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Canada should drop ISDS provisions for good

Last week, legal expert David Schneiderman brilliantly argued in the Globe and Mail that rather than consulting with Canadians over the practice of including investor-state clauses that allow foreign investors to challenge government laws and regulations in trade agreements, Canada should drop them all together. He correctly pointed out that the Trudeau government appears wedded to the concept of investor-state dispute settlement (ISDS) in deals that Canada signs. He noted that ISDS is contained in both the recent deals with Europe (CETA) and Asia Pacific (CPTPP) and also in a number of bilateral agreements.

But the government is all over the place on this issue! In referring to the fact that ISDS in the old NAFTA (called Chapter 11) was dropped between Canada and the US in the new agreement (USMCA), Foreign Affairs Minister Chrystia Freeland boasted that this was a win for Canada. “ISDS elevates the rights of corporations over those of sovereign governments. In removing it, we have strengthened our government’s rights to regulate in the public interest, to protect public health and the environment,” she said, sounding like a charter member of the Council of Canadians.

ISDS provisions allow foreign investors to sue governments over decisions that impact their corporate profits even if they are made in the public interest.

Schneiderman questioned whether this showed a change in government policy, noting it likely did not since Canada recently enacted legislation for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that includes ISDS provisions.

In the article, Schneiderman points out that almost all of the online documentation the federal government provides to help people understand ISDS offers points that make it look positive, and not the negative information like how Canada is the most sued country in the developed world because of ISDS provisions. He says, “This is not a pitch to ditch ISDS.”

“This online background information does not weigh pros and cons,” he points out. “Nor is any evidence provided to show, as suggested, that signing onto such treaties attracts new foreign investment or even protects Canadian investors abroad. There are no data provided about anything.”

How can it be that ISDS is a corporate tool that thwarts democracy in one trade agreement (USMCA) but a necessary component of many others (CPTPP)?

We must challenge the government on this inconsistency and get rid of ISDS from all current and future trade and investment agreements Canada signs.