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Presentation to
British Columbia Special Committee
On the Multi-Lateral Agreement On Investment (MAI)
March 3, 1999

1. Introduction

The Aboriginal Rights Coalition is a nation-wide coalition of churches, First Nations, social justice and community organizations. If there is one single goal of the Coalition, it is to achieve a just and equitable relationship between aboriginal and non-aboriginal people in Canada. An important means to that end is modern treaty-making.

The Coalition has many local chapters across Canada. The Victoria chapter has for 25 years been an active participant in the public dialogue on aboriginal issues. We are essentially a volunteer-based organization; we have no staff. Examples of our activities of the past year include:
bulletparticipating in the Treaty Process on Vancouver Island;
bulletsponsoring many public events, including recent talks by Dr. Joseph Gosnell and a lunchtime series on the Nisga’a Agreement;
bulletconducting a survey of MLA views on the Nisga’a Agreement; and
bulletlobbying government for treaty-making process which is in accord with the guiding principles set out in the Delgamuukw decision.

Our long partnership with British Columbia First Nations has provided us with a unique basis for assessing the MAI. I stress out the outset that we have traditionally not been primarily concerned with international trade law issues (as problematic as they appear to some of our members). The MAI, however, is different. The MAI principles would destroy the much-cherished elements that have been so painfully achieved in recent decades.

The perverse irony is that at the very moment that the historic Delgamuukw decision provided wise counsel on how Canadians could, in a creative and just way, resolve the historic divisiveness of our aboriginal and non-aboriginal communities, Canada was supporting principles which would destroy Canada’s ability to do the things specified by the Supreme Court of Canada. We are here because we fear that the MAI principles can destroy the modest progressive steps in treaty-making in recent years, and remove any incentive to pursue future treaties. We are here to tell you that MAI principles should never trump the legitimate and fundamental place that aboriginal treaties should have in Canada’s constitutional future.

2. The ‘Backroom’ Negotiations

We, as many other Canadians, were appalled at the arrogance used by Canadian negotiators in attempting to negotiate something as substantial as the MAI behind closed doors at the OECD. We had naively assumed that Canada would have conducted a careful analysis of the implications of the MAI for aboriginal treaty negotiations before entering the MAI negotiations. We have been proven wrong – all that we could find are but the most general statements from free trade defenders that ‘we need trade’ and ‘don’t worry’. Canadians have not been well-served by the appalling lack of policy analysis of the MAI.

The "backroom" nature of the MAI negotiations have been well described by experts in previous committee hearings. Ed Allen, CEO of the Nisga'a tribal council repeatedly drew your attention to the lame excuses offered by the Federal Government and MAI negotiation team representatives around serious and expert concerns ( "don't worry" "we don't know".)

3. The Need for a Mandate

The federal government, in the face of the apparent defeat of the MAI in OECD deliberations, is posturing to suggest that the MAI is dead. We do not accept that the MAI principles are dead; strong shareholder interests in transnational companies will ensure that MAI principles will be advanced for some time to come in one way or another. So we view as frivolous any suggestion by critics of this committee that its topic of concern has vanished. We are disappointed that opposition members of this committee have decided not to participate in these important meetings.

We urge the provincial government to give notice to Canada that it should not enter into any substantive discussions or negotiations on MAI investor rights principles without seeking a broad public mandate to do so. It is long overdue, but the federal government should undertake a comprehensive assessment of the risks posed by international trade and finance agreements such as the MAI on the lives of Canadians. Of course, we would be active participants in that process, and would vigorously argue that the respective abilities of the Crown and First Nations to enter modern day treaties should not be compromised by MAI principles.

Britain’s Minister of Trade and Industry recently stated, in the face of criticism that British negotiators proceeded without an adequate public mandate, that it "must take proper account of social and environmental issues and of the interests of developing countries." (Brian Wilson, Minister of Trade and Industry, Press Release Jan 6/ 99). If Canada responds in a similar way, we hope that it would take proper account of the need to enter modern day treaties and the need to follow emerging international law reflected in the United Nations Draft Declaration of Indigeneous Rights.

On the home front, the President of the Union of British Columbia Municipalities, called for a very different approach by Canadian negotiators:

"It is unclear why your government would be willing to give up its right,and the rights of other sub-national governments, to enforce laws that reflect Canadian values... At the very least, we ask you to seek the opinions of Canadians generally on this matter. We believe that the future ability of all governments in Canada to govern according to the wishes of their citizens is at stake. "

These concerns are shared by the Aboriginal Rights Coalition.

