An inconvenient and catastrophic view of the free trade threat

So you think free trade is a fabulous thing? That’s what the Harper Tories and foreign corporations who rule them want you to believe.

However, in the authoritative and pro-capitalism National Post, the article “Free trade by stealth” by two academics points out that reality is very different from what our ruler, the one who promised an open, accountable government while campaigning, would have you think. What they describe is a dictatorial trade regime that derails much of our nation’s sovereignty. — Frank Touby

Mohsen al Attar & Lucas Versteegh

Last year, Prime Minister Stephen Harper signed a new trade agreement with the European Union. Beaming, Harper declared the Comprehensive Economic and Trade Agreement (CETA) “a historic win for Canada” and “the biggest deal our country has ever made.” So important is this agreement that, when implemented, it will supposedly generate a greater impact on the Canadian economy than did NAFTA: real income, exports and economic opportunities at large are predicted to soar.

The federal government on Tuesday laid out a timetable for ratifying the 1,500-page agreement to break down most of the tariff walls between Canada and the 28-nation EU bloc.

But the text of the deal for the Comprehensive Economic and Trade Agreement Comprehensive—tentatively reached last October following five years of negotiations—has yet to be made public.

We write conditionally and in the abstract, for we cannot say with any confidence which specific aspects of our lives CETA will affect. After several years of negotiations and many months of “public consultations,” virtually no one beyond the negotiating team knows what our “historic win” looks like. While this may seem odd, to those familiar with Canadian law-making procedures, it is par for the course.

Canada is a democracy, but all laws are not created equal. Our domestic laws are submitted and resubmitted, debated and amended before achieving royal assent. In the matter of international trade, however, a mix of law and tradition gives the executive branch exclusive authority. The Prime Minister’s Office can negotiate and sign an internationally binding treaty without involving Parliament until the final stage. With a strategic ways and means bill, the legislature need not be involved at all.

CETA is a particularly stark example of the “freezing out” of Parliament. According to New Democrat MP Don Davies, who co-chairs the Standing Committee on International Trade, neither he nor any other member of the committee knows what was under negotiation, what was rejected, what was agreed to or why. Bizarrely, the committee has nonetheless been on a cross-country consultation tour polling Canadians on their positions vis-à-vis the agreement. What makes the consultations surreal is that they are being held without the actual terms of the treaty: the PMO refuses to release the document.

Of course, negotiating agreements is not a casual affair, and the temporary use of secrecy is often a valid strategy. We note, however, that not everyone is kept in the dark: industry leaders were apprised of the negotiations throughout the process, and many even counselled the negotiating team on their preferred outcome. Included on this VIP list are Canada Pork International, the Chamber of Commerce, SNC-Lavalin and other agricultural, financial, and service industry groups. Parliamentarians, premiers, academics and the rest of Canada simply have to wait and see.


While historically a thorny issue, the executive dominance of trade policy is particularly troubling today, as treaties have become the preferred vehicle for social regulation. Modern trade agreements cover access to medicines, the use of crop seeds, the delivery of water, and even the regulation of labour markets. So-called “non-tariff barriers to trade”—such as sanitation and environmental regulations—are in the crosshairs as well. With a bit of effort, virtually everything under the (Canadian) sun could eventually fall under the banner of “trade,” thereby allowing the Prime Minister to push much of the economy beyond parliamentary authority. Efficient? Perhaps. Democratic? Doubtful.

What about the courts? Might they intercede to keep the executive in check? Alas, the judiciary has been unwilling to restrain the executive’s treaty-making power even as its own role is circumscribed by trade agreements. Canadian courts have been sidelined by the investor-state dispute settlement provisions first introduced in NAFTA (and allegedly strengthened in CETA). These clauses permit corporations to sue foreign governments for lost profits that result from “expropriation,” although the word is frequently stretched beyond recognition. These claims can only be brought by foreign investors, and are heard before private, unaccountable and secret arbitration panels.

Regulatory provisions that might conceivably hurt private profits will thus have to meet the requirements of a treaty into which few citizens have had any input

Investor-state dispute provisions not only exclude the judiciary, but they also result in massive litigation, especially for Canada. Under NAFTA alone, successful suits against Canada have resulted in payouts worth $157-million, and the repeal of one law. Of greater concern are the nine ongoing cases claiming $2.5-billion in damages. Many of these attempts fail, but—given the expansive definition of trade—they may have a direct effect on public policy beyond the enormous sums spent defending Canadian laws. Soon after Quebec suspended “fracking” pending further environmental research, Canada was hit with a $250-million lawsuit (as yet unresolved).

Harper has asserted that environmental regulations and social programs will not be repealed by CETA. This is accurate: The executive has many powers, but unilaterally rescinding existing laws is not one of them. However, as long as these dispute clauses remain, both existing and future programs and regulations will become vulnerable to corporate challenge, limiting democratic flexibility. Regulatory provisions that might conceivably hurt private profits will thus have to meet the requirements of a treaty into which few citizens have had any input.

These provisions are not a given. Frustrated by an avalanche of investor claims after strengthening tobacco restrictions, Australia announced that it would no longer sign treaties that contain investor-state dispute clauses. A German newspaper recently reported that the inclusion of investor-state dispute mechanisms had become a sticking point for the country. What this means for CETA overall is yet to be seen.

Canada, however, is following a different playbook. Between executive dominance of an ever-expanding trade agenda and the disproportionate influence of foreign corporations, popular accountability is eroding in our otherwise well-functioning democracy. The PMO lauds CETA as “Canada’s most ambitious trade initiative”; we will eventually find out what this means. What would be truly ambitious, however, would be allowing those at the source of political power—ordinary Canadians—a say in the matter.

Mohsen al Attar is an associate professor of law at Queen’s University Belfast, and a visiting professor at McGill University. Lucas Versteegh is a graduating BCL/LLB student at McGill University.