduce or eliminate government regulations that protect human and animal health in favour of private interests.
As with TBTs, the Government of Canada wants to "facilitate" day-to-day SPS activities within the hemisphere and proposes the establishment of a "Consultative Group on SPS" to provide a "regular forum for consultations, problem-solving and institutional cooperation." The committee would look at harmonization, risk assessment and transparency, among other things. Canada's strong leadership on this form of deregulation, particularly in light of the deteriorating environment of the countries of the hemisphere, as well as the lowered standards resulting from giant corporate farms, is great cause for concern.
- Government Procurement
The Government of Canada is also a hawk on the issue of government procurement in the FTAA, calling for full transparency and the publication of all laws, regulations, judicial decisions and administrative rulings to do with government procurement. "Canada agrees that making public the rules and administrative measures related to doing business with a government is an important aspect of the Free Trade Agreement of the Americas."
But DFAIT goes further, calling for a prohibition of "any type" of offset. Offsets, DFAIT explains, are "measures imposed or considered by an entity prior to or in the course of its procurement process that encourage local development or improve its balance of payments accounts by means of domestic content, licensing of technology, investment, country-trade or similar requirements." In other words, DFAIT supports the elimination of all the ways in which governments ensure that foreign investment return some local good to a community in return for the profit transnational corporations gain from such access.
If Canada followed this formula proposed by DFAIT, all sorts of affirmative action, community investment and local hiring programs would have to be eliminated when dealing with foreign-based transnational corporations.
- Competition
Canada is calling for very strong language around competition policy in the FTAA "to ensure that the benefits of the FTAA liberalization process are not undermined by anti-competitive business practices." However, DFAIT is strangely mute on the question of "official monopolies and state enterprises." Its hawkish position on government procurement coupled with its strong position on competition, as well as its apparent pro-services bias, may put Canadian public institutions, such as the CBC, in jeopardy.
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