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Trudeau wants controversial investor-state provision in ‘free trade’ agreements with India

The Trudeau government is reportedly working on trying to conclude two ‘free trade’ agreements with India.

In January, the Toronto Star reported, “Federal Liberal Infrastructure Minister Amarjeet Sohi, fresh off a trade promotion trip to India, says a free-trade agreement with India ‘is high priority for our government’.”

Yesterday, The Globe and Mail reported, “[The new Indian High Commissioner to Canada Vikas Swarup] now has his mind set on his first major task as high commissioner: securing a visit by Prime Minister Justin Trudeau to India. He hopes the trip will happen this year, but the Prime Minister’s Office says no dates have been confirmed. In the meantime, Mr. Swarup is working to help finalize two major trade agreements for Mr. Trudeau’s visit. Talks on a Canada-India free-trade deal started under the previous Conservative government, and a foreign investment promotion and protection agreement (FIPA), which establishes rules for investors, is in the final stages.”

The article adds, “A number of cabinet ministers have visited India in recent months, including International Trade Minister François-Philippe Champagne in March. According to the Hindu Business Line, Mr. Champagne insisted that the FIPA be signed before the free-trade agreement – something his Indian counterpart would not agree to do.”

Negotiations on a Canada-India Foreign Investment and Protection Agreement (FIPA) were launched in September 2004 (under Liberal prime minister Paul Martin) and concluded in 2007 (under the Harper government), but the deal was never signed.

That’s because soon after India’s government refused to sign any foreign investment agreements that included the investor-state dispute settlement (ISDS) provision. Following that, in late-2015, India proposed a model Bilateral Investment Treaty (BIT) that requires investors to pursue disputes in domestic courts for at least five years before moving to international arbitration.

Then in January 2016, the Trudeau government reportedly pulled back on the Canada-India Comprehensive Economic Partnership Agreement (CEPA) stating that the FIPA had to be signed and brought into force first before CEPA talks could proceed. The Hindu explains, “India wants investors to exhaust the domestic remedies before approaching international tribunals [but] Canada is worried about judicial delays in India and wants flexibility to help investors approach international tribunals at the earliest.”

It remains to be seen how the Trudeau and Modi government will resolve this issue.

Various news articles have noted that Canada’s negotiating objectives include:

  • increase exports of forest products, minerals, manufactured goods, agricultural products, fish and seafood products, machinery, construction materials, aerospace and environmental technologies

  • export oil, gas (including liquefied natural gas) and expertise in development of energy infrastructure such as hydroelectric transmission

  • resume Cameco Corp. exports of uranium to feed India’s nuclear reactors

In October 2013, India’s then-high commissioner to Canada stated, “If Canada can take steps to bring oil and gas toward East Coast tidal ports, investors from India will be there to help with required investment”. In June 2014, the Financial Post reported ONGC Videsh Ltd., the overseas arm of India’s biggest state-owned energy explorer, has stated that the Energy East pipeline “would be of natural interest to us”.

The Council of Canadians is opposed to the profoundly anti-democratic investor-state dispute settlement provision, given it allows transnational corporations to sue governments that have implemented legislation or regulations in the public interest (very often environmental protections) for lost future profits. In addition, studies show that rather than creating jobs, free trade agreements are likely to result in job losses, greater inequality, and a transfer of wealth from labour to capital.