4. Selected MAI Problems for Modern Treaty-Making

Your committee has heard and will hear from many experts on international investment and the MAI. We have reviewed that expert testimony and we have read the MAI draft text. Our view is that the following three MAI principles have particular potential for encumbering modern treaty making in Canada.

4.1 The Unprecedented Notion of "Investment" in the MAI

The MAI defines"investment" to include every kind of asset owned or controlled, directly or indirectly, by an investor, including: any type of business, rights under contract, and intellectual property. Investment rights include rights conferred pursuant to law or contract such as concessions, licences, authorizations and permits (Article II.2(vii)). This list of rights goes well beyond the types of property which are subject to expropriation laws in Canada.

These definitions clearly would cover the very things which are now the subject of treaty negotiations. Virtually any contract, concession, permit, privilege or authorizations respecting fishing, mining, energy resources, and forests – regardless of how minor -- would crystallize MAI investor rights. The MAI claimant would be able to argue that, having acquired these rights, he or she was on the way to exploiting an opportunity, and because an aboriginal treaty prevents that full exploitation, full compensation for the lost opportunity is owed.

4.2 The "National Treatment" Principle

The MAI’s national treatment principle is that foreign investors must be given every right, concession or privilege that a government might extend to local companies or communities. The implication for aboriginal treaty-making is clear:

"investors" in a given area, having acquired one of the many types of "investment rights", are entitled to the same or equivalent rights, concessions or privileges reached with a local First Nation. A government which, for example, enters into agreement with a First Nation for access for fisheries would be required to give the same sorts of rights to MAI "investors", even though these rights are not the types of rights which would normally be the subject of expropriation under Canadian law.

We concur fully with the following position of West Coast Environmental Law Association, one of the leading organizations on MAI issues, when it says:

The principle of providing foreign corporations precisely the same access to crown resources as is available to Canadian citizens, companies and First Nations offends many people’s sense of fairness or equity. It is also clearly incompatible with any notion of First Nation entitlements or land claims. However, there is also a strong environmental rationale for "discriminating" in favour of local communities and first nations when it comes to allocating public natural resources.

When access to resources engenders no obligation of stewardship, the result has inevitably spelled disaster. Sometimes referred to as the "tragedy of the commons," these are the dynamics that underlie the current crises affecting global ecosystems from our oceans to the earth’s atmosphere. Because of the absence of any meaningful international controls, the exploitation of these global of common resources is effectively unregulated or supervised.

4.3 Expropriation: Private Property Rights in a Global Constitution

While National Treatment and Performance Requirements rules will undermine the economic, community development and industrial policies needed to support truly sustainable resource management, the MAI’s most direct assault on environmental law and policy is found under the heading of Investment Protection: Expropriation and Compensation [Article IV. 2] which reproduces the wording of NAFTA verbatim:

A Contracting Party shall not expropriate or nationalize directly or indirectly an investment in its territory of an investor of another Contracting Party or take any measure or measures having equivalent effect (hereinafter referred to as "expropriation") except… accompanied by payment of prompt, adequate and effective compensation … equivalent to the fair market value of the expropriated investment … [Emphasis added]

It has long been the goal of property rights advocates to have these private rights entrenched in Canada’s constitution. Their campaign is primarily directed at Canadian laws that asserted that private property rights must give way, in certain instances, to the greater public good. Thus challenges to such measures as zoning bylaws or habitat protection laws as interfering with private property rights have been consistently rebuffed by Canadian courts. But what has been unacceptable to the courts, and rejected as part of Canadian constitutional reform, now appears to have been accomplished by NAFTA and would be expanded under the MAI. Moreover, the "constitutional" rights conferred through this back door are far more expansive than those dreamed of by most property rights proponents.

The most obvious examples of how these rules will undermine the capacity of all governments to achieve environmental and planning objectives concern land use controls and regulation. Whether it is for the purpose of preserving salmon habitat, or to protect endangered species, the imposition of habitat protection measures can have significant impacts upon the use of land subject to such protective measures. For example, stream habitat protection measures can substantially limit the extent and character of forest harvesting activities. Similarly, land use bylaws, agricultural land protection , parks creation and other initiatives can impact development activity, whether occurring in remote or urban areas of the province.

By limiting the uses to which land may be put, the imposition of habitat protection measures can significantly reduce the development value of property or the profitability of harvesting licenses or other permits. But under MAI and NAFTA expropriation rules, any government action that even indirectly interferes with the profitability of an investment may give rise to a claim for damages and compensation. Nor are there any exceptions to this prohibition against such government actions. While such measures are permitted when taken for legitimate public purposes, in every instance full compensation must be promptly paid to any foreign investor and for the full market value of any investment "expropriated" [Article IV 2.3 and 2.2]. This is true no matter how compelling the public policy rationale for infringing investor rights.

It is also important to understand that this expropriation rule applies to the full range of economic interests that fall within the treaties expansive definition of investment. This means that an investor need not have a direct interest in real property to assert a claim for compensation. Because the MAI defines "expropriation" in the broadest terms, its rules may effectively prohibit a broad array of government regulations that even indirectly reduces the profitability of corporate investment.

In fact, it would be difficult to identify an environmental or conservation initiative that would not have this effect, at least for some investors. Indeed there is recent evidence that environmental regulations are the most likely target of this prohibition against government "taking." One case in point is a law suit brought by Ethyl Corporation.

 4.4 The New Right of Investors to Sue Governments Directly

The above-noted principles are backed with extraordinary enforcement mechanisms. The rights given to aggrieved investors under Part V (Dispute Resolution) provide two types of remedies:
bulletthey can convince their home (eg. non-Canadian state) to enforce sanctions against Canada under the "state to state" provisions – this remedy has been with international trade law regimes for some time, albeit one that has attracted considerable controversy; and
bulletthey can sue under Canada directly, and do not have to convince their home state to sue Canada. This "investor v. state" process is especially problematic. Aside from NAFTA, this new private right is a new feature of international law, and one that is actively

The result would be that an aggrieved foreign investor, who believes that an aboriginal treaty settlement, removes an opportunity which was available to him in a treaty area, can sue Canada to obtain compensation in a quantum equivalent to the so-called privilege accorded the First Nation under the treaty. With this spectre of litigation, there would be little incentive for governments to enter aboriginal treaties.

To make matters worse, the foreign investor does not even have to make out his claim in a Canadian court. The MAI claim would be pursued at international arbitration panels operating under the auspices of such institutions as the World Bank and the International Chamber of Commerce. These panels do not follow domestic legal principles and procedures, but rather apply international legal rules and operate according to procedures established for resolving international commercial disputes. These are procedures, so highly secretive, that they must be seen as antithetical to the open and accountable judicial processes that are the hallmarks of contemporary legal systems. The hearings are entirely closed to public view or participation. Public access to documents or evidence is permitted, but only when both parties agree.

5. The MAI and British Columbia’s Aboriginal Policy

We appreciate the initiative taken so far by the BC government and this committee to raise the profile of MAI issues. We especially appreciate your recommendation #21, which states that "Canada must satisfy British Columbia's First Nations and the Province that the Federal Government achieved complete and full effective protection not only for measures related to aboriginal peoples, but for aboriginal self-governments and the treaty making and implementation process". We are also pleased that the Committee has made reference to the "fiduciary duty" of the Federal Government towards First Nations and the fact that the Government has thus far failed to consult with the First Nations of BC.

We are encouraged by the expressed intent of the new Minister of Aboriginal Affairs when he states in relation to the current treaty process that the snail's pace of settlements is not acceptable, that accelerated resource extraction on claimed lands is a disgrace, and especially when he expresses deep anger at the deliberate opportunistic distortion of issues by many in this province around the settlement issues.

In addition to these good intentions, we suggest that the government should pay particular attention to the MAI principles that may emerge in another forum. The government should make a clear and unequivocal gesture to all British Columbia First Nations that not only will it diligently seek treaty negotiations, but as importantly, it will resist with all vigilance the incursion of MAI principles if they create a risk of encumbering treaty-making. We hope that Minister Wilson and others in his Cabinet recognize the deeply anti-democratic approach manifest by the MAI. A significant portion of BC aboriginal policy should be concerned with mitigating the effects of MAI and other international trade law principles.

The significance of the MAI in terms of land claims across BC, and the ability of First Nations to protect their own development should a MAI-like agreement open access to their areas, are concerns which will be shared with all British Columbians. We would do well to heed the warning of the First Nations in terms of their own colonial experience.